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Luxuries Are Not Necessities!

I was taking a look at this article at Yahoo Finance about a University of Chicago law professor, Todd Henderson.  He blogged that making $250,000 or more does not mean a person is rich and “we are just getting by despite seeming to be rich”.  He then went on to name expenses like a nice house close to work, a nanny, and a lawn care service.

I completely agree.  If I make $250,000 a year but spend $250,000 a year, I am not creating wealth.  If I make $50,000 a year, live on $40,000 a year, and save the difference, I do create wealth.  BUT, I definitely have more of an opportunity to create wealth making $250,000 a year than someone making $50,000 a year.  How?

BY SPENDING LESS. It isn’t that hard to figure out.  Spending less than you earn is the first step to surviving financially.

A nanny, a nice house close to his university, and a lawn care service are not necessities.  Those are all called “luxuries”.  I should know, Mr. BFS and I do have a biweekly housekeeper and a biweekly lawn service during the spring and summer…we know they are luxuries and budget as such.  BUT THEY ARE LUXURIES NONE-THE-LESS.

Is Todd smoking something?  If my husband and I can somehow save 35-40% of our income when we “only” make $80,000-$85,000 a year jointly (and are happy to boot), I think that a couple making $250,000 a year in Chicago has a fighting chance to build wealth too.

Sure, I do not have kids and childcare is expensive, but I bet there are cheaper options than a personal nanny.  I also doubt that childcare is eating up the $165,000 difference between our salaries.

I usually try to be more sympathetic, but I just don’t feel like coddling anyone today.  Whether someone is making $20,000 or $1,000,000, I just don’t think they should get coddled when they complain that their LUXURIES are costing too much.  I splurge on luxuries, but you will never hear me whine that we can’t make ends meet because our housekeeper costs too much.

Todd, shut the heck up.  You are being a whiny brat. That is all.

What do you think?  Am I being too harsh?

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48 comments to Luxuries Are Not Necessities!

  • I completely agree with you Crystal! When people complain to me that they don’t have enough money to make ends meet, I am often taken back.

    My wife and I have a similar income as you and your husband, but we can put nearly 40% of it toward our debts each month. Now, we don’t have any children, but it seems like you’re doing just fine with your finances.

    It’s mindblowing to witness all the luxuries that are thought of as “necessities”.

  • I’m going to say luxuries are relative. A car is not a luxury here, it might be the ultimate luxury in a poorer country. The thing with monty is, more money makes more luxury items, can’t-live-without-items. Not supporting Todd here, (I’ll support you always Crystal! ), but with bigger salaries, you have a bigger house with a big lawn and maybe Todd lives in a city where lawn maintenance is mandatory.

    Of course Todd has a choice. Not buy a large house to begin with!

    But then if Todd makes 250K and has expenses for 250K and Joe makes 50K and saves 10K, Joe is wealthier than Todd. I’m in agreement with you there.

    Just a thought.

  • You’re not being too harsh at all. Todd needs to read the millionaire next door and pay himself first. Once he put away some saving, then he can spend on luxuries. He does come off as a whiny brat.

  • If a boat isn’t a necessity, then I don’t know what is! :)

    Just kidding. I’m with you on this one. In general I wish people would stop playing the victim.

  • @LifeAndMyFinances, we don’t have children either and I will fully admit it makes a difference, but even if I had kids, they wouldn’t have a private nanny. I made it through public day care, so can they, lol.

    @Moneycone, you are very right. Having a car in Houston is not a luxury – it is how you have to get around since public transportation is non-existant in many of the surrounding suburbs. But I don’t know of anywhere that mandates that you have to hire a nanny, housekeeper, and lawn guy. If he happens to live in a place that does relegate it, then he should move. He shouldn’t whine. It makes him look stupid. :-)

    @retirebyforty, I may have to start using the word “brat” in more of my posts. It’s fun to write and makes me laugh when I read it. :-)

    @Kevin, yeah, the sense of entitlement I hear out of so many people confuses me. I think everyone is entitled to have the freedom to pursue whatever they want as long as it doesn’t hurt anyone else. Anything above and beyond that is earned.

