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4 Men with 4 Very Different Incomes Open Up About the Lives They Can Afford

Stuart Patience

 The median household income in America is $53,657. Politicians draw $250,000 as the line between the middle and upper classes. And the true starting point of real wealth remains a cool $1,000,000. We asked four more or less typical men, each of whom earns one of these incomes, to tell us about the lives they can afford.

$1,000,000 Per Year – Tim Nguyen, 35

Location: Huntington Beach, California

Occupation: Business owner, CEO/cofounder of BeSmartee, a DIY mortgage marketplace

Family status: Married with a 9-month-old son

Homeowner? Renter? “I’m a homeowner. No mortgage.” (Price of home: $1 million.)

Do you keep a budget? We track every single penny that comes in and out of our bank account. And we give 6 percent of our money away to charity. We have a big heart for animals, children, the el­derly, the underprivileged.

What’s a weekly grocery bill for you? I break it down monthly. We eat main­ly at home. We spend around $1,200 a month.

One thing your family needs but can’t afford: There’s nothing that we need that we can’t afford. Anything reasonable I can afford.

One thing you want but can’t afford: The thing that keeps me up at night is want­ing to retire my parents. There’s a certain dollar figure that would allow me to pay off all their debts. That’s my first goal: to retire my parents so they can be independent and just live their lives.

The last thing you bought that required serious plan­ning: We budget our money all the time, so we’ve already been planning for every­thing—I could tell you exactly where all my money is going over the next five years.

Do you have credit cards? I have one credit card. It’s cash for points, so we charge ev­erything on the card and pay it off at the end of the month.

How much debt are you carrying now? Less than 10 grand.

I’VE BEEN BROKE BEFORE. I’VE REFINANCED MY HOUSE TO PAY MY EMPLOYEES. I’VE BEEN THROUGH ALL THAT—THAT WAS ME WORRIED.

Saving for retirement? Yes. [I’ve put away] north of $5 million.

At what age would you like to retire? I’ll always be working. As far as working on a start-up, I want to be done with that in five or 10 years. But as far as working, investing in real estate, things of that nature, you can do that until you’re 90.

College plans for your kids? We set up a trust with our at­torney where our kids will have money for college. But they’ll only get more than that if they achieve their milestones, such as getting a certain GPA or vol­unteering in the community. We want our kids to be good citizens. They can’t be spoiled brats. We want them to understand what it means to work and to earn your way to the top. We put the rules in place to help reinforce that.

Looking at your current ca­reer prospects, how much money do you think you’ll be earning in ten years’ time? My goal is to have a net worth of $150 to $200 million.

How happy are you on any given day, on a scale of one to ten? I’d say eight or nine. Lately, with the start­-up, I’ve been putting in two to three hours more per day than I’d like, and that’s taking away from family time. So if I could get those two or three hours back, I’d be a happy man.

How often do you worry about money? Maybe once a week. I’ve been broke before. I’ve refinanced my house to pay my employees. I’ve been through all that—that was me worried. Now, because I’m able to forecast and plan my money better, there’s not as much worry.

How much money do you think you’d need to have the life you want? I need about 25 [million]. That includes retiring my parents, an upgraded home, and enough money to make sure my kids have funds available when they want to start their own businesses. There’s a certain amount of mon­ey you need to live the life you want. Beyond that, it’s really a game, and money is the scoreboard.

Do you think your taxes are too high? I’m happy with taxes. I had a really good year when I was 22 or 23—I made about 250 grand—and I came home and complained to my dad about it. I said, “I can’t believe I’m paying all those taxes! Half the money is gone!” And my dad said, “You should feel lucky that you live in a country where you can pay taxes”: He came from a communist-run coun­try. Ever since that day, I never complain about my taxes.


$250,000 Per Year – Yakov Villasmil, 41

Location: Miami

Occupation: Real Estate Agent

Family Status: In a relationship; one son, 10 years old

Monthly rent: $2,000

Do you keep a budget?  Yes, I’m very organized with it. Overall, my fixed expenses are about $7,000 a month. They include rent and about $1,000 a month for transportation, $180 a month to the cleaning lady, $200 for gas for the vehicle, and a handful of little things—$300 a month for Netflix, Pandora, Skype, subscriptions like that.

What’s a weekly grocery bill for you?  I would say about $200 a week.

