Market Conditions: Sales Fall 0.2% YOY But 2016 Was the Hottest May in 9 Years

Statute in Lincoln Park June 22, 2017

The Illinois Association of Realtors is out with the May housing report. Once again, it was another strong month.

The city of Chicago saw a 0.2 percent year-over-year home sales decline in May 2017 with 2,973 sales, down from 2,980 in May 2016. The median price of a home in the city of Chicago in May 2017 was $306,750, up 5.5 percent compared to May 2016 when it was $290,750.

May sales:

  • May 2008: 2119 sales
  • May 2009: 1557 sales
  • May 2010: 2057 sales
  • May 2011: 1705 sales
  • May 2012: 2037 sales
  • May 2013: 2834 sales
  • May 2014: 2453 sales
  • May 2015: 2750 sales
  • May 2016: 2980 sales
  • May 2017: 2973 sales

Median price data:

  • May 2008: $319,500
  • May 2009: $225,000
  • May 2010: $230,000
  • May 2011: $190,000
  • May 2012: $203,000
  • May 2013: $234,000
  • May 2014: $269,250
  • May 2015: $281,000
  • May 2016: $290,750
  • May 2017: $306,750

“We’re in an interesting, sophisticated market at present, wherein inventory is restricting what’s available for those who are looking to buy,” said Matt Silver, president of the Chicago Association of REALTORS® and partner at Urban Real Estate. “Sellers are having to price their properties appropriately, as educated buyers are prepared to be flexible on their wants and needs in a new home or wait for the perfect home to come on the market and pay accordingly.”

30-year mortgage rates remain relatively low, averaging 4.01% in May versus 4.05% in April. A year ago, the 30-year rate was 3.6%.

Inventory continues to plunge statewide. It fell 15% year-over-year to just 56,535 properties versus 66,424 in 2016.

“The market appears to be in a “wait and see” mode in both Illinois and Chicago” said  Geoffrey J.D. Hewings, Director of the Regional Economics Applications Laboratory at the University of Illinois.  “The state’s economy has stuttered and the fiscal cloud hanging over the state has seen enhanced net out-migration that has contributed to a dampening of demand.”

In Chicago, the unemployment rate in May fell to a record low (for the Chicago-Naperville-Arlington Heights region) of just 4.1% from 5.4% a year ago. Although some experts believe it could be due to some leaving the state.

Downstate has been struggling, especially due to layoffs at Caterpillar and Deere.

How tight will this market get?

And with a tight market, that means that prices will rise.

Will we soon see a record high median price again in Chicago?

Illinois housing market makes gains in May with higher home sales and prices [Illinois Association of Realtors, Press Release, June 21, 2017]

 

108 Responses to “Market Conditions: Sales Fall 0.2% YOY But 2016 Was the Hottest May in 9 Years”

  1. I bought my home in 2012 and I thought that inventory sucked back then. I can’t even imagine shopping today. I am however seeing a lot of price reductions on extremely overpriced home. A larger 1960’s split levels should never sell for $700,000, not anywhere in the Midwest, never.

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  2. The metro area is losing people as the census has told us. Almost half of those who have left are african americans fleeing segregation and crime as a result of a racist past. The good news about the job numbers which seems to be missing from the Tribune article Sabrina linked is that Chicago metro has had record non farm payroll jobs year over year since 2015. And that previous record was in 2000.

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  3. Chicago’s violent crime today has less to do with a racist past and more to with the breakup of major gangs at or around the same time the cartel has flooded the street with cheap drugs, leading to every neighborhood gangbanger shooting each other for control of corners, and the so called lack of mentorship of older gang members to stop this. Violent and drug crime been declining for years until these recent developments.

    And furthermore, it’s not just AA’s that are leaving chicago – although a lot are – many who live in the northern metro area are leaving illinois entirely for WI and those in the southern have left for IN. I work with people who’ve left IL for IN and I know plenty who’ve left for WI. Anecdotally, one of my best friends from high school, lived his entire life in IL, just moved to WI for greener pastures, and it doesn’t appear he’s ever returning to IL. The only people I see moving to IL are college graduates with a higher income trajectory, or, those who’ve already accepted a higher paying job. Another anecdotal story, a friend of a friend recently moved the north shore from the west coast, and they are loving it. Great salaries, cheaper housing, better schools, less congestion (in the NS). Chicago is now a bit like NY or CA; few middle class people are dreaming of the big city or of the beach anymore. The middle class has been moving to the sun belt for decades now.

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  4. To back up HD: a handful of relatives of mine from the south suburbs jumped over the border ti IN. and still commute into Chicago for work. Many older people, friends of my parents, late 60s, moved to WI. and MI. in the last few years. The outmigration is real but the causes are varied. The younger south suburban people left because their homes crashed in value while their taxes skyrocketed. One walked away from their mortgage. The older people left to stretch their retirement dollars but still remain close enough to family.

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  5. Living in the city has become ridiculous. The traffic, the crime ( even in nicer neighborhoods like lincoln park, lakeview, roscoe, etc ) , the crazy taxes and corrupt politics..And obviously the nonsensical real estate values.

    I thought i’d never leave but the north suburbs, i.e., wilmette, winnetka, lake forest, and east highland park are looking more appealing than ever. Someone on here ( HD i think it was you ? ) told me I couldn’t afford to live in these suburbs…But the more I look, the more I’m realizing I’d save a boatload of money if I moved..Even given the high real estate taxes there.

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  6. Chicago’s violent crime today has less to do with a racist past and more to with the breakup of major gangs at or around the same time the cartel has flooded the street with cheap drugs, leading to every neighborhood gangbanger shooting each other for control of corners, and the so called lack of mentorship of older gang members to stop this. Violent and drug crime been declining for years until these recent developments.

    It’s a multi pronged issue:

    1) As you mention, breaking up the “nations” of gangs and putting the high level bangers away led to intra- and inter- gang fighting for control.

    2) The demolition of the projects and the relocation of the residents meant the destruction of a LOT of gang-controlled territory. Certain gangs controlled certain projects (or specific towers within certain projects) and those boundaries were understood. Now that former residents are scattered throughout the city, there’s more contact and hence more conflict between gangs.

    3) Closing and consolidating schools means that “gang members” either attend school in, or travel through, hostile territory just to get to school, leading to more conflict.

    4) There’s been a radical shift in gang culture (perhaps related to the “mentoring” issue HD mentioned above), whereby it’s almost impossible for some kids NOT to be in a gang. I put gang member in quotes in the previous paragraph because kids who are IN gangs will just assume that a kid from a specific area is affiliated with a rival gang (whether said kid actually has an affiliation or not). And thus will target ANY kids from that area.

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  7. How does one save a boatload of money by moving to the north shore, even given the high real estate taxes there? Houses = maintenance. Yards, roofs, windows, mechanics, on and on, it’s never ending. Utilities, the bigger the house the more they cost. Cars, you’ll need two so double the costs there. Traffic, unless you work/educate your kids close to your home, you’ll sit in traffic just like the rest. Corruption, the Madigan machine touches everyone in IL. I’ll give you the schools are probably better than the *average* Chgo public school, and the fear of street crime is certainly eased.

    If you think the suburban lifestyle is a better fit for you and your family, then do it without regard. But if you voice that you’ll be saving a boatload of money by moving to the north shore, you do nothing but perpetuate the stereotype that doctors are notoriously bad with their money.

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  8. “How does one save a boatload of money by moving to the north shore, even given the high real estate taxes there? Houses = maintenance. Yards, roofs, windows, mechanics, on and on, it’s never ending. Utilities, the bigger the house the more they cost. Cars, you’ll need two so double the costs there. Traffic, unless you work/educate your kids close to your home, you’ll sit in traffic just like the rest. Corruption, the Madigan machine touches everyone in IL. I’ll give you the schools are probably better than the *average* Chgo public school, and the fear of street crime is certainly eased.”

