Below Median Household Income of $120K
Posted by Frugal on May 26th, 2006
This is the seventh year of my family earning below the median household income of the city at which I work. I have pretty much given up on the hope of ever reaching the median household income, unless my wife starts to work. Despite my desires of living closer to the majority of my work colleagues and my workplace, I have never been able to catch up with the housing price. I always wonder how people around me earn so much money, or buy such expensive houses of $600K to 2 or 3 million dollars. Unfortunately, I have not found out how they do it. I guess somehow they do earn more money.
Actually, to think of myself below the median or the 50th percentile in anything really hurts my pride a little. My wife always comforts me and tells me that it is because she is not working yet, and that most of other family are dual-incomes. I guess that may be possible to a certain extent. Still, a $120K median household income is anything but high, and really high.
And sometimes, the hallway chats at my workplace are just a little bit too much for my ears. People will talk about they’ve got more than $500K house gain that exceeds the federal tax exemption amount on the primary residence sale. Or some may talk about playing $100 golf courses. Or their long vacation to Europe. Or buying their next million dollar home. The truth is that I could care less about their extravagant spendings. The only thing that I’m concerned is to buy a decent size (~1800 sq ft) condo or single family house that hopefully costs less than $650K for my family. I haven’t been able to find a home that I like, simply because my budget of $650K is usually not enough.
I guess one of the primary reasons that I cannot afford the house that I want is that my household income is below median of $120K. Or maybe I just need to bite the bullet and become another 30-year house slave.
Wealth is relative. And I’m still hunting for that elusive house for my home.
P.S. Here is my information source on the median income. I found several zip codes of median income that is about 120K or more.
- Saratoga, CA 95070, $138530
- Los Gatos, CA 95030, $117839
- Los Gatos, CA 95033, $119925
- San Jose, CA 95120, $120398
- Newport Beach, CA 92657, $124850
- Irvine, CA 92602, $123092
- Mission Viejo, CA 92694, $114229
- Santa Monica, CA 90402, $129144
- Yorba Linda, CA 92887, $113813
If the above links don’t work, go to www.homeseekers.com, and click on any property, scroll down to neighborhood profile, and click on it. Enter the zip code for a new location.
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May 26th, 2006 at 4:51 am
What city could you possibly work in that has a median HH income of $120k per year!? I think your statistics are way off. I live and work in Manhattan, and the median HH income for the borough is $47,415 according to the Census:
Census Link
Only 10% of HHs in Manhattan makre more than $100k. Unless you’re in Greenwich, CT or Atherton, CA or something, I can’t imagine that your statistic is correct.
May 26th, 2006 at 8:28 am
Hi Frugal,
Yes, I think the median around us is high because of dual income. I have been at the same company for a long time and am trying to remember what I was making a few years ago at your age. Maybe you can compare against my salary to see if you are getting the raises you deserve, somehow I have managed on single income to remain consistently well above median household every year. I am just a plain engineer and have avoided going into management all these years.
I also think people buy million dollar houses with stock options, not salary. I and 100% of the people I know made their money from stocks and real estate, not base salary. And they are not as debt-averse as you or me (I know people worth over $20M who still carry $1M or $2M mortgages). Given the economic boom in high tech in the last 20 yrs, the more debt you had, the better you did.
Age – Salary (not counting bonus or ISO, not adjusted for inflation)
21 – $35K (first real job)
23 – $43.5K (changed jobs)
25 – $48.2K
26 – $52.2K
26 – $50K (changed job, career – turned down a $57K offer)
27 – $56.7K
28 – $72K (changed job)
33 – $114.4K
34 – $141.9K
current – $170K (my salary has more than doubled at this job, but I bet it would be even higher if I had changed jobs a few times more)
Job changes and salary negotiation and working 10-12 hr days made a huge impact salary-wise, but really had nothing to do with my total net worth. I can barely keep up with “for fun” expenses on my salary, I think.
