$500K/yr? Might as well be welfare

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.

- “You Try To Live in 500K in This Town” by Allen Salkin, NY Times, 2/6/09

If I have learned anything about money, it is this: people have a hard time cutting back. In fact, the few times that I have really tried to cut back spending (such as right now, since 2009 is the official year of thrift), it has mostly resulted in an exercise of delaying inevitable purchases or trading of wants. For example, I might not go out to eat for several weeks, only to drop a few hundred bucks at a Barney’s shoes sale while home for the holidays. To console my consumerist heart I fall back on some words of wisdom I received from a co-worker, “JSR, like my mother said- it’s a lot easier to make more money than spend less.”

Clearly those same banking executives also took heed of such advice, but now find themselves in a situation where making more money is not an option if their employers have taken advantage of TARP funds from Bailout Package Round I. Luckily, they’ve found a sympathetic ear in the NY Times writing staff. And really, we should have sympathy. It’s tough keeping 2 kids in private school, a $1.5MM home in Manhattan, a $4MM one in Southhampton, a driver, and a nanny.

Midway through the article, the journalist juxtaposes the seemingly obviously solution with the harsh realities of life in the upper echelon on New York society. 

“Sure, the solution may seem simple: move to Brooklyn or Hoboken, put the children in public schools and buy a MetroCard…”  Actually, let’s just stop right there.  That is the solution, and it’s pretty simple.  When making more money is no longer an option, one has no choice but to scale back.  Don’t worry, your children, your out-of-work nanny, and Harry Winston will understand.