Financial Disconnect Or Financial Awareness?

When we're born into this world, we don't have a clue what money is. Thus, we all start out with a financial disconnect that's due to a lack of awareness. But, over time we're taught the value of money as well as financial awareness.

Financial Disconnect And Picanha - Best Brazilian Meat
Just order picanha and skip everything else!

But even as adults, some people still suffer from financial disconnect. Some people waste their money away yet still criticize how other people spend theirs. Others think only their way to invest is the right way, and the way everyone else invests is wrong. When it comes to money and people, financial disconnect abounds.

I thought about this recently with an interaction I had with a friend of mine. One of my new favorite restaurants in San Francisco is Espestus Churrascaria. The restaurant serves good old fashion Brazilian meat that is more tasty than some of the finest dry-aged rib-eyes. Ever since visiting Rio de Janeiro in 2006 during business school, I've been craving to eat some Picanha (rump cap) until finally my best friend took me to Espestus last month.

Financial Disconnect Abounds

After going without picanha for eight years, I wanted to return just a month later. Perhaps one of the main reasons why I never went was because of the cost. At $74 a person after tax and tip for food alone, Espestus costs a pretty penny!

Instead of just going with my friend the second time around, I asked her if she'd like to invite another couple friend of ours to make it four.

Here's her friend's text response: Too expensive!

Espetus is surely an expensive place to eat, but our friends are in their late 30s, rent a $3,700 a month apartment and drive a 2010 Porsche Cayenne. The husband also has a $10,000 motorbike.

Here's my text response to my friend: Ask them anyway. They drive a Porsche that costs literally 15X more than Moose!

She texts back: OK, I'll see. 

Who Is Out Of Touch With Financial Reality?

My friend knows this couple better than I do. I'm absolutely sure the husband makes more money than my friend given he's seven years older and is a hardware engineer in Silicon Valley. His wife is currently working part-time in retail, so probably doesn't make too much. Perhaps my friend was just thinking of her instead of looking at their entire financial package. My friend is a very frugal and kind person.

I'm a very analytical person when it comes to assessing someone's finances. I've got a couple triggers that get processed instantaneously. If I see someone driving a $40,000 Porsche Cayenne (he bought it used), I automatically assume the driver makes at least $200,000, if not $400,000 based on my 1/10th rule for car buying.

As a landlord, if I know someone pays $3,700 a month in rent, I assume they make at least $148,000 a year because 40X the monthly rent as annual income is the minimum I accept for tenants (See Pricing Strategy To Maximize Rent). I'm sure many of you have your own quick assumptions about others as well.

Surely a couple who makes $148,000 – $400,000 a year in combined income can afford a $150 dinner for two, no? Putting the situation this way, my friend agreed she didn't think things through. However, she still feels bad asking them to go with us to Espetus Churrascaria for a face-stuffing good time, so she never asked.

Is my friend showing financial disconnect, or am I being financially aware?

Be Careful With The Things You Own

The truth of the matter is, my friend is more right than wrong. It's unlikely the couple have a lot of savings given the old company the husband worked for went under. The wife has been out of steady work for two years and $3,700 a month in rent for a one bedroom is expensive. They just like their toys. Good on them for spending on what brings them happiness. They are a very generous couple who are very fun to be around – hence, why I asked my friend to invite them in the first place.

I've just got different financial values than them. For example, I personally would never spend more than $2,000 a month on rent. The day I needed to was the day I bought my first SF property back in 2003. Because they do spend so much on rent, I automatically think they are decently wealthy. Therefore, I assumed they can spend freely on food, which is something I don't mind paying up for.

The things you own allow your friends to paint a financial picture of who you are. I always want to anchor low so that I have the choice to spend up if desired. To anchor high would surely be bad for my finances as I'd hang around with wealthy people who think nothing of $75 dinners, $200 shows, $500 hotel rooms, and $8,000 business class tickets overseas.

They would automatically assume that I can afford everything because of my things. If I show any unwillingness to pay, then I'll be deemed as “cheap.” And there's little I find more annoying than when rich people call me cheap.

Turn Financial Disconnect Into Financial Awareness

I encourage everyone to err on the conservative side of spending on things which can be seen by others. When I owned a used BMW M3 coupe as a 27 year old, I wanted to naturally buy a fancy racing watch like the stainless steel Rolex Daytona ($10,000 back then).