May 26th, 2006 at 8:47 am
I have updated the post with my statistics. Check them out.
May 26th, 2006 at 1:17 pm
Rag2Riches,
Thank you very much for the precious data points on the salaries. I’m also just a plain engineer, more plain than you. I do know that my base salary + stock bonus is under what market will pay. But I am stuck with the “golden cuff” of the company stock options. Unfortunately, the stock options are so volatile that I dare not to count on it regularly. In just the past month, the value of my company holdings decreased by about 50%, and becomes not so golden now.
May 26th, 2006 at 2:59 pm
Rag2Riches,
I’m a plain engineer also, but 170K is quite impressive for an engineer in the valley. Could you provide some insight as to how you jumped from (normal) salary of 72K~114.4K to an amazing 141.9K~170K?
May 26th, 2006 at 3:58 pm
Why not concentrate on another income stream during nights or weekends?
May 26th, 2006 at 4:08 pm
Just my two cents. $135K to $140K is possible for an experience engineer. Beyond that point, you need to have a highly recognized achievement and/or technical skills if you stay in the technical ladder. For management, I believe it should be $150K or above.
Night or weekends are good, as long as there is no intellectual property issues.
May 27th, 2006 at 9:25 am
oops I typed too fast and screwed up on one data point. It should be:
31 – $114.4K
33 – $128.1K
34 – $141.9K
current – $170K
Thanks for catching that, Underpaid.
I am in my late 30s now, and only get 3-8% (?) raise a year. So there were no dramatic jumps, just steady 10-20% raises in my earlier years.
But even with an apparently high salary, I could only buy an old small house in the Bay Area if I didn’t have ISOs. I enjoy travelling, donating money, giving nice gifts, season tickets, nice cars, and other stuff too much to become a house slave, and my salary barely covers that stuff after retirement contribs and taxes.
Frugal, you have me really curious about where you work. Is it a software or hardware company? I have been through some unbelievable volatile times with ISOs before also, again it’s that dual-edged sword of “diversify, diversify, diversify”, right? From personal experience, it is hard not to diversify no matter what rules you have set up when your net worth can change hundreds of thousands or millions every day.
May 29th, 2006 at 9:45 pm
Rag2Riches,
Somehow your and my own comment will get caught by Akismet spam filter everytime, so that they don’t appear until I moderate them.
Anyway, I can answer all of your questions in details if you send me an email to confirm your email address from your hotmail account (is the third letter s?). I still have plans to eventually let my friends know about this website, without being recognized. My plan is to embed all these personal posts deep in the older posts.
I definitely lost more than $100K after-tax in my company holdings, which one can reverse engineer from all the available information. I won’t give out the exact numbers here, so that my true networth is not revealed. I actually don’t give much damn about how much I have, except that it has appeared to me time after time through blog carnivals that other PF bloggers may not like too much about my website name. So I have decided that I won’t make any further fuss about exactly how much I have anywhere on this website.
I think I have okay diversification in respect to my company holdings. But nevertheless it is not possible to be emotionless about the big losses.
May 30th, 2006 at 2:38 pm
I am SO in the wrong field.
May 30th, 2006 at 4:39 pm
Many of the people that take the expensive vacations, always drive a new Lexus, and have box seats for the Lakers are in debt up to their eyeballs. They have maxed credit cards and spend way more than they should, even if they have relatively good jobs. Some have done very well with their homes, but unless you’ve taken out a HELOC or held out some cash when you moved up to a new home, most of that money is tied up. In addition, most of those households have multiple wage earners. That makes a huge difference. If you’ve only got one earner, it’s a much steeper hill to climb.
October 1st, 2006 at 2:11 am
Debt Free is right — Those people who are bragging about their 1 million dollar homes are in debt up to their eyeballs and are going to be bankrupt in the next 3 years when the housing bubble pops. Frugal, save your money for 2 years when housing prices crash back to earth, and you will be able to pick up a house in the Valley for peanuts.