    Jay, with current real estate values being as they are, we’re living in ‘west lincoln park’ (whatever that is), home square footage is about 3300 and current value is about 1.5. taxes are in the 20’s for this year, I believe.

    Ive got one newborn kid and another hopefully on the way. Private school costs are about 20k per kid, for an average private school. We STILL need two cars in the city as the trains don’t run very close to us. Everything costs more here – gas, groceries, home goods. We still pay quite a bit for home upkeep, utilities, garbage/landscaping etc.

    In the current market it’s very attainable to get a pretty beautiful home with lots of character in the above mentioned northside suburbs. This is one I really like :

    https://www.zillow.com/homes/for_sale/4905246_zpid/0-1300000_price/0-4782_mp/priced_sort/42.229153,-87.596226,42.042026,-87.89629_rect/11_zm/f1ed6594e9X1-CR19ft94wxccwou_tqcyf_crid/?

    It’s a great size, amazing location close to the lake, and great school district. Even with the 5k or so more in property taxes, i’d be saving nearly 40 grand a year, every year, for the next 18 years , on my kids schooling alone. That’s a ton.

    My commute is about the same also..It’s tempting. I just don’t know if i can leave the city.

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  9. Riz, I say a lot of stuff to a lot of people, I may have said you can’t afford the NS, maybe not! it doesn’t matter;

    But what does matter is that highland park is a pretty far commute downtown, if that’s where you work. You’re coming from Lake County. If you drive you better leave earlier rather than later otherwise your commute will be terrible just to even get to the junction. but if you work at some practice out there in the burbs, it’s aweseome.

    Also, i have this theory, that no one else seems to subscribe to, that the NS and far NW suburban home prices have failed to recover since the recession due to the large number of upper middle class families like yours that choose to stay in the city rather than move. 30 years ago people upper middle class professionals like us would move to the suburbs and work on some corporate campus, but today, there aren’t that many more wealthy people, and many of them live in the city instead. $1.3 mil to live that close to the lake is a STEAL compared to the $1.5 it takes to buy a SFH in west lincoln park. but the house in the city is holding its value while the suburban property is not. however the sub $500 market in any near suburb is SUPER hot these days with many families at the low end of the upper middle class still fleeing the city as soon as baby number 1 pops out. I wanted to stay in the city but I just quite frankly couldn’t buy something for the price I wanted to pay (At that time). These days I could probably afford but there’s no looking back.

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  10. HD, we agree here. That place seems like a steal to me – as do many other properties in the area. To my wife, being that far away from the city, museum, restaurants, and all the “fun” in the city is not worth it. She’d rather save much less money, have a home in west LP , lake view, or roscoe, and just deal with the high costs of raising kids in the city. I used to be on her side, but as I get into my mid to late 30’s and think about retirement, kids college etc, I have a hard time justifying the cost. I work near Evanston so the commute is equivocal to me.

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  11. Well then Riz, there you have it. Certainly a nice house, but don’t fall under the illusion that a house like this will be cheaper to maintain than 3300 sq ft (brick?) in the city. That’s a lot of yard to maintain, wood siding, double the sq ft, you get the idea. Schools, personally I’d have no problem sending my kids to a LP public school, but that’s a third rail I’m not touching here on CC… your kids your choice.

    What I do find really telling though, is that this house with all of the benefits of size, location, school district, is asking “only” $1.3MM. That’s a lot of money, but there’s a reason why they’re not asking $2.3MM… they’d never get it, even in this hot market. Just this morning my Lake Forest friends who are visiting me for the weekend, were telling me they’d be lucky to get $950k for their house, a well maintained 4000 sq ft house, that they bought new in 1988 for $750k. Now they raised 3 kids there, enjoyed the good schools and their life there, but a $200k profit before broker fees/costs after 29 years of ownership isn’t great… and that’s for LF. I don’t believe the suburbs are going to disappear, nor should they, but there’s a cultural shift that has happened from suburbs to city, it isn’t a trend, and the suburbs have lost the dominance that they’ve enjoyed/expected since the end of WWII.

    Where will Riz’s home equity be in 25 years when he wants to sell his HP house? Nobody knows, but chances are, the chances pre-analized for you by huge corporations like McDonalds, he could have done better by staying put. Riz needs to look for out Riz’s financial future after medicine… his kids will do just fine in LP.

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  12. I agree that the suburbs have not recovered from the housing bust as quickly as the city. I also agree that the NS is not what it once was and won’t appreciate as much during the next generation. However, Lake Forest and Highland Park were disproportionately hit hard in the recession are less preferred than the New Trier Township (Wilmette through Glencoe) because it is just that much farther from the city. Also, Highland Park is having school issues (failed referendums regarding closing some schools and building) which has caused many people to move and/or send their kids to private (Lake Forest Country Day, Baker, North Shore Country Day etc…).

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  13. I moved from the city to Winnetka in 2013, bought a 4 bed 3 bath 2 car garage house for $640K, This year I could easily sell it for $800K, but I’m not moving – love the house and love living in Winnetka. Great neighbors, charming downtown, beautiful architecture and landscaping, and safety is great.
    Homes that are under $1m sell really fast, supply under $1M here is limited. Over $1M – it is overbuilt, all developers deliver now only $1.5M+homes. Buyers have many choices, demand newest finishes, most contemporary design, that’s one of the reasons why older homes do not see good appreciation. If they are updated and have great finishes, they sell.
    My neighbors sold their large colonial, old and needed renovation, for $1M. Buyer was a developer, Heritage Homes. Demolished it and built a house for $3,700,000. Homes here have to have a very contemporary appearance, in order to sell, or attractive price.
    I commute downtown every day, unfortunately have to drive. Morning commute to Streeterville is an hour. In the morning I take Sheridan, it is nicer and easier any time 7am – 10am. After 10am Edens is better, and my commute then is 30 minutes.. Afternoon – Kennedy and Edens are bad 4-7pm, about 1hour 15 min, Lake Shore Drive and Sheridan are faster. Train from Indian Hill to Ogilvie takes 30 minutes, and my house is 5 minutes walking to train.
    Gas bills – $200/month, electricity – $120, no big deal… Better than paying assessments. My landscapers charge $30/week for cutting grass, same with snow removal. Schools are simply the best…Great things for kids, park district has so much.. Good restaurants – Michael’s, Avli, Little Ricky’s, Cafe Buongiorno.
    It is really easy to get to downtown, and quality of life is really great here.

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  14. “It is really easy to get to downtown, and quality of life is really great here.”

    IMH but limited O, I’ve found that purchasing a home on the NS isn’t just a the choice of a home, but more of a lifestyle. Included with the package deal are neighbors who drive $80,000 cars and take one foreign vacation (or more) as a family every years, children who ski out west during Spring Break, designer everything, competition in everything all of the time, and home fixtures and furnishings where cost is of no consequence. There’s nothing wrong with that but if you and your family aren’t willing to spend like the Joneses, socially you may be an outsider.

    And as a side note, the sub-$1,000,000 housing stock up there does kind of suck. Mostly older, many in need of major renovations. It gets scooped up quickly but expect to throw a lot of money into it. If you’re lucky and don’t get outbid by some developer who will built a $3,000,000 spec home there instead. So many expensive homes, too bad all of the polo playing class cannot live and play everywhere at once…

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  15. This is what I’ve heard for years before I moved here. It’s a common perception, and different from reality. Like everywhere, there are some very wealthy people, but the majority here are regular normal families, that moved here for schools and safety. My next door neighbor drives a VW, husband works in the city, wife is stay at home mom, with two adopted kids. They have nice but average lifestyle, nothing fancy. Moved here because of schools. Another family on the block – drives older Toyotas, has one kid with disability, very regular lifestyle. Designer clothes is something for Galas and fundraising parties, maybe – I do not really see it… My neighbors are great – nice with each other, great block parties..I heard a lot before I moved here, that it would be snotty, that as a single professional woman, I would not fit in – all wrong. With my average income and average lifestyle and no designer clothes I fit in very well, anyone will.

