If you are middle class (<150k HHI), how would things be different if you were rich (>400k HHI)

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:This is middle class - not $150K:

https://www.businessinsider.com/personal-finance/how-much-to-earn-middle-class-in-state-2021-4

+1. This is a tool you can use to see where you actually fall. It accounts for HHI, family size, and location.

https://grow.acorns.com/middle-class-calculator/

Your family size has nothing to do with social class. Your family size is a lifestyle choice. It strictly goes by HHI.

What if you get pregnant with multiples when you were only trying to have one? Asking from persons experience. One extra kid makes a big difference, and it’s not always the parents choice!

[Anonymous]

I do think that middle class no longer refers to the middle of the income spectrum. Historically, in Europe the middle classes were people in the approx top 20% of the population. Just underneath the 1% who were primarily the aristocracy. The rest were the working classes, and then the outright poor.

When I consider the assumptions for a standard middle of the pack American middle class lifestyle, it means having a standard SFH, say 1800-2200 sqft, two cars that aren't junkers, one trip a year to a beach, some savings for rainy days and retirement, being able to help with college, going out to dinner once in a while - that's what people took for granted as a middle class life in the 1980s. The difference from the 1950s was that it could be had on one income in the 50s, in the 80s it was taking two incomes but it was still a middle class life.

Today? I'd think 150k is really the threshold when you can do this for a family. A family of four living off 80k in most metro area is not middle class, but working class.

There's been a lot of talk about the hollowing out of the middle classes and growing income disparities, and this is a big part of it.

[Anonymous]

Anonymous wrote:I do think that middle class no longer refers to the middle of the income spectrum. Historically, in Europe the middle classes were people in the approx top 20% of the population. Just underneath the 1% who were primarily the aristocracy. The rest were the working classes, and then the outright poor.

When I consider the assumptions for a standard middle of the pack American middle class lifestyle, it means having a standard SFH, say 1800-2200 sqft, two cars that aren't junkers, one trip a year to a beach, some savings for rainy days and retirement, being able to help with college, going out to dinner once in a while - that's what people took for granted as a middle class life in the 1980s. The difference from the 1950s was that it could be had on one income in the 50s, in the 80s it was taking two incomes but it was still a middle class life.

Today? I'd think 150k is really the threshold when you can do this for a family. A family of four living off 80k in most metro area is not middle class, but working class.

There's been a lot of talk about the hollowing out of the middle classes and growing income disparities, and this is a big part of it.

This is a smart comment, in part because it acknowledges that being "middle class" is actually an aspirational status historically. It speaks to the idea that it is possible to meet all basic needs, including leisure, without having to be a member of the upper class (either by birth or through capitalism). In fact the argument for capitalism rests on the idea that being middle class is pretty pleasant, so capitalism must be better than a feudal system, right? The professional classes (lawyers, accountants, doctors) were actually originally the middle class because they were people who had to work for a living, but lived much more comfortably than household staff, feudal farmers, miners and industrial workers. That shifted with time and now some lawyers and doctors have entered the upper classes (though many, especially lawyers, remain middle class workers).

In the DMV, 100-150k is pretty squarely middle class, depending on size of family and if that's two incomes or one. A middle class family should be able to afford to buy a home and go on vacation, for instance. These aren't things that push you up and out of the middle class. The ability to own a car or easily afford transportation is also a mark of being middle class. Being able to easily afford reasonably nutritious food is a middle class marker. So is a reasonable amount of leisure -- the ability to have regular days off from work, to take 2-3 vacations a year, and to afford new clothes and shoes as needed as well as to afford necessary car repairs and home maintenance. In order to afford all that in this area, you need a minimum of about 100k, and you aren't going to have much excess beyond these essentials until you are making more than 150k.

Keep in mind also that at this point, many if not most members of the middle class are also carrying student debt for some portion of their adult lives. In order to obtain a middle class job (the lower paid professions like librarians, civil engineers, teachers, some attorneys, etc.) you generally need a college degree and in many places also a masters degree. With the cost of education, even at in state public schools, it is challenging to get the needed credentials without borrowing. So often those early salaries of 50k or so are smaller than they look because of loan payments.

[Anonymous]

I make a hair under $150K. Already fund everything at the max (divorced, childless), and at $400K I would increase my charitable giving.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Yes it is middle class. I standard government or military salary is middle class. If you have to live far from the city and have a long commute to work in order to comfortably afford housing, you are middle class.

The point is that people in the >400k range don’t need to make those compromises. That is the difference. Whdd we n you are rich you can have what you want.

