Workers scrape by on $24,000 bonuses; shop for bargains, hold off on Ferraris.

[Unspeaked]

Losing your home or dropping out of college is one thing.

Now that I've read about these poor souls having their bonuses slashes from $50,000 to $25,000, I finally see the severity of the recession.

How do they scrape by day-to-day?

LINK (http://www.nytimes.com/2009/02/19/business/economy/19bonus.html)


Bonus Cuts Hurting More Than Top Wall Streeters

By MATT RICHTEL

It is not just Wall Street executives who banked on receiving year-end bonuses to support their lifestyles when the economy was booming. A more muted form of the bonus culture extends across the United States.

Millions of Americans, far removed from Lower Manhattan, count on receiving extra checks to help pay for cars, trips, home renovations, and school tuitions and summer camp for their children.

Now, in the 14th month of a deepening recession, smaller bonus checks are arriving, if they come at all, and are delivering diminished expectations.

Anthony Abraham, 33, a management consultant in Chicago, is already figuring he will not be buying a new car, and has canceled a trip to Paris and will be paying back less than planned on his student loans.

Last year, his bonus was around $50,000. This year, it will be half that amount, he figures, give or take a few thousand.

“It makes a real material difference,” said Mr. Abraham, who has a $135,000 base salary. His bonus has typically gone to basic lifestyle maintenance, not frivolity, he said, adding, “It’s not the kind of money where I could head down to the Ferrari dealership.”

To critics, including President Obama, the multimillion-dollar Wall Street bonuses have come to symbolize capitalist excess. For example, 700 Merrill Lynch employees received bonuses of $1 million or more each, even though the brokerage firm lost $27 billion last year.

A provision in the $787 billion stimulus bill passed by Congress on Friday would prohibit cash bonuses for the five most senior officers and the 20 highest-paid executives at large banks that receive money under the Treasury Department’s bank rescue program. It would also bar other executives from receiving bonuses exceeding one-third of their annual pay.

Meanwhile, other workers’ bonuses are being scaled back because of business conditions. About 10 percent of workers nationwide receive annual bonuses, according to the Bureau of Labor Statistics. They are awarded in widely varying amounts, and at companies big and small. For instance, 14 percent of employees at companies with fewer than 99 workers get some extra year-end compensation, the federal agency said.

Companies of all sizes — and even many nonprofit organizations, like school districts — have adopted bonus systems for a variety of reasons: as a way to reward performance, to hold down base-pay levels, and to provide more flexibility to smooth out costs. And workers naturally enjoyed the smaller-than-Wall-Street windfalls when the economy was booming.

But such a system can also mean sharp swings in pay in a ravaged economy like this one. And the trickle-down effect can hurt prospects for restaurants, real estate agencies and other businesses that rely on discretionary purchases.

“People have begun to live as if bonuses were not bonuses at all but part of their expected annual income,” said Jay Lorsch, a professor at the Harvard School of Business. “When those bonuses don’t come through or are substantially reduced, people have to take it out of their lifestyles.”

Smaller bonuses mean another hit to the economy that is not reflected in some of the broadest measures of the nation’s health, like the growing unemployment figures that have become shorthand for the misfortunes of America’s workers.

In 2007, Jan Klincewicz, 50, was selling high-end corporate computers for Hewlett-Packard. He had a base salary of $87,000. His performance bonus was $143,000, and he used the proceeds to help buy a five-bedroom house outside of Philadelphia, a 65-inch high-definition television and a baritone saxophone.

In 2008, he switched to another company, Citrix Systems, where he hoped for a repeat performance selling software for high-end computers. His base salary was $108,000, but his bonus was only $24,000. He is not sure what the future holds, given the rough economy.

“I shop for bargains,” he said.

Across the country, bonuses are structured in many different ways. Some firms pay them based on individual performance or some combination of individual and corporate performance. And some regions and industries have their own peculiar bonus-pay cultures.

In Silicon Valley, performance-based compensation can come in sales commissions, as it does for Mr. Klincewicz. But more typically, people there get stock-option incentive packages that are not paid at year-end but can be cashed in by employees after a certain period of time, assuming the stock has risen enough to make the options valuable.

Given the state of the stock market, the options returns are as meager as the year-end bonuses handed out elsewhere, according to Silicon Valley residents. Some of the local business are feeling the pinch.

At the Silicon Valley Auto Group, a dealership in Los Gatos that sells Rolls Royce, Bentley and Lamborghini cars, the least expensive costing $60,000, the sales manager, Matthew Griffin, said he was not expecting the usual bonus-generated bump in sales. But that is not entirely because his clientele cannot afford to buy.

“Is it the politically correct thing to do when you’re consolidating offices and laying off people to show up in a new $400,000 car?” he asked.

[DoFoT9]

well at least he gets a bonus, what a selfish git.

i live off around $6k a year (AUS). tell him to try live off that, he would die.

i jsut cant show remorse for these people..

[yojitani]

I'm speechless.

[Unspeaked]

I'm speechless.

As was I.

I really had to read it twice, paying attention to every detail the second time, before it finally sank in that I was reading The New York Times and not The Onion.

[notjustjay]

That's flabbergastingly ridiculous. Where can I get a job with $87,000 base pay and a $143,000 performance bonus?!

At my company, the incentive plan is based on accomplishing objectives. At the beginning of the year, goals are set: $x cash flow, win this project bid, get these milestones on those projects. If the company meets ALL those objectives, then you get your full incentive pay -- 5-10% of base salary depending on your position and seniority. If the company meets only SOME of of those objectives, then you only get a proportion of the possible 5-10%.

Based on this rule, we did get bonuses last year -- not the full amount possible, but I sure wasn't going to complain. Who knows what'll happen this year though.

[Eraserhead]

well at least he gets a bonus, what a selfish git.

i live off around $6k a year (AUS). tell him to try live off that, he would die.

i jsut cant show remorse for these people..

FWIW If you earn more than US$4000 a year after PPP you are counted as middle class.

[DoFoT9]

FWIW If you earn more than US$4000 a year after PPP you are counted as middle class.

oh righto, i have no idea what it is in australia.. but 6k AUS is under 4k US, or pretty darn close to it!!

[Rodimus Prime]

I hate to be an ass about this but if you read the article it is very true in many way.
The lost of bonuses really hurts people.
Generally speaking at a certain point they do become part of your salary. You learn to count on them. A lot of time they are used for down payments on things that are needed/wanted. Term Christmas bonus make you think of anything. People used that to cover the cost of Christmas and it determined how good it was going to be so to speak.

I can tell on these boards a lot of people here can not fathom living in a family with a 6 figure income and thinks those people are great. Truth be told 6 figure is a more expensive life style but does not mean they are any better off and if they lose their jobs they do not adjust to all of a sudden the lost of it. They have fixed bills like house payments, rent and so on that are beyond what many of us can afford.

I grew up with parents who made over 6 figures. It is not hard when both your parents have a 4 year college degree.


The bonus are like a huge stimulus check. I am getting a estimated 3k one in the next 2 months. It is going to be used to refill my savings from me having to dip into it for some car repairs and huge maintenance bill and then give me a little spending money to buy myself a new toy I been wanting.

