Study shows that 350k/year is barely scrapping by as middle class

[Anonymous]

We live in NW DC and this article is basically about us. We are more like $310K a year and I can account for our budget differences in property taxes, childcare, and food. But otherwise it's not that far off from what we spend. Our mortgage payment plus taxes is about the same as the mortgage payment here.

That said, we are 40, keep a liquid cash savings cushion of about 40K, have just shy of 1M in 401k, are on a path to retire around 60 and have about 75% of kids college in the bank by the time they get there. So we're comfortable, but we're driving non-flashy cars, living in a 3 bedroom house, going to public school, and living what's otherwise a pretty non-rich person lifestyle.

[Anonymous]

Anonymous wrote:We live in NW DC and this article is basically about us. We are more like $310K a year and I can account for our budget differences in property taxes, childcare, and food. But otherwise it's not that far off from what we spend. Our mortgage payment plus taxes is about the same as the mortgage payment here.

That said, we are 40, keep a liquid cash savings cushion of about 40K, have just shy of 1M in 401k, are on a path to retire around 60 and have about 75% of kids college in the bank by the time they get there. So we're comfortable, but we're driving non-flashy cars, living in a 3 bedroom house, going to public school, and living what's otherwise a pretty non-rich person lifestyle.

So what are you spending money on? Vacation, clothes, eating out, activities?

1M retirement savings is good but not where the majority of your money is going.

[Anonymous]

I heard this story on NPR this morning and would be interested in reading her book:
https://www.npr.org/2019/09/04/755221033/families-not-just-students-feel-the-weight-of-the-student-loan-crisis

Real middle class families are struggling to pay for college, taking on too much debt, and/or their kids are living at home while attending community/state college. People who make $300k+ and complain that they don't have a lot leftover after fully funding college, retirement, and their expensive DC/Bethesda/Arlington mortgage are so clueless.

On the other hand, it really wasn't that long ago when paying for college WAS achievable for the middle class. My grandparents raised 8 kids on my grandfather's salary working at an HVAC company. All attended catholic school and went on to 4yr college. Grandparents helped a bit, part-time jobs covered the rest. The only one with any debt went to law school. Things changed so much in just one generation.

[Anonymous]

Anonymous wrote:

Anonymous wrote:We live in NW DC and this article is basically about us. We are more like $310K a year and I can account for our budget differences in property taxes, childcare, and food. But otherwise it's not that far off from what we spend. Our mortgage payment plus taxes is about the same as the mortgage payment here.

That said, we are 40, keep a liquid cash savings cushion of about 40K, have just shy of 1M in 401k, are on a path to retire around 60 and have about 75% of kids college in the bank by the time they get there. So we're comfortable, but we're driving non-flashy cars, living in a 3 bedroom house, going to public school, and living what's otherwise a pretty non-rich person lifestyle.

So what are you spending money on? Vacation, clothes, eating out, activities?

1M retirement savings is good but not where the majority of your money is going.

Not PP but I’d assume

- college savings (is over $1k per month per kid)
- childcare (at least 3k per month for 2 kids)
- mortgage for a home where kids can attend public school.

I’m a little bit higher of an income and calculated that 85% of my 450k HHI goes towards savings, taxes, mortgage, college savings and childcare.

[Anonymous]

Anonymous wrote:

Anonymous wrote:We live in NW DC and this article is basically about us. We are more like $310K a year and I can account for our budget differences in property taxes, childcare, and food. But otherwise it's not that far off from what we spend. Our mortgage payment plus taxes is about the same as the mortgage payment here.

That said, we are 40, keep a liquid cash savings cushion of about 40K, have just shy of 1M in 401k, are on a path to retire around 60 and have about 75% of kids college in the bank by the time they get there. So we're comfortable, but we're driving non-flashy cars, living in a 3 bedroom house, going to public school, and living what's otherwise a pretty non-rich person lifestyle.

So what are you spending money on? Vacation, clothes, eating out, activities?

1M retirement savings is good but not where the majority of your money is going.