  • Becky

    On the nanny part- I’m assuming the need for child care is understood, and the issue is with the method.

    We found it would be more cost-effective to have an in-home babysitter/nanny once we had multiple kids- The cost of a full-day child care program for two infants (our kids are 13 mo apart) was a wash with paying a nanny. The only benefit to paying a formal program would have been the opportunity to submit to a pretax dependent care account… but the benefit of having an in-home sitter was occasional light housework (ie. kids’ laundry, dishes, sweeping after meals/glitter projects, etc.) and the other obvious non-financial perks of personal attention to the kids, relationship building, etc.

    Also, keep in mind the cost of commuting in Chicago- my husband’s commute downtown takes him 1-1.5 hrs each way on public transportation. We live 12 miles from his office. Parking near his office is $22/day IF you get there before 8:30am. So while I agree that an opulent house in walking distance of a university may be uncalled for, there are other costs of living further away. That being said… he invested in a sweet phone to make the commute comfortable and hits the bus & train every morning.

    Overall, I agree that if you’re not happy with the money you are saving, you should evaluate where you’re spending money and make changes- but we don’t know this guy, or his situation beyond what he’s chosen to share, and it behooves us to extend the benefit of the doubt just a bit.

    Can’t we all just get along?

  • @Becky, normally I would completely agree and try to empathize, but it is impossible for me to extend the benefit of the doubt to a guy who is complaining that $250,000 isn’t enough.

    I have nothing against anybody who wants to spend their own money. I hold no resentment to the fact that the guy lives in a really nice house close to his job and pays for luxuries. I resent that he is whining about it.

    If he chooses to spend on extras, more power to him, but I take offense when he then complains that he “has to” spend too much. No he doesn’t. He chooses to spend so much. There is a big difference between what he “has” to spend and what he chooses to spend, right? That is what is frustrating the crud out of me. He is confusing his chosen expenses for his necessities…

  • @Crystal: Can’t argue with that!

  • Not harsh at all Crystal, how can a family have an income of 250k and spend it all is beyond me! Talk about financial ignorance…

  • Becky

    This is where I get frustrated… “impossible for me to extend the benefit of the doubt…” Empirically, not true. You make a CHOICE to see things that may or may not be there- same as this guy makes a choice to spend his money the way he does. If you want him to call it like it is, you’ve got to be prepared to do the same. respectfully ;)

    Let me ask you this- is he a religious guy? Is he a religious Jew or Muslim? I’m an Orthodox Jew, keeping kosher and shabbat- from sundown Friday until sundown Saturday, there’s no using electricity (lights are on timers only), no work, no carrying anything/pushing a stroller outside a house that’s not in an enclosed area, etc- This week, sundown is at 4:15pm. There IS NO SATURDAY to mow the lawn, do laundry, etc. I may make the decision to hire a lawn service because my religious beliefs remove an entire chore day every week (y’know, once I have a lawn ;) ).

    Also, what is the cost of ground beef? 99c/lb? My ground beef costs $3.99/lb. My T’giving turkey was a steal at $2.49/lb. It was around the aisle from other turkeys which were free with the purchase of a carving set. The trade-off here is most of our friends eat less meat (I CHOOSE to maintain my carnivorous ways- I’d rather have steak on Tues for lunch than jewelry ;).

    Our kosher lifestyle also means we can’t send our kids to public childcare programs without great strife (we have to make special arrangements to send only kosher food, and mitigate any social issue our kids may encounter on field trips/b’day parties involving food or on Saturdays, etc.).

    I’m making the case for BENEFIT OF THE DOUBT. Not to be confused with “it’s hard to make ends meet on a quarter mil a year”. I’m saying, we don’t know what he doesn’t choose to share- and I’m not even going to the easy-bites (serious/expensive medical issues, financially supporting a family member, personal business expenses- maybe he is not a formal employee and has to pay out of pocket for health insurance or maybe his wife owns the medical practice and has high expenses related to CME etc, charitable contributions- maybe he’s a serious macher, lingering “good” debt- a friend & his wife are both attorneys with $200K+ income and nearly that in student loan debt, predatory mortgage situation- he could be seriously under water in his place right now and unable to move even if he were willing).

