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This survey was conducted by a retail marketing research group. The amount stated for comfortable living is 3 times the median household income. Who did they ask? Did they ask those who make 1/3 the comfortable figure? If so, how would they know that is what is needed to live comfortably if they have never made that amount? If they asked those who make $150,000 or better would you expect that they would say they could live comfortably on 1/3 of what they currently make?
It appears to me that this is a worthless survey. Any survey conducted by a research group for retailers is of questionable validity in my opinion.
If I put any credence in this article I would have to believe 90% of Americans were impovrished
So? That's personal choice you made. Just because you made bad decisions, it does not logically follow that everyone else should be forced to make bad decisions, too. You could pay 0$/year for day-care, but that would way too much like work for you.
You also highlighted a valid criticism, which that such things like "to live comfortably" is highly subjective. Personally, I'd rather not live my life in the manner some Liberal thinks I should, just because they have a bizarre view of what living comfortably is.
Comfortable....
Mircea
Whoa! Care to explain what "bad decision" I made? Is it choosing to have kids or choosing to have them in preschool so they can learn and interact with other kids while I earn a living? I was simply explaining the context of the article, which is for a family to live "comfortably", which includes "needs", "wants" and "savings". That's is what the poll in the article was based on. $17,000/yr. wouldn't cut it meeting that criteria.
When you have kids, there are certain things that change.
You have to live in an area that has a reasonable expectation of safety.
You have to provide a quality education, whether that means living in a decent school district, or providing private school
You have medical bills/unexpected expenses. Getting new shoes every 6 months as their feet grow, etc.
Provide reliable and reasonably safe transportation. Doesn't mean a luxury vehicle, but in most cases a $2,000 clunker won't cut it.
All of the above cost money, especially the first two items which increase housing costs.
Like I said, I was just explaining what the context of the article is, because anyone can say "I get by on $17,000", but the article isn't about living frugally as a hippy in a hovel, it's about living comfortably as a family, having wants, needs and savings.
Personally, my wife and I make around $330K when bonuses are added in, so I'm not sure the $21K in daycare/preschool is a "mistake", as you say. We are able to live below our means in a nice house. My wife saves $30K/year in her 401K after the company profit share is added in, and we save an additional $65K + per year in personal savings. And the good news is, as the kids get into school, the payment goes way down (until college). I think the $150K number is a bit high, but not too out of line. If you want to be able to take at least 1 family vacation a year, live in a nice area, have at least one newer car and enjoy a dinner out once every couple weeks, and STILL save for retirement, I think realistically $120-130K is where you need to be minimum.
Personally, my wife and I make around $330K when bonuses are added in, so I'm not sure the $21K in daycare/preschool is a "mistake", as you say. We are able to live below our means in a nice house. My wife saves $30K/year in her 401K after the company profit share is added in, and we save an additional $65K + per year in personal savings. And the good news is, as the kids get into school, the payment goes way down (until college). I think the $150K number is a bit high, but not too out of line. If you want to be able to take at least 1 family vacation a year, live in a nice area, have at least one newer car and enjoy a dinner out once every couple weeks, and STILL save for retirement, I think realistically $120-130K is where you need to be minimum.
I'm with you.
Every time a thread like this comes up someone says something like "I do it on $39 a year!" and then people jump on that bandwagon; I once commented that if you made $150K with no kids, you'd probably need $300K a year to maintain the same standard of living post-kids and I got the full wrath of the board for that one, but, depending on where you live, thats very much true...
+Nanny is going to cost $3000+ a month, or daycare at about $1500 per kid will get you to the same answer for 2 kids (perhaps a bit less)...
+Private school, which for many in my area is considered a must, is roughly $25-30K a year per kid.
+529 plans, if you plan to fund them, which you should, is another $10K a year per kid.
+Plus various other things like clothes, food, medical, bigger condo, double vacation costs, etc
Add that all up and you get to about $115K after tax, so call it $150K before tax.
I'm always baffled by the argument of "it can be done on $X! I know someone who does!". Just cause it can be done, doesn't mean people *want* to... Sure, I could move to some far suburb commute two hours each way in wrist-slitting traffic, raise my kids in a 1 bedroom condo, save nothing for retirement or college, never take a vacation to something more exotic than the local public pool and probably do it all on $45K a year, but that's not the life I want.
I want to be able to enjoy my retirement... I don't necessarily want to pay for my kids college education in its entirety, but I do want to be able to help so they don't graduate with crippling amounts of debt. I don't want to buy my kids a BMW on their 16th birthday, but I would like to be able to give them an old car when they go off to college or help them get a loan of their own when time comes. I'd like my kids to experience other cultures and travel the world because these are enriching experiences, that quite frankly, are much easier to do when you are not married/working/have a mortgage. I'd like to be able to go to dinner with my wife and not have to worry about whether or not I can afford the salmon entree or a glass of wine, or worry that when my dishwasher breaks I cant afford a new one, I'd like to be able to make it home for dinner most nights of the week rather than stare at the dashboard of my car until the sun goes down.
