AEI says Dual-income 1-kid $133k/yr is "upper middle class"

[Anonymous]

We make 800k and it definitely doesn't feel rich . I live to the sameife style as my gs15 single earner household did in the 90s.

[Anonymous]

Anonymous wrote:Fake news.

I live in a MCOL area with three kids, dual income with an HHI of $325 and we are struggling. Between childcare costs, student loan repayments, and credit card debt servicing (we took on cc debt during a spell of unemployment) we do not feel flush.

Yes you can make a lot of money in America but ain’t nothing free or cheap.

This is the dumbest argument that is constantly repeated in some form or another. "I have made (suboptimal) life choices that have led to significant financial burdens. Our high salary in a MCOL area is spent servicing those obligations; therefore, we are not UMC."

It's a combination if financial illiteracy, rationalization, and trying to establish yourself as the hero of your own story.

[Anonymous]

We live in DC with one kid on $160k and I definitely would not refer to us as "upper middle class." Middle class, for sure, I think we have a pretty normal middle class lifestyle and then we have extra that goes straight into savings because we do in fact want to retire at some point and we want our kid to go to college.

But on this income, I do things like shop at Aldi regularly because it can save me over 100/mo on groceries, make most of our food at home, live in a condo, have one old beater car for emergencies but otherwise walk or bike most places, do the cheapest possible summer camp option, etc. I don't mind that stuff. I grew up middle class but in a big family and that was way harder, there was truly never enough to go around and I often felt deprived as a kid (no extra curriculars at all, meals very basic, school clothes from Kmart). With one kid it's more manageable.

I will also note that while we are dual income, one of us works PT in order to make the childcare situation work. If that spouse went full-time, we'd be over 200k in income BUT we'd be spending about 6x what we currently spend on childcare. I have done the math. We'd come on a teensy bit ahead financially but life would be more stressful, which is why we do it this way. It's an unhappy compromise but that's life.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Fake news.

I live in a MCOL area with three kids, dual income with an HHI of $325 and we are struggling. Between childcare costs, student loan repayments, and credit card debt servicing (we took on cc debt during a spell of unemployment) we do not feel flush.

Yes you can make a lot of money in America but ain’t nothing free or cheap.

This is the dumbest argument that is constantly repeated in some form or another. "I have made (suboptimal) life choices that have led to significant financial burdens. Our high salary in a MCOL area is spent servicing those obligations; therefore, we are not UMC."

It's a combination if financial illiteracy, rationalization, and trying to establish yourself as the hero of your own story.

DP. It's a mix here. The credit card debt and three kids are dumb choices for sure. As a PSA, try not to have kids at all until you have a solid emergency fund in place to deal with surprise unemployment. There are too many fixed costs with kids and you need to feel confident you can cover those for 3-6 months on one income or no income, depending on your situation. Also people have this weird idea that additional kids are like a negligible additional cost? I don't understand it. There are some efficiencies that come with a second kid, especially if close in age, but that third kid is going to push you into a different spending category for everything, forever -- childcare, transportation, food, travel, everything. Third kids are the most expensive kid. Perhaps the only situation here that might not be true is in a single-earner household with a SAHP who *really* loves being a SAHP (and therefore won't burnout and want to start outsourcing because they can't take another second of what is actually a really hard job especially when you hit that third kid).

But childcare as a line item is not extravagant, almost everyone needs that. And student loans have been a necessity for a lot of people for decades. I think that's changing and there are efforts in the works to wean the higher education industry off loans. But for instance, I could not have gotten a college degree without loans -- no family contribution, scholarships only covered half my costs, even in-state I needed 40k in loans to get through college, and it took me a long time to pay them off. But I can't imagine not having a college degree either -- there are so few jobs for people with HS only, and a lot of them are hard labor that I am physically not suited to do especially at my current age. Shaming people for taking out loans, especially back in the 00s and 10s when college costs were skyrocketing but financial aid awards were shrinking is just not fair. In this economy, college should be a right for anyone willing to do the work.

[Anonymous]

We are at 180k, dual income two kids, and I feel like we're middle class but definitely not UMC.

Middle class: own our home, have health insurance and keep up on preventative care, some ability to save for college and max out retirement accounts (but can't pay full fare for private school or retire early); some discretionary income so we are able to do social stuff and some fun activities.

Not UMC: we live in a townhome with our kids sharing a room, had planned to buy an SFH around now but are simply priced out, even in one of the less expensive DMV exurbs. I am sure some if you will say that we could if we made better spending choices, but most of our clothes are secondhand, we share one car, and we are careful about limiting expenses for kids' activities and entertainment like eating out or babysitters; houses really are just that expensive right now.