Now that I drive a 14 year old Land Rover, I'm just happy if my dashboard clock doesn't go out! Spending begets more spending thanks to your own desires, and thanks to the assumptions made by others. It's not someone's fault for thinking you make more than you really do when you've got a lot of fancy toys.

Avoid the negative spending trap as much as possible if you want to grow your wealth. And if you're already wealthy, well then don't forget to treat your less wealthy friends out for all-you-can-eat picanha!

Further Reading

Readers, is my friend showing tremendous financial awareness or financial disconnect by saying the couple can't afford to eat with us? Am I overly simplistic in my financial assumption of others because I believe everybody is rational? How do you balance going out with friends who have much different financial wealth than you? Do you think it's natural for other people to guesstimate your financial health based on the things you own? 

Related: Are You Delusional? Don't Let Dunning Krueger Ruin Your Life

54 thoughts on “Financial Disconnect Or Financial Awareness?”

  1. My wife and I save more than $150 a day on average, and we’ve never spent close to $150 on a dinner for the two of us – and wouldn’t unless there were a very good reason or we just wanted to see what all the fuss was about. We can afford it, but “too expensive” still applies.

  2. Thomas @ i need money ASAP!

    Couldn’t imagine why it would be a problem to at least ask your friends. Especially if you’ve been out to $75pp dinners before. It’s up to them if they want to spend $150 on dinner or not. I don’t think it’s fair for someone to decide for them.

  3. My wife and I love cars, we owned a 100k sports car and a 60k SUV, I worked in technology company for 15 years and my salary is 100k/year and my wife makes about the same. And we do go out with friends to spend $200/couple for dinner. Brazilian meat is one of my favorite.

    In the eyes of some of my friends and colleagues, we are considered over spenders, since most of them were my ex colleagues and college friends in the similar fields and position.

    However, we owe nothing (debt free) on the car and house since we paid it off long ago. We did it by starting a side business when we were young and now we have 4 employees and the sales is about 1.3m a year with 40% gross and still growing, we also have a couple rental properties that paid off, giving us about 5k/month.

    I do get comments from colleagues like ‘The car payment must be expensive.’ ‘You shouldn’t spend so much on cars and save more.’ ‘Your wife must make alot of money’. One of my managers even told me ‘You need your job, so you can sustain your lifestyle.’ I usually just nod and smile at their comments.

    My point is that people who think they know you judged you the way you spend your money. Just like your friend Sam, she thinks that the meal is too expensive because they drive a nice car and live in an expensive place.

    People like to compare themselves against others they know and some have this mentality, “If I can’t afford it, how can he/she?” or “I’m better off, because I’ve savings and he/she does not.”

    1. Jay,

      I was thinking about that too. But, then I re-read Sam’s post. It looks like the husband has recently started working for a new company. His old company went out of business.

      The wife hasn’t had a full time job for two years and now is working part time in retail. Sounds like financial stress.

      What is not indicated is how long the couple has been renting this particular apartment. Whether it is subject to rent control. Why they choose to live in this location (safety, commute, etc.). Why rent a one bedroom? Were they already renting this place while the husband worked at the previous company. Etc.

      Nothing really wrong with owning a Porsche. Or a motorcycle. Or whatever. It just appears to me, that this couple may have fallen into financial stress and are still trying to recover. And maybe in a few years, they might just be fine.

  4. If everyone were reasonable and responsible, there would be no credit card debt. Everyone would save for retirement and live within their means. Way too many people do what makes them happy at the moment which generally means they spend their money in a variety of ways without having any savings.
    Eventually, you will surround yourself with friends that have similar goals and wealth. That still does not mean that they will want to go to an expensive restaurant with you. I still reserve those occasions for special events with my wife and family.

  5. No Nonsense Landlord

    You have to analyze what an expense is, vs. an investment. A car is an expense. If one chooses to drive a less expensive car, you can have more of the things that you enjoy. A car just gets you here and there – and impresses your colleagues.

    I would rather a good meal. Of course, even as a business write-off, $74 per person would make me flinch…

  6. Ryan @ Impersonal Finance

    I don’t think it would ever hurt to ask. People, even the most aloof ones, know what images are being presented by virtue of their clothes, cars, and home. These are choices that are made, whether it be a conscious decision or not. You would think downsizing would be a consideration if someone was struggling, but I’ve learned over time that people don’t like to move down, only up. As for me, I shop for used clothes, drive an old car, and people know these things. I rarely discuss how (decently) well we are doing financially, but like you, I hate being labeled as cheap, especially when I would call it “smart.” My finances have priorities, and basically those are experiences (including fine meals) over depreciating assets/toys. But, to each their own, right?

