Perhaps the most out-of-touch video ever

[Indy Texas]

There is an interesting psychology that happens with people as they progress in their careers and make more money.  Many people continually re-frame things in their head, they convince themselves that they are worth the money they are getting paid. This often moves in short order into them thinking that they are even underpaid for their awesome work. On a parallel track non-essential luxury things which were once out of their realm and reach in their former lives, now become must haves. Because God forbid you dont have the latest car, fanciest modern kitchen, send your kids to the right schools, vacation at tony places etc etc

The sad truth is that the hamster wheel of consumption does not slow down as income grows.

Particularly as you get into higher-paying jobs which are scarcer, less replicable and require more luck/connections/je ne sais quoi to obtain, the opportunity cost for opting out of a lot of the stuff on that list becomes higher.

You can say, "Well, country club dues are a luxury; the Evil Bourgeoisie should shut up and play at the public course." Well, everyone else they work with at their company and in their line of work are members at that exclusive club. So when you're interviewing for an executive position or trying to raise money for a business, are those guys going to give the job/capital to you, or to the guy they know a lot better because they see him every weekend on the links?

You can say, "Shut up and buy a cheaper house in a more proletarian neighborhood." Again, all that will do is put their children at a disadvantage by forcing them into a less affluent public school or putting them farther away and more removed from their private school. And you won't know the people you work with and do business with as well because you won't be in the same neighborhood as they are.

You can say, "Buy cheaper clothes and drive an Accord instead of a Mercedes," but rich people are no less subject to peer pressure and shallow judgment than poor people are.

[Indy Texas]

My personal version of this phenomenon...

One of my accounting professors this year was the CFO of a small publicly traded company. I looked up her compensation and she made about $500k in 2013. 2013 was an unusually good year, but she never made less than $300k for all the years she was CFO. This person could not comprehend paying cash for her car.

It goes to show that fiscal competence and high income are only somewhat correlated.

what about fiscal competence and being an accounting professor?

My dad is a physician who constantly berates his patients about the health decisions they make, all the while being someone who never exercises and is considerably overweight. People can compartmentalize their knowledge and let their emotions interfere when it comes to applying it to their personal circumstances.

[Indy Texas]

Thinking about this topic I want to make it clear how expensive it is to raise a child in an neighborhood where a family that makes $400K might reside once we take discretionary spending in to account.  Looking at my own case, I did an analysis of what it would cost in discretionary spending for my three year old child from birth to him finishing graduate school.  In 2014 dollars I worked it out to a bit more than $1 million.  This does not include cost of food clothing etc etc which I consider mandatory spending.  The $1 million include the cost of nannies, nursery school, various classes, taxi to take the child to nursery school/classes, summer camp, a car for him when he is old enough, cost of private university and graduate school.  Note since we live in a good school district we do not have to pay for elementary school and up.  Note that classes of various sorts will add up.  Our son goes to swimming, soccer, and martial arts classes on top of nursery school which works out to about $6K a year.  This will only go up from here.  $1 million could be even worse if it was not the fact that we plan to retire early so there will be no need for nannies once our child is ten or so.  If it was not for that the bill will be even higher.  Note that this family in Chicago has two children so you can imagine this financial burden.  Of course as I pointed out, this is completely discretionary, but around where I live what we are doing for our child is pretty standard.

None of the boldface items are necessities and you may be shocked to find that the majority of children in this country, to say nothing of the rest of the world, must manage without them.

Number of f#$%s given about your situation: Zero.

[Indy Texas]

Thinking about this topic I want to make it clear how expensive it is to raise a child in an neighborhood where a family that makes $400K might reside once we take discretionary spending in to account.  Looking at my own case, I did an analysis of what it would cost in discretionary spending for my three year old child from birth to him finishing graduate school.  In 2014 dollars I worked it out to a bit more than $1 million.  This does not include cost of food clothing etc etc which I consider mandatory spending.  The $1 million include the cost of nannies, nursery school, various classes, taxi to take the child to nursery school/classes, summer camp, a car for him when he is old enough, cost of private university and graduate school.  Note since we live in a good school district we do not have to pay for elementary school and up.  Note that classes of various sorts will add up.  Our son goes to swimming, soccer, and martial arts classes on top of nursery school which works out to about $6K a year.  This will only go up from here.  $1 million could be even worse if it was not the fact that we plan to retire early so there will be no need for nannies once our child is ten or so.  If it was not for that the bill will be even higher.  Note that this family in Chicago has two children so you can imagine this financial burden.  Of course as I pointed out, this is completely discretionary, but around where I live what we are doing for our child is pretty standard.

None of the boldface items are necessities and you may be shocked to find that the majority of children in this country, to say nothing of the rest of the world, must manage without them.

Number of f#$%s given about your situation: Zero.

He actually called all the boldface items "discretionary".

It's kind of pointless to discuss how expensive something is after you've chosen to make it a lot more expensive than it needs to be.

If I went to McDonald's and ordered multiple portions of every menu item, it would be relatively expensive by fast food standards. That doesn't make "McDonald's is really expensive" any more valid of a statement.

It is true that if you want your kid to go to an Ivy League school (a "real" one, not Cornell or Dartmouth or Brown, sorry...) and follow the stereotypical MBA-->Goldman Sachs/McKinsey/etc-->Manhattan penthouse and Hamptons house trajectory, those boldface items are necessary and not even sufficient.

Someone like jaichind isn't going to ask where that leaves children whose parents cannot provide those things for them and what the ramifications are for their future success or lack thereof. He's going to say, "Screw them, I've got mine. But au pairs and lacrosse camp sure aren't cheap."