[Anonymous]

Anonymous wrote:We make 800k and it definitely doesn't feel rich . I live to the sameife style as my gs15 single earner household did in the 90s.

There's upper class and there's "rich." We make 600K (albeit in lower COLA than DC) with 3 kids and we are definitely beyond UMC. We do have to work for a living, which I think distinguishes our bracket from the truly wealthy, but we have a beautiful home, take multiple flying vacations a year, save aggressively such that we will be able to retire or semi-retire (DH will go half time) in our 50s. We are definitely not luxury people but then when my youngest had learning disabilities, we were able to move him to a private school without having to make any adjustments to our spending. We will be able to pay for our kids' college tuition at any private university, and will likely be able to cash flow a few extra years of grad school if needed. We basically never have to worry about money- I think UMC are either working until conventional retirement age (~65+) or doing without so many luxuries, not having both.

[Anonymous]

Anonymous wrote:We are at 180k, dual income two kids, and I feel like we're middle class but definitely not UMC.

Middle class: own our home, have health insurance and keep up on preventative care, some ability to save for college and max out retirement accounts (but can't pay full fare for private school or retire early); some discretionary income so we are able to do social stuff and some fun activities.

Not UMC: we live in a townhome with our kids sharing a room, had planned to buy an SFH around now but are simply priced out, even in one of the less expensive DMV exurbs. I am sure some if you will say that we could if we made better spending choices, but most of our clothes are secondhand, we share one car, and we are careful about limiting expenses for kids' activities and entertainment like eating out or babysitters; houses really are just that expensive right now.

I would argue that maxing 401ks (which btw is saving like $40K per year) is UMC. I would say middle class is more like saving 5-10%.

[Anonymous]

Anonymous wrote:

Anonymous wrote:We are at 180k, dual income two kids, and I feel like we're middle class but definitely not UMC.

Middle class: own our home, have health insurance and keep up on preventative care, some ability to save for college and max out retirement accounts (but can't pay full fare for private school or retire early); some discretionary income so we are able to do social stuff and some fun activities.

Not UMC: we live in a townhome with our kids sharing a room, had planned to buy an SFH around now but are simply priced out, even in one of the less expensive DMV exurbs. I am sure some if you will say that we could if we made better spending choices, but most of our clothes are secondhand, we share one car, and we are careful about limiting expenses for kids' activities and entertainment like eating out or babysitters; houses really are just that expensive right now.

I would argue that maxing 401ks (which btw is saving like $40K per year) is UMC. I would say middle class is more like saving 5-10%.

DP (I'm the PP with the 160k HHI from above) and I disagree. They are maxing out their 401ks by saving money other places -- just one car, limited activities for kids, buying secondhand clothes, limited entertainment and babysitters.

Even a working class person can make choices like this if they budget really, really tightly. It's how people facilitate their kids' upward mobility, because saving for education and your own retirement helps to unburden the next generation with the same financial stressors you had/have (like education debt and elder care). This is a classic middle class choice.

UMC people don't have to choose. They can max their 401k and still buy their kids new clothes for school and hire a sitter for a date night.

[Anonymous]

Anonymous wrote:We make 800k and it definitely doesn't feel rich . I live to the sameife style as my gs15 single earner household did in the 90s.

If that’s true, then you should be saving at least $350k a year. That adds up fast and you should feel rich within a few years of that.

[Anonymous]

Why are you people SO CLASS OBSESSED. Must be exhausting to feel so inadequate.

[Anonymous]

Anonymous wrote:We are at 180k, dual income two kids, and I feel like we're middle class but definitely not UMC.

Middle class: own our home, have health insurance and keep up on preventative care, some ability to save for college and max out retirement accounts (but can't pay full fare for private school or retire early); some discretionary income so we are able to do social stuff and some fun activities.

Not UMC: we live in a townhome with our kids sharing a room, had planned to buy an SFH around now but are simply priced out, even in one of the less expensive DMV exurbs. I am sure some if you will say that we could if we made better spending choices, but most of our clothes are secondhand, we share one car, and we are careful about limiting expenses for kids' activities and entertainment like eating out or babysitters; houses really are just that expensive right now.

The AEI estimate was for a family with 1 child, so you are pretty close to their cut off, having 2 children. You are also in a high COLA. So it makes sense that you feel middle class, rather than UMC. But I think once you get to the 200K HHI for a family of 4, only DCUM could say you are anything less than UMC.

[Anonymous]

Anonymous wrote:Why are you people SO CLASS OBSESSED. Must be exhausting to feel so inadequate.

Everyone wants to think they are middle class. They want to sound "better" than working class, but upper middle class sounds privileged, and people don't like to think they're privileged.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Fake news.