$150 is Not middle class. You don't have to have a far commute, you just get a smaller house, like we did. And very few people need to live close to DC/city. We don't.

At under $150K we live very comfortably. Kids are in multiple activities (expensive), private weekly music lessons, almost paid off house, college savings (at this point enough to pay for a state school, room and board and extras), retirement savings, paid cash for our last vehicle and will for our next. And, we do things like carry out a few times a week. Its how you spend your money. If you choose crazy high housing costs, sure, you can be house poor but is poor financial decisions not middle class.

PP, when did you buy your home? You say it's almost paid off, so did you buy a long time ago, put down a huge downpayment, or double-up on payments? What is your PITI?

100% thus person bought 20+ years ago. That is not the reality of someone today warning 150K. There are 0 homes or condos under 400K.

There are plenty of houses in Wheaton, Silver Spring and other areas of MoCo for that price. We have a 900 square foot house. Its very doable. Buying a condo is dumb as you have HOA fees. But, there are plenty of condos for that price or less too. Maybe not in DC but not everyone wants to live in DC and you live where you can afford, not always where you want. We also bought a shack that no one else except builders and flippers wanted and had to invest money in repairs.

...what?

NP here. I live in DTSS, and only bought 3 years ago, without a huge budget. There were very few non-condos that were under $500k, let alone $400k, and the few homes under $500k were 1) major fixer-uppers and/or 2) very very small (<1000 sq ft) or 3) townhomes with condo fees, of which there aren't many anyway, like a few dozen that even exist, forget about them coming up for sale more than 1 or 2 at a time. This also meant bidding wars that usually pushed them over $500k.

But under $400k? Not really, no. I just looked at realtor.com and found 0 non-condos under $400k in SS below the Beltway.

Now, Wheaton? I'm seeing a few under $400k, but believe me, I looked at those 3 years ago, too, and they are either sort of "half-townhomes"-- like duplexes, more like 2-3 story <1000 sq ft condos-- AND they have condo fees-- or a couple SFH that were very small, like yours-- 900 sq ft, 2 BR, 1 BA.

Silver Spring being unincorporated and half the county having a "Silver Spring" address-- sure, you can go up closer to Leisure World or even close to Howard County and get something modest, but totally reasonable for under $400k. You won't have a million options, but you'll definitely have a few if you want to live up Columbia Pike or wherever.

Before we bought our SFH-- about 1200 sq ft for us and we could afford it only because we rent out the basement-- we lived in a 900 sq ft apartment with a kid. I am always happier with less space in a more convenient location, so this was fine enough at the time, pre-pandemic, with one kid <5 years old. And of course, lots of families make do with more kids and less space. But in general, people with the average 2 kids are going to want/"need" more than 1000 sq ft. Ideally at least 1200.

So, yeah, actually-- virtually no options for that in "Silver Spring/Wheaton" under $400k without a condo/HOA fee.

[Anonymous]

Anonymous wrote:

Anonymous wrote:I do think that middle class no longer refers to the middle of the income spectrum. Historically, in Europe the middle classes were people in the approx top 20% of the population. Just underneath the 1% who were primarily the aristocracy. The rest were the working classes, and then the outright poor.

When I consider the assumptions for a standard middle of the pack American middle class lifestyle, it means having a standard SFH, say 1800-2200 sqft, two cars that aren't junkers, one trip a year to a beach, some savings for rainy days and retirement, being able to help with college, going out to dinner once in a while - that's what people took for granted as a middle class life in the 1980s. The difference from the 1950s was that it could be had on one income in the 50s, in the 80s it was taking two incomes but it was still a middle class life.

Today? I'd think 150k is really the threshold when you can do this for a family. A family of four living off 80k in most metro area is not middle class, but working class.

There's been a lot of talk about the hollowing out of the middle classes and growing income disparities, and this is a big part of it.

This is a smart comment, in part because it acknowledges that being "middle class" is actually an aspirational status historically. It speaks to the idea that it is possible to meet all basic needs, including leisure, without having to be a member of the upper class (either by birth or through capitalism). In fact the argument for capitalism rests on the idea that being middle class is pretty pleasant, so capitalism must be better than a feudal system, right? The professional classes (lawyers, accountants, doctors) were actually originally the middle class because they were people who had to work for a living, but lived much more comfortably than household staff, feudal farmers, miners and industrial workers. That shifted with time and now some lawyers and doctors have entered the upper classes (though many, especially lawyers, remain middle class workers).