October 2nd, 2006 at 10:05 am
Foz, I hope you’re right. My patience is running almost empty.
November 26th, 2006 at 6:20 pm
Y’all are making $120 and $170K USD a year? That is a lot of change for an engineer. If you make 6 figures and can’t afford to buy a house then something is wrong?
December 4th, 2006 at 12:29 am
H2O,
If you’re a senior engineer, or an engineering manager, that’s certainly a possible salary number.
I do make 6 figures, but at the low end as said in this post. And I can’t really afford to buy a house. I think there is something wrong too, but I can’t help it, *sigh*.
December 4th, 2006 at 12:42 am
Frugal, change ur name to Scroogy. Lez zee, u have 360K(cash)+170K(low ball price if u sell ur condo)+50K(ur stock goes down a bit)+90K(from ur loaded folks)=670K(excluding ur 200K stock options). Dude, you need to dump all of ur millionaire friends, and pick some homeless buddies. Looks like ur millionaire friends are making u look poor. With 670K you can buy a nice 1800+ sqf condo without borrowing a penny. U must want the 3000+ sqf multi-million dollar condo on the beach eh? If that’s the case, ur right. You’re too poor to buy a home without a mortgage.
Frugal’s Posted Financial:
1. $360K from savings, after working for about 9 years.
2. $90K from stock investment.
3. $260K from owning a small condo.
4. $200K from my company stock option.
5. $90K from my parents’ wedding gift for the formation of a new household.
December 4th, 2006 at 1:14 am
When I say I cannot “afford” to buy, I’m talking about that I cannot afford to buy based on my income alone.
I can sell off everything else and put my hard-earned money to buy a great home. But I doubt that would be a wise decision.
I believe one should spend according to his income, not his net worth (well, at least before retirement). Whether you rent or buy with 20% down, those are living expenses that you incur, with respect to your income.
Spending a proper amount on your home in commensurate to your income should be the better way of managing your own finance. American culture is in love with consumption. From my upbringing, I spend according to my income. Just because of I can spend, it doesn’t mean that I should.
But you do have your point. I may be a little extreme in my thinking of “spending according to my income”. But that’s at least 36% of the reason for my 1st M.
March 18th, 2007 at 1:16 am
Frugal,
have been reading your background and story.. Impressive, inspiring, disappointing and uplifting at the same time.
what kind of investing/options trading strategies do you employ?
Kindly,
Gennady,
New York City
March 19th, 2007 at 1:25 am
Gennady,
Thanks for your comment.
I have many archived investing posts and about 4 posts per week. You’re welcomed to peruse through those. I don’t trade that much, and my recommendation would be to properly allocate asset.
Best,
Frugal
April 8th, 2008 at 10:49 am
Frugal Don’t diversify that’s a myth. Look at Warrens portfolio.
8-10 companies. Heck just buy Berkshire and fagettit. Why try to beat Warren?
My pick for unlimited wealth Silver Now! To the moon Alice!
No really find the bull and ride it. The bull now is precious metals and commodities. My favorite Silver and some gold. In Silver from 7.75 and Gold @ $350 20% forever. Just don’t sell like Warren. Take a second job if necessary just buy all the silver and gold you can.
October 12th, 2008 at 3:52 am
I didn’t read everything on your website, but I assume that you live in the Silicon Valley area. I also want to live in a city where the median income is over $120K, specifically Saratoga, CA. Actually I live there now, but under my parents since I’m still in college. I really hope to live there in the future with a family, but looking at the website homeseekers.com, the median income there is now $241,334. I did some calculations and I don’t think it’s possible to live there even if I take over my dad’s job. Maybe I can convince my parents to rent their house to me in the future
. Well anyway, I really like your website. It’s quite an interesting read. 
I hope that in the future I’ll save money like you do. From what I learned from my parents, it’s hard to save up enough for retirement when you try to live a comfortable lifestyle in a place like Saratoga.