  7. Despite the fact that we are basically the only “savers” out of our group of friends, we have the least amount of nice stuff. Our friends are always spending everything they have and then some, even when it’s clearly not in their best interest.
    I like what you said about “anchoring down” when it comes to your monthly expenses. I like to do that as well. I can choose to spend more if I want to as long as my expenses are low. If my expenses are high, I literally have no choice. I would not ever pay $3,700 for a one bedroom apartment. I know you’re in SF, but that’s insane!

  8. Bryce @ Save and Conquer

    It may be natural for others to guesstimate your wealth based on the things you own, but it is very typically incorrect. The couple you talk about may be just scraping by, or even going into debt just to pay their expensive rent. Many big spenders are not necessarily wealthy. They are just doing what they can to keep up with some Joneses that have impressed them. My wife and I are at a point in life where we do not care what others think about our wealth. If we want to have fun with other friends who do not make as much money as us, or who might make more, we invite them over for dinner and have a nice time. We certainly do not ask them to join us at a resaurant where the cost is in the vicinity of $75+ per person.

    1. Hence, you would vote that both my friend and I are demonstrating financial awareness. For a couple with such spending habits, I see no problem if they spend $150 for a night out for two on dinner with friends.

  9. Maybe the couple with the $3,700/month rent payment doesn’t like to spend a lot of money on dining out or they’re trying to eat very carefully (and know they can’t get $74 of value out of a reasonable quantity of grilled meats!).

    They might like to spend a lot of money on a swank pad and a sweet ride. Whether they enjoy the aesthetics of luxury housing and luxury transportation or they want the nice apartment and car to appear wealthy externally, who knows? And who cares.

    Your friend might know the couple well enough to judge that they would be very unlikely to go out to eat, and it might cause all three of them discomfort when the couple responds they can’t go.

    In my case, my close friends know well enough to avoid inviting me to a $50+ per person restaurant, since I would probably decline or suggest an equally fun but better value proposition (the $8 cheese steak place or $10 taco joint perhaps). They probably know we could afford to eat at the $50/person place every meal for the next decade, but we’re pretty tight with money when it comes to dining out. However they might invite me on a month long journey somewhere crazy, because they know I don’t mind dropping some dough on awesome adventures.

  10. Maybe your friend wanted to go out to dinner with just the two of you. Are you one of those guys who are completely oblivious if a girl is into them?

  11. You know what? Your post harked me back to the days when I was still in my early twenties figuring out what exactly I wanted from my life. I clearly remember how I used to listen to my seniors talking about their finances and tried to implement similar financial plans. Once I was listening to my aunt ruing the fact that they were still unable to set up their own house as they didn’t bother much about saving up when it came to food. Her son (my cousin), on the other hand exclaimed, “It’s ok mom..I can’t really sit down to think about savings when my friends are going out to have a Malibu shot at a bar..I’m happy that way…” I quite agree- different people have different financial priorities.

  12. Am I overly simplistic in my financial assumption of others because I believe everybody is rational?

    Yes you are being overly simplistic. I can remember a several decades back bringing home about $700 every 2 weeks after taxes and renting a 1 bedroom apartment for $500/month, and that was only putting 3%/yr away for retirement. I didn’t go to another standard apartment for $600/month, and soooo happy that I didn’t waste that money.

  13. Going out in groups can get weird sometimes. I had a group of friends I used to go out with who love to drink so the bills would get really high. The bill would always get split evenly even if I hadn’t ordered any booze and while I always paid my portion it got old after a while so I stopped going. It’s hard to know what your friends would decide to do but they could always decline if they felt it was out of their price range. If you still want to consider going you can ask in a way that they don’t feel put on the spot or obligated to say yes.

    1. Now THAT can get pretty annoying quick given how expensive going out to drink is.

      I would just start my own tab if I wasn’t a drinker. Would be a shame to no longer hang out with your friends for drinks.