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  16. Vera,

    Honest question, I know Highland park is relatively diverse, but I haven’t heard much about wilmette, winnetka, and glencoe..Family members have told me that minorities aren’t felt as ‘welcomed’ in these neighborhoods when compared to other ‘higher end’ chicago suburbs more south, like oak brook, etc. Thoughts?

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  17. “IMH but limited O, I’ve found that purchasing a home on the NS isn’t just a the choice of a home, but more of a lifestyle. Included with the package deal are neighbors who drive $80,000 cars and take one foreign vacation (or more) as a family every years, children who ski out west during Spring Break, designer everything, competition in everything all of the time, and home fixtures and furnishings where cost is of no consequence. There’s nothing wrong with that but if you and your family aren’t willing to spend like the Joneses, socially you may be an outsider.”

    HD, again, good point..but you have the same problem if you’re living in a SFH in the city in west LP, LP, lakeview, wicker, nowadays even roscoe, and especially if you’re sending your kids to private schools. I’ve got a toddler and i’ve already got other parents chiding me because I insist that I will never send my kids to francis parker. 30 grand a year for high school? no thanks.

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  18. One subject that can not be ignored is the sorry state of finances of our state, city and county. With the state’s current budget issues, I can guarantee you that higher income taxes are on the horizon and that will probably be only the first set of income tax hikes. Currently the Democrats want to raise the state income tax to 4.95% and make no structural reforms.

    I would not rule out a city income tax after the mayoral election in 2019. In 2020 it is a strong possibility that we can have a city income tax. After the mayor and the aldermen win their seats for the next four years, usually in year one they introduce the high confiscatory taxes. Usually that is their modus operandi.

    You add all this up and why on earth would people want to move to Chicago or Illinois? Why would businesses want to move to Chicago or Illinois.

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  19. “IMH but limited O, I’ve found that purchasing a home on the NS isn’t just a the choice of a home, but more of a lifestyle. Included with the package deal are neighbors who drive $80,000 cars and take one foreign vacation (or more) as a family every years, children who ski out west during Spring Break, designer everything, competition in everything all of the time, and home fixtures and furnishings where cost is of no consequence. There’s nothing wrong with that but if you and your family aren’t willing to spend like the Joneses, socially you may be an outsider.”

    I moved from the city to the NS. You can look back at my old posts and see that I thought I would never leave the city. We lived in the green zone. I have come to love the NS and I don’t think its any wealthier or snobbier than Lincoln Park, Lakeview, River North, Gold Coast or Southport. Same kind of people, but the school choices, park district classes, and neighborhoods full of children make life easier. We moved when my spouse changed jobs/office and the commute north became too much. I can work at home 50% and train to the Loop twice a week via the Metro. It’s 40 minutes door to door.

    I have found Wilmette and Glencoe to be the most welcoming to minorities. The NS is predominately white, but I think that has more to do with its history (they all had restrictive covenants except Glencoe which had a substantial black population dating back to the pre-Brown vs. Board of Education era) and it will take a while to undo that history/baggage.. I don’t think there is overt racial discrimination (in fact my street has several black lives matter signs, and signs in Spanish and Arabic saying all neighbors are welcome), but minorities will feel some degree of racial isolation because there might only be 2-3 minority kids in a class.

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  20. Ritz,

    More Indian and Chinese families than African American… There are several signs on my block and few blocks around – “We welcome All”, in different languages (none in my native Russian:))). My daughter had many Chinese and Indian kids in her New Trier class, and few African American, though I only see two African American families when I walk my dog… North Shore Country Day had a good number of African american kids, and they do have something around $1M that they use for tuition for low income families. I know first hand, as my daughter had two friends who were recipients of this tuition. I’d agree – it is pretty much the same attitude as in Lincoln Park – you chose your friends, and there is plenty of choices.

    One thing that I noticed that I think is predominant here – it is the area of overachievers. As a result, they do demand a lot from schools, from village government, police and fire department, etc. We pay high taxes, and village delivers excellent services in return. Park district has fabulous programs for kids. Streets are clean. When it snows, village cleans streets through the night, and at 6am streets look like a model winter area, good for photos. When I drive from here to the city on a snow day, the contrast is unbelievable.

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  21. “You add all this up and why on earth would people want to move to Chicago or Illinois? Why would businesses want to move to Chicago or Illinois.”

    Where would you go?

    New York and California taxes all significantly higher than those you proposed in your comments.

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  22. I don’t disagree that the homeowners in LP, Southport etc are more or less the same type of people who move to the NS, but the NS is more established for basically generations of families these days, where as LP doesn’t quite have that sense of generational money yet.

    I, however, disagree that the NS is just mostly average people living in the NS (outside of those few small blocks with post-war housing in Highland Park, and the far western edge of all of the NS). Perception is reality and from what I hear, there’s enough really wealthy children that the merely upper middle class ones feel they are normal. And for an outsider looking in, everyone looks ‘rich’ to a middle class kid living in Skokie.

    I’ve never lived in the NS but I grew up close enough (not skokie), and I’ve know more than quite a few people who live there, had quite a few former bosses that lived there and I work with two people right now who live there, and I had more than one high school teacher live there. I had high school and college friends from there and peers, etc. And heck I just drove through a sliver of it at it’s very western edge on my way out to a picnic at the Skokie Lagoons last weekend. Beautiful, well maintained larger homes even that far west, you certainly know you’re in the north shore, even west of GB road. YOu can tell me my view is skewed, or incorrect, I think that those living in a bubble (Which the NS basically is) forget that Oak Forest is’ normal’ people, Lake Forest is rich people. I laughed a few years back when he whose name shall not be mentioned opined that Kenilworth where he lived was mostly just working stiffs trying to pay the mortgage and send their kids to good schools. Kenilworth has a *median* household income of $250,000, and he said these are just regular people working….yeah, top 5% of the country regular! 250 years ago we called the residents of Kenilworth the Second Estate, but today to he whose name shall not be mentioned, he calls them working stiffs!

    There’s nothing wrong with the NS, but it’s going to take a lot to convince me that it’s ‘mostly’ just normal (aka UMC) people living there for the schools who drive older Toyota’s and VW’s, because that’s not at all the experience I see as an outsider looking in at the area as soon as I realized where the wealthy in chicago lived.

    As for the whiteness of the NS, yes, it very much is. The restrictive covenants have something to do with it, but a lot more has to do with established family generational money in and around the area. SO the grandchildren mostly come back to live there….unlike Oak Brook which probably doesn’t have many larger homes older than 20-30 years old. Also, the NS is fairly liberal socially, and it is exact opposite of diverse, whereas Oak Brook is DuPage county and ironically, is far more diverse than the NS, but votes Republican.

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  23. Where would you go?
    New York and California taxes all significantly higher than those you proposed in your comments.

    Because those are the only options

    Comparing the decision making process of a 25 Vs 35 year old is a fools errand

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  24. “yeah, top 5% of the country regular! 250 years ago we called the residents of Kenilworth the Second Estate, but today to he whose name shall not be mentioned, he calls them working stiffs!”

    It used to be that when you become wealthy, you worked fewer hours and had more leisure time. Now, the more wealthy you become, the more you work. When someone is working 60+ hours a week, to me they qualify as a working stiff.

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  25. “It used to be that when you become wealthy, you worked fewer hours and had more leisure time. Now, the more wealthy you become, the more you work. When someone is working 60+ hours a week, to me they qualify as a working stiff.”

    Agreed. I would never describe myself or my income as ‘average’, but even being in a high income bracket, I don’t consider myself ‘wealthy’. To me, ‘wealthy’ is generational wealth, ie, you don’t have to work that hard, or work much at all. My wife and I earn in the top few percent of the country, but I’m routinely putting in 70-90 hours week every month or so..And I don’t have millions in the bank. By that definition, I’d consider myself much more of a ‘working stiff’, or consider my household a ‘working family’ as opposed to ‘wealthy’.

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  26. HP house, ” double the sq ft”

    That place ain’t 7000 sf, even counting the basement AND the garage.

