Monday, December 31, 2012

If You Make $250,000 a Year, You're Rich

And if you are rich in America, you are rich anywhere else in the world.

One of the most expensive places in the U.S. to buy a house is in Los Altos California, where homes averaged $1.7 million in 2012. With no money down, a 30-year mortgage at 5% on a home in Los Altos costing $1.7 million would cost you $131,000 a year (almost $11,000 a month for a mortgage payment).

That is less than half your annual income if you earned $250,000 a year; so you'd still have enough money left over for heat and food.

But I keep hearing the talking heads on TV saying that for someone living in a big city like L.A. or New York, $250,000 isn’t really all that much. Oh really?

I once lived in New York City and survived (though not very well) on a waiter's pay plus tips, living in a weekly rental apartment on West 42nd Street before Times Square was renovated. I later moved to Queens with a co-worker to rent a house for a lot cheaper (in middle-class neighborhood across the street from a school).

I also lived in a ritzy area of Philadelphia (Rittenhouse Square), and on a waiter's pay I managed to live in a very nice high-rise apartment called the Rittenhouse Claridge. I didn't starve.

$250,000 is 5 times the national average "household income”, when two people in a household usually work -- which squares with the Social Security Administration, which says 50% off all U.S. workers earn $26,966 a year or less --- and the Census Bureau that says 80% of all households have at least two income earners.

Obama wants households earning over $250,000 to pay a little more (the old tax rate under Bill Clinton); but everyone earning more than that (especially multi-millionaires) are kicking and screaming like they have it so damn bad.

"Ah-ha!" I can hear Bill O'Reilly saying, because in my little scenario I'm not figuring in to account federal, state, city, and FICA taxes into that $250,000 that someone is earning.

Well, in that case, instead of buying a $1.7 million house in Los Altos California, maybe if you earned $250,000 BEFORE taxes, you could afford one of these "slum" 2 & 3 bedroom condos in New York City for half the price --- or far much less.

FOR SALE: $898,000 - South End Ave & West St. - $5,756 a month with no money down at 5%.

FOR SALE: $799,000 - 250 Manhattan Ave - $5,121 a month with no money down at 5%.

FOR SALE: $755,000 - 375 East 68th Street - $4,839 a month with no money down at 5%.

FOR SALE: $350,000 Wadsworth & West 181st - $2,243 a month with no money down at 5%.

What? You can't afford to buy and can only rent? With $250,000 a year you can easily get one of these slummy crash pads...
Apartment for rent in Midtown - $3,275 a month
Apartment for rent in Midtown - $3,130 a month
If you lived in Midtown Manhattan, you might pay $3,000 a month for a nice one room apartment (that's $36,000 a year). But even after taxes, you would still be living on Easy Street if you earned "only" $250,000 a year. Most working people in America have to work at least 10 years to make $250,000, which is more than the median price of a home in the U.S.
But most people who work in NYC don't live there, they commute.
If you earned $250,000 in America, you are rich. If you earned that much money in the Democratic Republic of the Congo you could buy your own army.
And Bill O'Reilly could probably buy the whole country.
But never fear, because a deal was reached in the Senate tonight on the threshold for extending the Bush tax cuts, and it is now $450,000 a year. So if you earn that much money every year, and you live in Los Altos, New York, Boston, L.A. or San Francisco, you won't have to worry about where your next meal will come from, because your taxes won't be going up anytime soon.
Now we have to hope that the Republican idiots in the House will vote for it.

1 comment:

  1. The Senate, in an overwhelming 89-8 vote early Tuesday morning, approved a plan to raise tax rates on families earning more than $450,000 and postpone the so-called sequester cuts for two months, among other provisions.

    The deal now heads to the House for a vote as early as New Year's Day.

    Technically the country has now gone over the so-called fiscal cliff, though President Barack Obama and lawmakers hope to contain any damage with quick congressional action. (ha-ha!)