  14. I think it’s pretty easy to send an email saying, “Hey we’re going to this place for dinner at this date/time. Here’s a link to the menu. Want to meet us for dinner?”
    Then the ball is in their court. You made no presumptions on their income, and they are able to decide if they want to spend that much on dinner.

    Another good option that we’ve instituted with close family/friends who live near us is that whoever invites/picks the restaurant pays for everyone. Inviting is pretty even all around (though I doubt anyone is keeping a score sheet), so I think it balances out for the most part.

  15. In my group of friends, all in grad school or recently working, I think myself and two other friend are the high earners ($75K+). Even being one of the higher earners, I am definitely very frugal and don’t see the value of going out to a club/bar for someone’s birthday to hang out and socialize… especially when it costs $10 in taxi fares (low estimate if I can share a ride), $0-10 cover charge, and then $25 for drinks (2 for me and 2 for others total… again, a low estimate). Even on a low key night when I don’t get too crazy, that’s at BEST $35.

    Different priorities though. I still go out once in a while, but definitely would not enjoy going out every Fri/Sat. That’s easily an extra $140/mo if I went out once a week on just drinks!

    I also have a friend who rags on me for not upgrading my car (which is a used 2008 Acura with 90K miles). I don’t drive a ton and right now I don’t have a car payment. I prefer it that way as long as it doesn’t start giving me problems.

  16. It is churrasco! Obviously I would go, though I would first see if there are any discounts. On our annual trip to visit family we go to Tucanos in Orem, Utah for our birthdays’. But since we are part of the birthday club we get a BOGO deal. Ah just thinking about it makes my mouth water.

    Anyway the only way to know what their response would be, would be to ask. So everything now is just speculation. I mean if you looked at me bringing my lunch every day, driving a ’07 Corolla, living in a smaller than average home for family size, doing my own yard work around the house, only a single vacation a year (to visit out of state family) and rarely going to after work activities you’d think that you couldn’t invite us because it would be too much. But you’d be wrong as I bring lunch to finish yesterday’s dinner, just care that the car gets from point A to B, the house has acreage and we can always increase the room later, I like doing yard work with the kids when I get home, and my work schedule is an early riser so most activities are held long after I have clocked out.

  17. $150 for dinner adds up if your friends want to go out every week or you have multiple sets of friends wanting to go out all the time. You’re talking 600-1200 per month to feed yourself on the weekend if you do that 1-2 times a week.

    I have friends who invite me to expensive dinners that I turn down even though I could afford it. It just seems like kind of a waste. For that much money I could have quite the feast at my place and I’d enjoy that much more. Then again it doesn’t sound like I have as much money to burn as these guys.

  18. Sam,

    How come you didn’t offer to pay for everyone? For $500.00 you could have wined and dined your friends, and had most likely an enjoyable evening. If they felt the need to reciprocate, tell them burgers on the bbq with a cold beer.

    P.S. Since you wrote an article about this you could also have deducted half the meal as a business research meeting.

    Thanks, Bill

    1. I think you’re right. I should.

      Perhaps it’s b/c I hosted a Super Bowl party at my house and paid for all the food and drinks. I told them not to bring anything, and they didn’t.

      So instead of treating them again, we would just go Dutch. But again, it wasn’t me who didn’t end up inviting them, it was my friend. We may still go!

  19. I’d probably try the place at least once to see if it’s good. We prioritize good food over cars and apartment so we’d be willing to try. I’d be surprise if a Porsche owner decline a good restaurant based on cost. I guess everyone’s priority is different.

  20. This post doesn’t seem to be entirely about enjoying friends over a nice dinner.
    1) you ask your best friend to invite a couple to dinner
    2) she declines with a reason (which may not be the real or entire reason(s))
    3) you question her reasoning, and repeat the request
    4) your best friend does not honor your request
    The experience sounds very nice. But if the primary goal was to enjoy the company of these friends with your best friend, and your best friend’s objection was to be met, a lower cost option could have been presented. Asking your best friend to make the invite insulates you; would you be willing to call these friends and ask? How about a cheaper alternative, to respect your best friend’s judgment? People like to feel valued, and when the experience is the primary objective then by default, the people are secondary. Is ‘cost’ the real issue?

    1. Cost is an issue and the analysis of how people view costs because I try and utilize life experiences to share stories on this site.

      I wonder if there’s a Chucky Cheeses around here.