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  27. “I’ve got a toddler and i’ve already got other parents chiding me because I insist that I will never send my kids to francis parker.”

    Ok, I’ll chide you for not considering CPS as the first option. So, now you can get it from both sides.

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  28. “I would not rule out a city income tax after the mayoral election in 2019.”

    You know that the city canNOT have an income tax unless Springfield passes a law allowing it first, right?

    Next, you’ll suggest that Rauner will put the State in BK if he’s re-elected. Nevermind the gating issue of an Act of Congress to allow it.

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  29. Ritz, agreed.. When people have no family money, no support system, work 70-80 hours a week, this is not wealth or being rich. I came here from Russia 15 years ago, with no financial support but great education and a desire to work hard and build a good life for my family. I have a good job, great house, nice car, work 7 days a week, about 14 hours a day and love it. In my Russia I would never be able to achieve this quality of life – government, organized crime, back in the days when I was leaving, would never allow you to rise, unless you were a part of their system. Here in North Shore I just see people with the same background – hard working, very well educated families, local and immigrants, who move here to give best education to their kids, plus have more comfortable life with less crime, beautiful streets, etc. Many Asian families, very prudent with finance, well educated, caring for kids, live like that – not wealthy, just hard working, Eastern European families – these are new buyers in the North Shore. Many of my downtown clients move here with their kids, for schools and for their dream homes.

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  30. “By that definition, I’d consider myself much more of a ‘working stiff’, or consider my household a ‘working family’ as opposed to ‘wealthy’.”

    It doesn’t matter than you work 80 hours a week. You have the money and choose to work that many hours by your own volition, not because you are working two full time but minimum wage jobs to make ends meet.

    I have relatives and friends who earn much less than the median wage in our area, and believe me, you’re ‘rich and wealthy’ even if you don’t feel like you are. You have nice cars, live in a nice apartment, have money in the bank, and know exactly where the money is coming from to pay this month’s bills. It’s well accepted that 63% Of Americans Don’t Have Enough Savings To Cover A $500 emergency (google it). Just ask anyone of your medicaid patients how much money they earned so far in 2017, and compare that to your own bank account. I realize my household is also in the top 5% income nationally, and many of my relatives look at me as ‘wealthy’ because I can take vacations, pay the mortgage in advance and buy pretty much whatever consumer good I want without even caring about the effect on my disposable income. But most of the country doesn’t look like that.

    That being said, I too agree that we aren’t ‘wealthy’ despite what most people in the country think. The difference between the wealth of the bottom 95% and top 1% is as large as the Atlantic Ocean is wide. My personal belief is that if you have to work every day to pay your bills, you are working class, despite the high income. The family who earns $250,000 a year actually has more in common with the medicaid family on social security disability that it has with the top 1%, but few, including the government, look at it that way. And when during the Great Fear, the peasants stormed the local chateaux to burn the feudal records, they didn’t first check to them to determine if the lord was mortgaged up to his eyeballs in debt, or if he was in the top 1% or the top 5%. They saw the land, the trappings of wealth, and burned it all down. That’s what will happen to all of us, no matter how much your pleas that you work 80 hours a week, or that your savings account balance isn’t more than $1,000,000. There’s meth heads out there now who will rob your house and kill you for a few thousand dollars cash if they know you had it.

    http://www.chicagotribune.com/suburbs/mchenry-county/news/ct-man-shot-killed-home-invasion-met-20170531-story.html

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  31. “The difference between the wealth of the bottom 95% and top 1% is as large as the Atlantic Ocean is wide.”

    I think that you have the 95 number pegged a little too high (like 90%, or maybe 85%), but the point is still good.

    Here’s one run of the numbers:

    https://dqydj.com/net-worth-in-the-united-states-zooming-in-on-the-top-centiles/

    1%, measured by income, ain’t crap compared to the 1% measured by wealth–$8m invested for income could throw off almost enough to be 1% by income, and adjusted for effective tax rates, certainly is.

    It’s all about assets. $5m+ in net worth is “the rich” that we all think of.

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  32. “The difference between the wealth of the bottom 95% and top 1% is as large as the Atlantic Ocean is wide.”

    “I think that you have the 95 number pegged a little too high (like 90%, or maybe 85%), but the point is still good.”

    I dunno. I think going from 1% or maybe even 20% to 90% (is that what we’re talking about?) is a much bigger jump than going from 90% to 99%. At 1% or 20% you are tremendously insecure in your life. At 99% you are “wealthy” by any reasonable defn but it’s not FU money. You have (substantially) nicer versions of what you have at 90%, to be sure.

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  33. “is that what we’re talking about?”

    HD saying that the difference in “wealth” from anyone in up to 95th to 99th is HUUUGE. I’m saying that for the “typical” American, 90th (and prob 85th, maybe 80th) looks a lot like 95th.

    Not a lot of difference (esp. after adjusting for age and location) b/t 80th and 95th, especially for someone at 20th or 50th. So, if trying to posit an ‘everyman’ view of American wealth, certainly 90th (and maybe 85th) looks more like 99th than themselves–after all, 90th ~= “millionaire”.

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  34. “esp. after adjusting for age and location”

    yeah you really kinda have to have that implicitly in mind.

    “HD saying that the difference in “wealth” from anyone in up to 95th to 99th is HUUUGE. I’m saying that for the “typical” American, 90th (and prob 85th, maybe 80th) looks a lot like 95th.”

    So what’s your version of his “good” point, or were you grading on a curve? His point, setting numbers aside, is that (really poor to very well off) is greater than (very well off to truly wealthy)? I’m saying really poor to very well off is much bigger than very well off to the 1 percent (but not the 0.1 percent).

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  35. “is greater than”

    mean less than, so to restate:

    So what’s your version of his “good” point, or were you grading on a curve? His point, setting numbers aside, is that (really poor to very well off) is less than (very well off to truly wealthy)? I’m saying really poor to very well off is much bigger than very well off to the 1 percent (but not the 0.1 percent).

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  36. The 1% meme gets muddled because it depends on if you are talking income or wealth. The top 1% income isn’t as impressive as the top 1% by wealth. A lot of moderately successful professionals will make it into the top 1% income wise but be no where near the top 1% in terms of wealth.

    It is all about perspective. I think you only need to make around $35k to be considered top 1% globally income wise which basically means any working stiff at most low wage jobs in America is the 1%. Around $700k in wealth.

    A family making $400k a year has a lot more in common with a family making $100k/yr than they do with people who make $1 million/yr. The $400k family isn’t even in the same sphere socially or lifestyle as people making $5 – $10 million a year or more even though both would be considered the 1%.

    I describe it like this. At 6 foot tall I am pretty sure I am in the 1% a far as height is concerned. However, it don’t make me a pro basketball player.

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  37. Sorry, according to this:

    Russ:height :: HD:income

    https://tall.life/height-percentile-calculator-age-country/

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  38. ” At 6 foot tall I am pretty sure I am in the 1% a far as height is concerned.”

    haha I don’t think so!

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  39. “So what’s your version of his “good” point”

    HD seems to be ignoring the really poor. As do I, when talking about the perception of “the wealthy”.

    I take him to be talking about the “average American”–which includes anyone who can plausibly claim that about themselves, which is probably everyone from 20th percentile to whatever top line we’re using here. And, as to assets, that line isn’t really 95th, as having Two Millions of net worth ain’t “average” to the folks with $75k.

    Also, I think that chart I linked to overstates the numbers for some portion of the bottom half, unless they are counting assets/liabilities in a funky way.

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  40. Damn it, I’m a midget. Where are all these super tall people? I am always like one of the tallest people…

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  41. “6 foot tall I am pretty sure I am in the 1%”

    6’4 1/8″ = 1%, in US

    6′ 1′ isn’t even top 10%.

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  42. “I’ve got a toddler and i’ve already got other parents chiding me because I insist that I will never send my kids to francis parker.”