AT THIS POINT IN MY LIFE, IF I HAD $600,000 YEARLY INCOME, I WOULD HAVE THE LIFE THAT I WANT TO BE LIVING. BUT THEN AGAIN, WHEN I GET THERE, I’LL WANT TO BUY THE JET.

One thing your family needs but can’t afford: Nothing.

One thing you want but can’t afford: I’m a fan of watches, and there’s a Cartier that just came out that’s about $10,000. It’s not that I can’t afford it; it’s just not a priority right now.

The last thing you bought that required serious plan­ning: I spend money trav­eling every year, and that’s something I put some thought into. Last December, I went to Austria, Slovenia, and Italy.

Do you have credit cards? Fifteen.

How much debt are you carrying now? $7,700 on one card, and it should be paid off by the end of the month.

Saving for retirement? I am saving, but not for re­tirement. I’m saving up to buy an apartment building, which will give me another stream of income. My money is all in play right now to make more money. The kind of life that I want to live when I retire is not one I have to manage by having, you know, a million dollars and 3 or 4 percent [interest]. It’s not going to happen.

At what age would you like to retire? I don’t think that I want to retire.

But say you did: At what age would you be able to retire? I want to be financially free by age 50.

College plans for your kid? No, but it’s all part of making sound investments.

Looking at your current career prospects, how much money do you think you’ll be earning per year in 10 years’ time? In 10 years’ time, I want to have $50,000 a month from apartment buildings, and another $50,000 a month from the real estate business. A million-five per year is the goal.

How often do you worry about money? Every single day. Every single minute. I always want more, and every single day I’m thinking, “What’s the next move?”

How much money do you think you’d need to have the life you want? At this point in my life, if I had $600,000 yearly income, I would have the life that I want to be living. But then again, when I get there, I’ll want to buy the jet.

How happy are you, on a scale of one to 10? I’m a good nine every day.

Do you think your taxes are too high? You know what? No, I don’t think they’re too high. I re­member I had a boss about 10 years ago who said, “You guys complain about the tax­es being taken out—if you don’t want them to take that much, just make less.”


$53,000 Per Year – Michael Greene, 48

Location: Brooklyn

Occupation: Concierge for a property-management group

Family status: Married with 3 children (a 21-year-old stepson and 8-year-old twin girls)

Monthly rent: $1,000

Do you keep a budget?

We do. Because of the size of our family, we have to budget at least $150 per month for BJ’s [Wholesale Club]. BJ’s is our friend; we have to buy in bulk.

What’s a weekly grocery bill for you? Probably in the range of $100 to $125.

I’D LOVE TO STAY IN BROOKLYN, BUT RIGHT NOW THE ASKING PRICE IS BETWEEN $500,000 AND $600,000.

One thing your family needs but can’t afford: A ranch-style home, four to five bedrooms, two to three bathrooms. I’d love to stay in Brooklyn, but right now the asking price is between $500,000 and $600,000.

One thing you want but can’t afford: I’ve always liked Volvos. If I could get a big, six-seater Volvo, that would be nice. In my color: navy blue. With a little TV in the back for the kids.

The last thing you bought that required serious planning? We bought bedroom sets for ourselves and our girls four years ago. Our set was between $5,000 and $6,000, with the dressers and everything. Our girls’ little beds—which they’re about to outgrow now—we got a better deal for them: around $2,000 or $2,500. I had to go into my savings a bit to get it, but we got it. We got it done.

Do you have credit cards? Just one. A Chase Visa. I’m definitely on top of my month­ly payments, and I try not to go anywhere past $300 to $400 a month. That would be stretching it. And I have to thank my wife for that. She helps me stay focused.

How much debt are you carrying now? No credit-card debt, but I definitely still have a student loan from the mid-nineties that I’m trying to bang out. I think I still have seven G’s left.

Saving for retirement? Yes, I am. Our company of­fers a 401(k) plan, and our union offers one, so I have two separate running re­tirement plans. Gotta do it. I don’t know how much is in there at the moment.

At what age would you like to retire? I’m 48 now. Realistically, I’d say I wouldn’t want to go past 60. But I think I’m looking at 60 be­fore I’ll be able to retire.

College plans for your kids? We have a college plan in place for the girls. I put away money biweekly—$75 to $100.

How much money do you think you’ll be earning per year in 10 years’ time? I’d love to say I’ll be making dou­ble if not more than double what I’m making now.

