If I Made $250k...

Playing the "If I won the lottery" game is always an interesting exercise. I find that I can make use of about the first $1-2 million (lump sum) but that things get fuzzy beyond that and any money past $10 million is pretty much useless (even for investment) other than just giving it away. Altering the game to "If I made $250k/yr" is surprisingly similar...

Based on current tax law (federal, state, and local) and last year's deductions (most of which I would still be eligible for) my take home would be right around $170k, or $14,167/month. Let's make it $14k/mo and $168k/yr.

First off, are living expenses...
House - $1750/mo, $21k/yr
Utilities - $450/mo, $5400/yr (cell, tv, web, gas, electric & water)
Food - $600/mo, $7200/yr (groceries, restaurants, takeout)
Car - $2500/yr (gas, maintenance, insurance, registration)
Debt - $350/mo, $4200/yr (a bit over minimum payment)

Utilities are maybe a bit high, but not much. Food is certainly high (too many restaurants), but car is low (own outright) so that kind of cancels. That totals a bit over $40k/year or $3358/month, leaving nearly $10,640/month or $127,700/year. Time for fun...

Travel - $5000/yr
Other - $15k/yr (home improvement, clothes, entertainment, presents)

This is pretty nice living. Most of the country can't afford $5k in vacation travel per year and $15k on stuff. But even with that This still leaves nearly $108k ($9k/month), after taxes, left to spend/save. After paying taxes, covering living expenses and having plenty of fun I am left with a fair bit more than I make before taxes currently. I know pretty well what I would do with it: my student loan debt (currently ~$40k) would be gone in roughly 6 months (eliminating its inclusion above). The bulk of the rest--say $50k--would, in year 1 go to savings (house interest is low, and tax deductible) and charity. The remaining $18k I would use for various extras that I presently can't afford...hard to say exactly what, but probably some home rennovation work, some new furniture, a motorcycle, a road bicycle. Certainly it would also include some more for presents and others, but exactly how that would all get distributed is not so exact as the student loans.

But the inexactness of what to do with that money is kind of the point. After taxes, with all my living expenses covered and with lots of fun covered, and even with my student loans paid off and a large portion used for savings/charity, there is still $18k left over...in only 1 year of earning $250k.

If I were brining in this income I would own my house outright in ~5 years (just figure that $40k from the student loans going toward the house instead in years 2-5). I would be able to bank $0.5M within 10 years (at least $30k/year yrs 1-5, then $70k/yr for 6-10), which with investments and other savings/401k be around $1M in under 15 years.

This is a budget that Obama has promised not to raise taxes on (it is not over $250k/year, and deductions would bring it below even that). This is a budget that Republicans insist raising taxes on would be hurtful to the economy, a budget in which at least $70k is socked away and pretty much useless to the economy anyway.