6 figure individual incomes in Southern California

[kev374]

Can someone shed some light on income/savings statistics for Southern California? What percentage of individuals (NOT households) earn $100,000 or more annually? How many people in the 25-35 age range have $70,000 cash saved up for a 10% down + closing costs on the median $600k home?

The reason I ask these questions is that all I see around me are people driving BMW, Lexus, Mercedes and LIVING LARGE like the lifestyles of the rich and famous, many of these are young 25-35 age group. I am wondering WHERE is the money coming from?

[meadandale]

Well, I can’t provide you with any hard statistics on any of this, just my gut instincts. I’d say that less than 10-15% of 25-35 year olds in so cal have any kind of real savings, let alone something approaching $70k. Most are living on borrowed time.

Most of these people (of all ages) driving these expensive cars are leveraged to the hilt. I know a young woman who is a waitress and her husband works as a salesman at a BMW dealership. They typify most young people I know. She wants a new BMW to replace her 5 year old car. Her annual income is MAYBE $30k. She has no business driving a car that costs more than her annual salary (note that HE is already driving a used Mercedes that they probably can’t afford).

My niece (early 20’s) is a shop-aholic. She impulsively buys expensive designer clothes that she can’t afford, has a car that doesn’t run (and she doesn’t have any money to fix) and is about $30k in the hole and she just keeps digging. She even lives at home so has very few expenses against her $40k-ish salary. I’ve been trying to talk some sense into her but she just doesn’t want to hear it. She’s going to wakeup up in 5-10 years with a bunch of ‘stuff’, nothing in the bank and a $60k ball and chain around her ankles that is going to take her years to pay off.

[Anonymous]

I’ve been a long time reader on this blog and figured I’d finally chime in on this one.

The majority of my friends are in this age demographic, most working for pretty good companies. I’d say that 10-20% might make the 100k salary. However, as for having 70k saved up for a down payment and everything else, lol I’d say that few to none actually have this. Most I know who have bought homes have borrowed money somehow – ranging from taking out a 100% or more loan, a loan for the downpayment, or borrowing from parents.

The ones in the BMW’s etc live on credit – lots of it. Most don’t know how to save at all. When they get a bonus or raise, the equivalent amount of money is added to a credit card balance before it even reaches their paychecks. I can think of about 2 people in my age group who consistently make sound financial decisions.

[PerryChase]

How do people afford the luxuries?

I think that we need to go back 25 years and look at the financial/credit industry.

It used to be that you had to have a downpayment to buy a car. Now it’s the NINJA (no income, no job or assets) loans. It used to be that only business executive would lease cars. Now everyone does it.

It used to be that you need a downpayment to buy a house. Now you can can do NINJA 100% financing, interest only, option ARMS or negative amortization.

It used to be that teenagers had to work and save to buy stuff. Now they just apply for credit cards.

The lenders don’t want to do any real underwriting because it’s costly to staff those departments. They now rely on computer models and FICO scores to assign risk to certain borrowers and to figure out the interest rates to charge. but they forgot that with computer programs, it’s garbage-in , garbage-out.

Vendor financing used to be rare. Now sellers finance their customers so they don’t have to turn away anyone.

So long as buyers can make the minimum payment, they can afford their lifestyle. And the lenders can record increasing revenue on growing “assets” (now declining in value as borrowers are defaulting).

Growth fueled by credit can last for a while but eventually the music stops.

————-

I think that Californians are more into bling than East-Coasters or Mid-Westerners (except for New York and Florida).

[yooklid]

I am 30. I am salaried at $150K+. I have 215 in the bank, and another 250 in other investments. I drive a 10 year old used BMW (M3, definitly a weekend car) that is paid off, live in a nice neighborhood in SF (but only pay 1350 a month including parking) don’t have any credit card debt (I pay them off at the end of the month), and think buying property any time over the next couple of years is the stupidest thing I could do.

I do admittedly spend a lot of money on luxury items, but nothing that I can’t afford. I see a lot of people with nicer cars and flashier stuff than me and I don’t know how they do it. But my goal is to be retired by 45 and do other stuff. I doubt people think that far ahead anymore.

