You Try to Live on 500K in This Town
By ALLEN SALKIN NY Times
PRIVATE school: $32,000 a year per student.
Mortgage: $96,000 a year.
Co-op maintenance fee: $96,000 a year.
Nanny: $45,000 a year.
We are already at $269,000, and we haven’t even gotten to taxes yet.
Expecting the tax payers to pick up your tab: Priceless
According to the NY Times, that half a million dollar pay cap on executives of the banks that are getting our money is not enough for these guys to live on.
To many people in many places, it is a princely sum to live on. But in the neighborhoods of New York City and its suburban enclaves where successful bankers live, half a million a year can go very fast.
“As hard as it is to believe, bankers who are living on the Upper East Side making $2 or $3 million a year have set up a life for themselves in which they are also at zero at the end of the year with credit cards and mortgage bills that are inescapable,” said Holly Peterson, the author of an Upper East Side novel of manners, “The Manny,” …
Sure, the solution may seem simple: move to Brooklyn or Hoboken, put the children in public schools and buy a MetroCard. But more than a few of the New York-based financial executives who would have their pay limited are men (and they are almost invariably men) whose identities are entwined with living a certain way in a certain neighborhood west of Third Avenue: a life of private schools, summer houses and charity galas that only a seven-figure income can stretch to cover.
But in New York, where a new study from the Center for an Urban Future, a nonprofit research group in Manhattan, estimates it takes $123,322 to enjoy the same middle-class life as someone earning $50,000 in Houston, extricating oneself from steep bills can be difficult.
The cold hard math can be cruel.
If a person is married with two children, the weekly deductions on a $500,000 salary are: federal taxes, $2,645; Social Security, $596; Medicare, $139; state taxes, $682; and city, $372, bringing the weekly take-home to $5,180, or about $269,000 a year, said Martin Cohen, a Manhattan accountant.
Now move to living expenses.
Barbara Corcoran, a real estate executive, said that most well-to-do families take at least two vacations a year, a winter trip to the sun and a spring trip to the ski slopes.
Total minimum cost: $16,000.
Heaven forbid they cut back when everyone else is.
A modest three-bedroom apartment, she said, which was purchased for $1.5 million, not the top of the market at all, carries a monthly mortgage of about $8,000 and a co-op maintenance fee of $8,000 a month. Total cost: $192,000. A summer house in Southampton that cost $4 million, again not the top of the market, carries annual mortgage payments of $240,000.
And they have to have the Hamptons house. God, how could they do without? They could (gasp) rent.
Many top executives have cars and drivers. A chauffeur’s pay is between $75,000 and $125,000 a year…
I never thought about being a chauffeur, but now I am. I am a very good driver.
To garage that car is about $700 a month.
A personal trainer at $80 an hour three times a week comes to about $12,000 a year.
I suggest they power walk to work and save a bundle, killing two birds with one stone.
The work in the gym pays off when one must don a formal gown for a charity gala. “Going to those parties,” said David Patrick Columbia, who is the editor of the New York Social Diary (newyorksocialdiary.com), “a woman can spend $10,000 or $15,000 on a dress. If she goes to three or four of those a year, she’s not going to wear the same dress.”
Total cost for three gowns: about $35,000.
I think I may puke. You could fly to China, have 5 dresses made for you and get home for 10% of that. (New business idea!)
Not every bank executive has school-age children, but for those who do, offspring can be expensive. In addition to paying tuition, “You’re not going to get through private school without tutoring a kid,” said Sandy Bass, the editor of Private School Insider, a newsletter that covers private schools in the New York City area. One hour of tutoring once a week is $125. “That’s the low end,” she said. “The higher end is 150, 175.” SAT tutors are about $250 an hour. Total cost for 30 weeks of regular tutoring: $3,750.
What is with these stupid rich kids? How about these buff executives and their tiaraed spouses sitting down with their own kids and helping with the homework?
Two children in private school: $64,000.
Again, I wonder who these nannies are that get nearly a thousand a week? I never knew any that were well paid. I think that we should put that in the bill: if you take the money, you have to hire a poor person and pay them $1000/wk.
Ms. Bass, whose husband is an accountant with many high-end clients, said she spends about $425 every 10 days on groceries for her family. Annual cost: about $15,000.
More? Restaurants. Dry cleaning. Each Brooks Brothers suit costs about $1,000. If you run a bank, you can’t look like a slob.
The total costs here, which do not include a lot of things, like kennels for the dog when the family is away, summer camp, spas and other grooming for the human members of the family, donations to charity, and frozen hot chocolates at Serendipity, are $790,750, which would require about a $1.6-million salary to compensate for taxes. Give or take a few score thousand of dollars.
Does this money buy a chief executive stockholders might prize, a well-to-do man with a certain sureness of stride, something that might be lost if the executive were crowding onto the PATH train every morning at Journal Square, his newspaper splayed against the back of a stranger’s head?
I believe the stockholder doesn’t care what the guy looks like or how he gets to work if he takes care of the company. Ditto for us taxpayers giving him the money to do a job.
At the end of the day, I think this economic crisis we are in is going to require that we all, and that includes those captains of industry who screwed the pooch, all of us will have to change the way we look at money and what makes our lives full. This utter excess described as necessity is a good place to start.