The lost of bonuses hurts the economy quite a bit. The richer people drive this economy a lot more than the poor and the bonuses are normally largely spent on extra "fun stuff"

[Golfer00ksu]

This is not new news.. These bonuses have been going on forever. Just now that we are in this recession it becomes pertinent. It is good we speak out about this but to truly make a point we should have brought this up when the economy was booming.. People were also struggling then, you know.

[Unspeaked]

I hate to be an ass about this but if you read the article it is very true in many way...

If someone making $135,000 has so much of their paycheck going to fixed bills that "only" getting a $25,000 bonus rather than a $50,000 causes a significant burden, they deserve whatever trouble they get themselves into.

[DoFoT9]

If someone making $135,000 has so much of their paycheck going to fixed bills that "only" getting a $25,000 bonus rather than a $50,000 causes a significant burden, they deserve whatever trouble they get themselves into.

i agree with you, while i think bonuses are a good idea the fact that they are a such large amounts is rediculous. they get so used to receiving them that once it is taken away they have a cry... hate to be a mere mortal!

[fr33 loader]

If someone making $135,000 has so much of their paycheck going to fixed bills that "only" getting a $25,000 bonus rather than a $50,000 causes a significant burden, they deserve whatever trouble they get themselves into.

Let me emphasize that for you. :p Pity...

[Rodimus Prime]

If someone making $135,000 has so much of their paycheck going to fixed bills that "only" getting a $25,000 bonus rather than a $50,000 causes a significant burden, they deserve whatever trouble they get themselves into.

and it goes back to one of my other statements.

Many people here do not nor can understand what it is like to have a 6 figure income.

Remember cost of living goes up as pay increase. If you get a near a 50k bonus every year. Then you get used to it and it started being consider part of your salary.

Now butting 25k our of a 185k normal yearly income works out to be a 13% reduction in pay.

How you adjust if you got slapped with an unexpected 13% reduction in pay. A lot of people that will hammer. Most people do not even save 10% of there income much less deal with a 13% loss.

[fr33 loader]

[QUOTE=Rodimus Prime;7138403]A lot of time they are used for down payments on things that are needed/wanted.

True. It's the "wants" that usually screws people up. Once they are accustomed to that lifestyle, its hard to get back. Then it becomes a "need".

lost of bonuses hurts the economy quite a bit. The richer people drive this economy a lot more than the poor and the bonuses are normally largely spent on extra "fun stuff"

I could help you spend that. :D. Let the poor do their share in rebuilding our economy.:p

[DoFoT9]

[QUOTE]

True. It's the "wants" that usually screws people up. Once they are accustomed to that lifestyle, its hard to get back. Then it becomes a "need".

I could help you spend that. :D. Let the poor do their share in rebuilding our economy.:p

im in the same boat, imagine having money to actually spend!! right now i struggle with getting petrol to get to uni, let alone paying for a 100k car/30k MP in cash/full without a worry in the world.

[Unspeaked]

and it goes back to one of my other statements.

Many people here do not nor can understand what it is like to have a 6 figure income.

Remember cost of living goes up as pay increase. If you get a near a 50k bonus every year. Then you get used to it and it started being consider part of your salary.

Now butting 25k our of a 185k normal yearly income works out to be a 13% reduction in pay.

How you adjust if you got slapped with an unexpected 13% reduction in pay. A lot of people that will hammer. Most people do not even save 10% of there income much less deal with a 13% loss.

I think most of us understand it, we just think it's ridiculous.

I could lose my job tomorrow and be fine for a year, because I do these crazy things called saving and planning.

If these six-figure income people can't do something as simple as that, they're idiots.

If these same people continually up their lifestyles proportionately to their pay checks year after year, they're even bigger idiots.

At some point, you have to say to yourself, "I am happy with the large house I have. I am happy with the luxury vehicle I drive. I am happy with the types of vacations I take. I will try to put future money aside instead of upgrading the aforementioned luxuries year after year after year."

I understand it. It just clashes with common sense.

[sushi]

I think most of us understand it, we just think it's ridiculous.

I could lose my job tomorrow and be fine for a year, because I do these crazy things called saving and planning.

If these six-figure income people can't do something as simple as that, they're idiots.

If these same people continually up their lifestyles proportionately to their pay checks year after year, they're even bigger idiots.

At some point, you have to say to yourself, "I am happy with the large house I have. I am happy with the luxury vehicle I drive. I am happy with the types of vacations I take. I will try to put future money aside instead of upgrading the aforementioned luxuries year after year after year."

I understand it. It just clashes with common sense.
Well said.

I guess the old adage that your spending habits expand as you income increases is true in this person's case.

[SactoGuy18]

I have no sympathy for these people. http://www.websmileys.com/sm/music/musik25.gif

[Rodimus Prime]

I think most of us understand it, we just think it's ridiculous.

I could lose my job tomorrow and be fine for a year, because I do these crazy things called saving and planning.

If these six-figure income people can't do something as simple as that, they're idiots.

If these same people continually up their lifestyles proportionately to their pay checks year after year, they're even bigger idiots.

At some point, you have to say to yourself, "I am happy with the large house I have. I am happy with the luxury vehicle I drive. I am happy with the types of vacations I take. I will try to put future money aside instead of upgrading the aforementioned luxuries year after year after year."

I understand it. It just clashes with common sense.


So you are telling me having your pay cut by 10-15% would have no effect on you nor you life.

I know if my pay was cut by 10% that my savings rate would drop like a rock.


Even if they had a savings built up the lost of the expect bonus (effectually cutting their yearly pay) is painful.

Now a lot of people have savings but the lost of the bonus pretty much kills a lot of the extra spending. My parents where working on redoing part of there house and want to take a very nice vacation both planned around a bonus check. No bonus means they put that stuff on hold very quickly because they where not going to dip into their savings to pay for those things.


The bold section is exactly my point on people here NOT understanding it. They see people with a lot of money and are jelous. They can not put it in simpler terms. Think in percentages and see how having a 10-15% pay cut would directly effect you. what would you do to adjust to a 10-15% pay cut.

[MacBoobsPro]

You live by what you earn. That is to say if you earn £100k your lifestyle will reflect that, if its cut by £20k you are going to feel it even though other people can live on much less that £20k a year.

That being said for people to be moaning about it when they are earning those amounts of money is despicable. They should be content to be in such a good position to begin with.

As for the bonuses for the bankers all the bonus money from all the banks should be divided up and an equal share given out to each of the banks customers as a way to apologise for the **** they have put everybody in.

If I lost my company £500 I would get reprimanded and possibly fined/fired. Never mind a collective $27 billion.

[iAlan]

I am bonused (not a real word?) quarterly, and it is all performance based. I hit my targets consistently and I know what i can achieve for doing so, thus have a good idea what my bonus will be. And I kind of budget certain purchases around my bonus. I don't get anywhere near the level of bonus mentioned in the article, but if you are to receive a clearly defined bonus based on your achievement you have no reason to complain if you don't reach the achieved goal and thus don't receive the bonus. If you receive a bonus based on something else and don't pay attention to what is going on you only have yourself to blame - if you are bonused at such a high amount you must be senior within your organization and thus privy to what is going on. Sure, you may not be getting access to the 'C-suite' but I would hope if your bonus is dependent on your company performance you would be paying attention.

I know I am simplifying here, but I am sure you get my point.