    Others chide me because I insist that I will never grow 4 inches taller, develop washboard abs and walk on the Moon.

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  43. “HD saying that the difference in “wealth” from anyone in up to 95th to 99th is HUUUGE. I’m saying that for the “typical” American, 90th (and prob 85th, maybe 80th) looks a lot like 95th. ”

    I agree that a $1,000,000 at the 90th percentile (which really is just a retiree with a paid off mortgage and a decent 401k balance before taxes (or even a nice pension somewhere on a coast), while they might be wealthy to the average american in the gutter looking at the stars (to paraphrase Wilde), the difference between 1 or 2 million and several million+ is HUGE. And that’s the difference between the wealthy and the truly wealthy. It’s your average frugal lawyer with a mil in savings who packs his lunch everyday vs. zuck or bez or gates, or any one of them, or even slight further down the ladder with any CEO with eight figures in the bank or more. The $400,000 doctor isn’t having around the $1,000,000+ CEO of the hospital, and they live completely different lifestyles. But to the average american collecting social security disability, or working a service job, they think we all have yachts (or a land yacht, like a huge Tundra or something), even though they really don’t fully understand the difference between vacationing in Tuscany and owning an estate there. But again, in the foreseeable future, likely within my lifetime, the 100,000,000 gun owners across the country rise up and burn the feudal records, they’re not going to ask the balance of your mortgage on the million dollar home before they torch, and they’re not going to ask if you stock options are vested or not when they loot your accounts. They’re just going to point at you, the rich guy, and the unruly mob will attack, and you won’t have a chance to run to your panic room.

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  44. ” They’re just going to point at you, the rich guy”

    Yeah, and from that perspective, it’s top 10-15% that are “rich”, not just top 1%.

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  45. I agree, they’re not rich, well off maybe, but to the mob, we’re all rich and all of stuff is going to burn as they drag us to the guillotine!

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  46. I associate true wealth with being able to live a life of leisure while still being able to afford a nice home, car, and vacations. If you’re making $1,000,000 a year, but working 16 hour days, it just doesn’t seem wealthy to me exactly. What is the point of all that money if you can’t take a vacation or ever get time to spend with family/friends? On the other hand, I would rather be retired and receive a free $200,000 a year. To me that latter is wealthy.

    If you’re still beholden to your job, then you are still a working stiff.

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  47. “If you’re still beholden to your job, then you are still a working stiff.”

    Agree with this. So I think you need something approaching $10 million plus in assets to live the Jenny life of leisure and be comfortable against contingencies etc.

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  48. “something approaching $10 million plus in assets to live the Jenny life of leisure”

    With an income requirement of “only” $200k, even in the current interest rate environment, isn’t it more like “only” $6m?

    $10m is a nice number tho. Not nice enough to buy a $3m house or anything, but certainly enough that I wouldn’t care that much about the Joneses.

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  49. If you aren’t caught up in the finer things, you could live a pretty chill life off $2.5 million with fairly modest returns assuming you are at least mortgage free.

    The reality though is that most people live to their incomes and assets. Instead of stacking chips and cashing out, most live like the same level of income will continue.

    I know a few folks who made some nice coin on Wall Street. Talking $2-$5 million/yr in their early 30s. If you get a few years of that income and continue to live modestly you can cash out rather comfortably. Most wind up buying a multi million dollar place, coke habits, sports car or two, etc and still wind up needing to work instead of just taking the money and moving to middle America and retire before 40.

    I did read about a new “movement” of people who make really high incomes at a young age and are extreme savers. They then quit their jobs and roam the earth/retire early. BigLaw, Finance types who remain single, roommates, live cheap and basically save a lot for around 10 years and cash out.

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  50. Haha, didn’t think i’d say it so many times – I agree with HD. And everyone else actually.

    You’re right, 10 million in the bank + interest to live off that would make for a super comfortable lifestyle. That being said, I literally know no-one that is regular working professional that will have that anytime before retirement.

    I’ve lived at multiple income points –

    I made 50k a year as a resident, close to 100k as a fellow, 300k my first year of practice, then a bit more, and this coming year closer to the higher six figures. That being said – I noticed a HUGE change in lifestyle between 50 and 100 – I could actually afford to eat out a bit, take minor trips, and wasn’t worried about making rent. The next jump to 300 wasn’t as drastic – Much of the extra money I made went into things I didn’t worry about before, like retirement, savings account, investments, life insurance, blah blah. I was able to afford a slightly nicer car and condo, but nothing crazy.

    There is a big jump between going from 300 to 600ish. Enough that I was able to start contemplating spending 1.5 mil or so on a house ( the whole reason i started this north shore convo ) . I bought a sports car, ( much to the chagrin of my wife – not a ferrari or something ridiculous, but a nice one..) , and I don’t ever worry about paying for bills, groceries, vacations, etc. As HD put it above, i don’t think twice about buying material things or day to day costs.

    That being said – my lifestyle is ENTIRELY dependent on me working my butt off. I work 60-80 hours routinely..I can afford some ‘nicer’ things that people may think qualify me as ‘rich’ – but when I stop working, the money stops. I don’t own some business or have some crazy investments that are earning me dividends.

    With that being said, My Senior partners are making around 1 mil and have been for many years – there is a HUGE difference in their life and mine. They don’t have mortgages. They don’t fly coach. They don’t need to worry about buying in the suburbs vs the city, because they have homes in both places. Their kids have small trust funds.

    Then, there’s the next level. My wife’s boss is a partner at a corporate firm in the city. He makes a couple million or more. He has a new ferrari every year, has the lake forest house and also the city penthouse, his SON in college drives the car i just bought as an attending physician – he flies private from time to time. He owns equity in his firm and makes money no matter what. He will make money from his firm beyond retirement. That to me, is ‘wealthy’. Not Rich. Rich is zuckerberg.

    It’s all about perspective.

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  51. “With an income requirement of “only” $200k, even in the current interest rate environment, isn’t it more like “only” $6m?”

    Prob $6-7m is okay. But if you really wanted to be secure, you’d want to feel like you okay if your assets dropped eg 25% suddenly. Add in $1m for contingencies for healthcare or whatev, some more if you have kid (I realize that’s not jenny). And I think you’d need $10m to really be done in the sense of having enough money and not worrying about your exposure to risk.

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  52. “You’re right, 10 million in the bank + interest to live off that would make for a super comfortable lifestyle. That being said, I literally know no-one that is regular working professional that will have that anytime before retirement.”
    “There is a big jump between going from 300 to 600ish.”

    If you took your extra money going from $300 to $600 and saved it all (you can live fine on $300 unless you’re todd henderson), invest, compound etc, and you could get close to $10m in your 50s? @fo, yes? (don’t be shy w the rate of return assumption)

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  53. “But again, in the foreseeable future, likely within my lifetime, the 100,000,000 gun owners across the country rise up and burn the feudal records, they’re not going to ask the balance of your mortgage on the million dollar home before they torch, and they’re not going to ask if you stock options are vested or not when they loot your accounts.”

    I really hate this argument. You know how many years someone has been making this argument to me? (about Americans with their guns coming over the gates of the rich people’s houses?)

    For over 30 years!

    Lol.

    Hasn’t happened yet. You know why? Because the have nots want to BE the haves. Hell- they put a man in the White House with a gold encrusted penthouse.

    I’m soooooo tired of this stupid argument. It was probably made in 1900 too.

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  54. “If you took your extra money going from $300 to $600 and saved it all (you can live fine on $300 unless you’re todd henderson), invest, compound etc, and you could get close to $10m in your 50s? @fo, yes?”

    $150k/yr ($300k net of tax) for 25 years at 7.5% is $10m. So, maybe not “in your 50s”, unless you get that bump at 30.

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  55. “$150k/yr ($300k net of tax) for 25 years at 7.5% is $10m. So, maybe not “in your 50s”, unless you get that bump at 30.”

    isn’t wiz about 30? and his income will hopefully go up a bit further in real terms.