  21. The First Million is the Hardest

    I think you’re probably being a little overly simplistic in your assessment, because we know most people aren’t as financially rational as they should be. Maybe your friend knows the couple a little better and has a better grasp on their true situation?

    My group of friends is very diverse financially. There are some how make over $250k/yr and others who make 30-40k/yr. It’s never really been an issue in our group as we know we all have different financial situations and try to take that into consideration when we decide when and where to get together.

    1. I would prefer to hang out with friends who make less than I do. Not because I need to feel like the winner, but so that I never feel like what we do together is excessive. I’m very frugal and don’t get the same enjoyment out of some things that others do (namely, going out to clubs/bars). Strangely, I get a kick out of pre-gaming at someone’s apt and then only buying 1/2 drinks while I’m out. Saving money is like a “win” for me… even though I don’t need to be so frugal.

      Maybe I’m just competitive in being the most frugal :). It’s definitely something I would love to be in 1st place.

  22. Nice modern take on the Diderot effect for your own spending.

    Some folks care more about stuff than experiences and find that spending on services (such as restaurants) takes away from their ability to buy status items. It just depends on where you personal values lie.

  23. Just as it’s possible for the financially wise to practice “Stealth Wealth”, Sam, it’s also possible (albeit, often a bit harder) for the financially profligate to project a Fake Financial Facade; it’s just a question of “how long can they keep it up?”

    Of course it also could be about priorities. Your friend opined that the restaurant was “Too expensive for them”, possibly because she understood their priorities better than you did.

    You wrote, “I’m a very analytical person when it comes to assessing someone’s finances.” But your own Stealth Wealth technique should tell you that a surface level assessment can’t necessarily be trusted. Of course, some degrees of wealth absolutely cannot be faked (private jet, anyone?). But in the mid-range it seems there are a lot of folks who can put up a great front, while beneath the surface their legs are churning madly to keep them afloat.

    (I will say that in the City, $3,700 for rent isn’t necessarily a “luxury” at this point! The vehicles, on the other hand— no excuse for that if they really are on the edge.)

    So no, not everyone is as rational about money as you (and most of your readers) are.

    I have this conversation all the time with my friend who shares my fiscal frugality. I’ll fret about seeing “everyone else” appear to have “made it”, with the house and the cars and the trips, etc., whilst I trudge along saving and saving and saving and still unable to buy a house in this crazy market. Invariably she says, “Yes, but you don’t know what things look like behind the houses and the cars. An awful lot of people carry an awful lot of debt, and they’re not saving anything.”

    People seem to think that increased income automatically gives them carte blanche to upscale their lifestyle. The smart ones keep the old lifestyle with the new income, and reap the benefits long term. It is very much about priorities.

    1. Sadly, $3,700/month isn’t exactly luxury living, but their place is pretty nice for a one bedroom. For a two bedroom, $3,700/month is VERY average.

      I generally always give people benefit of the doubt when it comes to their wealth (believe they are wealthier). It lends for a better attitude, and keeps any hint of arrogance at bay.

  24. Everyone makes judgments and assumptions based on the material wealth people display. My wife does this ALL THE TIME and I’m always quick to caution her that doesn’t necessarily mean they’re really that well off. Lots of people spend everything they earn or, worse yet, live on credit. It’s not just what property they rent or the type of car they drive, but also the fancy vacations, nice clothes, etc. People live paycheck to paycheck – even high earners. But, I do agree that if these people “talk the talk” then you shouldn’t hold back from asking them to “walk the walk” by inviting them to a pricier dinner.

    My wife and I will have to keep Espestus Churrascaria in mind. She’s a “foodie” and would no doubt love the place…although it does sound a bit pricey for us!

  25. To be honest, I think you may be overanalyzing the situation to begin with. My thought would simply be to invite them and if they want to come, they’ll say yes. If anything, at least by asking you show that you’re at least keeping them in mind and would like to hang out with them.

    But going on a bit of a tangent on stealth wealth, I completely agree with you on setting the bar low on people’s expectations of you. And I’m not just talking about friends, I’m talking family too. People practically expect you to foot the bill just because you make more than them, and sometimes they’re not even shy about it. Or other times people will just assume you sit around all day drinking $10 mojitos on your time off. Even my fiance’s parents once made a dig at her (and me) as if we don’t clean our own home because we must be hiring a maid service. I guess it’s just irritating to me because we work pretty hard for our money and we try to be mindful of how we spend it so that we can retire early and others just look to us to foot the bill. What they don’t see is that we save over 50% of our income while they’re saving 10% or less.

