Squeaking by on $300,000

What is the formula by which one should decide how much he can spend every year relative to his income and savings? Should one live at a level where he only has a 0.1% chance of "getting into trouble" should his personal circumstances or overall economic conditions change? What about 1%? What's the happiness-maximizing consumption risk level*?

Should my services as a software guy only warrant $10/hour a couple of years from now, my family will be in trouble after we exhaust our savings. Should we have purchased a house given this risk? Or, should we rent in a slum and save our money for the dark times that might await us?

Obviously, this woman and her family won't starve. And, I have little compassion for those who spend when they shouldn't just to hide their new-found financial state. But, to suggest that this woman behaved irresponsibly while taking pity on the factory guy who got laid off from his union job and can't afford his two SUVs is punishing one's overall level of wealth rather than his choice of consumption risk level.

Given this fact, I kinda wonder why any of them agreed to be interviewed. Surely they must have known how this article would turn out?

If you lived simply, and made that money, within a couple years you could retire, and not have to keep up with neighbors, but the neighbors can trigger that competitive bone.

I think the $1M question is, what the hell is this doing on Hacker News!!! Please don't make this a general thread for cute NYT topics.

I think I was expecting something like: "how to run a startup for a year for 300K" or "How to make an autonomous giant squeaking robotic rodent for only 300K".

Anybody else have some interesting interpretations for this subject?

My heart bleeds for these people. Oh the injustice of it all!