This New York Couple Makes $300,000 But Is Living Paycheck To Paycheck

Updated: Oct. 10, 2019 


Greg and Danielle, a married couple living in New York City, brought home more than $300,000 in income last year working as corporate mid-level managers.

And yet, they still find themselves living paycheck to paycheck. 

The couple, who are both 35 and have a two-year old son, just can't seem to escape the rat race. 

They spend $60,000 a year on rent, employ a private nanny for their son, order take-out nearly every night, have a cleaning a laundry service, and take two vacations per year.

"The thing is," Greg told me, "I don't feel like many of our expenses are that 'luxurious'—just typical things that most NYC couples with kids spend their money on." 

Disclaimer: Greg (not his real name) is a good acquaintance of mine—we live in the same apartment building—and he agreed to share his income and budget with me if I promised to give him some constructive feedback on how to help him and Danielle (not her real name) get back on track.

What $300,000 Looks Like

Greg and Danielle both have six-figure jobs working as mid-level managers at Fortune 500 companies in the city, and their W-2 income last year surpassed $250,000 last year, which is nothing to sneeze at, but doesn't even get you halfway to 1% status in New York.  

On top of that, since Greg started to feel the financial pressure, he even picked up a side consulting gig that he does on nights and weekends, that brought in more than $40,000.

Greg was nice enough to share his income tax return with me as "proof" (not that I didn't believe him):


So where does all this money go every month?

Luckily, Greg keeps decent track of his expenses using Mint, and we were able to piece together a pretty good snapshot of their spending habits.

Take-Home Pay

When you earn more than $300,000 and live in a high-tax state like New York, it's no surprise that your biggest "expense" is not going to be your rent or mortgage, but actually your taxes.

Note: all numbers below are rounded.

Gross Income


401k Contribution (Greg)


401k Contribution (Danielle)


Income After 401k Contributions


Federal Taxes


State Taxes


City Taxes


Take-Home Pay


While $300,000 sounds like a tremendous income—and don't get me wrong, it is—the truth is that after socking away money for retirement and paying more than 30% of your take-home in taxes ...

What your left with is actually closer to $183,000, or $15,250 per month.

How To Spend $15,000 Per Month

So how does a family of three actually spend $15,000, to where they have no cash flow left over by the end of the month?

Here is the budget breakdown of Greg and Danielle (all figures are monthly, estimates, and rounded).

Take-Home Pay (Monthly)






Food (non-groceries)








Cable & Utilities


Laundry & Cleaning Service


College Savings (529)




Misc. Spending


Camp & Activities 


Household Stuff




Personal Care






Let's go through these different categories and spend and see where Greg and Danielle can cut back and start to generate a positive cash flow of at least several hundred dollars per month.

The Good News

First, let's start with the positive–Greg and Danielle are both maxing out their 401ks, and they're putting aside $3,600 per year for their son's college education (they say they are planning on having a second kid). 

If they keep this up, they'll be socking away more than $40,000 a year in retirement/college, which is huge. 

Does this help their cash flow problem? No. But it's an important call out because while they may feel strapped month-to-month, they're still building wealth in other ways.

The Big-Ticket Items

Greg and Danielle spend $8,500 per month on just two items—housing, and a full-time nanny to watch after their son while they're both at work all day.

And while this may seem like an obscene amount of money to most people who don't live in NYC or the Bay Area, as someone who lives in Manhattan with two small kids, I can assure you these numbers are "normal".

$5,000 will get you a nice, 1BR apartment around 1,000 sq. ft. in a nice part of the city, and $800-$900 per week is the going rate for a full-time nanny.

Could Greg and Danielle move to a less expensive part of the city—or even somewhere like Jersey City—and have their son go to daycare instead? 

Most definitely. But those are longer term decisions that require a lot more though, and right now we're focused on the quick wins that will still move the needle. 

The Quick Wins

When reviewing Greg and Danielle's budget, a couple of things stuck out to me where they should quite easily be able to cut back.

Food (non-groceries): $2,000 


I can see how this number would stick out to a lot of people—especially considering that it doesn't even include any groceries—but working and living in New York City myself, I can somewhat understand how Greg and Danielle spend this kind of money on eating out and ordering in.