I know for some in the company I work for, the attitude has become 'I got XXX bonus last year i want the same this year'. Well, if it is in your contract and you perform, great, if not, you can't expect it. I know I will have a struggle this quarter and may not hit my targets 100%, so I know I will have to adjust what I do with my bonus when I receive it next quarter - plan to save it all for a new Mac purchase!

[GSMiller]

Wait...They're still getting bonuses that big?

Oh those poor souls.

And I doubt the big dogs on Wall Street are suffering. Sure, they can't buy a new private jet every five years now, but that's not exactly suffering.

[MacBoobsPro]

I am bonused (not a real word?) quarterly, and it is all performance based. I hit my targets consistently and I know what i can achieve for doing so, thus have a good idea what my bonus will be. And I kind of budget certain purchases around my bonus. I don't get anywhere near the level of bonus mentioned in the article, but if you are to receive a clearly defined bonus based on your achievement you have no reason to complain if you don't reach the achieved goal and thus don't receive the bonus. If you receive a bonus based on something else and don't pay attention to what is going on you only have yourself to blame - if you are bonused at such a high amount you must be senior within your organization and thus privy to what is going on. Sure, you may not be getting access to the 'C-suite' but I would hope if your bonus is dependent on your company performance you would be paying attention.

I know I am simplifying here, but I am sure you get my point.

I agree. If you 'earn' the bonus great but you shouldn't be given a bonus a for poor performance.

If I was in a bonus pay structure I would treat my bonus as exactly that... a bonus. I would never plan on spending something I don't actually have. Then if I under perform I have no reason to piss and moan that I didn't get 'my' bonus.

[bigjnyc]

I'm an investment banker in NYC, my bonus this year got cut by about 75% from what it was last year, I'm a junior banker and by no means making huge bucks yet... but I usually just take my bonus and use it for savings, people who are dependent on their bonus to pay bills and other life necessities really should re-evaluate their budgeting scheme.

[yg17]

and it goes back to one of my other statements.

Many people here do not nor can understand what it is like to have a 6 figure income.

Remember cost of living goes up as pay increase. If you get a near a 50k bonus every year. Then you get used to it and it started being consider part of your salary.

Now butting 25k our of a 185k normal yearly income works out to be a 13% reduction in pay.

How you adjust if you got slapped with an unexpected 13% reduction in pay. A lot of people that will hammer. Most people do not even save 10% of there income much less deal with a 13% loss.

Bullcrap. If I had a 6 figure income and lost my bonus, I'd readjust my lifestyle. Which, for these people would probably mean selling their huge mansion and buying a smaller mansion, trading their Ferrari in for a BMW, instead of eating a steak and lobster dinner, choosing either steak or lobster, and only drinking fine wine 5 days of the week instead of all 7. Boo-*********-hoo. I have no sympathy for them whatsoever.

Cost of living is cost of living, no matter how much your salary is. As long as you're making enough to cover the cost of living, you're going to be able to live a comfortable lifestyle. I'd like to see these people make what the average American making less than COL makes and trying to live off that for a month, just so they can see what it's like.

Oh, and one more thing. If their budgeting skills are so bad that they're so far into debt, that despite a 6 figure income, they rely on their bonus to pay bills, what the hell are they doing running a bank?

[pilotError]

I think most of us understand it, we just think it's ridiculous.

I could lose my job tomorrow and be fine for a year, because I do these crazy things called saving and planning.

If these six-figure income people can't do something as simple as that, they're idiots.

I'm curious as to where on the west coast you are?

What are home values there?

In NY or even California, those salaries are dead center middle class incomes.

I hate to break it to you, but either coast is very expensive to live.

How do you know that person isn't performing? Do you seriously think someone making $135k is buying Ferrari's?

If the guy who sold computers made a $146k bonus, you can bet he worked his butt off selling them.

[atszyman]

I hate to be an ass about this but if you read the article it is very true in many way.
The lost of bonuses really hurts people.

I've never, no matter how consistently I've been given bonuses in the past, counted on the bonus to fund any of my families lifestyle. Most often bonuses are used to buy something only mildly frivolous while the rest gets put into savings. It's called a bonus for a reason, and it will be one of the first things cut should something happen that affects the profitability of the company and therefore while they are nice, they should never be counted on to meet a yearly budget.

I can tell on these boards a lot of people here can not fathom living in a family with a 6 figure income and thinks those people are great. Truth be told 6 figure is a more expensive life style but does not mean they are any better off and if they lose their jobs they do not adjust to all of a sudden the lost of it. They have fixed bills like house payments, rent and so on that are beyond what many of us can afford.

I grew up with parents who made over 6 figures. It is not hard when both your parents have a 4 year college degree.

No, it isn't that hard, and my wife and I are fixing to give up almost half our income so she can stay home with the kids for a time period after the birth of our third next week. We save, and we plan. About the only cost that we have had that actually seems to move with our income is the cost of childcare, of course when we keep popping out kids every 2 years, the day care expenses pile up quickly. Without daycare our costs have been relatively constant over the past 5 years despite our pay increases.

The bonus are like a huge stimulus check. I am getting a estimated 3k one in the next 2 months. It is going to be used to refill my savings from me having to dip into it for some car repairs and huge maintenance bill and then give me a little spending money to buy myself a new toy I been wanting.

The lost of bonuses hurts the economy quite a bit. The richer people drive this economy a lot more than the poor and the bonuses are normally largely spent on extra "fun stuff"

I'd argue that not giving the bonuses is better for the economy. If a company can't afford the bonus, then not giving them will mean that some employees get to keep their jobs. The article talks about a $25k reduction in bonus. There are a lot of people who don't make that much in a year, much less as a one time bonus every year. For every 2 executives that don't get a bonus, that's a decent white collar job that is saved, and more people earning money will have a more stimulative effect than giving that money to the well-to-do who might just decide to not splurge this year and save it due to the economy.

What ever happened to personal responsibility?

I'm really beginning to think that there's a market for celebrities, politicians and executives to offer them a crash course on how to live on $100k a year or less. Force them to do it for at least a year. Why is it that you always see pop stars who earned millions only a few years back, filing for bankruptcy, or people like Donald Trump? Politicians should just have to do it to see how much of the country is really doing.

[sushi]

Interesting perspectives in this thread.

Most of my wealthy friends live very frugally. I would venture to say that none would be hurt by a 10-20 percent cut in pay. Sure they may adjust their lifestyle, but it would not hurt them.

Personally, I believe that if anybody who doesn't live within their means, which includes savings and investing, is setting themselves up for failure.

[savar]

That's flabbergastingly ridiculous. Where can I get a job with $87,000 base pay and a $143,000 performance bonus?!

At my company, the incentive plan is based on accomplishing objectives. At the beginning of the year, goals are set: $x cash flow, win this project bid, get these milestones on those projects. If the company meets ALL those objectives, then you get your full incentive pay -- 5-10% of base salary depending on your position and seniority. If the company meets only SOME of of those objectives, then you only get a proportion of the possible 5-10%.

Based on this rule, we did get bonuses last year -- not the full amount possible, but I sure wasn't going to complain. Who knows what'll happen this year though.