You’re clueless. Someone at this income is spending most of their money on childcare, taxes and college savings! Not eating out or clothing!! Eating out and vacations are a drop in the bucket compared to the tax burden and required college savings for someone at a 300k HHI.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:We live in NW DC and this article is basically about us. We are more like $310K a year and I can account for our budget differences in property taxes, childcare, and food. But otherwise it's not that far off from what we spend. Our mortgage payment plus taxes is about the same as the mortgage payment here.

That said, we are 40, keep a liquid cash savings cushion of about 40K, have just shy of 1M in 401k, are on a path to retire around 60 and have about 75% of kids college in the bank by the time they get there. So we're comfortable, but we're driving non-flashy cars, living in a 3 bedroom house, going to public school, and living what's otherwise a pretty non-rich person lifestyle.

So what are you spending money on? Vacation, clothes, eating out, activities?

1M retirement savings is good but not where the majority of your money is going.

Not PP but I’d assume

- college savings (is over $1k per month per kid)
- childcare (at least 3k per month for 2 kids)
- mortgage for a home where kids can attend public school.

I’m a little bit higher of an income and calculated that 85% of my 450k HHI goes towards savings, taxes, mortgage, college savings and childcare.

Well, yeah. If you're counting savings then most of your money should be going toward those things. Unless the ideal lifestyle is for 60% of your income to be spent on caviar or something?

520K HHI here, with about 14% of that left after you tackle everything on your list. Which doesn't make me feel poor, it makes me feel good about my investment balances.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:We live in NW DC and this article is basically about us. We are more like $310K a year and I can account for our budget differences in property taxes, childcare, and food. But otherwise it's not that far off from what we spend. Our mortgage payment plus taxes is about the same as the mortgage payment here.

That said, we are 40, keep a liquid cash savings cushion of about 40K, have just shy of 1M in 401k, are on a path to retire around 60 and have about 75% of kids college in the bank by the time they get there. So we're comfortable, but we're driving non-flashy cars, living in a 3 bedroom house, going to public school, and living what's otherwise a pretty non-rich person lifestyle.

So what are you spending money on? Vacation, clothes, eating out, activities?

1M retirement savings is good but not where the majority of your money is going.

Not PP but I’d assume

- college savings (is over $1k per month per kid)
- childcare (at least 3k per month for 2 kids)
- mortgage for a home where kids can attend public school.

I’m a little bit higher of an income and calculated that 85% of my 450k HHI goes towards savings, taxes, mortgage, college savings and childcare.

Savings are not expenses. You may have earmarked that money for a specific purpose, but you did not spend it. It is not gone. You still have that money.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:We live in NW DC and this article is basically about us. We are more like $310K a year and I can account for our budget differences in property taxes, childcare, and food. But otherwise it's not that far off from what we spend. Our mortgage payment plus taxes is about the same as the mortgage payment here.

That said, we are 40, keep a liquid cash savings cushion of about 40K, have just shy of 1M in 401k, are on a path to retire around 60 and have about 75% of kids college in the bank by the time they get there. So we're comfortable, but we're driving non-flashy cars, living in a 3 bedroom house, going to public school, and living what's otherwise a pretty non-rich person lifestyle.

So what are you spending money on? Vacation, clothes, eating out, activities?

1M retirement savings is good but not where the majority of your money is going.

Not PP but I’d assume

- college savings (is over $1k per month per kid)
- childcare (at least 3k per month for 2 kids)
- mortgage for a home where kids can attend public school.

I’m a little bit higher of an income and calculated that 85% of my 450k HHI goes towards savings, taxes, mortgage, college savings and childcare.

Well, yeah. If you're counting savings then most of your money should be going toward those things. Unless the ideal lifestyle is for 60% of your income to be spent on caviar or something?

520K HHI here, with about 14% of that left after you tackle everything on your list. Which doesn't make me feel poor, it makes me feel good about my investment balances.

Of course you don't feel poor, you make 520k. Huge huge difference! Guess you don't work in math field?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:We live in NW DC and this article is basically about us. We are more like $310K a year and I can account for our budget differences in property taxes, childcare, and food. But otherwise it's not that far off from what we spend. Our mortgage payment plus taxes is about the same as the mortgage payment here.