As Greg explained it to me, they are both grabbing a sandwich or salad for lunch every day at work, and by the time they get home by 6-7pm, all they want to do is unwind and spend time with their son—not shop for, prep, cook, and clean a dinner.

So Greg is estimating they each spend $12 on lunch and combined another $30 on dinner (on the nights they don't cook, which is most). That's $54 per day on days they "eat out" for both lunch and dinner, and so you can start to see how they arrive at that number.

Especially when you consider that factored into this $2,000 figure is all dining-out at restaurants and date nights—and Greg says the have a nice date night maybe two times per month. 

But, when your goal is to cut back on your expenses, you have to make the effort. I don't think it's unreasonable to see Greg and Danielle bring their lunch to work at least half of the time, meal prep and cook at home at least 3-4 times per week, and make date nights more affordable. 

Potential Monthly Savings: $500

Vacations: $1,000 

Greg and Danielle have a "vacation fund" of $1,000 per month, and they divide that $12,000 and spend it on two vacations per year.

While spending $6,000 on a vacation sounds like a lot, when you factor in a hotel for 7 nights (at $250 per night), $500-$1,000 on flights (depending on destination), transportation to and from the airport/hotel, plus 7 days and nights of eating and drinking out, I think it's reasonable to see them spending maybe $4,000 on each vacation.

If they can reduce their vacation budget to $8,000 per year, that's a savings of $4,000 per year.

Potential Monthly Savings: $333

The Debatables

Laundry & Cleaning Service: $400

To a lot of readers, spending $400 a month to have your laundry done (weekly) and your apartment cleaned (twice per month) is a giant waste of money, especially when you have zero monthly cash flow.

But as Greg explained to me, the reason for this expense is that they're "buying their time back"—instead of spending the couple of hours per month it takes to do their laundry and clean their apartment, they hire it out instead, allowing them to spend more time together and with their son doing things they enjoy.

I can definitely relate to this thought process and paying for convenience to get your time back, especially when it involves doing unpleasant chores.

And so I think a happy compromise here might be to "meet in the middle"–instead of paying to get their laundry done every week, they can send it out once every other week, and instead of having a cleaning service clean their apartment twice per month, they can pay to have it cleaned once per month.

This effort alone saves them $2,400 per year in cash.

Potential Monthly Savings: $200

Clothes: $250

Spending $3,000 a year on new clothes for two people (plus a two year-old) seems a little excessive to me, even if you work as corporate professionals who have to go into the office every day like Greg and Danielle do.

Personally, I might "refresh" my work wardrobe once a year (and spend $500 doing it), and my wife will do the same, though she definitely spends a little more.

I think allocating even $1,500 a year to new clothes is enough, even when you factor in stuff for the kid.

Potential Monthly Savings: $125

What About Everything Else?

Honestly, I don't think the other line items on Greg's budget look that bad.

It would be one thing if Greg and Danielle were negative cash flow each month and were in debt (they're not)–in that case, yes, we could be more ruthless in what we're cutting back.

But for these purposes, we only have to cut four items from their budget, and as a result ...

Potential Monthly Savings: $1,158

We just put more than $1,100 back in their pocket per month, or nearly $14,000 per year—in cash.

Credit Impact

One other thing worth mentioning—especially since this is a site all about helping you improve your credit—is that Greg's spending habits have had a negative impact on his credit score (which is in the "high 600s", Greg told me).

For one, Greg and Danielle are constantly maxing out their credit cards each month, which gives them a very high credit utilization ratio (which is the second most important factor that goes into your credit score).

Even worse, because of poor cash flow management, Greg has even had a couple of late payments on his credit cards

Bottom Line

Greg and Danielle are definitely falling victim to "lifestyle creep" and they're basically spending every dollar that they earn (though they're still maxing out their 401ks).

That said, with a few lifestyle tweaks and scaling back in key areas like eating out and other conveniences, they can make a big difference in their savings to the tune of an additional $14,000 per year, without much sacrifice.

What about you?

What would you change about Greg and Danielle's budget? What areas do you think they should cut back the most on?

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