That's actually pretty small compared to Wall Street jobs. I have a lot of friends who worked on the street straight out of college. A typical compensation package for a straight-A b-school graduate would be $60-70k in base salary, and $150-200k in bonus. Essentially they work 100 hour weeks for 1-2 years then cash in on their bonus. The $60-70k base salary barely covers living expenses in new york city.

Most of those friends lost their jobs in the last year, however, so I'm not very envious.

[Kebabselector]

If you get a near a 50k bonus every year. Then you get used to it and it started being consider part of your salary.

That's the problem, don't rely on a bonus. Live within your salary.

[dmr727]

In NY or even California, those salaries are dead center middle class incomes.


I was going to make this comment too. $135K/year allows you to rent a condo and drive an Accord around here. It's not poor by any means, but it's nothing more than straight up middle class. Ferrari, or heck, even buy a house? Heh.

Nonetheless the point still remains - I can't feel too bad for people that are forced to readjust their lifestyles to this level. Yeah, it sucks, but it's not catastrophic.

[zelmo]

I was going to make this comment too. $135K/year allows you to rent a condo and drive an Accord around here. It's not poor by any means, but it's nothing more than straight up middle class. Ferrari, or heck, even buy a house? Heh.

Nonetheless the point still remains - I can't feel too bad for people that are forced to readjust their lifestyles to this level. Yeah, it sucks, but it's not catastrophic.

Agreed. While it may be negatively impacting them, it's pretty crass to be whinging about your plight when 90% or more of the country/world would love to be in your position. Poor babies.

[Mousse]

I think most of us understand it, we just think it's ridiculous.

I could lose my job tomorrow and be fine for a year, because I do these crazy things called saving and planning.

If these six-figure income people can't do something as simple as that, they're idiots.

If these same people continually up their lifestyles proportionately to their pay checks year after year, they're even bigger idiots.

This might come as a shock to you, but the average American's net worth is $0.00. That's right. It doesn't matter whether they make a $1000 or $10,000,000 a year they spend it all to maintain their lifestyle.:rolleyes:

My net worth is ~$150,000. That's respectable considering the fact I'm one of the down trodden working-class masses.:eek: If I made six figures, I'd be worth several millions by now.:p

[ErikCLDR]

If you make $135,000 a year you are not going to be buying a ferrari anyways.

Like someone said before yes they are losing a fairly substantial amount of their income. Yes they are making a good amount of money, but the cost of living in or around new york is insane. In Manhattan the cheapest apartment you can buy is around $600,000. If they live in New York they probably don't even have a car anways. If you live in Connecticut and commute, the smallest dilapidated 1,000sq ft shack you can find in fairfield county is around $500,000 plus an hour commute. Anything moderately sized is at least $800,000. Do I have sympathy for these people, yes because they are losing a fair share of their income. $135,000 really is not "rich", especially in New York.

That said people should be prepared for uncertain economic times (including lay offs) and should not rely on bonuses entirely.

But let me ask you this, how did you feel in the movie Christmas Vacation when Clark W. Griswold did not receive his Christmas bonus but rather a membership to a jelly club? At least these people's cousins aren't going off and kidnapping their bosses.

[ski2moro]

The article uses techniques common to propagandists by exaggerating. No one making 6 figures has a Ferrari or private jet.

Let's take this Bonus concept down to everyday terms.

Long ago, when I was in college, I had a sales job where I was paid minimum wage hourly base pay PLUS 8% of everything I sold. Adjusted for current US wages, let's say $10 per hour, 20 hours per week so $200 per week base pay.

Then, as a bonus or sales incentive, I got 8% for every unit I sold. Each unit was approx. $2000 ($160 for me) but some sold for $5000-10,000. I didn't sell many of the big ones, but sometimes I could. I averaged 3 sales of the $2000 units per week.

If I sold nothing, I made guaranteed $200 per week. If I sold 3, I got a bonus of $480 for that week, If I sold 4, I got $640 plus $200 base salary. Sell a big one, and I had a nice $800 additional in my paycheck. I was paid the base pay weekly, and I got a bonus check once a month.

If I made money for the company by selling product, I got paid more than if I just sat around doing nothing at all. Some weeks, I worked by butt off and never got a sale. That's why I was paid a base hourly wage.

My annual base pay (adjusted to today's terms) was $10,400. My sales incentive 'bonus' was $26,000 if I averaged 3 sales per week. That's 2 1/2 times by base pay!

What's so hard for you to understand about that?

I lived within my means, just in case I didn't sell a thing that month. That never happened because I was motivated to sell and make more money. When I got that bonus check, I could do whatever I wanted to do with it.

When I got the bonus checks, I saved for a down payment on a house. I saved 6 months of pay just in case I lost my job. I had a family to support.
I rode a used motorcycle to work. To save $$$, I ate peanut butter sandwiches for lunch and lots of pasta for dinner.

Fast forward to 2009. I am firmly in the middle class. I pay my bills, play by the rules, and live within my means. Despite a really good income, my family and I still live frugally. I still pack my lunch, clip coupons for groceries, wait for things to go on sale, and put aside $$$ for the future. I have a nice car (not a Ferrari), live in a nice house, and have real furniture (no more milk crates for night stands) My spending weakness? I splurge on the technology I want.

My philospohy - If I don't have it, I don't spend it. I pay my credit cards off each month. (I will never understand the people who are paying 20% interest on a pizza they bought 3 years ago.) I started with nothing and built my nest egg with no help from anyone. If I lost my job tomorrow, I would be ok for a while, but I would still be out there doing whatever I could to support my family without sucking at the government's teat. I have my pride and I'm driven to succeed. If more people had this simple philosophy, we wouldn't be in this mess.

[Pnut13]

If you make $135,000 a year you are not going to be buying a ferrari anyways.

Like someone said before yes they are losing a fairly substantial amount of their income. Yes they are making a good amount of money, but the cost of living in or around new york is insane. In Manhattan the cheapest apartment you can buy is around $600,000. If they live in New York they probably don't even have a car anways. If you live in Connecticut and commute, the smallest dilapidated 1,000sq ft shack you can find in fairfield county is around $500,000 plus an hour commute. Anything moderately sized is at least $800,000. Do I have sympathy for these people, yes because they are losing a fair share of their income. $135,000 really is not "rich", especially in New York.

That said people should be prepared for uncertain economic times (including lay offs) and should not rely on bonuses entirely.

But let me ask you this, how did you feel in the movie Christmas Vacation when Clark W. Griswold did not receive his Christmas bonus but rather a membership to a jelly club? At least these people's cousins aren't going off and kidnapping their bosses.

yes i live on Long Island and many people 80-90% of my age 30 that grew uup here are gone, it is supper expensive, not Manhattan expensive, but still.

As many smart people said before people live above their means
If you make $135K plus $50K bonus, or make $40K total, you need to live at your income level. Someone on 1 income making $40 knows he cant afford a home, that idiot making $185K maybe should not buy a 5BR house, maybe a 3BR house, maybe not have 2 hummers but one and a sedan.............these people need a reality check, thankfully most are getting their wakeup call now. TG

[Arran]

Agreed. While it may be negatively impacting them, it's pretty crass to be whinging about your plight when 90% or more of the country/world would love to be in your position. Poor babies.

If you're talking about the world, it's more like 99.5%. Check your own position here: http://www.globalrichlist.com/ Quite an eye-opener, yes?