  • Haha, well-said Crystal! I agree with you, do what you want but just don’t complain you can’t make it with a $250,000 income! Everyone could make it, depending of their choices, or as you illustrated well, depending on the luxuries they chose! Let’s face it, we all pay for luxuries. And that is some of the fun part of life. But if you let those crash out your budget, then simply stop!
    I remember living on a $10k a year back when I was a student (I got loans for tuition though but still). Was I dying? No, it was hard from time to time but I made it. Could I do it again? Of course! I would not like to, but I surely could! Why? Because I have lots of luxuries I did not have back then (although I don’t have a nanny and a lawn care service!). That being said, although it is more easier to create wealth now than it was with a 10k, it is true to most human beings that “the more you get, the more you want”.

  • I can see different views on this. I remember reading about the quote, and thinking he was a total self-centered whiner. However, I do think that it depends on where you live.

    In his case, living in Chicago, things aren’t cheap. If he teaches at U of C, he’s living in the city. That alone, for a safe/decent area, will not be cheap at all. $250,000 is a really good amount of money, and surely he should NOT be just getting by…he should be able to manage and save something. I agree with that. But it’s probably not as great of an income as it would seem in other cities or areas of the country. Heck, a 3br townhouse/condo in even a gentrified area safe for kids might be $500k or more, with a house $800k? Just ballparking, but the idea is that he probably has real significant expenses.

    Still, I don’t feel sorry for him at all. I’ll trade places with him, income-wise.

  • @MoneyCone, thanks!

    @BeatingTheIndex, I think it’s more entitlement than ignorance. :-)

    @Becky, good point. I meant “impossible” as in there is no way on this earth that I will empathize with this man.

    If it’s medical issues, I seriously think they were underinsured. If it’s religion, a bunch of his fellow-whatever-religion-members are getting by on way less every day (like I doubt you are living paycheck to paycheck despite your high cost groceries and lawn service). If he’s having hard times because they have a ton of “good” debt, then he should have sacrificed the nicely located home to pay off debt.

    As far as we don’t know what he isn’t saying, then that is on him. He chose to write a letter complaining that he can’t make ends meet because of luxury items. If he wanted to argue that he couldn’t make ends meet because his family all have medical issues, then he should have said that. I’m venting about what he chose to write.

    Don’t you read personal finance posts because you are interested in what we bloggers have to say about something? Do you make up worlds for all of us or do you just have to accept some things based on what we write? I personally go on what I have available to me, so honestly, I cannot fathom how anyone who is financially responsible could empathize with this man BASED ON what he actually wrote.

    Thanks so much for the comments! You are making me think of my initial reaction in real terms. :-)

  • @Squirrelers, good points. I was thinking about his cost of living too, but I ended up coming to the conclusion that he did choose to live where he lives. The ultimate money choice. If it was going to be a close call, they could have rented an apartment for a few years while saving a huge chunk of change for the expensive house. A muliple bedroom apartment in Chicago is way cheaper than buying a home next to the university.

    Commutes stink, I know, I live in Houston (land of the minimum 1 hour commute if you live outside of a 10-15 mile radius), but that doesn’t mean I should buy a house next door to my job if it will mess up all of my savings goals.

    Thanks for bringing that up! :-)

  • @DoNotWait, this brought up my college memories too, lol. I remember being pretty happy living on about $13,000 a year (that was what was left after paying for the small amount my scholarships didn’t cover). Sure, I worked 3 part-time jobs, took 12-18 hours a semester, and the only luxury I had was my computer, but it was still good times. :-)

  • Kat

    I’m sure there are plenty of teacher’s assistants, admins, and janitors that work in U of C, or in Chicago in general, and are getting by just fine with kids and such on much less than 250k a year.

  • @Kat, I bet there are too. :-)

  • Crystal, I agree with you, and was quite shocked when this story came out. The dude isnt comfortable because he cant manage his finances, end of story.
    I think his cost of living may be high, but even then, he could do without other things that some people pay for (like a vehicle). He should have something at the end of the month!

