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Elite Traveler – ET Insider – April 17, 2012


ET Insider – April 17, 2012

Elite Traveler Insider –


April 17, 2012

Elite Traveler Insider

============================================================ More than ever private jet travelers, or elite travelers as we like to call them, are the most lucrative market for luxury brands and service providers.  With readers spending $10,000 per hour to fly privately, the over 600,000 readers Elite Traveler reaches each issue provide you a great way to make sure your message is in front of consumers who have the money to be good customers.  With our Asia Edition, Elite Traveler Superyachts, our over 60 Elite Traveler Destination Guides at, our global database of private jet owners and our award-winning custom marketing team, we would welcome the opportunity to be of help to you in making sure you get a bigger share of our reader spending.

With a Net Worth of more than $25 trillion, I hope you will agree elite travelers should be a key target for your marketing! ============================================================

In our March 20 Issue of Elite Traveler Insider, we covered an article in Bloomberg Businessweek profiling a number of financial services executives who were struggling to make ends meet on $500,000 per year.

Having previously reported on the Washington Post study finding that households in New York, Washington D.C. , South Florida, Chicago and Los Angeles were all spending more than they earned despite eschewing luxury cars and design fashions at $250,000 household income, the Bloomberg story didn’t surprise us.

We have for years been saying that it takes at least $400,000 Household Income – OUTSIDE of major metro areas – to be a luxury consumer of any reasonable value – and well over $1 million HHI to even start to become a ‘heavy user.’

Robert Frank, the Wealth Reporter for The Wall Street Journal, recently wrote about the Bloomberg piece on his blog and it spurred well over 100 comments.

I consider this a must read for luxury marketers as it speaks to the need to shoot higher.  I can’t tell you how many advertising RFP’s I see from ad agencies saying the target consumer has a HHI of $150,000 or $250,000 +.   Below are some of the comments. Read on and make your own evaluations about where you should be aiming your ad dollars.

============================================================ Alexander wrote:

$350,000? Yikes. My income was $600,000ish last year and I was still struggling! The average apartment price in Manhattan is $1.4M. I just bought an apartment and I could barely afford a bit more than the average home price. Factor in taxes, mortgage on a $2M apartment, money to do all the “NYC culture stuff, to eat at the top NYC restaurants, transportation costs. You’re left with nothing. I love living here of course, but $350,000 is nowhere near rich in this region. The top 1% here is sky high.

Art K wrote:

Many of you are missing the point. Because NYC is the cultural capital of the country if not the world, many of us want to live close to the theaters, museums, fine restaurants, etc. we enjoy and not be bothered with “shlepping” into the City from the ‘burbs. Admittedly this is an elitist point of view but to do so we do not want to put our children into a sub-standard public school or live in a shabby apartment. Simply put, if you aspire to this lifestyle, as many of us have, you can barely make it on $350,000/year, and have anything left over for significant savings. These are just the facts of life here so stop your moralizing.

Anonymous wrote:

My wife and I collectively earn $300K in the San Francisco Bay Area. We live OK – 4 bed, 3 bath, 2000-square-foot house, decent public schools, two OK cars paid off – but we are FAR from living in a large mansion on huge sculptured grounds. It’s pretty much all relative.

============================================================ ONLY ELITE TRAVELER – Elite Traveler is the ONLY global publication targeting and reaching private jet travelers to have its circulation successfully audited.  View our BPA statement here. ============================================================ Mike wrote:

I feel the same. I am at $215k in Silicon Valley and have two young daughters. We are making the public / private decision now. Private means that we will continue to rent a house and basically maintain our current lifestyle. A vacation for us is renting an RV and camping out or having a staycation. I am honestly confused as to why we cannot get ahead. We have two cars, but both are 6+ years old. We do not get cable. We rent a 1700 sq. ft. house. We have a date night every other week which is usually dinner and a movie ($120 after babysitter). Don’t get me wrong – I am saving money, but not enough to buy a house in the next 20 years at my current pace and geography. I understand feeling “stuck” and feel like I am competing with people who inherited millions of dollars from their parents before they started working. All I want is to provide for my kids roughly what was provided to me. I feel like I am failing.