In the DMV, 100-150k is pretty squarely middle class, depending on size of family and if that's two incomes or one. A middle class family should be able to afford to buy a home and go on vacation, for instance. These aren't things that push you up and out of the middle class. The ability to own a car or easily afford transportation is also a mark of being middle class. Being able to easily afford reasonably nutritious food is a middle class marker. So is a reasonable amount of leisure -- the ability to have regular days off from work, to take 2-3 vacations a year, and to afford new clothes and shoes as needed as well as to afford necessary car repairs and home maintenance. In order to afford all that in this area, you need a minimum of about 100k, and you aren't going to have much excess beyond these essentials until you are making more than 150k.

Keep in mind also that at this point, many if not most members of the middle class are also carrying student debt for some portion of their adult lives. In order to obtain a middle class job (the lower paid professions like librarians, civil engineers, teachers, some attorneys, etc.) you generally need a college degree and in many places also a masters degree. With the cost of education, even at in state public schools, it is challenging to get the needed credentials without borrowing. So often those early salaries of 50k or so are smaller than they look because of loan payments.

This was always my view of the middle class, too. It wasn't literally the mean or median. It was a lifestyle somewhere between minimum wage poverty and rich people. But since everyone has their own definition for "rich", the upper bound of middle class is poorly defined.

[Anonymous]

I would spend more money on travel, college funds and cleaning service.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Yes it is middle class. I standard government or military salary is middle class. If you have to live far from the city and have a long commute to work in order to comfortably afford housing, you are middle class.

The point is that people in the >400k range don’t need to make those compromises. That is the difference. Whdd we n you are rich you can have what you want.

$150 is Not middle class. You don't have to have a far commute, you just get a smaller house, like we did. And very few people need to live close to DC/city. We don't.

At under $150K we live very comfortably. Kids are in multiple activities (expensive), private weekly music lessons, almost paid off house, college savings (at this point enough to pay for a state school, room and board and extras), retirement savings, paid cash for our last vehicle and will for our next. And, we do things like carry out a few times a week. Its how you spend your money. If you choose crazy high housing costs, sure, you can be house poor but is poor financial decisions not middle class.

This is us too. We have everything we need, including a five bed house very close in and don't worry about paying for activities or eating out or vacations. We make less than $140k but that's about 40k more than we made two years ago and I feel like we have so much now!

[Anonymous]

We used to make HHI 150k and now make over $550k. Our lives have changed considerably. While we don’t feel wealthy, we’re not worried about money. But we still budget. I spent a very long time paying off law school loans. That limited savings. Now that loans have been paid, all extra cash goes to savings. Our home is not new construction but an older home that we renovated. Kids in public, as private would kill savings.

With increased income, we save more, travel more and don’t worry about most kids’ extracurricular costs (music, sports, private tutoring). At 150, we were stressed about groceries, daycare, travel costs and just about everything. We can breath more easily but I know that we’re behind in retirement bc we only recently increased income to comfortably level

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:This is middle class - not $150K:

https://www.businessinsider.com/personal-finance/how-much-to-earn-middle-class-in-state-2021-4

+1. This is a tool you can use to see where you actually fall. It accounts for HHI, family size, and location.

https://grow.acorns.com/middle-class-calculator/

Your family size has nothing to do with social class. Your family size is a lifestyle choice. It strictly goes by HHI.

What if you get pregnant with multiples when you were only trying to have one? Asking from persons experience. One extra kid makes a big difference, and it’s not always the parents choice!

Having a kid is a choice and that is a risk. It has nothing to do with hhi.

[Anonymous]

Anonymous wrote:We used to make HHI 150k and now make over $550k. Our lives have changed considerably. While we don’t feel wealthy, we’re not worried about money. But we still budget. I spent a very long time paying off law school loans. That limited savings. Now that loans have been paid, all extra cash goes to savings. Our home is not new construction but an older home that we renovated. Kids in public, as private would kill savings.

With increased income, we save more, travel more and don’t worry about most kids’ extracurricular costs (music, sports, private tutoring). At 150, we were stressed about groceries, daycare, travel costs and just about everything. We can breath more easily but I know that we’re behind in retirement bc we only recently increased income to comfortably level

This sounds like a spending issue if you stress at that income.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Yes it is middle class. I standard government or military salary is middle class. If you have to live far from the city and have a long commute to work in order to comfortably afford housing, you are middle class.

The point is that people in the >400k range don’t need to make those compromises. That is the difference. Whdd we n you are rich you can have what you want.

