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

[Anonymous]

Anonymous wrote:This isn't a "study" as the thread title suggests, it's a blogger's example. And bloggers get traffic by making ridiculous claims that a bazillion people like this thread go to object on all the ridiculous points.

So true, and yet, we have some posters who sigh loudly and agree that they make $350K before bonuses and are just getting by....

[Anonymous]

Anonymous wrote:Buying new cars and luxury cars makes you poor.

Buying a bigger home than you need makes you poor.

Buying expensive name brand clothes makes you poor.

Stop buying stuff you don't need that makes you poor.

1. makes you stupid
2. makes you stupid
3. makes you stupid
4. makes you not poor, not ever, and still stupid.

[Anonymous]

I'm having a hard time believing that these exact numbers have been vetted by thousands of readers. The tax bill is WAY too high. He’s using the standard deduction, but these people have a $1.8M mortgage, so even with tax law changes, they’re going to be itemizing until that loan is almost paid off. Also, 9% state tax is high for many states, and they wouldn’t be paying Social security on all of that income, only for the first $132,900 of each income. Also, they should get a small deduction for the 529 plan, be able to deduct $5k for childcare, and some of those healthcare expenses would also likely be non-taxable. In real life, I’m betting that those people are paying at least $10-15k less in taxes than what he is estimating.

I think that some of the other expenses are too high – I don’t know that you need $4000 of baby items EACH year, and the food expenses are also pretty high.

But the biggest issue is the $53k allocated for childcare expenses – that is 23% of their income, but it’s really only for a couple of years while the parents have two kids in daycare/preschool. Yes, the parents will still have to pay for afterschool care and camps and such, but those expenses are not likely to be $53k/year the whole way through.

[Anonymous]

Anonymous wrote:

Anonymous wrote:You should be saving that much a year though!

If you have more than one kid and you want them to attend an elite private school (I know you'll pooh pooh this but come one, admit this is the secret dream of ALL middle class and upper class folk), you need to somehow produce over 300k dollars for each one in 18 years.

Plus pay your mortgage, pay off your own student loans, and save for retirement.

This has never been a middle class indicator. Middle class goes to state schools.

Not true. Getting into an elite institution used to be a path to social mobility and lots of middle class kids took that opportunity, myself included.

Now it's too expensive.

[Anonymous]

OMG! That article is so me!! 3M HHI and I was just expelled from my friend group because I couldn't afford a SFH in Aspen and they thought buying a condo was for poor people! What a wake up call about my status in society. I filled my application for food stamps yesterday! Fingers crossed!

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:You should be saving that much a year though!

If you have more than one kid and you want them to attend an elite private school (I know you'll pooh pooh this but come one, admit this is the secret dream of ALL middle class and upper class folk), you need to somehow produce over 300k dollars for each one in 18 years.

Plus pay your mortgage, pay off your own student loans, and save for retirement.

This has never been a middle class indicator. Middle class goes to state schools.

Not true. Getting into an elite institution used to be a path to social mobility and lots of middle class kids took that opportunity, myself included.

Now it's too expensive.

What middle class did you belong to?

[Anonymous]

Anonymous wrote:

Anonymous wrote:So sad that their third yearly vacation has to be a staycation.

Why is this sad? We make nearly double these people, take 4 weeks off a year, 2 weeks are staycations. I actually LOVE my staycations. So relaxing and such a great opportunity to really reconnect as a family, more so than being on the go when traveling.

You make $650k and get 4 weeks vacation? What do you??

[Anonymous]

Anonymous wrote:

Anonymous wrote:It’s not a “stupid article.” It was vetted by FIRE proponents and they agreed with the estimates. As a family with HHI around $320K in NW DC, these estimates are spot on.

The trick is to get a job in DC or Boston, and then move to a LCOL area while continuing to telecommute with the same job. I have a few colleagues doing this and they are very happy, especially in the young kid years.

What "middle class" neighborhood has a median home price of 1.6 million? It's definitely not Silver Spring, which is my definition of middle class in the DC area.

I was just thinking this. We live in Silver Spring, in a great house we paid $450k for 3 years ago. Local elementary is excellent. We paid $24k/year per kid for pre-school, but I'm under no illusion that it's essential. We chose not to use the totally decent in-home daycare in our neighborhood for $800/month, and that's on us.

I love all these articles that are basically like, if you make insanely expensive choices, you can spend a lot of money!

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:It’s not a “stupid article.” It was vetted by FIRE proponents and they agreed with the estimates. As a family with HHI around $320K in NW DC, these estimates are spot on.

