Do You Consider $200,000 A Lot of Money?

[jaysoon17]

So I'm talking with a friend living in New York City who lived here in Korea back in 2003. I mentioned a guy I know who saved up over $200,000 dollars over ten years here in Korea, and my friend said that's nothing.

$200,000 can take you at least 10 years in Korea, and you can live for the next 20 years in The Philippines or some other SE country with that kind of money. Are costs that high in New York City, or is my friend somebody who doesn't know how to manage money at all? Try to think about your city, places you lived and what you would do with $200,000.

[RachelTibai]

With that money I could buy a house and pay off my student loans. So, yes, it is a lot of money.

[Rusty Shackleford]

I would never consider even bothering trying to save up that amount of cash. What's the point of having 200K in the bank doing nothing? I'm back home at the moment trying to get a respectable job so I can use my Korea money to put a deposit on a house. Then the plan is to go back to Korea and try to pay it down as quickly as possible. Hopefully at the end of ten years (5 years from now), I will own a house that cost about 200K today. Hopefully it will be worth more then than it does now. The goal is to be worth 300K by the time I'm 30. (Also, I want an independent source of income worth about the minimum wage that I don't have to work for, but that is separate to this).

So, to answer your question, I consider 200K to be about par for net worth if you have been actively building it for 10 years. But there are better ways of doing it (of which I believe my method is one better way). 

[Jeff619]

I caught Suze Orman on CNN a few weeks ago.  Some woman asked why her and her husband could barely make ends meet living in New York although their combined income was over $200,000 with no children.  Suze's response was simple...because they live in New York.

I'm originally from San Diego which also has a very high cost of living.  I'd be amazed if I was able to make 200k last more than 3 years there.  Sure, it's possible to find really cheap housing but you'd have to live in a ghetto.  Anything decent is going to cost about 2k per month just for the rent.  Utilities also seem to be much higher.  My parents rarely use heat or A/C (San Diego is very temperate) but their gas and electric bill is $800-$1,200 per month.  Factor in all the other expenses and I can easily agree that 200k is not a whole lot of money in NYC.

[Sticks]

Depends entirely on where you live. In NYC $100,000/year is a middle-class salary, anywhere else in the country or a bit further out of the city you'd be living quite respectably I would think. This is probably why OP's friend was so dismissive of $200,000. For a fresh faced student or one who just graduated, $200,000 would be a lot of money. That amount of money in Korea would get you a fair way, but again it'll depend on where and how you live (Seoul? A satellite city? Out in a cow paddy rice field?)

I consider $200,000 a lot of money. If I had that much saved up i'd move back home, rent out a house somewhere further away from the main city centre (Sydney property prices are ridiculous) or another city, find a decent job and invest the rest.

[Rusty Shackleford]

I caught Suze Orman on CNN a few weeks ago.  Some woman asked why her and her husband could barely make ends meet living in New York although their combined income was over $200,000 with no children.  Suze's response was simple...because they live in New York.

Another problem that people with high incomes have when it comes to saving money is the social pressure they have to spend money. They probably suffer from pressure to dress in expensive clothes and jewelry, have fancy home appliances, go on vacations, eat out at expensive restaurants, etc. Some sociologists did a study of millionaires back in the 80s and their findings were that millionaires don't look like millionaires. http://www.amazon.com/Millionaire-Next-Door-Thomas-Stanley/dp/0671015206 There used to be a very good summary of the book by the NYT, but I see it's gated now. https://myaccount.nytimes.com/auth/login?URI=

So, despite these people having high incomes, many of them are in debt.

[TheWB18]

If you're living in Manhattan, rent on a one bedroom apartment will likely cost over $2,000/month.  If you want one of the more popular neighborhoods, or an elevator, or any kinds of amenities it's more like $3,000 and up. So your housing alone can run $25-35,000 a year.

Where I come from, $25-35,000 a year would put you at about the average salary, give or take a thousand, and you could live on it fairly well.  So obviously for someone in Manhattan, spending upwards of $50,000 a year on housing, food, and transport alone, $200,000 isn't much.  But for someone elsewhere in the US, $200,000 is the cost of a home and/or financial security and/or almost a decade of living expenses, so it's quite a lot of money.

I think all at once (as some kind of windfall, or a lump savings) $200,000 is significant. But in larger terms, it's not that much.

[Daelim]

I would never consider even bothering trying to save up that amount of cash. What's the point of having 200K in the bank doing nothing? I'm back home at the moment trying to get a respectable job so I can use my Korea money to put a deposit on a house. Then the plan is to go back to Korea and try to pay it down as quickly as possible. Hopefully at the end of ten years (5 years from now), I will own a house that cost about 200K today. Hopefully it will be worth more then than it does now. The goal is to be worth 300K by the time I'm 30. (Also, I want an independent source of income worth about the minimum wage that I don't have to work for, but that is separate to this).

