Middle class life has me completely baffled

[Anonymous]

Also, you have to consider the age of the people you are comparing yourself to. Someone who has all those things in their late 40s did NOT have all those things when the were 30.

For us, we got married, paid off all student debt that I had ($70k , 20 yrs ago), BEFORE we had any kids. We lived in a small townhouse . We were able to move up to a SFH over time. We now have over $3mil saved and our sfh is paid off. No car loans or debt of any kind. We are older than you might think even though we have a 13 yr old and 16 yr old.

If you are 35 yrs old and wondering how this is possible....remember that we didn't have the kids or the SFH when we were 35...and we didn't have any savings either. We didn't have high paying jobs....just gov jobs (one fed, a military pension).

Save. Invest. Give it time.

[Anonymous]

correction....we have over $2mil saved. Not 3.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Generational wealth. So no student loans, help with down payment, etc.

And not the point of this thread but it struck me that this is why there’s a call for reparations. Black households on average have only $9 of wealth for every $100 in wealth the average white household has.

As a consequence of single-headed households. While the divorce rate and never married rates have increased, the reality is black families have a disproportionate number of single/never married parents and this has been the case for generations. Their poverty rates are prompted by a number of factors.

[Anonymous]

Anonymous wrote:Damn, the fact that so many people point to the fact that people in this region get ahead because of family money and intergenerational wealth really hits home to what a lot of BLM protesters are rallying about. It is hella hard to bootstrap your way up. I don't have parental support either for anything.

You can if you sacrifice your wants. The problem is people want to live at or above their means, not below. We are an immigrant family and we bootstrapped ourselves up with no inter generational wealth or family help. It can be done.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:HHI is currently $280k. We are very comfortably middle class with two kids and no debt, but wouldn't have been able to afford our house without downpayment help from parents.

LOL. You are not middle class by any definition. You are in the 1%.

You are rich 1%ers.

They are not in the 1%

[Anonymous]

I mean, this is why people in HCOL cities think 250k or 300k HHI is "middle class."

Statistically, it's not. But something approaching that income is what it takes to live a "middle class" lifestyle (ability to buy a single family house in a "good" school district, pay the daycare bill, take one or two modest vacations a year, pay back debt, and save for the future) in cities like DC.

[Anonymous]

To be in the 1% in DC, you need to earn $598,155

That's the bottom rung of the 1%

https://patch.com/district-columbia/georgetown/virginia-dc-s-1-percent-earn-much-annually

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Generational wealth. So no student loans, help with down payment, etc.

And not the point of this thread but it struck me that this is why there’s a call for reparations. Black households on average have only $9 of wealth for every $100 in wealth the average white household has.

As a consequence of single-headed households. While the divorce rate and never married rates have increased, the reality is black families have a disproportionate number of single/never married parents and this has been the case for generations. Their poverty rates are prompted by a number of factors.

No, as a consequence of systematic barriers to accumulating wealth and theft. Black people were systematically excluded from building wealth through homeownership (the bulwark of Americans' family wealth) with redlining, the property they did own was taken from them through legal schemes (https://features.propublica.org/black-land-loss/heirs-property-rights-why-black-families-lose-land-south/), and nearly every time they were able to build wealth in spite of the numerous roadblocks set in front of them they were murdered and it was stolen (Tulsa, Rosewood, etc., and the majority of lynchings from 1890-1920 were to steal land).

But sure, keep repeating Reagan-era talking points.

[Anonymous]

OP I think it's important to buy a house as it allows one to build equity. So wasteful to spend so much $ for rent.

Personally I would get into a house b4 I maxed out my retirement.

[Anonymous]

Anonymous wrote:I am completely perplexed as to how so many people can afford a 'middle class' lifestyle in this region where they own a decent home, buy new clothes all of the time, drive a new car ever 5 years or so, save for college, pay for childcare and have money left over for savings. We make $180HHI. Not the highest for the region, I know, but according to US census data for the areas of the DMV, in-line with the crowd. We max out our retirement accounts, live in a modest $1700 per mo apartment, and have no debt. We drive a very reasonably priced Mazda 3 that is paid off. We are trying to save for a house, but by the time we factor in the cost of living for everything and sock away savings for retirement, there isn't a whole lot to save per month for a house. At the rate we can save liquid cash, it'll take quite a long time to have a downpayment on a modest place that costs less than $600k. We don't have kids yet though. But for the life of me, I have no idea how in the hell people are affording kids, homes, cars, and new clothes all of the time in this area. Are people really that much in debt or are saving very little for retirement?

OP, you seem like you’re trying to do this responsibly, which is admirable. Most people in this country are in A LOT of debt.

[Anonymous]

Anonymous wrote:To be in the 1% in DC, you need to earn $598,155

That's the bottom rung of the 1%

https://patch.com/district-columbia/georgetown/virginia-dc-s-1-percent-earn-much-annually

This is a better one because it’s a calculator and you can specify state: https://dqydj.com/income-percentile-by-state-calculator/

We make $330,000 in Maryland. That puts us in the top 3%. Just goes to show you how rich this area is.

[Anonymous]

Hon, you're doing fine. You're just having a hard time seeing beyond the near term and putting savings timelines in the right context. Soon you will have saved an adequate emergency fund and then you can use that money for other things. And I agree you don't need to save as much for retirement as you have been. It's normal to save less during the years that you are paying for childcare. Your incomes will likely grow.