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  56. damn you MacBook autocorrect. riz not wiz, though that is better nickname than ponies got.

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  57. anon (tfo) on June 26th, 2017 at 9:46 am
    “I would not rule out a city income tax after the mayoral election in 2019.”
    You know that the city canNOT have an income tax unless Springfield passes a law allowing it first, right?
    Next, you’ll suggest that Rauner will put the State in BK if he’s re-elected. Nevermind the gating issue of an Act of Congress to allow it.

    anon (tfo) you are wrong. Please read the Constitution of the State of Illinois section 6 “power of home rule units” subsection A. I even provided a link for you below.

    http://www.ilga.gov/commission/lrb/con7.htm

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  58. “He owns equity in his firm and makes money no matter what. He will make money from his firm beyond retirement.”

    A *law* firm? A “corporate” law firm?

    If he keeps working in some capacity, sure. If he actually totally walks away? Not really.

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  59. Nimesh:

    Read your own damn link:

    (e) A home rule unit shall have only the power that the General Assembly may provide by law (1) to punish by imprisonment for more than six months or (2) to license for revenue or impose taxes upon or measured by income or
    earnings or upon occupations.

    Doofus.

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  60. Nimesh:

    It was only 4 subsections down from the one that you cite.

    Do you always only read the first paragraph, and then assume that there are no limitations on that in the rest of the document?

    Doofus!

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  61. Sabrina on June 25th, 2017 at 10:55 pm
    “You add all this up and why on earth would people want to move to Chicago or Illinois? Why would businesses want to move to Chicago or Illinois.”
    Where would you go?
    New York and California taxes all significantly higher than those you proposed in your comments.

    For the love of God Sabrina! You still do not get it don’t you? Our state and city is making life hell for businesses. Make it too hard for them and they will move with their feet. Right now we are in a death spiral. We are losing both population and businesses. This is not rocket science.

    There are other states in the Union besides Illinois, California and New York. For example, out of the five major technology hubs in our country, three of them are in the South. Austin, Research Triangle Park between Raleigh and Durham N.C. and southern Florida.

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  62. I’m 32 – getting up there. ( kidding )

    I’ve probably seen my last income jump for a while, don’t want to work any harder and senior partnership is likely 10 years away. I’ve chosen to live more the 400k life and save/ invest the post tax difference…this is my first year breaking into current income bracket so just hoping I’ll maintain, but Medicare cuts are always just a year away. We also invest my wife’s entire salary.

    That being said the plan is to go part time at 60 and retire at 65, wth all other things considered, I should be finally able to not “have” to work by then.

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  63. OT – i know it’s just discussion but IMO there’s too much obsession with getting to whatever number you’d need to just totally check out. it’s just not realistic enough for most people to even concern themselves with, not to mention you will likely always come up with another risk to worry about even if you get to your number. but spending time regularly figuring out how to save just a little extra / spend a little less goes a really long way.

    to Riz – if you and the wife are making high six figures a year I think you’re crazy not to as quickly as possible get yourselves a few million in the bank. it’s an incredible piece of mind to know you can just “walk away” from any job or situation you encounter even if it doesn’t mean you’re truly set for life. to me that is an attainable luxury for most people if you work hard and smart and it’s incredibly easy for you given your income level.

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  64. “as quickly as possible get yourselves a few million in the bank … incredibly easy for you given your income level”

    Ok, let’s say that the go “frugal” and live on the first $12k/month of net income, and that they make $750k gross.

    $750k nets to (close enough) $375k, after taxes, and above the line expenses (including 401k, which, to me, doesn’t count as ‘in the bank’).

    So, $230k per year, into a “few” (ie, 3 or more) million is 10 years, at 6%.

    I dunno if a 10 year horizon is “incredibly easy”, tho I agree that living on “only” $12k/month can be reasonably considered to be “incredibly easy”–so long as one makes it a priority.

    Obv, all numbers are assumptions, and the time to goal will vary up or down depending.

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  65. At some point living frugally becomes difficult if you want to continue having two people work full time, as I’ve learned the hard way. When I first posted on this board, probably back in 2006 or whatever, I watched the real estate frenzy bubble over as I was living in a $1,000 month apartment with my partner, paying of student loans, and savings money off my junior and then senior associate salary. I was able to make a sizable dent in my student loans (unlike many other associates and even partners I know), saved a downpayment for a home, and put some money in the bank. I drove an older imported car, packed my lunch every day, took driving vacations all around the midwest, and lived a good time.

    However, now that I’m slightly older and have a family, all of those cost savings have been thrown out the window. To cut down on the commute time so I could see my family, I bought a small house in an expensive neighborhood near a train like, which more than doubled my rent, child care is upwards of $3,000 a month for three kids, no way around that expenses unless I want to send my kid to the Illinois Action for Kids daycare a few towns away; my old imported sedan was replaced with a larger three row SUV, and unfortunately, the better value these days are the newer vehicles, rather than the used vehicles (the opposite of historical data and partially the result of 84 month loans for used cars to sub–prime borrowers), frugally packing lunch every day has lead to buying and eat both lunch and dinner out more often, simply because I don’t have the time or energy to spend an hour after work making a decent meal with left overs. I spend ungodly sums on milk and formula each week, which realistically, cannot be replaced with powered milk. Then higher tax brackets mean higher taxes, so less money in my pocket there; then add in new childrens clothing (as the hand me downs from other parents have all lived their useful life), and the trappings of life. Just this past weekend I had to purchase a new patio umbrella, and with the base, it was hundreds of dollars, money I would have rather saved, but I need to keep myself and my kids of the sun in the backyard. And god, traveling sports. Everyone does them, they’re all so expensive and time consuming, and so much, so much…Really the only places I can find to save money are again, not really taking many vacations, buying only items on sale, if they have to be purchased at all, and avoiding leaving the house as much as possible. The mortgage, student loans, child care, utilities, car payment, household expenses, these are all basically fixed costs. I find the pennies I used to be able to save are so minuscule these days it’s less than 10% of all my fixed costs. It’s difficult these days, the only way to save more money is to make more money, and even then, those extra marginal dollars I earn, nearly half of them are eaten up in taxes.

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  66. HD, that all makes a lot of sense.

    I can’t imagine where all this ‘extra’ money is going to go when I’ve got a few kids running around.

    To those above that mentioned saving as much as possible when having a higher income level, it’s important to consider all the things in life that come along with making more money and having more mouths to feed as HD mentioned above.

    That, and the fact that I’m finally making a decent wage after essentially being slave labor for the last 10 years, so it’s hard for me to say ‘no’ to things that I’ve wanted for so long – but don’t really need. Prime example is a new car. I could have settled for a standard model, but have always dreamed of the ‘turbo’ version. It was a lot more – but I talked myself into it, saying ‘ I’ve worked my whole life for this ‘ -Dumb move, I know. Or the vacation abroad I’m taking in a few weeks – I don’t NEED to spend that money, I could easily go to san diego for a few days and have a blast, but I tell myself “My wife has wanted this for so long, she deserves it”, and I just went for it.

    Saving and self control is a lot harder when it’s not forced, I’m coming to learn.

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  67. “I could have settled for a standard model, but have always dreamed of the ‘turbo’ version.”

    Shoot, you coulda bought another Rover for that price difference.

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  68. Just get rid of your wife and kids, HD, that right there will save you like 80%!

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  69. “‘turbo’ version. ”

    should have just got the “S”

    plenty fast for the roads, trust me!

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  70. ” I had to purchase a new patio umbrella, and with the base, it was hundreds of dollars”

    $54.35, delivered:

    https://www.amazon.com/TropiShade-Bronze-Aluminum-Umbrella-Polyester/dp/B000E17BIO/ref=sr_1_2?ie=UTF8&qid=1498591277&sr=8-2&keywords=patio+umbrella+with+stand

    You’re way fancier than me, HD.

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  71. “should have just got the “S””

    I know a guy in that $1m range, no kids, who “just got the S”. Turbo is for Rich Guys.