That said, we are 40, keep a liquid cash savings cushion of about 40K, have just shy of 1M in 401k, are on a path to retire around 60 and have about 75% of kids college in the bank by the time they get there. So we're comfortable, but we're driving non-flashy cars, living in a 3 bedroom house, going to public school, and living what's otherwise a pretty non-rich person lifestyle.

So what are you spending money on? Vacation, clothes, eating out, activities?

1M retirement savings is good but not where the majority of your money is going.

Not PP but I’d assume

- college savings (is over $1k per month per kid)
- childcare (at least 3k per month for 2 kids)
- mortgage for a home where kids can attend public school.

I’m a little bit higher of an income and calculated that 85% of my 450k HHI goes towards savings, taxes, mortgage, college savings and childcare.

Well, yeah. If you're counting savings then most of your money should be going toward those things. Unless the ideal lifestyle is for 60% of your income to be spent on caviar or something?

520K HHI here, with about 14% of that left after you tackle everything on your list. Which doesn't make me feel poor, it makes me feel good about my investment balances.

Of course you don't feel poor, you make 520k. Huge huge difference! Guess you don't work in math field?

You've lost the thread of the conversation. I'm responding to someone who makes $450k. There is not a "Huge huge difference" between that and my HHI. Guess you don't work in a "reading field"?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:We live in NW DC and this article is basically about us. We are more like $310K a year and I can account for our budget differences in property taxes, childcare, and food. But otherwise it's not that far off from what we spend. Our mortgage payment plus taxes is about the same as the mortgage payment here.

That said, we are 40, keep a liquid cash savings cushion of about 40K, have just shy of 1M in 401k, are on a path to retire around 60 and have about 75% of kids college in the bank by the time they get there. So we're comfortable, but we're driving non-flashy cars, living in a 3 bedroom house, going to public school, and living what's otherwise a pretty non-rich person lifestyle.

So what are you spending money on? Vacation, clothes, eating out, activities?

1M retirement savings is good but not where the majority of your money is going.

Not PP but I’d assume

- college savings (is over $1k per month per kid)
- childcare (at least 3k per month for 2 kids)
- mortgage for a home where kids can attend public school.

I’m a little bit higher of an income and calculated that 85% of my 450k HHI goes towards savings, taxes, mortgage, college savings and childcare.

Savings are not expenses. You may have earmarked that money for a specific purpose, but you did not spend it. It is not gone. You still have that money.

This is why it is hard to analyze without actual numbers.

Using similar rates to the source article you would have something like this:
310000 gross income
38000 401k
79360 taxes (based on 32% effective total)
192640 Net income (adding 4K child tax credit)
Expenses
12000 529 savings
65000 Mortgage PITI
5000 Utilities
24000 Childcare
24000 food (groceries, buying lunch, coffee, dinner out)
10000 Healthcare
4800 Car payment(s)
3000 Gas
1800 Cell phones
6000 clothing
5000 Gifts for family (Christmas, birthdays)
1000 Charity
7000 vacations (2 weeklong trips)
5000 entertainment (social gatherings, Getaway, sports tickets, etc)
Total expenses 173600
Cash remaining after expenses 19040

The devil is in the details, how much are you saving for retirement? Investments? 529? Future house Reno? What else is not on the above list? Emergency trip to visit sick family member? Cost of hobbies? Other stuff that is not easy to categorize?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:We live in NW DC and this article is basically about us. We are more like $310K a year and I can account for our budget differences in property taxes, childcare, and food. But otherwise it's not that far off from what we spend. Our mortgage payment plus taxes is about the same as the mortgage payment here.

That said, we are 40, keep a liquid cash savings cushion of about 40K, have just shy of 1M in 401k, are on a path to retire around 60 and have about 75% of kids college in the bank by the time they get there. So we're comfortable, but we're driving non-flashy cars, living in a 3 bedroom house, going to public school, and living what's otherwise a pretty non-rich person lifestyle.

So what are you spending money on? Vacation, clothes, eating out, activities?

1M retirement savings is good but not where the majority of your money is going.

Not PP but I’d assume

- college savings (is over $1k per month per kid)
- childcare (at least 3k per month for 2 kids)
- mortgage for a home where kids can attend public school.