How often do you worry about money? Money is not something that I stress over.

How much money do you think you’d need to have the life you want? I’m not a greedy guy. Because of my upbringing, where we learned how to do more with less, and with the times and the econ­omy we live in now, my fami­ly and I could be very comfort­able at $200 to $250K a year. I could be very comfortable with that.

How happy are you, on a scale of one to ten? Eight.

Do you think your taxes are too high? Yes. Yes. Yes. Yes.


The Poverty Line (Or: $7 An Hour Plus Tips) – Demetrius Campbell, 25

Location: Chicago

Occupation: Bar-back at the Signature Lounge in the John Hancock building

Family status: Single with two daughters, 7 and 4

Monthly rent: 30 percent of income through antipoverty nonprofit Heartland Alliance

Do you keep a budget? No, but I have been working on trying to recently. I know I have to pay bills for food, for clothes, gas. It’s a lot of things that go into budget­ing. It’s hard to plan for, be­cause you never really know what you’re going to need to spend money on. And the amount of money I make var­ies, because I work different hours. The biggest two-week check I’ve had so far is $250.

I’M IN A LOT OF DEBT. I HAVE TRAFFIC TICK­ETS, HOSPITAL BILLS, OLD PHONE BILLS. I’M PRETTY SURE THAT MY DEBT FROM THE TICKETS ALONE IS ROUGHLY $3,000.

What’s a weekly grocery bill for you? In a week, about $130 to $140—that’s when I have the money to spend. I’m on food stamps, and I get $400 a month through EBT.

One thing your family needs but can’t afford: I don’t really think about stuff like that. I just try to make do with what I have. I feel like I’m just working to pay for the bills. I don’t even have time to spend with my family—to take them out to certain places.

One thing you want but can’t afford: I’d buy a newer-model car. And every time those commercials come on TV—the Pillow Pets—my kids always ask for those. It’s discouraging, having to tell them all the time that we can’t afford things.

The last thing you bought that required serious plan­ning: I bought a TV—a Black Friday deal. It’s a Vizio 39-inch. I paid like $250. I had to work for it. I saved up.

Do you have credit cards? No.

How much debt are you carrying now? I’m in a lot of debt. I have traffic tick­ets, hospital bills, old phone bills. I’m pretty sure that my debt from the tickets alone is roughly $3,000. By the time you get the money to pay the ticket, the fine has doubled. Then you get another one and can’t pay that one. Like, I’m on a boot [booted vehi­cles] list, and I got the money to get off the list, but my car got towed that morning, so I had to pay half that money to get it out of the impound. It just keeps going like that.”

Saving for retirement? No. Retirement is a long ways from now.

At what age would you like to retire? As young as I can and still have money. Probably late 60s.

College plans for your kids? I’ve thought about it. Once I get all my debts paid off and I’m in a better place, I’ll start putting as much money as I can toward it. I’ll take steps to put myself in better standing.

How much money do you think you’ll be earning per year in 10 years’ time? My goal is to triple what I’m making now.

How often do you worry about money? Always. Living like this is hard to do.

Does money ever keep you up at night? I can say that it has. It’s a lot of things building up—having the money when the bills are due, having a ticket, and not being able to pay it before it doubles.

How much money do you think you’d need to have the life you want? 50 to 60 thousand a year.

How happy are you, on a scale of one to 10? I’d say a seven or eight. But you might get lucky and catch me on 10 now and then.

Do you think your taxes are too high? Yes, I do.

Source: Esquire –INTERVIEWS BY 

Illustrations by Stuart Patience.

This article originally appears in the April 2016 issue. 

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What happens to Aeroplan and other reward program points when you die?

Points

Aeroplan is “capitalizing on someone’s grief” by charging a fee to transfer points from a deceased member’s account, says the family member of a woman who died leaving 250,000 Aeroplan points behind.

“It seemed so callous. It seemed really insensitive. And it seemed really unnecessary,” says Kathryn Kwasnica of Victoria after finding out how much it would cost to transfer to her father the 250,000 points accumulated by her late stepmother.

But Aeroplan says it’s a “small” fee and that a second option allows users to avoid paying that charge altogether.

And even though the fees can be significant and travel booking potentially restrictive, compared with some other loyalty programs, Aeroplan has one of the better policies for dealing with points in the account of someone who has died.