  26. I think if you look at very wealthy people, not people trying to look wealthy, they save money on everything they can. Most wealthy people got there by working hard, it was not given to them. When you work very hard to get something it is tough to see money wasted on things.

    I do believe it is smart to spend money on things that really make you happy. I love cars, I have a an Aud1 S4 (2010) I bought used, a 1986 Porsche 928 and a supercharged 1991 Mustang convertible. I spend a lot of money on them, but I also don’t go out and buy a new car every three years either. I always shop around to get a deal (I bought the S4 sight unseen from LA and I am in Colorado). I have a nice house, but I waited until that house payment was 10% of my monthly income, not the 28% or more that I could qualify for. I also invest the majority of my income in rental properties, I don’t spend it.

    I think it is crazy that people can make hundreds of thousands and not save anything.

  27. Michael@Save-Invest-Grow

    Your friend is probably right, but ultimately, it comes down to what people value. They may not be able to afford an expensive meal, but its only because they have chosen to apply a large percentage of their income to housing/vehicles. The high rent and expensive vehicles may not be financially sound decisions, but its what they’ve decided they value. Like Geek said above, people aren’t always rational.

  28. Insourcelife

    We are doing well financially but I would also say no to that dinner. They seem to prioritize living in a nice place and driving expensive cars over spending on expensive dinners – that’s their choice and it’s fine. If I were in their situation I would find a cheaper place and get cheaper used cars, but I would still not drop that much cash on just one meal. I would much rather have my friends over and make some shish kebabs over an open flame fire pit in my backyard.

  29. I think that both you and your friend might be wrong in this situation (but you may be a little more right because I think they would join you for dinner). First, I think your analysis of this couple is too analytical (as you say). Yes, they spend a lot on their rent and own a lot of toys, but most people don’t show as much restraint when it comes to their own personal finance. So I’m guessing this couple spends more than your 1/10th rule on cars and probably a higher percentage of their income on rent then you would.

    Secondly, I think that your friends analysis of the your friends might be off too. Yes, the restaurant is expensive, but at the same time, if we apply your analysis, that may not matter to them. They appear to be spending money on what makes them happy, so what’s another night of fine dining with friends. It may not be the best financial decision for them, but they may not care.

    I think that your guess at their financial health is not accurate because most people aren’t as financially savvy as you are. But I think you may have still came to the correct conclusion that they would join you for an expensive meal. Personally, I would normally not spend that much on a meal because I’m not a big foodie, but at the same time since it’s not something I normally indulge in, I would be willing to do so viewing it as an entertainment expense in my budget rather than strictly a food expense. But that’s because I probably only do something like that once or twice a year at best. But if I started going out to expensive fancy meals multiple times a month I’m sure I would have a different rationale. (honestly I couldn’t see myself spending that much that often for something like that)

    1. Zee, I like your analysis a lot. The meal is more than the cost of the food – it’s about spending time with friends and entertainment. Given they are willing to “live it up” with their cars and nice apartment, surely they would be willing to spend $150 for two with friends for an excellent meal.

      I didn’t go for 8 years largely b/c of the cost, and also largely because the good times eating at Porcao with a view of Sugar Loaf in Rio was just so awesome. Surely, the experience and quality of food could not be topped in SF. Well I must say, the food is exactly as I remembered it to be. Just not the view.

      1. Wall Street Playboys

        Off topic but agree with this 1000%. Brasil is the most scenic place in the world.

        Not even into art/photography but at the top of christo/sugar you immediately think
        “I wish I had a panoramic camera”

        This was pre-iPhone upgrade days….


        “There are two men, those that have never been to brasil and those that are trying to go back”

  30. I also just assume not to dinner with people who are so worried about the price of the meal before you even get to the restaurant. Long ago, I realized I hated the process of splitting a bill, and I hate even further asking a waiter/waitress to split checks – unless it is very easy or if they willingly offer to do so. I stopped doing dinner with people who would itemize every aspect of the bill for each patron. Just took some of the fun out of a communal dinner. I always feel like it evens out in the end, or if I know my meal was way more expensive, I’ll offer to pay more. At this point in my life, I just don’t need the after-dinner audit and I generally do not feel like making a server’s job any more difficult, who are almost always great.