Anonymous wrote:

Last year I made $350,000. I paid a total of $140,000 in taxes PLUS an additional $15,000 in AMT. My house is a $550,000 house in LA. I paid cash for a $35,000 used car (I put 35,000 miles a year on my car and have to replace it every 3 years) and $27,000 for my wife’s used car. I spent 120 days away from home on business and worked almost 10 hours a day when I was home. This was after working full time while going to school to get a master’s degree, basically 8 am- 10pm 5 days a week for 2 years. Since I’m considered “wealthy” by the government I don’t expect to get anything from SS. My forced contributions of almost $14,000/yr will go to eva, the other commenter here, who didn’t invest in herself and is only making $35,000/yr, most likely pays no federal income tax, and will get her SS. Thus I must put additional money into my retirement account to the tune of $22,000/yr which will earn me just about what I would have gotten from SS when I retire. I donate $10,000/yr to various charities (which adds to my AMT tax), and spend $25,000/yr keeping my elderly mother in her house and paying for her healthcare and car. I earned every penny I made by sacrificing for most of my 50 years. I made $250,000 2 years ago and last year I made $350,000. This year I’m unemployed. The previous years I averaged less than $100,000. So, I worked hard for 50 years, had 2 great years, am considered rich by others, and had to pay 44% of my 2 top years in taxes for which people say I didn’t pay enough. I’ll never make that money again. Thank god I saved most of my life. People who call me rich don’t have a clue.

============================================================ ONLY ELITE TRAVELER – Elite Traveler is the ONLY publication in the world delivering 400,000+ readers with a Household Income of $1 million +============================================================

Anonymous wrote:

I would agree with Schiff. My wife and I have an income of $340,000; however, we pay for student loans well over 6-digits. We both studied hard and believe we deserve all we get. But, we do not get the opportunity to deduct our student loan payments. Despite this we live fortunate lives but we do not consider ourselves rich. We drive old cars. My car is 13-years old and my wife’s is 11-years old. We shop at TJMaxx. If we did not have student loan payments, then yes I would consider us as borderline rich. I think some people do not realize the cost to become successful including the government. I don’t mind helping our deficit but only if we could deduct our student loan payments. My wife and I are living the American dream but Uncle Sam views no differently than the couple earning the same but the latter couple had mommy and daddy to pay tuition and living costs. They are rich, not us.

smc wrote:

I agree with him, Houses here, even pretty modest ones, run $250k and up. And there are only a few pockets where one can live and send their kids to public school (assuming a good education is important to you). So, in addition to our high property taxes, high sales tax, high state income tax, and all federal taxes, we also have to add private school tuition, which runs from about $12k/year to $25/year and up- per kid. I started making less than $900/month living with many roommates; no t.v., $5/week spending money. I never thought I’d make this much, but believe me, $350k goes fast. I am not struggling, but I still clip coupons, drive an older car, and watch my pennies. To me, this definitely isn’t “rich.”

Anonymous wrote:

To Dave K, nobody is “complaining” that they have things bad or are looking for sympathy because they earn $350k. They are simply stating in major metro areas, $350k doesn’t go as far as Nowheresville. Further, if one were to move to a place where the houses were $100k vs. $2M, the income one could expect to earn would drop proportionally as well. That’s why houses in non-major metro areas are so inexpensive, incomes are lower in those areas. The point is that it’s all relative. Someone who earns $350k in NYC is not “rich”, despite being well-off and comfortable, which I think everyone would acknowledge.

Anonymous wrote:

I completely get where he is coming from. That is part of the difficulty of coming up with a one size fits all system. $350k in Wichita Kansas would let you live like royalty but in New York it’s probably just enough to let you live a decent lifestyle.