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  72. I agree with a lot of what you said HD. Although I would like to know where you get childcare for $1K/month per kid. That seems like a bargain!

    Riz – how do you have time to post on crib chatter so much? 😉 I’m in doctor’s offices more often than I’d like to be and their schedules are crazy.

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  73. Yikes, HD’s life really sucks.

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  74. Marie,

    I should have broken it down more. It’s $1,500 per kid x 2 kids plus the summer camp stuff for the older one, and after school stuff for the older one too. So it’s actually more like $3,500 to $3,700 a month depending on the month. Yeah, $40,000 a year just on child care. I could go to a nanny for slightly cheaper, but the most important thing for me is reliability. If I have to be somewhere, I have to be there for work. I can’t have my nanny calling in sick or taking time off. The child care is open every day (for the most part!) during certain hours and I can rely on it.

    Anon(Tfo) I refuse to shop amazon unless there is no where else that sells that item (like the power capacitor repair soldering kit to repair my LCD TV for $40 rather than spending $1,000 to replace it, that’s a good way to save money and only sold on Amazon, ebay didn’t have the kit I needed!)

    and that umbrella is garbage and the base is sold separately. ANd the base is only 22lbs which will barely hold up a stick much less an umbrella. So I got the menards $60 66 lbs base instead. As for the umbrella, Target. I figured I’m ‘saving’ money because my next choice was the $200 base and $300 umbrella from Room & Board!

    Riz, I understand you’re being humble saying you make a ‘decent’ wage but you make a fantastic living. Just don’t fritter it away like many doctors who have to work until their 70’s to make up for the money they spent in their 40’s.

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  75. “Or the vacation abroad I’m taking in a few weeks”

    Where are you going? And I hope you’re in biz at least.

    I don’t buy S or turbos but travel is the one expense that has really scaled up.

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  76. sonies, don’t you know, it’s cheaper to keep her!

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  77. “my next choice was the $200 base and $300 umbrella from Room & Board”

    He really is getting fancy.

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  78. “menards $60 66 lbs base instead. As for the umbrella, Target.”

    60 + 100 /= “hundreds”, even with tax.

    It implied to me that you got something like this:

    https://www.costco.com/11-ft.-Cantilever-Umbrella-.product.100309807.html

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  79. More than $100 for the umbrella but not too much. The with tax and a few other items the entire shopping experience was about $200 bucks. Which is still $200 bucks I’d rather have in my wallet right now rather than some stupid material item taht will sit in my shed 9 months of the year before one of the kids breaks it next summer.

    http://www.roomandboard.com/catalog/outdoor/umbrellas/oahu-9-and-11-umbrellas-in-sunbrella-canvas

    This is what my wife wanted (and she’s more frugal than I!). we got the target/mendards version of this.

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  80. “Shoot, you coulda bought another Rover for that price difference.”

    “I know a guy in that $1m range, no kids, who “just got the S”. Turbo is for Rich Guys.”

    I probably over extended myself with the turbo – and the S is absolutely fantastic. the base Carrera and S are both turbos now anyways..just not at the level of the regular turbo. It’s a rocket. That being said, If you go a few months pre-owned, you can currently get great deals on these.

    “Riz – how do you have time to post on crib chatter so much? I’m in doctor’s offices more often than I’d like to be and their schedules are crazy.”

    My schedule ebbs and flows. I’m in a procedure based outpatient practice 90% of the time, so we have some days where I’m stenting cold legs and blocking fibroid uterus’s for 16 hours, and some days like today, where I zapped a couple veins and will probably head home in an hour.

    “Riz, I understand you’re being humble saying you make a ‘decent’ wage but you make a fantastic living. Just don’t fritter it away like many doctors who have to work until their 70’s to make up for the money they spent in their 40’s.”

    Absolutely agreed. I’m still new to it though and not trying to get too carried away. HD , 40k a year in child care is a lot for not having a nanny, isn’t it??

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  81. “Where are you going? And I hope you’re in biz at least.

    I don’t buy S or turbos but travel is the one expense that has really scaled up”

    It’s my first year having substantial vacation ( 9 weeks! ) so were taking two weeks and doing Tokyo / Kyoto and a pit stop in Thailand on the way home..pretty psyched about it!

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  82. Still flying coach FYI…I figured I’d grunt and bear the coach trip and have more money to spend on a nice hotel and food / experiences. I can’t quite get myself to spend for business or first class on an international trip…wayyyyyy more expensive.

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  83. Child care and personal responsibility are why people who make say $300-$400k or so don’t feel “rich”. When you are in that income bracket, you make good coin, but a lot of it is just going out the door to fund retirement, college savings, and child care. Not too mention a lot of these folks having a ton of student loans.

    You aren’t on a budget or feel broke, but you certainly aren’t living large. You may not have a budget or worry about a few hundred bucks here and there but you definitely aren’t poppin bottles with Jay Z.

    Sure, you don’t get any sympathy from the true middle class, but it is a bit of a stretch to call these people rich too.

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  84. Riz – In the city northside daycares are $2000-2500/month. For one child I’ve found nanny shares are the cheapest option, then daycare, then a full-time nanny. If you have more than one child a nanny is the cheapest option. Although most families with nannies also pay for enrichment classes, camps, etc. for the children or at least the older child. Personally, I am hoping to that public school works for us so we don’t have to continue paying $25-30K per year.

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  85. “Still flying coach FYI…I figured I’d grunt and bear the coach trip and have more money to spend on a nice hotel and food / experiences.”

    http://www.luxeat.com/blog/7-chome-kyoboshi-expensive-tempura-world/

    Go here or some good tempura place. Seriously.

    “9 weeks!”

    I hate doctors.

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  86. Haha, DZ have you been? I’ve made reservations for some sushi spots and have a walk in ramen shop on the list , don’t know much about tempura.

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  87. “Haha, DZ have you been? I’ve made reservations for some sushi spots and have a walk in ramen shop on the list , don’t know much about tempura.”

    Not that one. Have been to place below and similar. Since I was spending all the money you’re saving from coach I searched for most expensive.

    It’s an experience that you can’t remotely have in Chicago or US generally (though I think there’s a decent place that opened in NYC), as opposed to ramen and sushi where yeah it’s better there but the gap is closing. And it’s really delicious as opposed to kaiseki, the finer points of which are lost on my ignorant self.

    http://www.tinyurbankitchen.com/tempura-kondo/

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  88. ” If you have more than one child a nanny is the cheapest option. ”

    I don’t if its the cheapest. An american born nanny like english Mary Poppins ain’t coming for $40k a year for 10 hours a day. That’s why I prefer the reliability, and the socialization of day care. I take my kids out early in the day quite often without notice, and they’re always open. Thank god the public schools are halfway decent so in 5 years I can actually start saving some $$$.

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  89. “I don’t if its the cheapest. An american born nanny like english Mary Poppins ain’t coming for $40k a year for 10 hours a day. That’s why I prefer the reliability, and the socialization of day care. I take my kids out early in the day quite often without notice, and they’re always open. Thank god the public schools are halfway decent so in 5 years I can actually start saving some $$$.”

    You can’t dismiss your nanny early?

    Name one person of consequence in society who went to day care.

    This may be duplicate comment.

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  90. “Name one person of consequence in society who went to day care.”

    I believe that “people of consequence” call it “preschool” rather than “daycare”.

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  91. HD has a point about the Nanny –

    English speaking ones cost a fortune.

    There are plenty of really wonderful primarily spanish speaking and polish speaking nannies in the city – My sister in law has a live-in spanish nanny who doesn’t speak english , but is great with the kids. Her kids are getting older now and speak a lot more spanish at home than english, and even when her son points out things like a garbage truck, he says ‘basura truck’, not ‘garbage truck’. There can be an argument made that this is a good thing, but i’m not sure if it’s what I’d want. That and she also has a hard time communicating with the kid’s teachers, cross guard, people at the grocery store, etc..Which can be problematic.