  • I agree with you, but people in those situations ALWAYS justify their luxuries as necessities. For example, I feel like my car is a necessity to get to work since I work an hour away, but in reality, I could take the metro. IMHO, I don’t see how people who are making $100,000 combined a year can possibly live at or above their means. The only answer is that they justify their luxuries, a nasty habit that everyone has

  • @Jeff, that is what I was thinking too.

    @Briana, it is amazing how quickly a splurge can become common-place…

  • I couldn’t agree more. If they want to spend everything they make, then that’s their choice; but then whining about it is annoying! I’d have to say that if a couple makes more than $95,000 annually, they are exempt from whining. :)

  • What is a luxury? Before you respond, it is a rhetorical question. Almost everything we do is more than we need it to be. You need a form of transportation to get to work and other things. It does not have to be new, or anything more than reliable. If you live i a major city a car can be a luxury. No matter how much you earn you can apply reasonable principles to meet your needs and still reach your long term goals. This is even more important for the minimum wage earner.

  • People do make choices to live in a certain neighborhood, to hire a lawnmower service, to spend on a nanny. Or not to spend. But I totally agree that if you made a conscious choice to lead a certain lifestyle, do not complain that you cannot afford it. If you cannot afford, make changes.

  • He probably has a good tenure / retirement plan too…

  • Not just a whiner, but borderline wanker.
    Saving money is like losing weight, except in reverse.
    Burn more calories than you take in.
    Very simple.

  • Julie

    Crystal, I remember reading this story a while back.

    This guy is a law professor, and his wife is a pediatric oncologist (treats cancer in children). They have over 250K in student loans each. For that amount of student loans, he is correct that they should be making more. The payment on those would be around $4K a month alone. Add in the 15K in property taxes and all their other bills.

    Assume this guy went to a top law school to get his PhD. Many law schools do not allow their students to hold outside jobs. So add in expensive tuition with no job, you get tons of student loans. Then assume that his wife, being a pediatric oncologist, has a job requirement to be close to the hospital, in case one of the children she is treating need her. That means that they CANNOT live too far from the hospital. Now, safe housing in a good neighborhood in Chicago proper is $$$$. Yes, they could have chosen to live elsewhere, but where else could a guy with a PhD in law and a doctor live that would pay them enough to put a dent on their combined 500K in student loans? Should the woman have decided not to pursue treating young cancer patients? Should he have decided not to pursue his dream of a law degree? Yes, they probably should have rented until they paid off their student loans, but not everyone is born financially savvy.

    Now, he is not saying that he NEEDS these luxuries. His whole point is that if you continue to tax the “rich” without keeping up with inflation and breaking it up, those closer to the 250K mark than the multimillion mark will have to give up on “luxuries” such as housekeepers and lawn guys. As there are more people closer to the lower end, more housekeepers and lawn guys will be out of a job. So the REAL people that it ends up hurting are those workers, NOT this guy. He points out that the super rich “hide [cash] in the Cayman Islands” and don’t use Turbo Tax like he does. If you read his blog post carefully, and not this Yahoo drivel spun to increase readers, then you might have seen that he is only saying that he doesn’t have much left at the end of the month. I do agree that he used poor judgment when he wrote that post, though.

  • Julie

    Oops, I typed before thinking. IN the above post, replace “should be making more” with “shouldn’t be penalized and take home much less than they currently do.”

  • @Little House, lol. :-)

    @krantcents, good point. Everybody has to make their own choices and live with them.

    @Aloysa, spot on!

    @Jenna, hehehe, probably.

    @101 Centavos, you know, “wanker” is now my new favorite word. It even beats “brat”.

    @Julie, even knowing that they have tons of college debt still doesn’t excuse him for whining about the choices they made. No one forced either of them to pursue $500,000 worth of degrees. No one made him become a professor. His wife’s choice of profession is awesome, but that doesn’t change that they both decided to live the life they have instead of concentrating on debt repayment. He really should not have written that letter in my opinion.

  • People that make comments that amount to saying that living on 250k is hard should be smacked. I recognize Chicago is expensive, but that is still a good amount of money. Now, if you have a lot of student loan debt, maybe some major medical bills or something, I can see needing more money. But that does not describe this fellow.

