Reply to Why a 300-400k salary doesn't feel rich

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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]300K is rich in the sense that at that level you can [b]reasonably pay a mortgage, save for retirement, save for college, pay for daycare, and go on decent vacations[/b]. You are building wealth and buying your kids some breathing space, which is more than the vast majority of Americans can do. [/quote]

It’s kind of crazy that these things are now for the “rich.” I feel like owning a home and being able to save and occasionally take a vacation or 2 should be a very middle class thing that everyone can do. It’s weird to me that with all the resources we have and technology that makes life better, we haven’t figured out a way to improve human life more. Like unless you’re born to rich parents you have to take out massive loans to get an education and may never make it on the property ladder.[/quote]

No, no, no. Please stop it. It’s not just for the “rich”. Many middle class Americans own homes, send kids to college and occasionally go on vacation.
They own average homes, have modest vacations and send kids to average colleges.

It was never, never and never a time when the middle class could afford to live in the best neighborhood in town, send kids to the best schools in town, and go to the best vacation spots. This was always reversed to the “rich”.

[b]The median home price in the DC area is now about 550k. Higher than it used to be, but a middle class family can manage to afford it.[/b]
It won’t allow you to buy a SFH in NW DC or Arlington. It won’t allow you to send your kids to a 10/10 school. But that’s not what middle class means in the first place. That’s for the upper class.

It won’t allow tou to save for college enough to afford private ivy league colleges. But that’s not for the middle class. That’s for the rich elite.
The middle class sends kids to community colleges or public in-state colleges.

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I think the only way that's true is if you have a SAHP.  Say your middle class family earns a $100K HHI and contributes 10% to retirement and pays $5K per year for health insurance so pretax $85K.  Let's say of that $85K pretax there is a total of 15% for all taxes (federal/state/payroll taxes) so $72.2K net.  PITI on a $400K loan (assuming about 20% downpayment) would be around $2.1K PI, $500 taxes and $100 insurance of $2.7K total ($32.4K per year).  That leaves the family with about $40K per year for everything else.  Say 1% of house value for repairs that brings it down to $35K annual net or about $3K per month for everything else. Let's say average utilities (all in water/electric/gas and including cell phones) of $200 per month, groceries of $500 per month and college savings (state school) of $300 per month brings it down to $2K left most of which would be consumed by childcare if both parents work.  You still have car insurance, car repairs and either a car payment or a car replacement fund in addition to clothes.[/quote]

I think your math is a little off; a $400,000 mortgage at 7.8% (current rates) is $2904 plus $500 taxes and $100 insurance = $3504. [/quote]

I think I used 5% as the amount for the rate under the theory that rates are high now but in the recent past they weren't that high and will probably come down a bit from where they are now in the next few years.  I think rates are closer to 7% now for people with good credit than 7.8%.[/quote]

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