About once every couple of years, a Financial Samurai post goes a little nuts on the internet. Recently, Twitter got a hold of “Scraping By On $500,000 A Year: Why High Income Earners Can’t Escape The Rat Race” and consumed it like a rabid dog shaking a rag doll.

I first started noticing Twitter activity Friday morning, March 24. Overnight, it seemed, about 500 new tweets of the post had appeared. By Monday, March 27, the tweet count had risen to a whopping 40,000+! What the heck was going on?!

Apparently, the internet found the $500,000 a year couple’s budget so absurd it started poking fun at the post. Some say my chart has even reached meme status. Well pinch my nuts! I get to check off another bucket list item before I croak.

The budget I originally posted is actually a real life couple’s budget shared with me to share with you. Their budget has been corroborated by hundreds of other couples and individuals making similar incomes while living in an expensive city like NYC, SF, London, Paris, LA, and Hong Kong. Financial Samurai already gets over 1 million organic pageviews a month, so it’s easy to gather feedback. Just check the comments on the post to see for yourself.

Here are some points I wanted to make from the post:

1) It’s not what you make, it’s what you keep. Without discipline, it’s easy to spend everything you earn. Lifestyle inflation is the biggest culprit for why folks never feel like they have enough. It’s not just the cars and houses that people compete on, it’s also the schools parents want their children to attend. Hopefully, the post encourages everyone to take a hard look at their own finances or if they haven’t already done so, create and monitor their own budget. “If you can’t manage it, you can’t improve it.” – Peter Drucker.

2) High income comes with high costs. Yes, it’d be nice to earn big bucks living in the heartland of America, where I’m bullish, but in the heartland, those high income jobs are harder to come by. If one shouldn’t spend any more than 3X – 5X their gross income on a home, how much does one have to make in order to afford the $1.2M median home price in SF or NYC?  Answer: $240,000 – $400,000 AFTER coming up with a $240,000 downpayment. Unfortunately federal income taxes adjust based on income amounts and not on the costs for living.

3) Think about geo-arbitrage. Technology and the internet are allowing people to untether themselves from an office. Find companies that allow you to work remotely in a lower cost area. You might not get to relocate to Bali, Indonesia, but there are plenty of fantastic cities that are much cheaper than NYC, SF, LA, Boston, and Washington DC. I’ve interviewed several CEOs in SF and they all say that given SF’s tight labor market and high cost of living, they are hiring more remote workers. Better yet, have your own internet-based business. Take advantage of the best technological shift in history.

4) Save and invest often over the long run. There’s great value in maxing out your 401k and building home equity over time, even if you have very little left over. According to the Bureau of Labor Statistics, only about 55% of the American workforce has access to a 401(k) and only about 38% of the total workforce participate. Doing some low level math, that means roughly 31% of those who have access to a 401(k) are not participating. I strongly believe that over time, home equity is one of the major reasons for a widening wealth gap between home owners and renters. Find a place you know you’ll be for the next 10 years and try and get neutral real estate by owning your own place. Of course, be responsible with your purchase.

5) Ask what it’s all for at the end of the day. I know plenty of high earning people who are not happy because they are stressed at work and can never spend as much time with the people they love. Not only that, they know the work they’re doing isn’t really helping society so they feel they’re selling their souls. They can’t leave due to an unhealthy desire for prestige, money, and power. Realize there’s a wonderful life beyond just making lots of money. Seek your happiness before you look back on life full of regret.

I realize it’s only human to judge others, even if we’ve never walked in their shoes. However, simply judging others does nothing to improve our own situations. Therefore, let’s do our best to approach things with open minds. With open minds, progress can be made.

Financial Samurai has always been about finding solutions to problems. I’d like to provide an optimized budget for this $500,000 couple. I’ll conclude by highlighting some interesting observations I’ve made about the public’s reaction to my original post as well. 

Every time I’m waiting in line to deposit a check at a bank, I wonder what the hell is taking so long. Who are these people with huge envelopes full of cash? Why does the elderly lady always have to argue with the teller about why her ATM card isn’t working? What are tellers thinking when they see massive bank accounts from punk kids? I’ve invited a blogging buddy to share his insights. Enjoy!

RAARGH!!!! I’m ARB, the Angry Retail Banker!

Over at my blog, I offer “An Insider’s Take On Retail Banking.” But today, I’m going to talk about people instead.

People. The general public. The customers who bring us the moolah. When you work with them and their money, you get to know them a bit.

I’ve been in banking for ten years. I’ve seen and dealt with people from all races, religions, and socioeconomic classes. And when you work in retail banking, you start to get insights into how people work.

Money is the most powerful force in the universe, right up there with gravity, compounding, and bacon. It finances wars and it finances dreams. Having it can buy you freedom and your life; the lack of it can make you a slave to strangers. People’s relationship with their money is very complex, and nowhere does a person interact with their money more than at a bank.

Because of this, you can learn a lot more about people when working in retail banking than most other places, because a few numbers on the screen can tell one hell of a story if you take the time to read it.

Data by the Federal Reserve Bank of St. Louis (FRED) reports the national average on non-jumbo money market accounts deposits (i.e. less than $100,000) is a miserly 0.08%. It’s only marginally higher for jumbo deposits at 0.12%.

CD rates have also plummeted. The current national rates for CDs are only 0.22% for 1-year, 0.49% for 3-year and 0.78% for 5-year. That’s a far cry from the 4.1% I’m currently receiving for a 7-year CD that is finally coming due in March, 2017.

Given the low rates, investors have bid up income producing assets such as rental properties, REITs, and bonds. Stocks have certainly been a beneficiary as well. The question on every investor’s mind now is: how much have income producing assets risen due to fundamentals versus a Fed-induced frenzy?

Are you conflicted by how much time and money you should give to help other people because you aren’t financially secure yet? Because you feel fortunate, do you feel guilty for not giving more? Welcome to the club!

In my 20s and early 30s, because I was getting beaten by a stick at work, I struggled with giving generously. The more I gave, the longer I would have to work in the salt mines. Of course I participated in various volunteer and giving activities through work, but I didn’t go out of my way to give much more. Instead, I told myself to hurry up and make “enough” money so I could help more people later.

How much of your time and money to give is a personal decision. Don’t let anybody judge you for what you decide. There are countless people who despite having never walked in your shoes will say you should have done this or you should have donated that without doing anything themselves. Ignore them.

If you can’t donate any money, consider donating some of your time. If you can’t donate time or money, then work to get yourself in the best possible financial shape so that nobody will have to take care of you. After all, it’s always best to put on your oxygen mask first before helping others.

I have trouble spending money on things I don’t need because I extremely value the freedom money buys. After enjoying complete financial freedom for the last four years, I NEVER want to be forced to go back to work for money again. Once you have financial freedom shooting through your veins, you’ll do anything to keep the high going!

At the same time, I struggle finding a proper balance between my earnings and my spending. To earn money is why we wake up at 5am, commute in painful rush hour traffic, tolerate micromanagers, work 80 hours a week, start a business, ignore our spouses, neglect our kids, and do all sorts of other selfish things. Thus, if we sacrifice so much, surely we are entitled to spend a portion of our earnings on things we don’t need.

To overcome spending dysfunction, I’ve come up with a no-brainer ratio to help people spend responsibly. Let’s just call it the Financial Samurai Responsible Spending ratio (FS:RS).