So, to answer your question, I consider 200K to be about par for net worth if you have been actively building it for 10 years. But there are better ways of doing it (of which I believe my method is one better way).

200k IS A LOT OF MONEY. There is no two ways about it. It's about 5 times the average YEARLY salary, for goodness sake. In the UK you could buy a very decent house for that money, a car outright and put at least 10k in a rainy day fund. Then you could either find a job you like and use it to pay for retirement (instead of for a house you have mortgaged over 25 years and "plan" to pay off quicker) or you could keep working abroad and travelling.

Your plan is good in theory. However, you are saying it's better to invest in a property with a mortgage than it is to save the money up in cash and buy a place outright in 10 years. The problem with your plan is:

- You need to GET a mortgage.
- You need to PAY for that mortgage to get arranged.
- You need to PAY interest until the mortgage is paid off.
- You need to have a JOB to pay the mortgage.
- You need to deal with the STRESS a mortgage brings.
- You need to worry about being made redundant.

Once you have your mortgage it's not going to be as easy as just moving back to Korea to pay it all back off. Then you need to worry about:

- Remortgaging when your rate is up. (Will they remortgage to someone abroad?)
- Interest rate hikes that eat into your income.
- Insurance for building and contents.
- Annual repairs and maintenance.
- Any land tax, water rates etc.

I think that saving your money until you can buy outright destroys the notion of owning with a mortgage and paying it off faster. Ask anyone who has a mortgage that question and see what they say ;)

[Mark van]

Well firstly how they heck did he save $200,000 over 10 years? That's more than 22million won a year savings! If you don't spend at least 50% of an English teachers salary then you can maybe save around 10mill each year. He must have had a really nice job back in 2003 to save so much money

[TheWB18]

I would never consider even bothering trying to save up that amount of cash. What's the point of having 200K in the bank doing nothing? I'm back home at the moment trying to get a respectable job so I can use my Korea money to put a deposit on a house. Then the plan is to go back to Korea and try to pay it down as quickly as possible. Hopefully at the end of ten years (5 years from now), I will own a house that cost about 200K today. Hopefully it will be worth more then than it does now. The goal is to be worth 300K by the time I'm 30. (Also, I want an independent source of income worth about the minimum wage that I don't have to work for, but that is separate to this).

So, to answer your question, I consider 200K to be about par for net worth if you have been actively building it for 10 years. But there are better ways of doing it (of which I believe my method is one better way).

200k IS A LOT OF MONEY. There is no two ways about it. It's about 5 times the average YEARLY salary, for goodness sake. In the UK you could buy a very decent house for that money, a car outright and put at least 10k in a rainy day fund. Then you could either find a job you like and use it to pay for retirement (instead of for a house you have mortgaged over 25 years and "plan" to pay off quicker) or you could keep working abroad and travelling.

Your plan is good in theory. However, you are saying it's better to invest in a property with a mortgage than it is to save the money up in cash and buy a place outright in 10 years. The problem with your plan is:

- You need to GET a mortgage.
- You need to PAY for that mortgage to get arranged.
- You need to PAY interest until the mortgage is paid off.
- You need to have a JOB to pay the mortgage.
- You need to deal with the STRESS a mortgage brings.
- You need to worry about being made redundant.

Once you have your mortgage it's not going to be as easy as just moving back to Korea to pay it all back off. Then you need to worry about:

- Remortgaging when your rate is up. (Will they remortgage to someone abroad?)
- Interest rate hikes that eat into your income.
- Insurance for building and contents.
- Annual repairs and maintenance.
- Any land tax, water rates etc.

I think that saving your money until you can buy outright destroys the notion of owning with a mortgage and paying it off faster. Ask anyone who has a mortgage that question and see what they say ;)

Though paying on a mortgage will save you on taxes...perhaps several thousand a year.

[jaysoon17]

I'm originally from the San Francisco Bay Area, but I left pretty much right after college. My parents have a house that is pretty much paid off (Paying $200 a month), and they are living off social security, which seems to be enough for them. Rent and going out must be really expensive. I'm not sure why your average Joe would like to live in New York City. I'd just visit New York, because of the costs are really high. I didn't think it was that expensive to live there.

As for saving up $200,000 and just looking at it, I completely agree with that being a bad idea. One who is a good investor can turn that $200k into a passive income that can pay for their living expenses, which would enable them to retire in SE Asia or retire humbly in Korea.

[cinamon]

So the moral of the story is don't live in NYC. 