    It is especially hard when you see yourself getting by on much less.

  • @Everyday Tips, according to Julie, this guy and his wife have $500,000 in student loans. But if you make $250,000 a year and live cheap (like on $75,000 a year, lol), you could have those paid off in less than 4 years. Yep, I still vote whiny brat.

  • Well, I have been on both sides of the fence here. I’ve lived on very little and am currently living on a more than decent dual income lifestyle. In both cases, I wasn’t broke or just getting by. You adapt your lifestyle to fit your needs.

    I do pay a ton in childcare costs (it was more than my mortgage), but I figure the leftover money from my income had better be going into savings or paying down debt. Every year that I work, hopefully I will be better off than the previous one. I don’t live in a high COL area though, so a big mortgage alone might be what’s making them feel the pinch.

    It’s scary that they are just treading water. I hope they make some changes soon because one day they’ll be retired and then what?

  • Julie

    It’s interesting that people have all sorts of misconceptions about this guy. Nowhere does he say he is struggling. All he is saying is that he lives paycheck to paycheck (as do many Americans), and that if his take-home pay decreases, then he will cut out the unnecessary things first. The mention of a housekeeper, lawn service, etc. were just areas where he mentioned he would cut first. I seem to remember in his blog that he mentioned that they are saving for retirement and paying their student loans fine.

  • @First Gen American, I hope they have themselves covered too.

    @Julie, I haven’t read his actual blog and can’t access it from work, but they did quote a piece of his letter “we are just getting by despite seeming to be rich”. That is what led me to believe they were struggling. Even living paycheck to paycheck would imply they aren’t saving. If he is saving and is doing hunky-dory, then he is way better off than the article stated.

  • wow . . . it’s always been so hard for me to justify going against common sense

    what does it take for some people? i don’t think i will ever understand the motivations underlying such behavior

  • The problem is that they chose to take out massive student loans with the assumption that they would have very high earning power. If they get taxed more because they are “rich” by the U.S. government’s assumption, than they are getting punished for their INVESTMENT.

    They invested time and money into a high-paying career, and they are simply saying that we shouldn’t assume SALARY makes someone rich, NOR should we unfairly tax people for working hard to make that salary.

  • Julie

    Well said, Amanda.

  • @Sunil, me neither…

    @Amanda, they are not being punished, they are being taxed. I know it feels similar, but we don’t have to live in the USA if we don’t want to. I see my taxes as a necessary evil that I much prefer over living elsewhere. I happily pay more taxes now than I did in college – I am making more and life is a lot easier. I also know that I am paying more in taxes than a bunch of people, but I also know I can afford it and they can’t. If you don’t agree with higher taxes based on income, what system would you like to see in place?

  • @Crystal,
    Yup, it was still good times! I’ll never forget those years, even though I would not necessarily go back then. But remembering the I-eat-peanut-butter-three-times-a-day-or-pasta-with-tomato-sauce period also helps me appreciate what I have now. I think this is something everyone should do so they will be happy when they’ll earn $250,000 a year!

  • ODWO

    I like what First Gen Amer. said: “You adapt your lifestyle to fit your needs.”

    To look at it in a different light:
    In some cases, people adapt their “needs” to fit their Lifestyle.

    That’s where part of the delusion comes in …. I need this country club membership. I need this [or that] to be considered a successful person .. to be revered in my [tribe of like-minded people]. I need ….

    The difference between “needs” and “wants” can be a little cloudy for some. having ones cake and eating it too …. is usually a goal people strive for. Once one gets to that point (ex: making a certain amount of money AFTER All Expenses), they are probably not whining about their needs. Or wants (too). they don’t need or want … they “have.”

    One could see a “running, and heated water shower” as a luxury. versus the ole’ rainwater barrel in the backyard alternative. I like that “luxury.” With a bar of soap.

  • If people earn 250.000 a year, they want to make sure other notice it. Most of them do.
    Sure you can save most of it, but you need to set your state of mind to a different frequency.
    All comes to self awareness, and until this person acknowledges/assimilates the reasoning/meaning of this issue, no point in being harsh or critical.

    The father of my children….

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