Quote:
Originally Posted by _Q_
Very quick math here.
$120,000 salary = $7700/month after tax
Average 3 bedroom detached home = $512,000 = $2200/month
Property taxes = $250/month
Average new vehicle = $40,000 = $600 lease
Child care for 2 children = $2400
Bills including TV, internet, phone, heat, water, sewage, etc. = $700
Grand total of $6150, leaving the family with just over $1500 per month for groceries, gas, savings, gym memberships, RRSPs, RESPs, paying off student loans and other debt.
That's about $350 per adult, per 2 week pay period for "discretionary" spending.
Sure.... it's doable. But it doesn't leave much room for daily coffee and avocado toast.
What ends up happening in a situation like this is things get cut out. Maybe the kids stay with their grandparents instead of daycare. Or maybe the family keeps driving their 15 year old beater. Or maybe they just say "fk it, we'll just keep accumulating debt, because what's the point?"
And this is in Calgary, where things are relatively cheap. Imagine living in Toronto or Vancouver, where average incomes are about 80% of what they are here and housing and child care are twice as expensive. No matter how many new TVs and vacations you tell yourself you won't purchase, it's not going to make any difference whatsoever.
|
It seems as though there's some misunderstanding of my post above.
As a reminder, this post was a response to Weitz' post from earlier claiming that the average household income in Calgary of $100-$140k is enough to be able to afford "average" things.
So I did some quick math to show that the average family that earns about $120k per year would have a very difficult time purchasing a whole bunch of "average" things. Yes, they can purchase a $350k home and a $15k car. They can find a cheaper daycare (though I have yet to find anything in this city much lower than the average). That's not the point though. The point is that if a family, making average income set out to purchase a regular 3 bedroom detached home, 1 new vehicle (though most families need 2 vehicles if they live in the suburbs) and put their two children in daycare, they would have a very rough time. In order to make it work, they would need to cut out some of those fairly "average" things and find cheaper, less desirable alternatives.
For the record, I do agree with a lot of the sentiment around here. Nobody "needs" a new Rav4. Nobody needs a $512k home. My wife and I make a fairly decent sum of money that would be considered well above average. Yet we live in a 2 bedroom condo with our 2 kids and drive a 12 year old Toyota. We're happy knowing that we dont have to struggle and live paycheque to paycheque.