Kwasnica’s stepmother, Linda Stewart, started feeling ill about a year ago, but it wasn’t until last summer that she was diagnosed with mesothelioma, an aggressive and deadly form of cancer.

AEROPLAN

It’s in the fine print. (CBC)

“Six months later she was dead,” says Kwasnica. Stewart was 68 when she died on Jan. 7.

Kwasnica, acting on behalf of her grieving father, Stewart’s husband, called Aeroplan to find out what to do about Stewart’s Aeroplan points.

She says she was told, in the event one of its members dies, Aeroplan charges a fee of $30 plus one cent per point to transfer the balance to a surviving family member. In Kwasnica’s case, because her stepmother had about 250,000 points, the fee would have amounted to about $2,530.  

“That seemed crazy for a data transfer,” says Kwasnica.

Aeroplan defends itself

“My father passed away a year ago, so I completely empathize with members who are going through what they’re going through,” says John Boynton, Aeroplan’s chief marketing officer.

“But we are always trying to balance shareholders and members, so there are certain costs that we have to recuperate.”

For a flat $30 fee, Aeroplan also offers the option to transfer those points to a newly created estate account, which can be used by surviving family members. But Kwasnica says she was told by the person she contacted at Aeroplan that the points in the estate account must be used in their entirety within one year.

Many Aeroplan trips need to be booked at least a year in advance, and Kwasnica understood that to mean her father would have had to make travel reservations practically while planning his wife’s funeral.

“Who wants to travel right after the love of their life dies and you’ve had the worst year of your life?”

But Boynton says that’s not actually the case.

“A year is how much [time] you have to do something with them. But you can also book an Air Canada ticket up to a year in advance too, so that’s two years. And if that’s too soon for you, you can also buy an Air Canada gift certificate, which doesn’t have an expiry, or a retail gift certificate as well.”

However, redeeming Aeroplan points for a gift certificate does not always offer the best value compared with, for example, redeeming those points for an international flight in business class.

Maximizing revenue

Patrick Sojka of the website Rewards Canada says transferring points is not a large expense for a loyalty program.

“Honestly, [the fee], it’s money-making,” he says.

“Ninety per cent of all programs worldwide charge you a fee to transfer points and miles to somebody else [in the event a member dies].”

In Sojka’s view, the fee is about maximizing revenue. “The fact [is] that the miles on those accounts are a liability. The sooner they can get them off the books, the better,” he says.

High cost of dying

Compared with Aeroplan, other loyalty programs have terms and conditions surrounding death that are even more expensive and draconian.

Air Miles used to allow the surviving family member to merge an account with that of the deceased at no charge.

But about four years ago, Air Miles changed its policy and now charges a fee of 15 cents per mile.

Sojka estimates the Air Miles fee is about 50 per cent higher than Aeroplan’s.

Other loyalty programs don’t even offer the option to transfer points in the event of a death.

According to the terms and conditions for Shoppers Drug Mart’s popular Optimum points program, “Upon the death of a Shoppers Optimum Member, the member’s account will be closed and any Shoppers Optimum Points in the account will be forfeited.”

Better not to tell?

But there may be ways around this.

In March 2013, Delta Airlines changed its policy, declaring SkyMiles would no longer be transferable upon death.

As a result, travel writers, bloggers, and travel hackers started advising SkyMiles members not to notify the program of a death.

“It’s a grey area. But you don’t let the program know that that person’s passed away,” says Sojka, who also advises this.

“What you do is ensure that everybody has your log-in and passwords and then you can use those miles. Because when you book rewards flights, they don’t have to be booked for yourself, they can be booked for anybody, essentially. You can go in and book points for yourself, your family members, you name it, using those points.”

It’s not clear if companies will crack down on this apparent loophole, but Sojka says he hasn’t heard of any repercussions from taking this route.

Now that they know about it, Kathryn Kwasnica says her family will probably go with the gift certificate option for her stepmother’s Aeroplan points.

“I think my dad would probably be into that. Because I think for him, the thought of travelling right now is just disturbing.”

 

Source: By Aaron Saltzman, CBC News Posted: Jan 27, 2016 

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Get your debt under control before building a nest egg

Financial experts say the key to saving enough for retirement is getting your debt under control early.