The trick is to get a job in DC or Boston, and then move to a LCOL area while continuing to telecommute with the same job. I have a few colleagues doing this and they are very happy, especially in the young kid years.

What "middle class" neighborhood has a median home price of 1.6 million? It's definitely not Silver Spring, which is my definition of middle class in the DC area.

I was just thinking this. We live in Silver Spring, in a great house we paid $450k for 3 years ago. Local elementary is excellent. We paid $24k/year per kid for pre-school, but I'm under no illusion that it's essential. We chose not to use the totally decent in-home daycare in our neighborhood for $800/month, and that's on us.

I love all these articles that are basically like, if you make insanely expensive choices, you can spend a lot of money!

Exactly! But you can't tell the spendthrifts around here that they're their own problem.

"I bought 3 boats and now I've only got $5000 to get to my next paycheck! Why don't myyyy kids get financial aid like those lucky poor kids??"

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:It’s not a “stupid article.” It was vetted by FIRE proponents and they agreed with the estimates. As a family with HHI around $320K in NW DC, these estimates are spot on.

The trick is to get a job in DC or Boston, and then move to a LCOL area while continuing to telecommute with the same job. I have a few colleagues doing this and they are very happy, especially in the young kid years.

What "middle class" neighborhood has a median home price of 1.6 million? It's definitely not Silver Spring, which is my definition of middle class in the DC area.

No that is low class, bad schools and a high proportion of low income people (more than 10%)

Dont be fooled by realtors and other cheerleaders of real estate, Bethesda is middle class, it's just not as affordable as it was in the past.

What happened is that the population of the DC metro area more than doubled in the last 40 years. By the law of supply and demand, that means prices go up. So what used to be middle class (e.g. Bethesda, Chevy Chase) is no longer middle class. With rising prices, the standards go down as the prices go up. So that means that the upper class now move from the downtown desirable areas to the nearby desirable areas formerly owned by the middle class. This makes those prices go up and push the middle class out to the less desirable further out areas and so on. So, the upper class cannot fully live in the upper NW area, and push out to the nearby suburbs like Arlington, McLean and Bethesda/Chevy Chase or EOTR in NE. This is now the lower tier of the upper class. The upper middle class is now living in Silver Spring, Rockville, Gaithersburg, Annandale, Vienna, Reston. And the true middle class is living in PG county, Howard County, AA county, Prince William County, Loudon County.

With growing demand, you cannot call the same areas that were middle class 40 years ago, still middle class. That just isn't the way real estate works.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:It’s not a “stupid article.” It was vetted by FIRE proponents and they agreed with the estimates. As a family with HHI around $320K in NW DC, these estimates are spot on.

The trick is to get a job in DC or Boston, and then move to a LCOL area while continuing to telecommute with the same job. I have a few colleagues doing this and they are very happy, especially in the young kid years.

What "middle class" neighborhood has a median home price of 1.6 million? It's definitely not Silver Spring, which is my definition of middle class in the DC area.

I was just thinking this. We live in Silver Spring, in a great house we paid $450k for 3 years ago. Local elementary is excellent. We paid $24k/year per kid for pre-school, but I'm under no illusion that it's essential. We chose not to use the totally decent in-home daycare in our neighborhood for $800/month, and that's on us.

I love all these articles that are basically like, if you make insanely expensive choices, you can spend a lot of money!

"I bought 3 boats and now I've only got $5000 to get to my next paycheck! Why don't myyyy kids get financial aid like those lucky poor kids??"

Yep. It's not like just because your job is in NW DC you have to live there! There's a lot of variation of cost in a HCOL and people have--and make--choices. That's being middle class. The budget he presents that you feel is spot on is what happens if you keep making expensive choices--I'm going to live in NW DC AND have a car AND go on multiple vacations each year WHILE I still have young kids in daycare that's expensive because I chose to live in NW DC.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:So sad that their third yearly vacation has to be a staycation.

Why is this sad? We make nearly double these people, take 4 weeks off a year, 2 weeks are staycations. I actually LOVE my staycations. So relaxing and such a great opportunity to really reconnect as a family, more so than being on the go when traveling.

You make $650k and get 4 weeks vacation? What do you??

I actually get 6 weeks PTO (I save the extra days for a day off here and there and sickness) I've been a the same IT company going on 11 years. My DH is also at an IT company for 3 years (household name) and started out at 3 weeks PTO and is now up to 5. His employer has over 350,000 worldwide employees.

Doesn't matter the position, everyone in the US gets the same amount of leave unless you've negotiated something special.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Ooooook.

