I always hear that people are living beyond their means, but…

[Anonymous]

I hear how many people live beyond their means. And that those people’s lifestyles will change as they get older and have to figure out retirement (or they aren’t able to retire). I’m just not seeing this with the UMC people I know. The people that seemed to have money just continue to. They really do, it seems. People don’t seem stressed about being overextended on CC debt etc. Obviously, people don’t always share their financial stresses but there would be signs. Is this just because I roll in boring circles with people in “boring” jobs who are risk averse? Or do you think a good portion of people who seem to be doing well financially really aren’t?

[Anonymous]

I'm totally guessing here, but from my experience growing up UMC and now being there myself, UMC people are generally not overextending themselves - I see that more as something that LMC people who feel like they have something to prove do. I grew up in a wealthy area bordering a very poor area (my high school contained both), and I drive a 10-year-old Toyota while many of my old classmates lease brand new luxury vehicles that they post pictures of. My friends in a similar financial position to me don't do that either.

[Anonymous]

There are more rich people here than a lot of other places but there are still certainly people overextending themselves. You read it a lot on here with people saying they bought a home at a price and monthly payment that was really tight but their salaries caught up to it and now it’s the best hind sight choice. You never hear from the people who did the same but their salary didn’t catch up and they are house poor, or had to downsize or have their kids take out more in student loans because they aren’t making as much as they thought they would be by the time college came around.

[Anonymous]

We prioritize spending money on the kids/with the kids right now when they are young. I don't anticipate paying for their expensive activities or trips forever, I'm not paying to take their college or young adult friends on vacation with us. We'll downsize homes when we retire. So I can see if you saw our life right now, and extrapolated to retirement, you'd think we spent above our means, but to us it's a temporary thing. And we carry no debt.

[Anonymous]

Anonymous wrote:I hear how many people live beyond their means. And that those people’s lifestyles will change as they get older and have to figure out retirement (or they aren’t able to retire). I’m just not seeing this with the UMC people I know. The people that seemed to have money just continue to. They really do, it seems. People don’t seem stressed about being overextended on CC debt etc. Obviously, people don’t always share their financial stresses but there would be signs. Is this just because I roll in boring circles with people in “boring” jobs who are risk averse? Or do you think a good portion of people who seem to be doing well financially really aren’t?

Probably this, and also: the economy has been pretty favorable for a long while now. Even with market fluctuations it hasn't resulted in mass layoffs or foreclosures like 2007-2009. People living beyond their means can usually float their expenses until something bad happens (job loss, illness, etc.). Even a house of cards doesn't fall without a breeze.

Also it's useful to realize that different people mean different things by beyond your means. For some it means going deeper into debt every month. For others it means not saving a reasonable amount. And that 'reasonable amount' will vary based on a whole host of factors.

[Anonymous]

No, I don’t think a good portion of people who seem to be doing well really aren’t. This is what people who don’t have a decent money like to think. From what I cans see, it’s just not true. Maybe they have a bad year and don’t go skiing in vail one year, but they still go away for a big summer and spring break trip.

[Anonymous]

Honestly, who cares. Life is short and you cannot take it with you. Money can buy some degree of happiness, but worrying about it is a recipe for envy and misery. Truly, who the hell gives a crap. Doritos taste the same all over.

[Anonymous]

Anonymous wrote:No, I don’t think a good portion of people who seem to be doing well really aren’t. This is what people who don’t have a decent money like to think. From what I cans see, it’s just not true. Maybe they have a bad year and don’t go skiing in vail one year, but they still go away for a big summer and spring break trip.

If they’re going to Vail every year, the people you know may actually be rich. It’s easy to live within your means if you make enough money. Then all you need is average self-control. The less money you make, the harder the choices, the more you have to give up, etc.

[Anonymous]

It will not be evident until retirement. People can live on cash flow while they have that cash flow. When the source of that cash flow is employment income, and employment ends, income has to be replaced by something else. That can be income from deferred compensation, pensions, Social Security, annuities, or investments/savings. People with little real wealth will have correspondingly few or only low-value such post-employment income sources, and their lifestyles will have to adapt accordingly.

[Anonymous]

At this point I’m just planning to die before having to worry about funding a long retirement.

[Anonymous]

I think many people with UMC incomes stretch themselves too with high housing payments, car payments, expensive vacations, and not shopping around for lower cost services or doing things themselves. You see it all the time in the money and real estate forums. I think an UMC income is a gift that is not guaranteed to last an entire career and should be leveraged for early financial freedom. I come from a LMC background and have definitely noticed that my tastes are more modest than most UMC people. I do not require a $1m home or expensive vacations, though I could afford them.

[Anonymous]

Anonymous wrote:I hear how many people live beyond their means. And that those people’s lifestyles will change as they get older and have to figure out retirement (or they aren’t able to retire). I’m just not seeing this with the UMC people I know. The people that seemed to have money just continue to. They really do, it seems. People don’t seem stressed about being overextended on CC debt etc. Obviously, people don’t always share their financial stresses but there would be signs. Is this just because I roll in boring circles with people in “boring” jobs who are risk averse? Or do you think a good portion of people who seem to be doing well financially really aren’t?

Are you the same poster who keeps starting threads rooted in comparisons of others?

[Anonymous]

Anonymous wrote:It will not be evident until retirement. People can live on cash flow while they have that cash flow. When the source of that cash flow is employment income, and employment ends, income has to be replaced by something else. That can be income from deferred compensation, pensions, Social Security, annuities, or investments/savings. People with little real wealth will have correspondingly few or only low-value such post-employment income sources, and their lifestyles will have to adapt accordingly.

It’s this for UMC. A lot of people have taken out equity from their house to fund a country club, second home, remodeling etc. When they retire they will need to sell to downsize.

[Anonymous]

Anonymous wrote:It will not be evident until retirement. People can live on cash flow while they have that cash flow. When the source of that cash flow is employment income, and employment ends, income has to be replaced by something else. That can be income from deferred compensation, pensions, Social Security, annuities, or investments/savings. People with little real wealth will have correspondingly few or only low-value such post-employment income sources, and their lifestyles will have to adapt accordingly.

This is correct. My in-laws lived *at* their cash flow level for years and years, and lived an arguably upper class lifestyle that whole time. Now, however, they can’t retire because their housing expenses are such that their retirement cash flow wouldn’t cover it. They have slowed down spending a lot in recent years, but the lack of retirement planning/ saving is a problem.

[Anonymous]

Within every income bracket there are some people who live beyond their means. It's temperament and habits.
But I think the DMV has less of them than other HCOL areas I have lived because this area tends to attract dual income households that are highly educated, Type A organized professionals. There are fewer of the hustler, entrepreneurial fake it til you make it style folks or people riding on the fumes of family money types here--in my experiences those are the people who visibly live beyond their means--and sometimes it catches up with them and sometimes it doesn't.

The people who I find might be sort of living beyond their means here are those whose careers don't have much upward mobility but are tied to DC in some way and their basic housing and child expenses are stretching them too thin to pay for retirement. But they aren't typically "living large" here, their kids go to public schools and in-state colleges, they take less expensive vacations, etc--and they will likely sell their house when they retire and move to a LCOL area and live a similar (or even better) lifestyle there.