    As far as daycare goes – HD how good is it? I know of some ‘high end’ ones in the city that are supposedly great, but I hear not so good things about your typical ones.

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  92. Well, everybody at the local child full day preschool facility in town (aka daycare) pulls up in an audi, bmw or mercerdes, and they seem to come and go at all hours, so professionals with flexibility. The big difference b/w nanny/stay at home vs. preschool is that by the time they get to kindergarten, the socialized kids are far more advanced. That gap narrows considerably by third grade or so but there is a huge difference.

    As for speaking spanish, it’s not really something that’s going to help the kids in the long run. They just end up speaking two languages poorly rather than one language well. And professionally, unless your child wants to work in underserved environments, it’s not going to help them either.

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  93. Day care terrifies me. A coworker’s grandchild choked at a day care and ended up with severe brain damage. I’m not sure if I could ever be a parent. I have way too much anxiety. I know the horror stories are rare, but when it happens to someone you know, on an emotional level, it feels common.

    I have a few friends now where one of the parents stays home. All of my friends who now stay home had planned to go back to work, but decided that they loved being home with their kids, so didn’t go back. If your partner is making less than $100k a year, it makes financial sense for that person to think about staying home. The idea of spending nearly $4k a month on childcare sounds overwhelming to me as someone who is making a bit under $100k. This is why I still count myself to be in the lower middle class despite making an above average salary in Chicago.

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  94. Hey, Nimesh, what was that again about a Chicago city income tax??

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  95. Au Pairs are a very reasonable option for more than one kid. Just have to have an extra bedroom.

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  96. Lol Tone,

    a very close family friend of ours was caught cheating with his Au Pair, so that option is definitely out the window, haha.

    I’d change the salary number to 75. If your spouse makes less than that, no point in spending 3-4k a month on day care. That being said, My wife and I both would go CRAZY staying at home all day and being a homemaker. I don’t think you can always put a price tag on sanity.

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  97. “Riz, I understand you’re being humble saying you make a ‘decent’ wage but you make a fantastic living. Just don’t fritter it away like many doctors who have to work until their 70’s to make up for the money they spent in their 40’s.”

    Doctors are the worst stock investors of all the professions. They have the god complex and it’s awful for investing. Also, because many of their friends are also in the upper middle class, they feel the need to “compete” materialistically on house, car etc. Most make a lot of money but never accumulate much wealth.

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  98. “For the love of God Sabrina! You still do not get it don’t you? Our state and city is making life hell for businesses. Make it too hard for them and they will move with their feet. Right now we are in a death spiral. We are losing both population and businesses. This is not rocket science.”

    We’re actually not losing businesses. More are opening than ever before. Tech is booming. Drug business is booming and manufacturing has recovered and is at multi-year highs.

    It’s not really “hell” for businesses here – at least compared to most states. Businesses are always looking for an educated work force and that’s what Chicago has. There’s a reason Caterpillar is moving to the Chicago area, ADM has moved here from downstate (they could have left the state completely), other tech companies have left the Bay Area and moved here etc.

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  99. “southern Florida.”

    There’s no “tech hub” in Southern Florida.

    Ha. ha. ha.

    That’s a good one.

    You know what- many businesses need a great international airport. Many of the areas you mentioned don’t have that. It’s a huge selling point for Chicago (and a reason to continue to try and expand the airport.) Many multi-nationals have come here because you can easily get to both Europe and Asia. Try getting anywhere from Austin or Raleigh.

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  100. “They have the god complex and it’s awful for investing.”

    That’s a pretty antiquated view of physicians – you’re showing your age Sabrina! Most physicians in my age group don’t have a god complex – far from it, they are pretty beat down from administrators, insurance companies, long work hours, and for most of them, dwindling pay.

    I agree that docs are historically terrible investors. I don’t have time to become good at the stock market or investments so I leave it up to a professional. This probably costs me in the form of fees etc, but it’s a safe bet. I also don’t invest in any “great” investment opportunities presented to my by cousins, college friends, etc. playing it safe.

    For any other docs on here I’d suggest reading “white coat investor” , shines light on a lot of issues docs face in finance – mostly “keeeping up with the joneses” and spending too much too soon.

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  101. Jenny / Riz – One thing to keep in mind in terms of childcare is the trajectory of earning potential vs. childcare costs. Take a daycare setting. Childcare costs are highest for an infant because the state mandates higher teacher to child ratios. Costs drop as the child gets older and the ratios change. Even with a nanny/au pair, if you choose to send your child to public school costs decrease when that child becomes school-aged. Theoretically, your income will increase over time. Having a spouse drop out of the work force because they’re “break-even” for a given year can be extremely short sighted.

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  102. “I agree that docs are historically terrible investors. I don’t have time to become good at the stock market or investments so I leave it up to a professional. This probably costs me in the form of fees etc, but it’s a safe bet. I also don’t invest in any “great” investment opportunities presented to my by cousins, college friends, etc. playing it safe.”

    You are getting this part right. Just matching market returns is the way to go if you’ve got at least a few decades of mid six figure income ahead of you. For you the utility gained from beating the market is negligible compared to the utility lost in some nightmare scenarios.

    As for your spending habits, I highly recommend working backwards and starting with a reasonable number you think you should save in a given year. After this you can fill in the blanks as far as what you want to spend your money on.

    Saving anything less than 20-25% of your post tax income is an egregious amount of overspending for a 32 year old with your income.

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  103. “Theoretically, your income will increase over time. Having a spouse drop out of the work force because they’re “break-even” for a given year can be extremely short sighted.”

    I told my spouse that if she quit her job there would be a line of interviewees two blocks long waiting outside her office. She would never be able to get her job back when she returned to the workforce. While it seems ideal to stay at home with crying kids all day, it’s also difficult and less enriching for both the mother and the child to watch sprouts all day long or to have playdates a few times a week in the neighbors basement. We’ve got a win-win situation going on right now in my household, even though it’s pretty darn expensive.

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  104. Woah – I’ve been to Kondo in Tokyo! It is amazing and I agree w/ DZ – you can not replicate it in the states while the sushi / ramen gap is closing. If you go to Kondo get the sweet potato. The chef gets all his veggies fresh daily from foragers who get it that morning. Two other food experiences that are still much better in Japan vs abroad are tonkatsu (breaded fried pork) and shabu shabu. I recommend going for lunch.

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  105. “Woah – I’ve been to Kondo in Tokyo! It is amazing and I agree w/ DZ – you can not replicate it in the states while the sushi / ramen gap is closing. If you go to Kondo get the sweet potato. The chef gets all his veggies fresh daily from foragers who get it that morning. Two other food experiences that are still much better in Japan vs abroad are tonkatsu (breaded fried pork) and shabu shabu. I recommend going for lunch.”

    c’mon riz, you gotta go. and agree lunch is often a good deal. don’t remember kondo specifically but lunch is often considerably cheaper and close to, if not same, as dinner experience. and if you do it while jet lagged can feel like dinner.

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  106. Riz: Re Tokyo – I rec ‘Ninja Akasaka’ if you can get a res. Imo it wasn’t a typical themed restaurant. Food was excellent, atmosphere was very, very cool & an extra wow factor came from ninja magicians performing tricks at table, impressing very skeptical me. Didn’t see other tourists maybe b/c it was March/ off season.

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  107. Got the wife working on the Kondo res –

    What kind of food was at ninja akasaka southbound?

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  108. ‘Ninja’ had wide array of options ranging from multi course ‘set meals’ to ala carte family style which we did – we had 8 or 9 courses including exc. sushi, stone heated soup, great salmon, Wagyu steak… Had good wine list too. It was all excellent. At magician’s 3rd visit to table he emphasized his very un-Japanese like willingness to accept a tip and then exchanged from his headband a receipt already made out for exact amount of folded cash tip we gave him – maybe cameras nearby? Whole experience starting w/ walking thru dark ‘ninja village’ tableau to JPN old school fashion individual cordoned off table areas where we sat in on floor cushions w/low table was very cool imho.

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