Here's what you do.
1) Stop putting so much in retirement. At least stop the Roth.

2) Stop putting so much in the car fund. You can finance a car at 0% when you need to.

3) Shop around for cheaper car insurance.

4) Doing those things should free up about $1500 a month. Put all of that into your emergency fund until it is at a level you are happy with.

5) Put your major savings accounts into a money market account. That way it will be very quickly accessible, but will earn some interest.

6) When you are happy with your emergency fund, stop putting money into it and put all of your savings into a house fund. That should give you $2500 a month to save for a house. You don't need to put 20% down. Aim for 15%. But remember, the cost of moving and any new furniture or whatever you might need.

7) Get pregnant! After you buy the house, you won't need to save for a house anymore. You'll just need like $1000 a month for maintenance, insurance, and taxes. So there's $1500 left over for childcare expenses.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Honestly, I'm wondering where your money goes. Our mortgage is lower than your rent, but we save about 40k a year after maxing retirement.

Bills (quoted below all in per mo.)

Car insurance: $150
Phone bill: 100
internet: 90
gas+electric: 80
rent: 1700
groceries: 300
parking: 70

About $2900 per month in left over cash after subtracting out all taxes and required payments for healthcare and pension contributions. We are also also putting away $300 per mo. right now into a 'new car pot' for the eventual day that we will need to buy a new car (ours is 4 years old right now), $1000 per month into free cash flow for emergency savings and rainy day funds that I really wouldn't want to tap in case of job loss or health care disaster. That only leaves about $1600 per month to save for a new house. Mind you, I also assumed $0 for leisurely activities, expenses if a wedding comes up, buying new clothes, car maintenance/repair, and other miscellaneous expenses. In reality, the amount we are able to save is more close to $1000-1200 per month for a house after all is said and done. Even 10% down on a modestly priced house of $500-600k will take several years, assuming absolutely zero goes wrong financially.

I don’t understand how this is all you have in take home pay even with maxing out retirement. My husband maxes his retirement and makes 160k and his take home pay after everything else taken out is 8600 per month. Yours is adding up to about 2k less.

I don’t really understand where all your money is going but 3.5 years ago we were making a HHI the same as you and not only paid for our own modest wedding but then was able to save for a small down payment on a house in one year (like 25k) and bought a starter home for 450k at the time. We had no help from parents other than setting us up without students loans. Our hhi has increased to 300k since then and we have one kid in preschool and another on the way plus 200k in equity in the starter home.

It wasn’t that difficult honestly and it’s not like we were eating rice and beans when we were in your position either.

Np: Your husband is maxing out one retirement at 160 and they are maxing out two retirements at 180, plus contributions to a pension plan – does your husband also contribute to a pension plan? In addition, due to different tax situations, I bet withholdings are set up differently between your husband and them. Multiple factors can contribute to the variance.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Generational wealth. So no student loans, help with down payment, etc.

And not the point of this thread but it struck me that this is why there’s a call for reparations. Black households on average have only $9 of wealth for every $100 in wealth the average white household has.

As a consequence of single-headed households. While the divorce rate and never married rates have increased, the reality is black families have a disproportionate number of single/never married parents and this has been the case for generations. Their poverty rates are prompted by a number of factors.

No, as a consequence of systematic barriers to accumulating wealth and theft. Black people were systematically excluded from building wealth through homeownership (the bulwark of Americans' family wealth) with redlining, the property they did own was taken from them through legal schemes (https://features.propublica.org/black-land-loss/heirs-property-rights-why-black-families-lose-land-south/), and nearly every time they were able to build wealth in spite of the numerous roadblocks set in front of them they were murdered and it was stolen (Tulsa, Rosewood, etc., and the majority of lynchings from 1890-1920 were to steal land).

But sure, keep repeating Reagan-era talking points.

I actually work in the anti-poverty space and am well aware of redlining and its impact. I’m similarly aware of the impact of teenage and adult single parenting in terms of education, employment, childcare and poverty rates (among other complex indicators).

[Anonymous]

Anonymous wrote:I am completely perplexed as to how so many people can afford a 'middle class' lifestyle in this region where they own a decent home, buy new clothes all of the time, drive a new car ever 5 years or so, save for college, pay for childcare and have money left over for savings. We make $180HHI. Not the highest for the region, I know, but according to US census data for the areas of the DMV, in-line with the crowd. We max out our retirement accounts, live in a modest $1700 per mo apartment, and have no debt. We drive a very reasonably priced Mazda 3 that is paid off. We are trying to save for a house, but by the time we factor in the cost of living for everything and sock away savings for retirement, there isn't a whole lot to save per month for a house. At the rate we can save liquid cash, it'll take quite a long time to have a downpayment on a modest place that costs less than $600k. We don't have kids yet though. But for the life of me, I have no idea how in the hell people are affording kids, homes, cars, and new clothes all of the time in this area. Are people really that much in debt or are saving very little for retirement?

You are living a normal middle class lifestyle. The people you are comparing yourself to, make much more money than you.

Comparison is the thief of joy. Worry about yourselves and you will be happier. There will always be someone with more than you.