I live in a MCOL area with three kids, dual income with an HHI of $325 and we are struggling. Between childcare costs, student loan repayments, and credit card debt servicing (we took on cc debt during a spell of unemployment) we do not feel flush.

Yes you can make a lot of money in America but ain’t nothing free or cheap.

This is the dumbest argument that is constantly repeated in some form or another. "I have made (suboptimal) life choices that have led to significant financial burdens. Our high salary in a MCOL area is spent servicing those obligations; therefore, we are not UMC."

It's a combination if financial illiteracy, rationalization, and trying to establish yourself as the hero of your own story.

DP. It's a mix here. The credit card debt and three kids are dumb choices for sure. As a PSA, try not to have kids at all until you have a solid emergency fund in place to deal with surprise unemployment. There are too many fixed costs with kids and you need to feel confident you can cover those for 3-6 months on one income or no income, depending on your situation. Also people have this weird idea that additional kids are like a negligible additional cost? I don't understand it. There are some efficiencies that come with a second kid, especially if close in age, but that third kid is going to push you into a different spending category for everything, forever -- childcare, transportation, food, travel, everything. Third kids are the most expensive kid. Perhaps the only situation here that might not be true is in a single-earner household with a SAHP who *really* loves being a SAHP (and therefore won't burnout and want to start outsourcing because they can't take another second of what is actually a really hard job especially when you hit that third kid).

But childcare as a line item is not extravagant, almost everyone needs that. And student loans have been a necessity for a lot of people for decades. I think that's changing and there are efforts in the works to wean the higher education industry off loans. But for instance, I could not have gotten a college degree without loans -- no family contribution, scholarships only covered half my costs, even in-state I needed 40k in loans to get through college, and it took me a long time to pay them off. But I can't imagine not having a college degree either -- there are so few jobs for people with HS only, and a lot of them are hard labor that I am physically not suited to do especially at my current age. Shaming people for taking out loans, especially back in the 00s and 10s when college costs were skyrocketing but financial aid awards were shrinking is just not fair. In this economy, college should be a right for anyone willing to do the work.

No one is shaming anyone for taking out loans. But people who whine about a $325K HHI in a MCOL area because they had 3 kids before clearing their loans deserve every bit of ridicule they get.

[Anonymous]

Anonymous wrote:

Anonymous wrote:We are at 180k, dual income two kids, and I feel like we're middle class but definitely not UMC.

Middle class: own our home, have health insurance and keep up on preventative care, some ability to save for college and max out retirement accounts (but can't pay full fare for private school or retire early); some discretionary income so we are able to do social stuff and some fun activities.

Not UMC: we live in a townhome with our kids sharing a room, had planned to buy an SFH around now but are simply priced out, even in one of the less expensive DMV exurbs. I am sure some if you will say that we could if we made better spending choices, but most of our clothes are secondhand, we share one car, and we are careful about limiting expenses for kids' activities and entertainment like eating out or babysitters; houses really are just that expensive right now.

I would argue that maxing 401ks (which btw is saving like $40K per year) is UMC. I would say middle class is more like saving 5-10%.

I'm the PP. We're maxing now to catch up because we made so little money in our 20s and early 30s that we couldn't save much. We have to choose between trying to be able to retire in our 60s vs having a single family house to raise our kids, basically. That's not UMC.

Also, I don't think saving 5% for retirement is standard MC. That's too low under almost any calculator.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:We are at 180k, dual income two kids, and I feel like we're middle class but definitely not UMC.

Middle class: own our home, have health insurance and keep up on preventative care, some ability to save for college and max out retirement accounts (but can't pay full fare for private school or retire early); some discretionary income so we are able to do social stuff and some fun activities.

Not UMC: we live in a townhome with our kids sharing a room, had planned to buy an SFH around now but are simply priced out, even in one of the less expensive DMV exurbs. I am sure some if you will say that we could if we made better spending choices, but most of our clothes are secondhand, we share one car, and we are careful about limiting expenses for kids' activities and entertainment like eating out or babysitters; houses really are just that expensive right now.

I would argue that maxing 401ks (which btw is saving like $40K per year) is UMC. I would say middle class is more like saving 5-10%.

DP (I'm the PP with the 160k HHI from above) and I disagree. They are maxing out their 401ks by saving money other places -- just one car, limited activities for kids, buying secondhand clothes, limited entertainment and babysitters.

Even a working class person can make choices like this if they budget really, really tightly. It's how people facilitate their kids' upward mobility, because saving for education and your own retirement helps to unburden the next generation with the same financial stressors you had/have (like education debt and elder care). This is a classic middle class choice.

UMC people don't have to choose. They can max their 401k and still buy their kids new clothes for school and hire a sitter for a date night.

Exactly. Thank you.