But if you live in DC, why are you paying anything for your 4 year old to go to school? And why do you need a house that expensive? There are lots of options for much less than that.

4 year olds need to go to preschool in Arlington and MoCo.

The mortgage in the example was only $3900/month. Not sure why they indicated such a high purchase price, but a $3900 mortgage is typical for inside the Beltway.

The point of the article is that typical middle class signifiers in many major American metro areas are now luxuries. What changed?

But it broke out property taxes, etc. The actual figure most people consider their "mortgage payment" is much larger.

This - in an effort to appear far more reasonable that it really is, they broke out PITI. When added together, the total is . . . $5890. Suggesting that being able to afford a nearly $6,000 mortgage payment, plus spend $70/day (!!!) on food, is a middle class marker is deeply, deeply deluded.

[Anonymous]

Anonymous wrote:The point is that $350k should be a comfortable UMC income. Many people would even consider that rich. But it doesn’t go nearly as far as one would expect. That’s our exact income before bonuses. We spend more on some things, less on others, but this isn’t too far off. We have a lot of expenses to make life as two working parents, with long hours and travel, work. We spent more on a house closer in vs having long commutes. One of our kids requires expensive therapy and tutors. We eat takeout way too often bc we get home too late to cook. We have an after-school nanny to shuttle the kids to appointments and activities. Sure, we could get rid of some of these “luxuries” but then one of us would have to cut back at work and our income would decrease. It would be a different ballgame if one of us made $350k and the other SAH. But there is a high cost associated with having both parents work at relatively high paying but not very flexible job.

And $350K is more than comfortable UMC income. The reason that it "doesn't go nearly as far as one would expect" is that you spend your money on luxuries. If you lived in true middle class areas, say Gaithersburg or Vienna, then you would have loads of disposable cash to take vacations, buy a yacht, and invest in expensive hobbies. Instead you spend your money for the luxury of living close in, for the convenience of having a nanny. And having an lower upper class in come means that when your child has special needs, you can afford to select therapies and tutors that are best suited for your child instead of taking what insurance will cover. You have the option to buy lunch and get takeout when you come home late. A middle class family would be cooking on weekends so that when they come home late, they can heat up a meal. They would be asking friends to carpool or trying to get a retired family member to move to the area to help with transportation for your child. And they wouldn't be paying for extra activities for their children.

Your entire post is filled with luxuries that you justify. Just because you spend all of your income and don't have a lot of disposable income leftover after you've spent it, does not mean that you didn't have a high income to begin with. It just means that you live a much wealthier life-style than a true middle class income could afford.

It's such a joke that the downtown lawyers and doctors and lobbyists are trying to claim being middle class. How do you think the paralegal in your office or the PT therapist that works in the same hospital or the office manager of your lobbyist firm live. They have the same commute issues that you have on 1/3 of your income and may not have a high income spouse to augment their income. These people are middle income staff (as opposed to the building security guard, the janitor or the gift shop clerk at the hospital who are making low income wages). The middle income people have to make the same commute, they have the same issues of childcare, they might have special needs children, and they still have to eat lunch and dinner. How do you think they do this on 1/3 of your income? You've deluded yourself into thinking that a standard with no qualifications defines middle class. It doesn't. The standard of home, childcare, food and expenses is upper middle class at best in the outer suburbs, but when you move everything into the close-in areas, then it becomes completely unattainable in close in. You pay the luxury upcharge to move everything into the convenience zone. And that requires an upper class income to do so.

[Anonymous]

Anonymous wrote:The point is that $350k should be a comfortable UMC income. Many people would even consider that rich. But it doesn’t go nearly as far as one would expect. That’s our exact income before bonuses. We spend more on some things, less on others, but this isn’t too far off. We have a lot of expenses to make life as two working parents, with long hours and travel, work. We spent more on a house closer in vs having long commutes. One of our kids requires expensive therapy and tutors. We eat takeout way too often bc we get home too late to cook. We have an after-school nanny to shuttle the kids to appointments and activities. Sure, we could get rid of some of these “luxuries” but then one of us would have to cut back at work and our income would decrease. It would be a different ballgame if one of us made $350k and the other SAH. But there is a high cost associated with having both parents work at relatively high paying but not very flexible job.

It IS a comfortable UMC income. You chose to spend that income to make your life easier. You make expensive UMC CHOICES that dont give you much financial breathing room, making you esstetially no better off than someone making 2/3s of what you make. If you do not feel you are living the UMC life that your w2 demonstrates then you are spending too much.

Don't confuse your financial choices with the middle class.