It seems obvious: save as much money as early as you can. You’ll benefit from compound interest and you’ll build a savings habit that will serve you well when your pay goes up.

But just because it’s obvious doesn’t mean it’s easy — or even possible.

Financial advisers know that real life — schooling, cars, homes, kids — can get in the way.

Three experts who spoke with CBC News say because people are investing in themselves early in their adult lives, the goal isn’t necessarily to save early so much as getting all their ducks in a row for later in life.

One of the most obstinate ducks to manage is debt.

“If you’re in your 20s or 30s, it would be nice to have some savings,” said Preet Banerjee, author of Stop Over-Thinking Your Money!

“But if you are starting a family, getting a new house, etc., it can be pretty tough. So I don’t think you should be freaking out that you haven’t started aggressive savings just yet.”

Though recent headlines suggest Canadians are in fact saving enough money for retirement, Banerjee says the general trend has been a decline in savings — a pattern he attributes to low interest rates and people “launching later,” waiting longer to leave school, get married, have children and buy a home.

Banerjee says that means savings are delayed, too, but he stresses that it’s not necessarily a bad thing, so long as people are moving in the right direction by reducing their debt.

‘Just start with the basics’

“Just start with the basics, which is being able to figure out your monthly cash flow and making sure that you’re running a surplus, and how to figure out your net worth,” he said. “You do those two simple things … you’re going to be in a fairly good situation overall.”

Don’t worry about investing until you’re in a position to invest, he said.

‘If you don’t have anything in savings by the time you’re 40 or 45, it’s hard to have a million by the time you’re 65. So the response is to avoid.’– Melanie Buffel, Money Coaches Canada

“Living within your means is quite a bit different than living at your means, which I think is what people naturally default to,” he said.

Cherith Cayford, a financial educator at CMG Financial Education in Victoria, stressed the importance of getting your debt under control early.

“For millennials the focus should be debt reduction, debt elimination, not putting on more debt, being very focused on that level before they start planning for their retirement.”

She said no 20-year-old is thinking about their golden years, anyway.

 

“We’ve got to get real,” she said. “I wouldn’t even be worrying about it in my 20s. Maybe start thinking about it in your 30s, but sort of position yourself so that you are debt-free so that you can actually start accumulating wealth.”

Cayford lays out a simple plan:

  • Establish a specific year when you plan to be debt-free. “It can’t be on the never-never plan.”
  • Focus on eliminating the debt with the highest interest rate, while making the minimum payments on the others.
  • Continue that process until all the debts are paid off.
  • Use the money with which you’d been paying down your debts to build life savings rather than “living higher.”

While many people, especially in the biggest cities, won’t pay off their mortgage until their 50s or 60s, it’s important to have a handle on it so savings can begin.

Without a proper debt-reduction plan, you might not save a dime until your 50s.

‘It’s going to be very difficult’

Cayford says that’s too late to save enough for retirement from nothing, and you’d likely have to rely heavily on Old Age Security and the Canada Pension Plan. That might mean living with less during retirement.

“It’s going to be very difficult, because CPP was only intended to replace 25 per cent of the average industrial wage,” she said. “And if you haven’t been able to max out your contributions, then that’s even less to try to live on.”

Preet Banerjee

Financial analyst Preet Banerjee says savings can quickly accumulate once your debts are paid. (CBC)

Melanie Buffel, a money coach with Money Coaches Canada in Vancouver, said if people begin saving only at a late age, they can become discouraged.

“It frightens people,” she said. “The numbers just don’t work. If you don’t have anything in savings by the time you’re 40 or 45, it’s hard to have a million by the time you’re 65. So the response is to avoid. This is when it becomes really important not to jump to the big numbers, which will add to the stress, which will add to the avoidance, and then they’re going to go into debt even further.”

She said when people start saving in their 40s and 50s, it’s important to have a clear idea of what they want their retirement to look like. What quality of life do you want? How long do you want to keep working?

Banerjee says if you can get your non-mortgage debts paid off and have a clear end in sight for a responsibly sized mortgage by your mid-40s, there’s no reason to panic.

Once debts such as the mortgage are paid off, people often find themselves with $1,000 to $2,000 free monthly, he said.

“That can do a lot of work for you,” he said. “That’s still a relatively long period of time for people to accumulate the savings they need to retire.”

Source: CBC News Posted: Jan 15, 2016 5:00 AM ET

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