Dear Financial Samurai,
It’s been a bad week. Oil is back over $100, the 10-year bond yield has pushed back to 4.7%, and large cap tech names like Google have taken a tumble on higher-than-expected capex plans. The market feels vulnerable with the forever war grinding on. It’s also hard to get excited about real estate either given where mortgage rates are sitting.
Ultimately, it now feels like we’re stuck in neutral or reverse for the next several months.
Meanwhile, forecasters increasingly see Democrats flipping the House while Republicans hang on to the Senate. That’s about as close to a gridlock scenario as it gets: neither side can push much through, which markets have historically taken as a positive catalyst.
Life Is Expensive
Several years ago, I said a family of four needed $300,000 to live a middle-class lifestyle in cities like SF, NYC, Seattle, LA, and Boston. Most people scoffed.
Well, thanks to inflation and new data, $408,000 is now the going rate for “comfortable” in San Francisco. Sadly, I don’t think it’s far off given what’s happened to food, housing, healthcare, and education costs. Some of you will still think it’s absurd. That’s fine. Read the post and tell me why.
Western cities and states dominate the list of highest income required, mostly because that’s where the wealth-building opportunities are. But the weather helps too. I lived in Virginia and New York for 10 years before moving to SF, and I have zero interest in muggy summers or frigid winters ever again.
Sitting here in Honolulu, nice weather is starting to feel less like a luxury and more like a necessary line item in the quality-of-life budget.
Check out: How Much A Family Of Four Needs To Earn To Live Comfortably By City
Americans Are Doing Better Than Expected
I shared my $408,000 household budget on Twitter/X and it pulled in a whopping 3.5 million views and 1,400+ comments. I did my best to respond to as many as I could.
My point was simple: a six-figure income disappears fast for dual-income households with kids, and $400,000 isn’t the golden ticket it looks like from the outside. You’re grinding long hours under real stress, and you’re more exposed when the next downturn hits.
Two things stood out from the overwhelming feedback:
- Most people think taking two or more weeks of vacation a year is absurd. That genuinely surprised me. I got two weeks as a first-year analyst and worked up to six weeks by the time I was a Director. Big tech alone often offers 2 to 4 weeks for new hires, sometimes unlimited paid time off. So either Americans are grinding harder than I thought, which is bullish for investors, or work-life balance in this country needs an intervention.
- Americans are more financially adaptable than the headlines give them credit for. Sure, FS readers skew more astute than the average American regarding money. But 3.5 million views of real, specific feedback told a more resilient story than the one the media keeps selling.
The funniest pattern in the replies and comments: readers telling me the middle class is struggling, and then, when I ask how they personally are doing, saying “Oh, I’m doing great. It’s everybody else who isn’t.”
After hearing that countless times, it starts to feel like we are everybody else. I get the instinct to feel better by assuming others are worse off. But based on the sheer range of honest feedback on that budget post, Americans are handling their finances better than the doom-and-gloom coverage suggests.
Check out: Why Americans Are Happier, Healthier, And Richer Than You Think
Last Week In Honolulu
This is the final week of a 30-day trip to see my parents in Honolulu, and time always speeds up in the last few days. Today it’s Hanauma Bay, one more trip to Wet ‘n’ Wild, and a school tour.
Then it’s back to the salt mines in chillier San Francisco, where I’ll get back to writing and thinking about money more often.
I’ve been keeping a spending log for this trip for a future Summer YOLO Fund post recap, and let’s just say it’s been an educational month. More on that soon, plus more thoughts on retiring in Hawaii, and a new angel investment with a product FS readers will actually want.
Until then, have a great rest of the week.
To your financial freedom,
Sam
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If you’re working on building wealth for the long run, Millionaire Milestones: Simple Steps To Seven Figures (USA Today bestseller) walks through exactly how to get there, decade by decade.