Middle class life has me completely baffled
![[Post New]](/jforum/templates/default/images/icon_minipost_new.gif){kind=icon}
Anonymous
+1. I grew up real middle-class. Never wanted for food or shelter, but no way were we getting new clothes all the time. My mom sewed most of our clothes until we rebelled and we had a very strict budget. Only one extra-curricular activity that cost money, and even then, if it was dance, then one dance class. Rec soccer, not a travel league. Very small college savings. We have a similar HHI to OP, and no we can’t do everything, we have to make compromises, but we can sure do a lot more, and have more financial security, than my parents had. I complain about my shitty 1940s house all the time, but still try to keep in perspective how fortunate we are. |
Anonymous
House: Lots of people buy in condos and/or up and coming neighborhoods to get on the property ladder. Time is on your side for this. Kids: Childcare is only That expensive for the first few years (assuming post covid world); you can pause retirement contributions during then. We bought far out (<500K) to live on one salary similar to your numbers but can still splurge on a part time nanny. You spend less on travel and leisure when you have young kids (you cant buy sleep heh heh) College: your income will likely rise and as long as you don’t go house debt crazy you will be able to pick up a 529 eventually. Bottom line: it’s a high COL area but there are big benefits to raising your kids here in terms of education and opportunities if you play your cards right. You will make it work. |
Anonymous
Maxing out on retirement contribution early will set them up for long term wealth opportunities. Conservatively, if they only contribute max amount to 401K for 30 years at 6% they will have over 3M. |
Anonymous
You can’t save for EVERYTHING at once. That is the whole point. You want a house, you retool your calculations and contribute less for a while to save up your down payment more quickly. At your ages you don’t need to max 401k and your Roth every single year. The ironic thing is your tax burden will be lower if and when you buy Aw house. So, you just make it work if you want to make it work. I’m fiscally conservative but you make a lot of money and have extremely low expenses for DINKs - you just need to suck it up and temporarily prioritize the house if you want the house. |
Anonymous
This person nailed it. |
Anonymous
|
Costs for certain things have skyrocketed in relation to gains in real incomes. College costs are the obvious examples here- someone working a minimum wage job to put themselves through college has to work a LOT more now than in the past. Even something like catholic school- my middle class grandparents put all of their kids though catholic school in the 50s/60s. My parents wanted to do that for us but there was just no way.
Retirement too- fewer employeR-provided pensions, people are living longer, and health care/long term care costs have skyrocketed. So it’s necessary to save more. |
Anonymous
|
OP, I actually think more people should be like you and rent a place that works for your needs while saving up early for retirement. Home ownership is overrated and tax efficient wealth compounding in 401ks/IRA's/etc. is underrated.
I think you are doing great. I'm early 30's and had $400K+ in retirement assets before buying a house and throwing in $39K / year will get you to a good place really quickly. Friends thought I was crazy for maxing out since right after college (and these were fellow high income people who had the ability to do so). I think if you really want a house/condo though; something will have to give. You'll either have to borrow at a higher LTV than your debt adverse risk adverse self will be comfortable with, wait to accumulate enough money (potentially to your detriment to the extent prices rise), or not save as much in emergency/retirement/etc. Great job though! |
Anonymous
No they aren't. Not even close. They're not even in the top 5%. This is literally 1 Google query you could have done in 5 seconds. |
Anonymous
+1 OP you're oversaving for retirement (which is a great problem to have!). Cut that back to 10% each (plus pension contributions) until you have your down payment saved up. Likewise the $1000/month to the EF is a great thing to have done, but by now you should have a pretty substantial EF built up. Don't let that get bigger than 3-6 months. Based on your budget now you can clearly cash-flow at least $1k/month for non job-loss emergencies, so this is really just for when s*** hits the fan. Redirect the extra 401k savings and $1k/month to the down payment fund. The car replacement fund doesn't have to be "purchase a new car in cash replacement" - once you have $5-8k in there to serve as a down payment on the next car redirect that $300/month to the down payment fund too. That's an additional $27k this year. I don't know how old you are, but we could afford our house partly because DH put 3% down on a two-bedroom condo in Columbia Heights that appreciated 100k in 4 years. That was our down payment for our SFH in NWDC. You can save more than you're currently saving, but you should also consider getting on the property ladder. |
Anonymous
+1 We make just under $300K and drive our cars into the ground because we'd rather put car payment money in retirement and college savings. I grew up comfortable "middle class" and my parents bought a car at most every 10 years. And, except for one big trip in my teens, our only travel was to visit out-of-state family. |
Anonymous
No, they are in the 5%. The top 1 percent is earning 475k or more per year for a family. For an individual it was 328k. They are not the 1 percent. |
Anonymous
SO MANY of the people you are talking about use family money for the downpayment of their first home. it's the not-so-secret secret to making this work. |
Anonymous
| I feel like with no kids you should be able to save more. We make less than you (105k) with a 1800 rent and managed to save each month. We won’t be able to save much though once our baby arrives but we can afford daycare for her (2k a month) but we saved in anticipation of this. |
Anonymous
|
OP, we make $140k with two kids and similar fixed costs to yours, excluding childcare. We don't max out retirement, which sucks, but we just don't have the money for that right now. We stopped saving for emergencies once we hit $24k. We don't save for new cars because we wouldn't buy a new car, we'd by a used one out of savings and then replenish; we run our cars into the ground. We rarely buy new clothes. We are planning to buy a small house far out in the $300-350k range this summer.
So...the other posters are right. Other people don't live the lifestyles you are imagining, and they don't save as much as you. You will have a very nice standard of living in retirement though! |
Anonymous
OP is putting $55.8k into retirement each year. They're saving, just not toward their stated priority of a down payment. |