Do you pity the HENRYs ("high earners, not rich yet")? If you’re Shawn Tully you do. In an astonishing feat of reporting, he’s discovered that if you ask people whether they feel rich, especially if they work hard and have children, they’re liable to say no, even if they’re earning very large amounts of money:
Our cover subjects, Lindsay Mayer and her husband, Zach, a Dallas attorney, feel stretched on $500,000 a year. Lindsay, a senior manager at telecom provider Avaya, has also started her own small business on the side, investing $60,000 to launch a company called Maelee Baby that markets stylish diaper totes. Once again, their biggest expense outside of taxes and their mortgage is the children. The Mayers pay $2,200 a month for child care for their two kids. "Child care is the real killer," says Lindsay. "We’ve achieved so much. We can’t understand why we’re still worrying about money." The last ten days of each month, she and her husband invariably remind each other to watch expenses. "It baffles us that we have to say that to each other," she says.
I just can’t make this add up. Assume a 40% tax rate, between the feds and Texas, and they’re making $25,000 a month after tax. Their house cost $350,000 in 2005 — which implies roughly $2,000 a month in mortgage payments. They’re also "pouring money into their 401(k) accounts for retirement," we’re told — so let’s assume that they’re both making the maximum contribution this year of $15,500 each. That’s another $2,500 a month or so between them. Let’s also assume that Lindsay’s took her entire business investment out of this year’s salary, and budget another $5,000 a month for that.
Between mortgage, childcare, 401(k) contributions, and Maelee Baby, then, we’re up to $11,700 a month in expenses — that’s about $140,000 a year, less than half their take-home income. The Mayers make $500,000 a year, and claim to be "not spending a lot of money on extra stuff". So how come they’re "still worrying about money"? Simple: worrying about money is a perfectly natural and human thing to do. Everybody does it, regardless of their income. But the idea that the Mayers are "not rich" is laughable.