Reply to Why are people so hesitant to call themselves rich/wealthy when they are by any definition?

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[quote=Anonymous][quote=Anonymous][quote=Anonymous]I think a big part of issue is that being middle class is often tied to the need to debt.  We need debt to buy houses, cars, education, and often healthcare.   It takes a huge amount of wealth to avoid the need for bank loans for major life expenses.[/quote]

Only because you keep increasing your baseline for what is acceptable for those expenses.

I'm middle class (HHI of 150k, spouse and I both work, one kid) and we had some college debt, though we paid that off. We don't borrow money to buy cars -- we just save up and buy decent used cars for cash (no SUVs, but then with only one kid we don't need a big vehicle, and we buy practical brands like Subaru or Toyota). We will pay off our house around 55 (purchased for $500k, now worth about $600k, so some added equity but not a massive windfall), and our intention is either to retire in place or to sell our home and downsize/move to a lower COL area. That should make us debt free before DC goes to college, which should enable us to pay for college out of saving and income and mostly minimize borrowing.

Rich people who carry a lot of debt are making a choice to do so. If our income was higher, we'd already be debt-free. Just because you scaled your lifestyle up to something that necessitates debt does not make you middle class. It just means your approach to finances relies heavily on leverage. So does Elon Musk's. Is he not rich? He bought Twitter with debt.[/quote]

We have always worked to not have debt.  It's a mentality of don't buy things until you can afford it.  With cars, pay it off in 3 years, then keep for 7-8 years so you can pay cash for a new one or pay for 75%+ with cash.  by the next time you should be able to pay cash, if not, keep the car until 10 years if no big issues.   By time we were 30 we paid for all future new cars with cash (and at 30 spent $35K on a new car)  Same for homes.  Bought our first so we could afford on 1 income not both, as we both made great money for our ages.  We bought in a decent area but not the best, and bought a nice home, but not fancy.  Could have spent 35% more easily and still felt comfortable.  We kept a 30 year mortgage but paid it off faster, more like a 15year.  By age 40 we owned a 500K home outright.  once you get in that mindset, it is truly freeing.  Now we have enough that it's not an issues, no need to have debt, plenty in the market and debt would cost more than the money we would be keeping in cash equivalents.  Plus, in many HCOL areas, the housing market is so hot, if you are not a cash offer, you will simply not be an attractive offer.  With cash only, you can close 14-18 days after the deal.  Simple easy fast.  
Still driving a 14+ yo vehicle because heck, it still runs just fine.  Sure I'd love a new one and yes, we certainly can afford it.  But I'm fine driving the older car so why would I waste money on a new one just because I can.

So while we have increased our baseline for many things, we only did that well after majority of Americans would (when a $2M home is only 10% of your networth, paying cash is not that big of a deal).  But part of the way we got there was by living below our means and making smart financial choices.  We didn't just spend to spend because we can afford it.  We still live frugally in many ways.  And yes, we are cognizant that we are rich---pretty difficult not to be aware of that
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