  31. Wall Street Playboys

    Your friend example is puzzling.

    Even if he has a high income, generally speaking rich people have rich friends and we peg his income at $250K with his wife at another $40K… That’s only $290K and they are driving two vehicles in San Francisco?

    Parking + a few tickets (everyone gets them in that city) + insurance on a bike is sky high + insurance on a Porsche is sky high + the $40K sticker (declining at 5% value or so per year)… The math doesn’t work.

    At minimum the guy should get rid of the bike. It’s financially irresponsible.

    Even if he simply likes cars more than you personally like brazillian food/nice restaurants the lost value is simply too high to ignore. You’re close to 5 figures on depreciation + parking + gas alone!

    Maybe it’s because I grew up poor but material things don’t really interest me. This is a huge blessing in disguise. I would rather play a heated game of tennis, basketball, soccer etc and spend my money getting physically healthier.

    A fancy watch/car is just going to bring me the wrong type of *friends* anyway.

    It would be cool to rent a lambo once for the experience but owning one? No thanks, the car owns you at that point.

    1. Playboy: don’t rule out the possibility that there is stealth wealth there. I would guarantee that people around me would “guess” that I pull in around $300k/year when in reality my passive income generates significantly more than that. I’m not saying that the couple in the story are loaded, but just because they have a few nice material things doesn’t mean they cannot afford them, or a hell of a lot more for that matter. One of my partners in my main business drives a freaking Buick LeSabre from like 1998…but he has significantly over $10M worth of race horses because that is what he loves (he won’t tell me the real number, but I’d put that at a minimum).

      If you had ALL your bases covered and never had to work another day in your life, why would you not have a nice watch or drive a Lamborghini. Who the hell cares what other people think I say! I think living in San Francisco or New York is crazy and foolish from a cost of living/value standpoint, I love visiting though because they are fun cities! To each their own, but hopefully we don’t judge one persons use of money as better or worse than somebody else’s.

  32. SavvyFinancialLatina

    People aren’t rational. I know I’m not rational with some of my spending. I try to be. Yes, I do judge people based on what they spend. Hard not to.

  33. People are not rational. They sell when the market is down, for example.

    I really liked “you are not so smart” which goes into detail about irrational things we do. They might have been rational at one point in our evolution, but they’re not now.

  34. Sam,

    I would estimate that your engineer buddy is making about $80,000/year.

    Wife works retail….. So at best, household income is around $100,000/year.

    No rational person rents a one bedroom for $3700/month unless they have to.
    So, yes, they can’t afford to blow $150 on restaurant meals!

    1. Ace,
      I work in hw engineering in the silicon valley and even new grads with master’s are offered at least 90k with 10-20k bonus. Given that Sam’s friend is 7 years older, I wouldn’t be surprised if he was pulling in 150k base.

      1. Hippo,

        You might be right…… But I have been around too long…. I’m skeptical. People always have a strong overestimate bias of other people’s income.

        FYI: Median household income for San Francisco is about $75,000. I’ll stick with my estimate. I bet Sam’s friend has a household income of about $100,000/year.

        He drives a Porsche and a motorcycle…… All that means is that he has higher than average automobile expenses (and probably little money in the bank).

        1. You really can’t rent a property in SF if you don’t earn at least 30X the monthly rent for your annual salary. The standard is more like 40-45X monthly rent.

          Interns are making $60,000 – $80,000 a year here Ace!

          From a recent article on Forbes, and actually everywhere:

          “That’s a far cry from the $42 an hour interns make at Palantir, the Palo Alto software company whose clients include the FBI and the CIA. It tops the Glassdoor list with a reported monthly intern salary of $7,000 (equaling a yearly salary of $84,000). The company currently lists 10 open internships. Most require programming skills but there’s one title I find especially intriguing: “Evangelism intern,” based in McLean, VA, home to the CIA. That job sounds like a combination of programming and lobbying. The description: “we introduce and explain Palantir to smart and powerful people – politicians, journalists, leading researchers, influential bloggers, government types, and business leaders in Washington and beyond.” If I were 20 years old and knew my way around Python and Java, I might want to apply.