$150 is Not middle class. You don't have to have a far commute, you just get a smaller house, like we did. And very few people need to live close to DC/city. We don't.

At under $150K we live very comfortably. Kids are in multiple activities (expensive), private weekly music lessons, almost paid off house, college savings (at this point enough to pay for a state school, room and board and extras), retirement savings, paid cash for our last vehicle and will for our next. And, we do things like carry out a few times a week. Its how you spend your money. If you choose crazy high housing costs, sure, you can be house poor but is poor financial decisions not middle class.

PP, when did you buy your home? You say it's almost paid off, so did you buy a long time ago, put down a huge downpayment, or double-up on payments? What is your PITI?

100% thus person bought 20+ years ago. That is not the reality of someone today warning 150K. There are 0 homes or condos under 400K.

There are plenty of houses in Wheaton, Silver Spring and other areas of MoCo for that price. We have a 900 square foot house. Its very doable. Buying a condo is dumb as you have HOA fees. But, there are plenty of condos for that price or less too. Maybe not in DC but not everyone wants to live in DC and you live where you can afford, not always where you want. We also bought a shack that no one else except builders and flippers wanted and had to invest money in repairs.

...what?

NP here. I live in DTSS, and only bought 3 years ago, without a huge budget. There were very few non-condos that were under $500k, let alone $400k, and the few homes under $500k were 1) major fixer-uppers and/or 2) very very small (<1000 sq ft) or 3) townhomes with condo fees, of which there aren't many anyway, like a few dozen that even exist, forget about them coming up for sale more than 1 or 2 at a time. This also meant bidding wars that usually pushed them over $500k.

But under $400k? Not really, no. I just looked at realtor.com and found 0 non-condos under $400k in SS below the Beltway.

Now, Wheaton? I'm seeing a few under $400k, but believe me, I looked at those 3 years ago, too, and they are either sort of "half-townhomes"-- like duplexes, more like 2-3 story <1000 sq ft condos-- AND they have condo fees-- or a couple SFH that were very small, like yours-- 900 sq ft, 2 BR, 1 BA.

Silver Spring being unincorporated and half the county having a "Silver Spring" address-- sure, you can go up closer to Leisure World or even close to Howard County and get something modest, but totally reasonable for under $400k. You won't have a million options, but you'll definitely have a few if you want to live up Columbia Pike or wherever.

Before we bought our SFH-- about 1200 sq ft for us and we could afford it only because we rent out the basement-- we lived in a 900 sq ft apartment with a kid. I am always happier with less space in a more convenient location, so this was fine enough at the time, pre-pandemic, with one kid <5 years old. And of course, lots of families make do with more kids and less space. But in general, people with the average 2 kids are going to want/"need" more than 1000 sq ft. Ideally at least 1200.

So, yeah, actually-- virtually no options for that in "Silver Spring/Wheaton" under $400k without a condo/HOA fee.

Want vs need are two different things. We have 1000 square feet and yes double would be nice but that is a want not need. There are some houses around $400k. You may not want them but then that’s on you.

[Anonymous]

Anonymous wrote:I do think that middle class no longer refers to the middle of the income spectrum. Historically, in Europe the middle classes were people in the approx top 20% of the population. Just underneath the 1% who were primarily the aristocracy. The rest were the working classes, and then the outright poor.

When I consider the assumptions for a standard middle of the pack American middle class lifestyle, it means having a standard SFH, say 1800-2200 sqft, two cars that aren't junkers, one trip a year to a beach, some savings for rainy days and retirement, being able to help with college, going out to dinner once in a while - that's what people took for granted as a middle class life in the 1980s. The difference from the 1950s was that it could be had on one income in the 50s, in the 80s it was taking two incomes but it was still a middle class life.

Today? I'd think 150k is really the threshold when you can do this for a family. A family of four living off 80k in most metro area is not middle class, but working class.

There's been a lot of talk about the hollowing out of the middle classes and growing income disparities, and this is a big part of it.

Your idea of middle class is skewed. Middle class don’t take yearly beach vacations, two newer cars and larger homes.

[Anonymous]

Anonymous wrote:I would spend more money on travel, college funds and cleaning service.

There is a world of difference between a single person with a $150k HHI and a family of four.

[Anonymous]

We were making about 125k hhi five years ago when dc1 was born. I stoppped working for a couple years to make a career change during that time. We now make 400k per year exactly and now have 2 kids. When we were making 125, I knew exactly when payday was and would count the days until getting dh’s paycheck would hit our account. Now, I’m oblivious to it.