I consider myself not so much an anomaly as a freak of nature.

[ibjames]

damn, what do you people do that make over 100K? Wow.

I agree. Just was talking to a friend. They bought a condo in 2002, saw it’s value shoot through the roof, I told them to sell last year. They didn’t. Have lost alot of what was potential equity since then.

Well, they found a house that isn’t on the market, sold through a friend of a friend etc. that someone’s grandma died in and has been vacant for a year.

They want to buy it. A fixer upper on the edge of PB/Clairemont (I guess) 3 bed 2 bath 2 car gar. for upper 500’s. I tried to talk them out of it. I guess from the upstairs master you can see the ocean as far left and right as you can see.

I got the typical “everyone wants to live in PB” and things like that. I gave up 🙁

[meadandale]

You gotta love a market where a fixer upper in an older neighborhood is still fetching almost $600k.

[anxvariety]

$60k ball and chain around her ankles that is going to take her years to pay off.

Decades!

[kewp]

It’s pretty easy to make over 100k in high tech if you have the commensurate degree and experience. There is a high barrier to entry and you can’t ‘fake’ competence in it, so employers still need to pay the big bucks to attract (and keep) the top talent. The risk of being ‘out sourced’ if overstated, in my opinion, as well.

Heck, I make close to that (if you include benefits) working in higher education *without* a degree; which is a notoriously stingy gig.

I agree with the previous posts; my experience is that in my age group (25-35), being over-leveraged is the exception, not the rule. I’ve fought about money with every girl I’ve dated in fact; they all *expected* a top-dollar lifestyle, regardless of our financial situation. Designer clothes, new cars, bling, fancy dinners a couple nights a week, etc. The sense of entitlement of my generation boggles my mind at times.

[barnaby33]

Date ugly chicks, they have lower expectations.

Josh

[davelj]

One of the reasons California’s economy is generally more volatile than the rest of the nation is that, on average, the people that live here are much more comfortable with leverage. And when things turn down, they more easily end up on their asses. I know an awful lot of people who live $300K/year lifestyles on $150K/year (and double those numbers). It just seems to be part and parcel of the California Lifestyle. Not for everyone, of course, but for many.

I see a lot of women that make less than $60K/year with $1000 Louis Vuitton handbags. While there are a lot of well-heeled folks in San Diego (and elsewhere), the Louis Vuittons of the world can’t survive on selling solely to the folks who can actually afford their products. There’s too much competition for the wealthy’s dollars. It’s from the people who cannot afford their products that the real profits are generated. Oh how I do love consumerism. 🙂

[Anonymous]

C’mon, Josh, you’ve outgrown your ‘Go ugly, early’ approach from your youthful military days, haven’t you?

[masayako]

Here is my statistic:

Friend #1: $60k/yr, $10k saving&asset, $20k car debt
Friend #2: $40k/yr, $5k saving&asset, $5k credit card debt
Friend #3: $25k/yr, $2k saving&asset, no debt
Friend #4: $50k/yr, $50k saving&asset, no debt
Friend #5: $75k/yr, $75k saving&asset, no debt
Friend #6: $85k/yr, $115k saving&asset , no debt
Friend #7: $115k/yr, $240k saving&asset , no debt
Friend #8: $35k/yr, $5k saving&asset , $5k debt
Friend #9: $0k/yr (job loss), $35k saving&asset , $? debt
Friend #10: $120k/yr, $90k saving&asset , no debt

Guess what, most people I know do not have heavy debt. They may not make a lot, but they still can survive in So Cal… so far. As long as the job market is good, we are still doing okay.

[davelj]

Masayako, just curious, but are you Japanese (or asian)? I ask because of your screen name and the fact that asians, in general, have a MUCH higher savings rate than non-asians. If you have a lot of asian friends, there may be bias is your sample. But if you’re not asian and/or don’t have a lot of asian friends then your sample results are… well… at odds with my observations.

[g2006]

One more factor is dual income families.

Husband + Wife salary is very easily more than 100K

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