So Now Wall Street Gets a Taste of How the Rest of Us Live: Pity the Poor Man Who Earns $350,000

I know I’ve discussed these kinds of ‘news’ stories before, but I can’t help commenting on this Bloomberg article about the ‘suffering’ of the well-to-do. Admittedly, it’s a target-rich environment, so there’s much fun and indignation to be had. But this article, unlike many others, raises a key point: the irresponsibility of the well-to-do. We’re always allowed to discuss the moral failings of the poor, but not the wealthy. Well, as longtime readers will know, around these parts, we do not believe that personal responsibility should be the sole purview of poor, single, minority mothers.

Anyway, to the Bloomberg article (boldface mine):

“I’m not Zen at all, and when I’m freaking out about the situation, where I’m stuck like a rat in a trap on a highway with no way to get out, it’s very hard,” Schiff, director of marketing for broker-dealer Euro Pacific Capital Inc., said in an interview.

Schiff, 46, is facing another kind of jam this year: Paid a lower bonus, he said the $350,000 he earns, enough to put him in the country’s top 1 percent by income, doesn’t cover his family’s private-school tuition, a Kent, Connecticut, summer rental and the upgrade they would like from their 1,200-square- foot Brooklyn duplex.

“I feel stuck,” Schiff said. “The New York that I wanted to have is still just beyond my reach.”

The smaller bonus checks that hit accounts across the financial-services industry this month are making it difficult to maintain the lifestyles that Wall Street workers expect, according to interviews with bankers and their accountants, therapists, advisers and headhunters.

Like I said, I’ve dealt with the issue of having lots of good stuff, but not quite-enough good stuff (and it costs money too!). But this is the important part:

Executive-search veterans who work with hedge funds and banks make about $500,000 in good years, said Arbeeny, managing principal at New York-based CMF Partners LLC, declining to discuss specifics about his own income. He said he no longer goes on annual ski trips to Whistler (WB), Tahoe or Aspen.

He reads other supermarket circulars to find good prices for his favorite cereal, Wheat Chex.

Wow, did I waste a lot of money,” Arbeeny said…

Richard Scheiner, 58, a real-estate investor and hedge-fund manager, said most people on Wall Street don’t save.

“When their means are cut, they’re stuck,” said Scheiner, whose New York-based hedge fund, Lane Gate Partners LLC, was down about 15 percent last year. “Not so much an issue for me and my wife because we’ve always saved.”

Hans Kullberg, 27, a trader at Wyckoff, New Jersey-based hedge fund Falcon Management Corp. who said he earns about $150,000 a year, is adjusting his sights, too.

After graduating from the Wharton School of the University of Pennsylvania in 2006, he spent a $10,000 signing bonus from Citigroup Inc. (C) on a six-week trip to South America. He worked on an emerging-markets team at the bank that traded and marketed synthetic collateralized debt obligations.

His tastes for travel got “a little bit more lavish,” he said. Kullberg, a triathlete, went to a bachelor party in Las Vegas in January after renting a four-bedroom ski cabin at Bear Mountain in California as a Christmas gift to his parents. He went to Ibiza for another bachelor party in August, spending $3,000 on a three-day trip, including a 15-minute ride from the airport that cost $100. In May he spent 10 days in India…

He thinks more about the long term, he said, and plans to buy a foreclosed two-bedroom house in Charlotte, North Carolina, for $50,000 next month.

If you want to live care free–and you’re aware there will be ups and downs and are willing to roll with them–that’s fine. But when $350,000 per year is a bad year, it’s hard to get any sympathy from me, because I immediately ask, “What did you do with the extra money from the good years?” I was in graduate school for less than six years, and had a relatively large stipend–it was a good deal. But when your late twenties roll around, living like that gets old. Then I did some post-doc work, and most of money disappeared into basic living and rent. For a crappy apartment near the LIRR (guess what? It really does run 24-7). Postdoc positions by definition are not long-term jobs, although they do have the advantage of being for a set term (provided you don’t engage in criminal activity or something else that can get you terminated). That profoundly affects how you live.

You are always aware of how many months’ rent is in your bank account. You always save for a rainy day, since you know that when the grant is up, the rain will come. You don’t spend profligately. If you can have nice things, they are very limited in scope. And even when you live like this, there isn’t much of a cushion. So when someone earns a lot of money, and doesn’t save, I have no sympathy for them. Especially when they just have to ‘downsize’ to a middle class lifestyle.

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5 Responses to So Now Wall Street Gets a Taste of How the Rest of Us Live: Pity the Poor Man Who Earns $350,000

  1. cdrfuzz says:

    Yes, but these are “very productive individuals”, y’know? Wealth creators. What do scientists contribute to the betterment humankind that even begins to compare with collateralized debt obligations and credit default swaps? You can’t expect these financial superstars to live like the rest of us proles.

  2. Mok says:

    I cannot comprehend the sort of mentality and lifestyle for which $350k/yr. is “not enough” to have everything you want and then some. My wife and I made about 10% of that last year, combined, before taxes, and we have an excellent life, to the point that we save more than we intend because we have run out of stuff to spend money on.

    Granted some of that is because we have very simple tastes, and don’t waste money of pointless frivolities like brand new cars, children, or expensive vacations, but on the other hand we also live in a major urban area with high rents (not New York City high, but pretty high) and piss away vast sums of money on our primary indulgence (our pets). We want a house, and if I weren’t moving for postdoc, could get a fairly nice one for the same monthly payment as our rent.

    Seriously, how can you possibly piss away $350k/yr. unless you’re wiping your ass with $1000 bills? What expenses can you possibly rack up that aren’t just ridiculous excuses to flush money?

  3. Bob says:

    @Mok: “pointless frivolities like… children”? :-)
    From personal experience, most of the money goes to private education and housing… no jets, no sports cars, no gold-plated ice cream sundaes. It’s quite easy to spend a lot while still living a thoroughly middle class existence. Of *course* it is possible to make less expensive choices (and I was perfectly comfortable living on $11K per year back when I was a postdoc). However, it really doesn’t feel frivolous when you are spending the money on your kid’s education and the house you live in. But hey, I’m not complaining, and those guys in the article are schmucks for not realizing how fortunate they really are. [btw, how much friggin' Wheat Chex does Mr Banker eat that he has to start clipping coupons - LOL!]

  4. Tori says:

    You are always aware of how many months’ rent is in your bank account.

    And are always aware of how very often the answer to this is, “Zero.” :D

  5. Pingback: Cities Haven’t Figured Out How to Accomodate the Upper-Middle Class (Yet?) | Mike the Mad Biologist

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