          Second on the list is VMWare, the cloud computing pioneer, also based in Palo Alto. The reported monthly internship salary there is also $7,000 ($6,966 to be precise, compared to Palantir’s $7,012, but I’m rounding for this story). There are some 50 open internships on the company site. Most have demanding requirements, like computer science degrees and skills with technologies that are totally unfamiliar to humanities majors like me (JQuery, JQuery UI, Bootstrap). VMware is a global employer, with internship jobs in Bangalore, Israel, Paris, Sao Paulo the U.K. and Ireland, as well as on its Palo Alto campus.

          In third place: Twitter, in San Francisco, which reportedly pays $6,800 a month. In all, 19 of the top-25-highest-paying firms are technology companies, including, not surprisingly, Microsoft MSFT +0.68%, eBay, Google, Apple AAPL +0.1% and Yahoo YHOO -0.53%. There are four oil and gas companies on the list, ExxonMobil, which pays the most, at $6,000 a month, Chevron CVX +1.4% at $5,400, ConcoPhillips, also at $5,400 and Schlumberger at $4,600. But the oil and gas companies have slipped in their positions on the list in the last year, when ExxonMobil was No. 1 at $6,500, and ConocoPhillips was No. 5 at $5,800. This year there only two financial firms make the top 25, BlackRock, which pays $5,100 a month and Capital One, which pays $4,900.”

          1. Naaaah!


            I’ll stick with the census numbers. Forbes is an unreliable source of data/info.
            Besides….. Your friend is supposedly a hardware guy, not a coder.

            I was living in the Bay Area around 1984; it was the same thing. All these folks boosting about the big money they were making in Silicon Valley. Most the jobs back then paid about $30,000 maybe $35,000/year. Good money at the time, but nothing to really get excited about from my point of view. There are always a few outliers whom make the news (and rumor mills).

            Your first clue is that he’s renting a one bedroom apartment. The second clue is that his wife/girl friend is working a part time retail job. Let’s be generous and say that his seven years of hardware experience gives him a market value $120,000. Once you add up the $3700 rent, guesstimate the car/insurance payment, figure in the high California income taxes. I’d say no….. They can’t afford to blow $150 for a meal.

  35. Sam, the one that always gets me cracking up is when my friends with kids spend literally $10k+ cost a year to put each of their 8 or 9 year old children in these travel league sports. This in some cases represents 10-20% of their gross income!?!? Somehow thinking little Sally will be the next Olympian soccer star, or Jimmy will play goalie for the San Jose Sharks…but they don’t save for retirement now because they will when they get older, not to mention what a hot potato the bill is when it shows up at a group outing. Honestly though if that is what makes their family happy, more power to them. I think it is disheartening though to hear people in their early thirties relegating themselves already to having to “work until I die”.

    I’ve been blessed financially through hard work and I’m happy to share my wealth and toys for the experiences with my family and friends.

  36. I think that you think everyone is reasonable/rational when it comes to finances and I would say that you are wrong. Most people are not good with their finances, hence the dismal savings rate in our country. It’s unfortunate that your friends pay so much in rent….that is ridiculous. I would never pay that much in rent!

    If people tried to guess what we were worth or what our income is they would be wrong. My husband drives a 1998 Ford Crown Vic that he picked up for $3,000 this year and I drive a 5 year old minivan. Plus, we live in a low cost of living area and no one would expect that either of us makes what we do. I am perfectly fine with letting everyone we know think that we don’t make a lot or have a lot of wealth.

    That being said, I do enjoy good food. I would pay $75 a person to eat out with you and we normally don’t pass up an opportunity to try a new restaurant.

  37. I agree with the comment from Moneystepper. They might not value spending that much on food, and save in that area so that they can afford other things. I know of a few people like this, and I don’t see anything wrong with it if that’s the same reason for this couple as well.

  38. moneystepper

    Perhaps it is too expensive for them because they don’t prioritize expensive restaurants. They might have been able to afford the house and the porsche because they never spend more than $10 on dinner. Unlikely, I know, but people have very different priorities when it comes to their money. I personally could afford the $74 for dinner but, unless it was truly a big occasion, I would have also refused to pay that much when you can get the equivalent elsewhere for much cheaper.

    1. I agree. One area where I am willing to splurge is on nice dinners. My wife and I like to eat nice meals out. Frankly, we probably do this more often than we should, but it is one area of indulgence I have always enjoyed (and so does she). I don’t fault people who would rather spend on a Porche than a dinner. It wouldn’t be my priority, but to each their own.

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