[dmr727]

No one making 6 figures has a Ferrari or private jet.

Well, nobody making in the $100s at least, but it doesn't take seven figures to justify a Ferrari. A private jet is a whole other ball game - even seven figure incomes usually don't justify ownership of one.

[AmbientEternity]

Now a lot of people have savings but the lost of the bonus pretty much kills a lot of the extra spending. My parents where working on redoing part of there house and want to take a very nice vacation both planned around a bonus check. No bonus means they put that stuff on hold very quickly because they where not going to dip into their savings to pay for those things.

Lol... Poor things. :rolleyes:

Maybe they'll learn not to expect their bonus' as a given from now on...


If I was in a bonus pay structure I would treat my bonus as exactly that... a bonus. I would never plan on spending something I don't actually have. Then if I under perform I have no reason to piss and moan that I didn't get 'my' bonus.

Exactly.

[Unspeaked]

So you are telling me having your pay cut by 10-15% would have no effect on you nor you life.

Heck, cut it 25% and I wouldn't flinch.

And trust me, I don't live a super frugal lifestyle. Nor make boat loads of money. I'm simply grounded in reality.


My parents where working on redoing part of there house and want to take a very nice vacation both planned around a bonus check. No bonus means they put that stuff on hold very quickly because they where not going to dip into their savings to pay for those things.

And redoing part of their house and taking a very nice vacation is necessary in what way, exactly?

I'm sorry, I have no sympathy for someone that needs to hold off redoing part of their house and taking a very nice vacation when they both still have a house and can still take a (not quite as very nice) vacation.


Bullcrap. If I had a 6 figure income and lost my bonus, I'd readjust my lifestyle. Which, for these people would probably mean selling their huge mansion and buying a smaller mansion, trading their Ferrari in for a BMW, instead of eating a steak and lobster dinner, choosing either steak or lobster, and only drinking fine wine 5 days of the week instead of all 7. Boo-*********-hoo. I have no sympathy for them whatsoever.

Cost of living is cost of living, no matter how much your salary is. As long as you're making enough to cover the cost of living, you're going to be able to live a comfortable lifestyle. I'd like to see these people make what the average American making less than COL makes and trying to live off that for a month, just so they can see what it's like.

Oh, and one more thing. If their budgeting skills are so bad that they're so far into debt, that despite a 6 figure income, they rely on their bonus to pay bills, what the hell are they doing running a bank?

Right on.

I don't care about someone making a half million dollars a year, nor am I jealous.

But I am astonished that they couldn't make due with a 10% pay cut, especially at those levels.

Where is the money going to? How can someone seriously post that a person making that much money isn't wasting any of it and is just living up to their means?


In NY or even California, those salaries are dead center middle class incomes.

If someone is unhappy with their purchasing power at their current location, maybe they should consider moving.

I hear the dollar goes far in Costa Rica...


Personally, I believe that if anybody who doesn't live within their means, which includes savings and investing, is setting themselves up for failure.

Bingo.


That's the problem, don't rely on a bonus. Live within your salary.

Bingo, again.


This might come as a shock to you, but the average American's net worth is $0.00. That's right. It doesn't matter whether they make a $1000 or $10,000,000 a year they spend it all to maintain their lifestyle.:rolleyes:

Sadly, I'm well aware of that fact, but I just have a hard time grasping it.


In Manhattan the cheapest apartment you can buy is around $600,000. If they live in New York they probably don't even have a car anways. If you live in Connecticut and commute, the smallest dilapidated 1,000sq ft shack you can find in fairfield county is around $500,000 plus an hour commute. Anything moderately sized is at least $800,000. Do I have sympathy for these people, yes because they are losing a fair share of their income. $135,000 really is not "rich", especially in New York.

Again, maybe they should consider living elsewhere.

I've known plenty of friends in New York making significantly less than $135,000 and enjoying themselves.

If someone making that much or more misses out on a $10,000 or $20,000 bonus and it impacts them that greatly, they're clearly doing something wrong. Either get a new job, move, change your lifestyle or a combination of all three.

[dmr727]

If someone is unhappy with their purchasing power at their current location, maybe they should consider moving.


I think the point being made is that it seems people are pissed about this article simply because of the salary numbers themselves (which I assume was the intent of the article to begin with), when in reality it's an issue of percentages. A 20% pay hit, regardless of salary, will force most people to change their spending habits.

[pilotError]

And redoing part of their house and taking a very nice vacation is necessary in what way, exactly?

I'm sorry, I have no sympathy for someone that needs to hold off redoing part of their house and taking a very nice vacation when they both still have a house and can still take a (not quite as very nice) vacation.


Let me see, them holding off on improving their home puts the carpenters out of work, the local supply store sells that much less of shingle, siding and lumber.

You don't seem to get that money rolls downhill and has a larger effect than Thurston not getting his west wing.


I don't care about someone making a half million dollars a year, nor am I jealous.

But I am astonished that they couldn't make due with a 10% pay cut, especially at those levels.


Seriously, at that level, if it's the only income for the family and you do have kids, your squeaking by on basic living expenses.


Where is the money going to? How can someone seriously post that a person making that much money isn't wasting any of it and is just living up to their means?

Taxes - Gov't takes their 35% cut
Mortgage / Property Taxes - $2500 - $3500 /month
Gas / Electric - $500 / month (being generous here)
Car Payment - $400+ (unless you have a ferrari)
Travel Expenses - $250 / month - Railroad, $80+ / month - Subway
Food - Lunch $10 - $15 / day / per person
Phone - OK, splurged on an iPhone $70 / month

That's just for starters, not including groceries, costs for a nanny if its a dual income family, cable, internet, etc.

If someone is unhappy with their purchasing power at their current location, maybe they should consider moving.

I hear the dollar goes far in Costa Rica...


That's just a dumb statement, but ask the folks in North and South Carolina how they like them Yankees moving in? Seriously, as those towns get invaded for living a more reasonable lifestyle, the cost of living increases and the locals can no longer afford to live there.


Again, maybe they should consider living elsewhere.

I've known plenty of friends in New York making significantly less than $135,000 and enjoying themselves.


If you don't have a family to support, its possible. You can find some reasonable rent rates and share an apartment outside of Manhattan.


If someone making that much or more misses out on a $10,000 or $20,000 bonus and it impacts them that greatly, they're clearly doing something wrong. Either get a new job, move, change your lifestyle or a combination of all three.

True, some people do live above their means. For someone at that level in NYC, that bonus money is their disposable income. Like I said, money rolls downhill. That salesman doesn't sell as many cars and gets laid off, the city spends money on public assistance instead of collecting income tax, everyone is affected when there's no disposable income.

[Unspeaked]

...

I could reply to each of your points one by one, but it's clear that there are two types of people posting in this thread: those that can't see how someone can adjust to downward changes in income and those that can.

It seems very little will change either side's mind.

You can post about high cost of living and trickle-down economics all day long and I will fail to see how someone making even $100,000 would not be able to adjust to not getting their $10,000 bonus pain-free.

[dmr727]

I could reply to each of your points one by one, but it's clear that there are two types of people posting in this thread: those that can't see how someone can adjust to downward changes in income and those that can.