I’m a little bit higher of an income and calculated that 85% of my 450k HHI goes towards savings, taxes, mortgage, college savings and childcare.

Savings are not expenses. You may have earmarked that money for a specific purpose, but you did not spend it. It is not gone. You still have that money.

So you’re saying that retirement savings aren’t a requirement to be middle class? You can be middle class and not save for retirement? My definition of middle class is eventually retiring.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:We live in NW DC and this article is basically about us. We are more like $310K a year and I can account for our budget differences in property taxes, childcare, and food. But otherwise it's not that far off from what we spend. Our mortgage payment plus taxes is about the same as the mortgage payment here.

That said, we are 40, keep a liquid cash savings cushion of about 40K, have just shy of 1M in 401k, are on a path to retire around 60 and have about 75% of kids college in the bank by the time they get there. So we're comfortable, but we're driving non-flashy cars, living in a 3 bedroom house, going to public school, and living what's otherwise a pretty non-rich person lifestyle.

So what are you spending money on? Vacation, clothes, eating out, activities?

1M retirement savings is good but not where the majority of your money is going.

You’re clueless. Someone at this income is spending most of their money on childcare, taxes and college savings! Not eating out or clothing!! Eating out and vacations are a drop in the bucket compared to the tax burden and required college savings for someone at a 300k HHI.

PP at 310k/here. Keep in mind that we pay about 62K a a year in federal and state taxes. Our takehome pay after medical insurance, 401K, life insurance (all of which I'd say are not negotiable) is $174K.

Our actual *planned* recurring expenses add up to about 135K a year. This is things like utilities, mortgage, taxes, car payments, gas. But it also includes a grocery allocation that allows for some splurges plus take-out.

We have a kid with special needs and have an au pair who does before and aftercare for us, which totals about 20K a year included in that.

I suppose the luxury of having this income that should make me feel "not scrapping by" is that we don't follow a strict budget. 40K a year of discretionary budget is pretty luxurious, I suppose. Though a lot of it doesn't feel luxurious: vet bills, household maintenance, trips to visit family, school donations, kids sports registration fees, etc. We usually do a vacation for spring break and a week in the summer and spend a 2-3K on each. The occasional date night could run 200 bucks if we do something really cool.

My point is we're able to do plenty of fun things, eat good food, and expose our kids to lots of fun things and experiences... but none of them feel like we're rich or anything close to it.

[Anonymous]

$135k in “just the basics” utilities, mortgage, gas, car?!

No. You have decided that luxuries are “basics.” You have bought a home in an expensive area and leased an expensive car. When luxuries become necessities, you do start to feel poor.

[Anonymous]

Anonymous wrote:$135k in “just the basics” utilities, mortgage, gas, car?!

No. You have decided that luxuries are “basics.” You have bought a home in an expensive area and leased an expensive car. When luxuries become necessities, you do start to feel poor.

I said that's my entire planned budget. That includes everything that I plan for - including food for 5 people, medical bills, household items, etc. By far the largest expense is $3800 (PITI) for my mortgage. Yes, I opted to live somewhere close to work with decent public schools. Could I knock this down by $1000/month by living much further out - yes. My quality of life would suffer in ways that aren't worth the savings to me. The best money allocated in that budget is about $5K a year for a cleaning lady. I'd cut lots of other stuff before that.

If my $23,000 Kia is an expensive car, I guess I'm doing something wrong.

I also never said I feel poor. I just said I don't feel as rich as I thought I would making over $300K a year.

[Anonymous]

Anonymous wrote:

Anonymous wrote:We have this income, and we are very comfortable, with lots of money saved each month or spent on discretionary items. However, that's because we live in Burke. If we wanted to live in Arlington or DC, pay for private school, etc., it would feel tighter. As it is, I would never call myself middle class. But I guess we did have to give up living close in, to have all this leftover. Gives us piece of mind. We could live on one salary if we wanted. We can decide each month whether to save extra or go on a vacation/do a home improvement project. I cannot complain.

Bingo.

So what? You don’t think you should have to pay a premium to live in one of the most desired places to live?