[Mark van]

I would never consider even bothering trying to save up that amount of cash. What's the point of having 200K in the bank doing nothing? I'm back home at the moment trying to get a respectable job so I can use my Korea money to put a deposit on a house. Then the plan is to go back to Korea and try to pay it down as quickly as possible. Hopefully at the end of ten years (5 years from now), I will own a house that cost about 200K today. Hopefully it will be worth more then than it does now. The goal is to be worth 300K by the time I'm 30. (Also, I want an independent source of income worth about the minimum wage that I don't have to work for, but that is separate to this).

So, to answer your question, I consider 200K to be about par for net worth if you have been actively building it for 10 years. But there are better ways of doing it (of which I believe my method is one better way).

200k IS A LOT OF MONEY. There is no two ways about it. It's about 5 times the average YEARLY salary, for goodness sake. In the UK you could buy a very decent house for that money, a car outright and put at least 10k in a rainy day fund. Then you could either find a job you like and use it to pay for retirement (instead of for a house you have mortgaged over 25 years and "plan" to pay off quicker) or you could keep working abroad and travelling.

Your plan is good in theory. However, you are saying it's better to invest in a property with a mortgage than it is to save the money up in cash and buy a place outright in 10 years. The problem with your plan is:

- You need to GET a mortgage.
- You need to PAY for that mortgage to get arranged.
- You need to PAY interest until the mortgage is paid off.
- You need to have a JOB to pay the mortgage.
- You need to deal with the STRESS a mortgage brings.
- You need to worry about being made redundant.

Once you have your mortgage it's not going to be as easy as just moving back to Korea to pay it all back off. Then you need to worry about:

- Remortgaging when your rate is up. (Will they remortgage to someone abroad?)
- Interest rate hikes that eat into your income.
- Insurance for building and contents.
- Annual repairs and maintenance.
- Any land tax, water rates etc.

I think that saving your money until you can buy outright destroys the notion of owning with a mortgage and paying it off faster. Ask anyone who has a mortgage that question and see what they say ;)

I bought a house and lived in it for a year before I came to Korea (my father helped me a little and I sold my car for the deposit). Since I've been in Korea (3rd year now) I've had a tenant pay off the mortgage and all the extra cash I make goes into the bond. I've had the house for about 4-5 years now and it's worth 40% more and the biggest thing is that I nearly have it paid off. It's amazing how quickly you can pay off your mortgage when:
A.) You put all your money into it (car, investments, pension payout).
B.) You have someone who pays rent.
C.) You can also pay in twice as much (because we don't pay for housing in Korea).

So your capital amount is quickly reduced which means the interest becomes very very small. My bond was for 18 years and I'll have it paid off under 6 years mainly because of working in Korea.

$200,000 is a LOT of money.. but 10 years is also an incredibly long time. As long as he invested the money in some way over the 10 years then that's good :)

[madison79]

Rusty Shackleford: 
I've read that book and a few others along this lines and it's true that most Millionaires don't live like they are rich. 

1 factor that is widely over looked is that fact that High income earners ie Doctors, lawyers and the such are still just income earners.  Thus they are taxed the most by American law. 
People like Warren Buffet and others get lower taxes since they are on the other side of the tax codes.  They have Investments and business that get lower taxes since they provide jobs for others. 

Yes, I think 200k is a lot of money to most people. 

[Rusty Shackleford]

I would never consider even bothering trying to save up that amount of cash. What's the point of having 200K in the bank doing nothing? I'm back home at the moment trying to get a respectable job so I can use my Korea money to put a deposit on a house. Then the plan is to go back to Korea and try to pay it down as quickly as possible. Hopefully at the end of ten years (5 years from now), I will own a house that cost about 200K today. Hopefully it will be worth more then than it does now. The goal is to be worth 300K by the time I'm 30. (Also, I want an independent source of income worth about the minimum wage that I don't have to work for, but that is separate to this).

So, to answer your question, I consider 200K to be about par for net worth if you have been actively building it for 10 years. But there are better ways of doing it (of which I believe my method is one better way).

200k IS A LOT OF MONEY. There is no two ways about it. It's about 5 times the average YEARLY salary, for goodness sake. In the UK you could buy a very decent house for that money, a car outright and put at least 10k in a rainy day fund. Then you could either find a job you like and use it to pay for retirement (instead of for a house you have mortgaged over 25 years and "plan" to pay off quicker) or you could keep working abroad and travelling.

I actually never said it wasn't a lot of money. I said I believe I could be worth that much in 5 years. It's a big task, but dumber people than me have done much greater things.

Your plan is good in theory. However, you are saying it's better to invest in a property with a mortgage than it is to save the money up in cash and buy a place outright in 10 years.

