Debt and Morons
I started reading an article entitled "Scraping by on $150,000 a year" on money.cnn.com, which told the story of a family with a yearly income of $150K who claimed to be living paycheck to paycheck. They had stopped paying for things like gourmet coffee and cable TV but were out of ideas. The article grew more and more bizarre as it explained that they have no credit card debt, no child care bills, and live in a moderately sized house in a moderately priced location.
The text continues with strategies for fiscal responsibility, including automatic saving plans that direct a percentage of income directing to a savings account, putting money into a 401(k), and eliminating big ticket expenses like vacations instead of making small budget cuts like Starbucks. OK, great advice, which is not only common sense but is also echoed weekly by just about every financial website. The article continues on, shaming those of us who are used to things like TiVo and Netflix and have trouble giving those things up.
Three-quarters of the way through the article, one discovers why they family is going through financial trouble...
They own two rental properties and have no tenants. Moreover, the rental market in their area is so soft that even if they find tenants, it probably won't cover their costs.
These, friends, are what are known as morons. Rich morons, but morons nonetheless. They have two additional mortgages, but are cutting back on gourmet coffee and cable TV because money is tight. And while their rental properties are making the Giant Sucking Sound, they stopped contributing to their 401(k) and haven't set aside a single dollar for their four children's college tuitions.
Why am I annoyed by this? I don't know. I guess it's because I know plenty of people who would claim to live paycheck to paycheck, and none of them come close to making $150,000 a year.