JWP in SF wrote:

I feel exactly the same as Andrew Schiff and I completely sympathize with him. All of you people saying nasty things about him have absolutely no idea what you’re talking about. No wonder you’re in the 99%. You’re so clueless. You just don’t GET it.

350,000 becomes 200,000 after taxes. Subtract rent/mortgage on your 1,200 sq. ft. place, which is going to run you 35,000/yr. Then subtract 10k in property taxes and 2,500 for homeowners insurance. Take out at least 30,000 to put two kids in preschool or daycare because that’s what it costs in NY or SF. Then take out 10k for health insurance premiums and 7k for additional medical, dental and vision costs. Take out 44,000 for utilities (because that’s what I paid in 2011), not including TV. You are left at that point with 61,500. If each spouse funds a 401k and you put a little money away for college, you might be left with 21,000. With that 21,000, you need to buy gas, groceries, professional clothes, kids clothes/toys/diapers, pay for any home care and repair, buy birthday and christmas gifts, pay for any entertainment, etc… There is nothing “rich” about this life.

============================================================ ONLY ELITE TRAVELER – Elite Traveler (audited by BPA Worldwide) is the only audited publication delivered to global locations for private jet travelers.  ============================================================ Matthew wrote:

I have similar sentiments to the Chicago Law Professor. There should be a valid distinction between $250,000 per year and those who are extremely wealthy. My wife and I are both medical professionals, now in our early 30s, and would be considered “wealthy” by President Obama’s definition. Of course, that does not take into consideration over $400,000 in student loans, delayed home ownership and family, and only now beginning college and retirement savings. These expenses after 50% is taken for federal, state and local taxes. Needless to say, these insufferable OWS protesters telling me to “pay my fair share” falls on deaf ears.

JR wrote:

I agree with Mr. Schiff. I make around $225,000 a year, and find that I am “just” able to survive in NYC comfortably. I live in a studio apartment of 500 square feet. I pay my taxes, my rent, my school loans, and I have enough to go out to eat and even pay for a city parking spot. There’s not much left after that.

Brian Miller wrote:

This discussion is really not about who makes what, but about what we value and how do we live in line with our values. If the discussion is about all of us working together to equitably provide everyone a chance at good future, that is one thing. If the discussion is about not being able to keep up with the standard of living expected by our community so we can fit in somewhere socially it is another. As someone who is a fairly high wage earner, I struggle with both of these. My Job, community, and culture want to define me by what I wear, and my success in my role includes looking the part. At the same time, money definitely does not bring happiness. As my wife and I focus more and more on serving our community and the greater good with our resources, the more content we are. Our solution is to try to live on as little as possible, buy the expenisve suits on sale at a Saks outlet for $350 instead of $1050, and make sure we are sharing what we have with those around us. (Note: While we have good initiatives in the Government, more government after a point is just more inefficiency. Contracting with the government extensively, I see the limitations of good people who are disconnected from our communities to make the right changes in many areas.) We have got to get out of the class warfare discussion and start having substantive discussions around some of these tough issues…

Ex-New Yorker wrote:

He’s spot on really. Reality is there are several major metros (NYC, CHI, SF, virtually all of CA) where $250k is not “rich”, at least by my standards. The biggest problem is the bidding-up of housing forced higher wages. Some of this housing is not high-on-the-hog either (1200 sf isn’t a castle). What’s missing is the gov’t (fed & local) worker that gets to retire at 55 with 80% of their pay and goes back to work, or sits on the beach. If you discount those wages back, they too are millionaires, and should be taxed accordingly. Ironically, they’re the “tar & feather” crowd … ============================================================ ONLY ELITE TRAVELER – Elite Traveler is the ONLY publication that delivers UHNW consumers on private jets from more than 100 countries with a single ad. ============================================================

Ellen wrote:

I do feel for the guy. $350,000 sounds like a lot of money, but in his locale, for his profession, it is not. If you make that much money, I think it’s fine to have a bare-bones beach place, even while paying exorbitant rent in the place where you make your money. And paying for your kid’s private school tuition shouldn’t be an unreasonable desire either. HIs point is that he lives in an expensive area, that buying a place to live in his income-producing area is out of the question, so he rents, and taxes take a lot of that theoretical pile of income. You can say “I live really cheaply somewhere else and don’t see his point” but it’s not a valid comparison. We live in a somewhat expensive part of the country, work in tech where the salaries are good compared to teachers/firefighters/police, but also are still dealing with the costs of a layoff in 2009, where it took 7 months to find any sort of work at all, and are now underemployed.

What does that mean? With the same grad school loans from the local public university (where we didn’t earn little enough to get subsidized loans, so these remain at 6.8%), with the same 15-year mortgage (thinking it was good to be responsible and pay it off faster), the new compensation package is lower than it was three years ago, the savings were drained while we tried to hold on to our house, the Catholic school tuition for the kid is half of what the other private schools in the area are, but we think it’s better than the public school option, and we do indeed struggle to get back to the level of life we had before the layoff. Several friends said we were “lucky” we didn’t lose our house. Lucky? That we had bought a house that was small, old, and conservative, paid cash for all improvements, didn’t have to drain the hard-saved retirement funds? That we couldn’t refinance without a job, and even now are told that to get the best rates on a re-fi, we need to show 2 full years of employment with the same employer, so we are still waiting, and not sure if current appraisals will sustain the refinance? We did the work, did the education, and now we try to figure out if we can go out to dinner here and there, scrimp to pay tuition, try to hold off on replacing the cars (one just had $3700 of maintenance when it flat out broke down, the other needs $2500 soon), and we now are saving half as much for retirement as we used to each year (that’s what most of the tuition replaced).

Sorry for us? Not likely, because we went out to the local Italian restaurant twice last month, and have started going through the drive-throughs sometimes again. We did go on vacation last summer for the first time in three years. We have cut our charitable giving, retirement savings, all events except high school sports admission price, and we still don’t have much saved. We were waiting for “normal” to come back, but now I think we have to realize that this is the new normal, and that we worked and went to school for nothing.

99% wrote:

Where I live (Washington DC), a household earning in the $300K range is squarely in the middle class, and the household could very well have little or nothing left over after paying the bills each month.

============================================================ ONLY ELITE TRAVELER – Elite Traveler is the ONLY global publication targeting and reaching private jet travelers to have its circulation successfully audited. View our BPA statement here. ============================================================

BE wrote:

I can totally relate to this. Our income is in the same ballpark in San Francisco, and while we’re not struggling we also don’t feel rich. Its feels bad to say that, because $350-400k is a huge number, especially considering its 5x the median household income in the area.

I think one fact that a lot of people miss is that it costs a lot to keep two people in a family working, and it also costs a lot to enable yourself to work as much as these high-income jobs require. A nanny makes more than a nurse where we live, and public daycare and preschool are really bad options.

Here is how it all breaks down: Gross 300,000 -Tax 105,000 35% -Health 4,800 2% -Housing 39,600 13% -Preschool 22,000 7% -Nanny 48,000 16% -Two cars 14,400 5% -Food & household 24,000 8% = Left 42,200 14% This still looks like a lot of money left, but remember still haven’t taken college savings, retirement, rainy day, or even vacation savings into account. Yes, we could save a little bit here and there, but between two 60-hour/week jobs and two small children there really isn’t any time to go couponing. Atlas Shrugged, Sick & Tired wrote:

I work 80hrs/ week. My income is 400K, Half goes to taxes, Next 25% goes to insurances and retirement plan. I live in a modest house, don’t watch TV, buy my clothes from Costco, under $20 shirts -shoes-pants. I drive a 6 year old Honda. My children get no scholarship, tuition assistance, and will be less likely to go to a great college despite being excellent students at a public school. I generate 15 full-time jobs, some of who buy $100 + shoes. I won’t get any benefits. Government is constantly threatening to squeeze me more. I am sick & tired of paying for lazy whiners! I want to go on strike.