I don't think anyone is arguing that someone can't adjust to downward changes in income - it's more a matter of disagreeing about what's 'painful'. :)

I'm about to have close to half of my household income lopped off in April. Now I'm sure you can have that happen to you and not flinch, as you put it, but the difference is what's makes us flinch. My lifestyle isn't going to change, but I won't be able to invest as much, put as much away for a house, and so on. And damn right that makes me flinch.

[Unspeaked]

I don't think anyone is arguing that someone can't adjust to downward changes in income - it's more a matter of disagreeing about what's 'painful'. :)

I don't know, I get the impression that a lot of people are arguing exactly that.

The ones posting that you can barely scrape by on $135,000 in Manhattan and such.


I'm about to have close to half of my household income lopped off in April. Now I'm sure you can have that happen to you and not flinch, as you put it, but the difference is what's makes us flinch. My lifestyle isn't going to change, but I won't be able to invest as much, put as much away for a house, and so on. And damn right that makes me flinch.

I'm sorry to hear that. But in this case, 50% is a pretty significant number. I'm surprised your lifestyle won't change much with that sort of cut, but if that's the case, I really admire your ability to deal with it.


Going back to the first post, I never intended for this to become a discussion of incomes and what's rich and what's middle class and how much one needs to live in NYC vs Phoenix, etc, etc. The purpose was to point out how ridiculous it is that someone's complaining that their $50,000 bonus was cut to $25,000 and how it's really messed up their budget when any sane person should be able to tell just by the name itself that a bonus is a bonus and nothing that should be taken for granted, but rather a gift, and a $25,000 gift is a pretty nice one regardless of how much you earn or where you live.

[dmr727]

I'm sorry to hear that. But in this case, 50% is a pretty significant number. I'm surprised your lifestyle won't change much with that sort of cut, but if that's the case, I really admire your ability to deal with it.


Hey thanks. It's nothing to admire though - my wife and I both work in unpredictable industries, so we agreed to budget such that we can live comfortably on one salary alone. Glad we did! :)

[Unspeaked]

Hey thanks. It's nothing to admire though - my wife and I both work in unpredictable industries, so we agreed to budget such that we can live comfortably on one salary alone. Glad we did! :)

Don't sell yourself short - there's plenty of folks out there that should be saving aggressively but don't, so it's nice to see someone looking beyond this week!

Good luck, regardless...

[sushi]

Hey thanks. It's nothing to admire though - my wife and I both work in unpredictable industries, so we agreed to budget such that we can live comfortably on one salary alone. Glad we did! :)
That's definitely the smart thing to do.

It's always best to live within your means. Bonuses do not count. If I make 60K per year, and have a bonus of 50K per year, my budget should be based upon 60K per year and not 110K per year.

Sure I can base my budget on 110K per year as many do but what happens when my bonus is decreased or eliminated all together? I will be up a certain creek really quick because I will be spending 110K and only receiving 60K.

If on the other hand, I simply saved the 50K bonus each year, I would continue to live as I normally did with no change to my lifestyle. Of course my savings would be decreased by 50K per year, but that would not affect my lifestyle.

It's all about priorities. Which is more important? Saving for the future or spending on something now?

[Rodimus Prime]

I could reply to each of your points one by one, but it's clear that there are two types of people posting in this thread: those that can't see how someone can adjust to downward changes in income and those that can.

It seems very little will change either side's mind.

You can post about high cost of living and trickle-down economics all day long and I will fail to see how someone making even $100,000 would not be able to adjust to not getting their $10,000 bonus pain-free.

No you are wrong on that first part. This thread is those who understand at a certain point the "bonuses" become considered part of the basic composition package. and those who do not.

That and those who seem to think that taking down the massage change in income is easy. It is not. Think about it for a little bit. Most of the fix cost do not change. It is going to put a huge dent in it and may put some on edge.

Bonus quite often where used to pay for trips (canceled now), pay for college educations for their kids (which was how mine was payed for), and so on.


I don't know, I get the impression that a lot of people are arguing exactly that.

The ones posting that you can barely scrape by on $135,000 in Manhattan and such.




I'm sorry to hear that. But in this case, 50% is a pretty significant number. I'm surprised your lifestyle won't change much with that sort of cut, but if that's the case, I really admire your ability to deal with it.


Going back to the first post, I never intended for this to become a discussion of incomes and what's rich and what's middle class and how much one needs to live in NYC vs Phoenix, etc, etc. The purpose was to point out how ridiculous it is that someone's complaining that their $50,000 bonus was cut to $25,000 and how it's really messed up their budget when any sane person should be able to tell just by the name itself that a bonus is a bonus and nothing that should be taken for granted, but rather a gift, and a $25,000 gift is a pretty nice one regardless of how much you earn or where you live.


Some one else in these thread showed how there bonus worked and effectively it was most of their salary. The article also explains how bonuses have been used to keep the person at a lower salary and yet still pay them competitive wages.

That goes to show that "bonuses" so at some point get counted as an expect part of your salary.

Now at some point it is going to cross into your normal wages. 50k a year is around 37% of there base salary. You are not going to tell me that an average person who gets a 37% bonus every year is not going to get to the point where they expect something like that every year. If you do then you clearly are not average nor understand the average person. It is starting to cross into that line where it starting to be come part of the base.

[QCassidy352]

Bullcrap. If I had a 6 figure income and lost my bonus, I'd readjust my lifestyle. Which, for these people would probably mean selling their huge mansion and buying a smaller mansion, trading their Ferrari in for a BMW, instead of eating a steak and lobster dinner, choosing either steak or lobster, and only drinking fine wine 5 days of the week instead of all 7. Boo-*********-hoo. I have no sympathy for them whatsoever.

Um, what planet do you live on? 6 figure income means starting at $100,000. After taxes (state, federal, social security, etc.) you're at about $60,000. $2000 rent/month gets you a very modest apartment in a lot of major cities (which is where higher paying jobs tend to be), and that puts you at $36,000. Now add in car payments, student loan payments, utilities, etc etc.

I'm not saying $100,000 is a bad salary, but mansions? Ferraris? Fine wine 7 days a week? I can only hope you're deliberately being ridiculous to make a point.

[marbles]

It's about time we did away with money and created a fairer system for all.



It's all created from thin air anyway , money is basically just a way of controlling the masses

[atszyman]

Now at some point it is going to cross into your normal wages. 50k a year is around 37% of there base salary. You are not going to tell me that an average person who gets a 37% bonus every year is not going to get to the point where they expect something like that every year. If you do then you clearly are not average nor understand the average person. It is starting to cross into that line where it starting to be come part of the base.

The bonus is huge compared to their salary, but the first clue that you shouldn't count on it is the fact that it's called a bonus. By that very nomenclature the company has defined it as something they can take away when they don't want to award you a "bonus."

The average person may get into a situation where they start to count on this but aren't these people supposed to be above average in order to justify their salaries and exorbitant bonuses?

I get a bonus every year around Xmas. It's almost always the same, but I don't count on it in anyway whatsoever. I always hope it's more, but I never expect more than a Jelly of the Month Club membership.

[QCassidy352]

It's about time we did away with money and created a fairer system for all.

It's all created from thin air anyway , money is basically just a way of controlling the masses

Yeah good luck with that. :rolleyes:

The bonus is huge compared to their salary, but the first clue that you shouldn't count on it is the fact that it's called a bonus. By that very nomenclature the company has defined it as something they can take away when they don't want to award you a "bonus."