Capital gains in ten years will likely be more than inflation. In NZ (where I'm from) inflation is guaranteed to be 1% (By law) and is usually much more than that. 200K in ten years will really be something closer to 150K and property prices will probably be much higher (though, they might not be).

The problem with your plan is:

- You need to GET a mortgage.

Not a problem for me, I have a good down deposit and understanding parents who will go guarantor. The banks are also flush with cash and giving it out like candy right now.

- You need to PAY for that mortgage to get arranged.

I will likely buy through a private deal. No, need for lawyers or agents.

- You need to PAY interest until the mortgage is paid off.

This is news to me. Can you provide a link. 

- You need to have a JOB to pay the mortgage.

I'm also aware of this. That is why I plan on getting a decent job in NZ, then getting a job with more chances for saving, like in KOrea.

- You need to deal with the STRESS a mortgage brings.

No pain, no gain.

- You need to worry about being made redundant.

Same with if you are renting, though.

Once you have your mortgage it's not going to be as easy as just moving back to Korea to pay it all back off. Then you need to worry about:
- Remortgaging when your rate is up. (Will they remortgage to someone abroad?)

I just plan on locking in fixed for 5-10 years. Rates are at historical lows in NZ right now. Same everywhere else.

- Interest rate hikes that eat into your income.

See above.

- Insurance for building and contents.
- Annual repairs and maintenance.
- Any land tax, water rates etc.

I know. But, life is fraught with perils. If people let stuff like this get in their way, nothing would ever get done.

I think that saving your money until you can buy outright destroys the notion of owning with a mortgage and paying it off faster. Ask anyone who has a mortgage that question and see what they say ;)

As I pointed out, inflation will severely erode any savings you try to accumulate.

[kps1]

Depends on who has the 200,000 dollars. To some it may be pocket change. To others, like me, I'd be a nice hunk of money to start a business, pay off loans, buy property or invest. I'd say it depends on your lifestyle and what you want to do with your time on this planet.

[Rusty Shackleford]

Well firstly how they heck did he save $200,000 over 10 years? That's more than 22million won a year savings! If you don't spend at least 50% of an English teachers salary then you can maybe save around 10mill each year. He must have had a really nice job back in 2003 to save so much money

10mil should be your bare bones minimum. A mil a month is doable. Add on your severance, that is 14 mil. Get your school to give you after schools (presuming PS), for me that was an extra 1.5mil a semester, you can add 3 mil. I networked (erm..sent a thank you email to the city co-ordinator) and that netted me some summer and winter camps teaching adults for the POE.  One paid 1.5 mil, the other paid 5mil. Chuck those in there. Getting close to 20mil.

[Cereal]

In Laos, $200,000 would be an amazing amount of money. You could build a beautiful house (3 bedroom, 2 bathroom) on a nice piece of land (1000 sq. m.) swimming pool, new truck or car, new motorbike and still stick at LEAST $75,000 in the bank.

[Rusty Shackleford]

In Laos, $200,000 would be an amazing amount of money. You could build a beautiful house (3 bedroom, 2 bathroom) on a nice piece of land (1000 sq. m.) swimming pool, new truck or car, new motorbike and still stick at LEAST $75,000 in the bank.

I want to do something like this in my 30s. Not exactly the same, but similar. The ultimate goal is to split half my time between the beach in NZ and the beach somewhere cheap. ie. not have to live in the winter.

As Daelim pointed out, it won't be easy. But, not trying is a sure fire way of not getting there.

[Jrong]

I caught Suze Orman on CNN a few weeks ago.  Some woman asked why her and her husband could barely make ends meet living in New York although their combined income was over $200,000 with no children.  Suze's response was simple...because they live in New York.

Another problem that people with high incomes have when it comes to saving money is the social pressure they have to spend money. They probably suffer from pressure to dress in expensive clothes and jewelry, have fancy home appliances, go on vacations, eat out at expensive restaurants, etc. Some sociologists did a study of millionaires back in the 80s and their findings were that millionaires don't look like millionaires. http://www.amazon.com/Millionaire-Next-Door-Thomas-Stanley/dp/0671015206 There used to be a very good summary of the book by the NYT, but I see it's gated now. https://myaccount.nytimes.com/auth/login?URI=

So, despite these people having high incomes, many of them are in debt.

You're right. All the millionaires I know dress like sh@#.

200k is not much in NYC, I agree. Not hard to make 80k a year in NYC. It is hard to keep that $, though.

If you want to live a Western life-style, then 200k a year is not gonna set you for life, but living in a developing country? Hell, yeah, you can live good for a looooong time.