============================================================ ONLY ELITE TRAVELER – Elite Traveler is the ONLY publication in the world delivering 400,000+ readers with a Household Income of $1 million +============================================================


Shelby wrote:

I think that the point many are missing here is that he is in no way whining about what he makes. I’m in a similar situation to this man, child in private school, I actually have a much larger home- due to location. However, like him, nearly half of every check is already going to taxes. On paper we may make $350,000 but that is certainly NOT even close to what we see deposited in our accounts. I understand that many people have to make the decision on whether or not to eat, I’ve been there. I remember the days in my early twenties of digging through the couch cushions for change so I could put $2 of gas in my car to make it to work. It seems though that once you work hard and pull yourself out of that situation and attain your goals, everyone who has not been as fortunate wants to punish you for it these days. I can guarantee that any person scraping to get by to feed their kids right now, once their luck changes and they are in a better financial situation, will not appreciate seeing their paychecks reduced by a higher percentage either. There is nothing wrong with wanting to enjoy what you’ve rightly earned. Don’t be so judgmental of another person’s situation. It is no better than looking at a homeless person and saying they are there because they deserve it. Sorry. Bit of a rant.

Alice wrote:

I totally agree with Schiff. The middle class is suffocating. We have mortgage/rent, 25 years worth of student loans, and miscellaneous household expenses just like everyone else. Our tax is high because we are subsidizing those who choose not to get an education or work. No tax credits or breaks are available for us either. IRAs phase out. Student loan interests phase out. The American Dream is harder to be reached in this system.

My husband and I are young professionals with no kids. In 2010, we made about $150K combined. My husband then lost his job and is still unemployed as of today. We went from a 2-income family to just 1. We constantly feel so poor. We can’t afford anything and we can barely made payments for our home. We can’t go out to eat. We car-pool as much as we can. And talking about taxes? We are lucky if we don’t owe!

============================================================ ONLY ELITE TRAVELER – Elite Traveler is the ONLY publication in the world delivering 400,000+ readers with a Household Income of $1 million +============================================================

indp wrote:

A dual income family living in a major city making 300k a year is very middle class regardless of what Obama or people who make a fraction of that think. They are often two professionals working very long stress filled hours, paying a ton to live in an area close enough to work those hours, paying a ton for daycare, education, insurance, and the 48%ish in taxes across the board is fairly standard. The taxes, cost of living, and current interest rate environment make it all but impossible to accumulate any wealth like people in that income bracket once could… no one is saying that there are not many who have it worse, but only that these are not the 1%ers that the left say are not paying their fair share.

longterm wrote:

350k is not close to the top 1%, being 1% is about net worth and economists estimate your nw needs to be around 10 mil to be 1%er. When our society taxes low and medium level professionals (example: non specialist MD’s) at a rate they cannot justify the years/cost of education and long hour/stress of work then they will stop doing it, which will either cause a shortage of healthcare or a spike in pay for those people which further inflates the cost of living for the rest of us. The long term effect of the tax and spend policy is a lower standard of living for everyone.

gabe wrote:

As someone who makes $350,000 and can’t afford a 2nd summer house, I understand the author’s feelings completely! I should be able to have a 2nd summer house, IN THE HAMPTONS, for goodness sake. It’s all the fault of those liberals! They are too entitled!

============================================================ ONLY ELITE TRAVELER – Elite Traveler is the ONLY publication in the world delivering 400,000+ readers with a Household Income of $1 million +============================================================

All the best,

Douglas D. Gollan Group President and Editor-in-Chief Elite Traveler, the private jet lifestyle magazine Elite Traveler Superyachts, the superyacht lifestyle magazine Elite Traveler Asia, Asia’s private jet lifestyle magazine, the private jet lifestyle online Elite Traveler Update, our weekly e-Newsletter to private jet owners worldwide

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