One of the biggest shocks when I got into real estate was how many "successful" people were one paycheck away from disaster. What I thought was wealth was really only the rented appearance thereof. All the high-end trappings which made them look successful were financed, not owned. Several high-limit credit cards kept pretty much maxed out. Every penny they made dedicated to payments. No cash reserves, no equity, and no safety net.
Brad
$250k/year may not be all that much if you work in in a place like Manhattan and live close to your job, but in most of the country you should be able to live quite well AND sock a bundle away for the future.
When the tech meltdown happened some years back, my neighbor mentioned that the majority of the homes for sale in a nearby gated community (Austin, TX area) were actually foreclosures - quite a few were owned by DINKs -
Double
Income
No
Kids - where a couple both with good jobs bought the absolutely most expensive home they could possibly afford, based on BOTH incomes.
And then one - or in some cases, both - of them lost their jobs when the bubble burst, any stock options they may have had became worthless, and they literally couldn't make their house payments.
Thinking further back, I was just a couple of years into my 1st job out of grad school, and one of my colleagues (a senior-level chemist) said he and his wife (who also had a good job) were having problems making their credit card payments - they were maxed out. Not because of an emergency, illness or casualty losses, but because both of them kept buying "stuff" whenever they felt like it, and figured as long as they could make the payments, they were OK. I
think at that point they realized they were in a hole and stopped digging - at least, he never mentioned losing his house.
Their situation reinforced my parents' wise counsel about living within - preferably
below - one's means.