That's fine if your bonus is a little extra at Christmas time. It's just not realistic when it's 50% or more of your salary. I'm sure there are people who make $150K and live on the assumption that they could drop down to $50K at any time, but it's not the way most people think, especially when these "bonuses" have been so consistent for so long.

No you are wrong on that first part. This thread is those who understand at a certain point the "bonuses" become considered part of the basic composition package. and those who do not.

Exactly right. People are getting too hung up on the nomenclature. When it's 2/3 of your total income it's your salary, regardless of the name you want to use.

[atszyman]

That's fine if your bonus is a little extra at Christmas time. It's just not realistic when it's 50% or more of your salary. I'm sure there are people who make $150K and live on the assumption that they could drop down to $50K at any time, but it's not the way most people think, especially when these "bonuses" have been so consistent for so long.


It's completely realistic. If my employer wanted to guarantee that money to me every year it would be in my salary. By the very fact that the employer, and employee call it a bonus makes it non-guaranteed. If you can't work that out and plan your finances accordingly then maybe you're not worth that first 2/3rds of your salary that is still over six figures. Just because it's been consistent in the past is no indication of future as anyone who puts money in the market should know by now. If it's called a bonus don't be surprised if it goes away when times get tough.

[Unspeaked]

It's completely realistic. If my employer wanted to guarantee that money to me every year it would be in my salary. By the very fact that the employer, and employee call it a bonus makes it non-guaranteed. If you can't work that out and plan your finances accordingly then maybe you're not worth that first 2/3rds of your salary that is still over six figures. Just because it's been consistent in the past is no indication of future as anyone who puts money in the market should know by now. If it's called a bonus don't be surprised if it goes away when times get tough.

Exactly.

If you want to know for show what you're making year to year, get a job with a high salary.

If a great deal of your income depends on bonuses, commissions, tips, reaching sales goals, etc. - either find a different line of work or don't complain if there's drastic swings from your to year.

[QCassidy352]

It's completely realistic. If my employer wanted to guarantee that money to me every year it would be in my salary. By the very fact that the employer, and employee call it a bonus makes it non-guaranteed. If you can't work that out and plan your finances accordingly then maybe you're not worth that first 2/3rds of your salary that is still over six figures. Just because it's been consistent in the past is no indication of future as anyone who puts money in the market should know by now. If it's called a bonus don't be surprised if it goes away when times get tough.

Exactly.

If you want to know for show what you're making year to year, get a job with a high salary.

Unless you have a contract, salaries aren't guaranteed either. Jobs aren't guaranteed. Dividends aren't guaranteed, and neither are investments. Nothing is guaranteed except cash you already have. If you're relying on ANY stream of revenue it can slow or stop.

Of course it makes sense to plan for the future and not spend every dime you make, but that applies regardless of whether your money comes in the form of a salary, a bonus, or whatever else. Maybe it's slightly easier to take away a bonus than a salary, but just ever so slightly.

Bottom line is that if someone has been consistently making $100K and you take away $50K, you've cut their income in half. Call it whatever you like - the effect is the same.

[zap2]

Its less the fact these people are getting these bonuses, will really unneeded if the companies are firing people....but the fact they THINK they need them is out of this world


Only 108K, SO SAD!

[Unspeaked]

Unless you have a contract, salaries aren't guaranteed either. Jobs aren't guaranteed. Dividends aren't guaranteed, and neither are investments. Nothing is guaranteed except cash you already have. If you're relying on ANY stream of revenue it can slow or stop.

Of course it makes sense to plan for the future and not spend every dime you make, but that applies regardless of whether your money comes in the form of a salary, a bonus, or whatever else. Maybe it's slightly easier to take away a bonus than a salary, but just ever so slightly.

Bottom line is that if someone has been consistently making $100K and you take away $50K, you've cut their income in half. Call it whatever you like - the effect is the same.

You guys still don't get it!

Bonuses don't factor into unemployment benefits, they don't factor into severance packages, they don't factor into anything because they're bonuses... not regular pay.

Even if you lose your job out of the blue, you could at least have some idea what sort of income you'd have for the immediate future from unemployment benefits (and, if state law or corporate policy allows, severance) based on your salary. Bonuses mean nothing.

To say a salary holds no more significance and/or offers no more security than a bonus is ridiculous.

[sushi]

The bonus is huge compared to their salary, but the first clue that you shouldn't count on it is the fact that it's called a bonus. By that very nomenclature the company has defined it as something they can take away when they don't want to award you a "bonus."
Very true.

In some cases bonus amounts are huge compared to salary. In others, the bonus is much smaller.

However, for someone to live with the idea that the bonus will always be there is risky and setting themselves up for failure. Plain and simple.

I get a bonus every year around Xmas. It's almost always the same, but I don't count on it in anyway whatsoever.
Same here. I don't count on it. Mine just goes into savings.

That's fine if your bonus is a little extra at Christmas time. It's just not realistic when it's 50% or more of your salary. I'm sure there are people who make $150K and live on the assumption that they could drop down to $50K at any time, but it's not the way most people think, especially when these "bonuses" have been so consistent for so long.
That may be true. But it doesn't negate the fact that if an individual's lifestyle is based upon their salary and their bonus, it is quite possible that hey will get into a bind someday when their bonus is greatly reduced or eliminated.

You guys still don't get it!

Bonuses don't factor into unemployment benefits, they don't factor into severance packages, they don't factor into anything because they're bonuses... not regular pay.

Even if you lose your job out of the blue, you could at least have some idea what sort of income you'd have for the immediate future from unemployment benefits (and, if state law or corporate policy allows, severance) based on your salary. Bonuses mean nothing.

To say a salary holds no more significance and/or offers no more security than a bonus is ridiculous.
Good points!

[Rodimus Prime]

Exactly right. People are getting too hung up on the nomenclature. When it's 2/3 of your total income it's your salary, regardless of the name you want to use.


Exactly. This is how this tread as broken down. Those you understand the current system and those who are on a high horse and clearly do not understand it.

Commissions are not factor into unemployment either but they are examples of counted on wages, or you can factor in tips which again are not factored into unemployment but are counted on as wages. and so on. Those "Bonus" think of them as commissions which are counted on as part of the money process.


At what point do yearly "bonuses" cross into the line of expected.

10% I would say not counted on. 15% starts pushing it. 37% is in the counted on range.

Think of that number in percentages also helps out because some people here are blinded by jealousy.

[Ugg]

I'm an investment banker in NYC, my bonus this year got cut by about 75% from what it was last year, I'm a junior banker and by no means making huge bucks yet... but I usually just take my bonus and use it for savings, people who are dependent on their bonus to pay bills and other life necessities really should re-evaluate their budgeting scheme.

Absolutely. A bonus is exactly that, a bonus, shouldn't be considered a part of base pay. Anyone who plans their budget around a discretionary bonus is insane.

[sushi]

Absolutely. A bonus is exactly that, a bonus, shouldn't be considered a part of base pay. Anyone who plans their budget around a discretionary bonus is insane.
Completely agree with this.

Crazy to base ones budget upon income to include bonuses.

[cleanup]

If you start making long-term expenditures and changes in your life that require money on top of your salary, then maybe you don't deserve to have the money at all. It's more profitable for the company to turn fixed costs like salaries into variable costs like bonuses, so that they can be cut back when money is tight, or when there's no reason to pay them. This is part of the problem; while someone would love to be rewarded for their performance, the company would rather give it in the form of a bonus rather than a pay raise, even if a pay raise would more stably increase the employee's quality of life.

So it becomes a question of where personal responsibility ends and corporate responsibility begins. It's kind of a muddy line.

[yg17]

Um, what planet do you live on? 6 figure income means starting at $100,000. After taxes (state, federal, social security, etc.) you're at about $60,000. $2000 rent/month gets you a very modest apartment in a lot of major cities (which is where higher paying jobs tend to be), and that puts you at $36,000. Now add in car payments, student loan payments, utilities, etc etc.

I'm not saying $100,000 is a bad salary, but mansions? Ferraris? Fine wine 7 days a week? I can only hope you're deliberately being ridiculous to make a point.

Could be $100,000 or $999,999, or anywhere in between. But even if I am exaggerating, the point still stands. They can still have a very comfortable life on that.

And another point, isn't the idea of a bonus to be a reward for being successful? If you're being bailed out by the government to avoid a collapse, you're not successful and don't deserve a bonus.

[sushi]

Could be $100,000 or $999,999, or anywhere in between. But even if I am exaggerating, the point still stands. They can still have a very comfortable life on that.
There are many who live a nice life on a lot less than $100,000 per year.

Money != Happiness.

Sure one needs money to live and survive. How much becomes the question. Even BG with all his wealth must be content with what he has. He can never have everything.

And another point, isn't the idea of a bonus to be a reward for being successful? If you're being bailed out by the government to avoid a collapse, you're not successful and don't deserve a bonus.
Well said.

[No1451]

So you are telling me having your pay cut by 10-15% would have no effect on you nor you life.

I know if my pay was cut by 10% that my savings rate would drop like a rock.


Even if they had a savings built up the lost of the expect bonus (effectually cutting their yearly pay) is painful.

Now a lot of people have savings but the lost of the bonus pretty much kills a lot of the extra spending. My parents where working on redoing part of there house and want to take a very nice vacation both planned around a bonus check. No bonus means they put that stuff on hold very quickly because they where not going to dip into their savings to pay for those things.


The bold section is exactly my point on people here NOT understanding it. They see people with a lot of money and are jelous. They can not put it in simpler terms. Think in percentages and see how having a 10-15% pay cut would directly effect you. what would you do to adjust to a 10-15% pay cut.


It's not that we are jealous, it's just ridiculous. Yes I understand the idea that we spend based on our earnings, but at some point you have to step back and realize that a lot of these "needs" are not needs. You don't need a 6+ bedroom house, you don't need a $200,000 car, you don't need to have a 60+ inch tv.

Their cost of living shouldn't need to be any higher than any other person's COL. They chose to live at the maximum of their budget, which is dumb dumb dumb. Live within your means, save for big purchases rather than banking on a bonus and all will be fine.

[dmr727]

but at some point you have to step back and realize that a lot of these "needs" are not needs.

But where is that point? Someone earning $1.5M/year will have a different opinion of "needs" than someone in the middle class. You ask about "needing" that $200,000 car, but then again, do you "need" that $30,000 car when you can buy a reliable, used Honda for only $5,000? Someone earning $15K/year might argue that you don't.

[Rodimus Prime]

But where is that point? Someone earning $1.5M/year will have a different opinion of "needs" than someone in the middle class. You ask about "needing" that $200,000 car, but then again, do you "need" that $30,000 car when you can buy a reliable, used Honda for only $5,000? Someone earning $15K/year might argue that you don't.

I think that it a good example. The more you make the general month to month cost goes up.

Also might like to point out that list the poster made does not hold true to some one making 200k a year. Those people might have at most a 5 bedroom house. 2 cars that where a max of 30k when they where new.

Now that 5 bedroom house if you factored in that they had 3 kids. Now the extra bed room no longer seems out of place.

People get hung up on stupid things and do not understand it.

[rhsgolfer33]

Could be $100,000 or $999,999, or anywhere in between. But even if I am exaggerating, the point still stands. They can still have a very comfortable life on that.

And another point, isn't the idea of a bonus to be a reward for being successful? If you're being bailed out by the government to avoid a collapse, you're not successful and don't deserve a bonus.

$100,000 in New York? Yeah, that'll go a long way to a living a comfortable life. Maybe a 700 sq ft appartment in a decent area and a subway ticket to work; I don't know what you define as comfortable, but that certainly doesn't fit my bill, especially if I'm putting in 90+ hours on the Street.

YG, you're passing judgement on a single traders based on the financial results of the entire company, thats unfair. Just because the company lost money doesn't mean every solitary trader or employee did. The company is being bailed out, not Tom Jones the Associate in the Investment Banking Department, he could have made millions. But apparently because the guys in the Mortgage Securities Department, which he doesn't even work in, messed up, he shouldn't get a bonus.

Wall Street compensation is almost all in "bonus" form. Its been that way for quite some time. Taking a cut in your "bonus" on the Street is like taking a straight cut in pay anywhere else. Its typical for an entry level associate to start at $60k and make a 100% "bonus." Its expected as part of the compensation package when you take that job. Bonus on Wall Street =/= to bonus anywhere else. If I were working as a trader at Sachs or Merrill and my boss told me my bonus would be halved from $50k to $25k I'd be damned pissed, especially after the hours I put in during the year, you would too. I'm certainly not saying this is right, but having considered joining the ranks of the people everyone loves on Wall Street many times I've learned a little about what compensation is expected. They definitely don't tell you $60k when you talk to an associate who's been around for a year or two, they tell you $120k, $60k salary and a $60k bonus that's "always" received.

$135,000 is only a lot of money when you're making less.

[Sun Baked]

Problem is while people don't feel sorry for the rich, their lack of income to spend will hit them quite hard when the sales/income tax revenue in their district gets hammered heavy.

If they aren't getting paid as much, these overpayed people living paycheck to paycheck aren't contributing as much to the tax base anymore.

Which rebounds into a greater state/federal/local budget deficit which everyone will eventually pay for.

You should be thanking the 6-figure yahoos for blowing through their dough instead of funneling it back to Wall Street.

[Rodimus Prime]

Problem is while people don't feel sorry for the rich, their lack of income to spend will hit them quite hard when the sales/income tax revenue in their district gets hammered heavy.

If they aren't getting paid as much, these overpayed people living paycheck to paycheck aren't contributing as much to the tax base anymore.

Which rebounds into a greater state/federal/local budget deficit which everyone will eventually pay for.

You should be thanking the 6-figure yahoos for blowing through their dough instead of funneling it back to Wall Street.


That goes into an interesting point on the stimulus checks Bush gave out last year.

Some called it a failure and a waste of money. The funny part is the checks where very successful. The spending of the people who got the checks hand a huge increase in spending but the richer group who did not receive the check the spending fell. This fall caused the over all spending of the economy to fall.

So a fall in the 10% of the people who did not get the check (most of the people in referenced in this story) fell more than the bottom 90% increase in spending. That 10% starts at about the point the stimulus checks stop.