To me, these aren't crazy aspirations or asburd luxuries.... I'm not looking to live in a 5,000 sq ft home or drive a maserati, or fly first class everywhere, or have a live-in cook and maid, or summer in the hamptons, or dress my kids from Saks, or buy a yacht... I just want to afford my children an education, save for my own retirement and be able to spend time with my family. In a lot of cities, mine included, that means making a substantial sum. I admire the people who manage with less, kudos to them for making it work, but I don't "look down" on those who make more.
Depends where, too. Seems about right for middle-class in NYC or San Francisco. The problem is largely what the "basics" means. A basic house is 2,500 square feet, a basic car (of which a family owns 2.3 of) is $30,000... As you move up the income, the basics becomes more. Basic becomes a $4-5,000 apartment in Park Slopes, preschool is $15,000 a year, private middle/high is $30k. Just the basics you're looking at $60,000 in rent and another $30-60k in tuition. $100-150k. On $250k gross that doesn't leave a lot.
Quote:
Originally Posted by asufan
.Like I said, I was just explaining what the context of the article is, because anyone can say "I get by on $17,000", but the article isn't about living frugally as a hippy in a hovel, it's about living comfortably as a family, having wants, needs and savings.
Personally, my wife and I make around $330K when bonuses are added in, so I'm not sure the $21K in daycare/preschool is a "mistake", as you say. We are able to live below our means in a nice house. My wife saves $30K/year in her 401K after the company profit share is added in, and we save an additional $65K + per year in personal savings. And the good news is, as the kids get into school, the payment goes way down (until college). I think the $150K number is a bit high, but not too out of line. If you want to be able to take at least 1 family vacation a year, live in a nice area, have at least one newer car and enjoy a dinner out once every couple weeks, and STILL save for retirement, I think realistically $120-130K is where you need to be minimum.
I think the debate comes down to the definition of "comfortable" or "financial security". And of course, we don't all agree on what classifies a person as middle class. There have been numerous debates on these forums about that topic.
For example, Malloric above said that a basic house for middle class is 2500 square feet. I disagree with that. As someone in the real estate and rental industry, most families I consider middle class live in a house closer to 1800 square feet up to maybe approaching 2500 square feet, but 2500 is the upper end. Anything above that is not "basic"
And Asufan, you said that to be financially secure, one needs to be able to take a family vacation every year, and have a new car. I don't think either of those things are necessary to be comfortable.
So that is where the discussion comes in, in what is required to be comfortable and what is just gratuitous because we like nice things and think we deserve them.
I don't have kids, and I fully acknowledge that it takes a LOT of money to raise kids, but I think things like private school and a nanny fall pretty firmly outside of the "middle class" definition and really don't fit in this discussion, so I think $150k/year for 2 kids is ludicrous. I was raised in what most people would consider a middle/upper-middle class household. Our house was 6000+ square feet, had a pool table, tanning bed, basketball court, volleyball court and a pool. But my sister and I were either taken to work with mom when we we were little, or babysat by grandma, went to preschool at the YMCA, went to public school, and got scholarships for college, and when we went on trips, it was typically a road trip somewhere, and the cost wasn't much more for 4 than for 2. Most normal middle class families do something similar. I guarantee that my parents did not spend $150k/year on our care. Honestly, I strongly doubt that they spend $20k a year on expenses they wouldn't have had without us.
Now, my husband and I live in a nice townhouse in a nice area, we buy what we want, when we want, we go on a trip every 5 years or so, which is all we want, we have cars that aren't new, but were new when we bought them (6 years and 14 years ago), and honestly are still "like new", we have almost a year's expenses in savings, and a retirement fund, and intend to pay our house off by age 40, and retire by 55. How is that not comfortable, or financially secure? Oh, and we only make about $60k a year, gross, combined. Even with 2 kids, we could be very comfortable with around $90k-$100k, although we may not be able to pay off the house or retire quite so early then.
I say all this to make a point. Yes, a middle class family can EASILY spend $150k a year anywhere in the country, but it absolutely does not take that much to be financially comfortable, at least not outside of the highest cost of living cities. I acknowledge that for some places in the country, $150k might be the bare minimum for a family of 4 to get by, even without having a retirement fund, but for most of the country, it is just gratuitous. For most of the country, if it takes you $150k to feel comfortable, and you feel strained with less, you are being greedy and entitled with your "wants" category.
I think a lot of these articles are written by out of touch people in expensive high cost of living east coast cities (I didn't bother to read the article so I don't know if that's exactly the case in this instance). They don't seem to have any clue what life is like in "flyover country."
I think the debate comes down to the definition of "comfortable" or "financial security". And of course, we don't all agree on what classifies a person as middle class. There have been numerous debates on these forums about that topic.
For example, Malloric above said that a basic house for middle class is 2500 square feet. I disagree with that. As someone in the real estate and rental industry, most families I consider middle class live in a house closer to 1800 square feet up to maybe approaching 2500 square feet, but 2500 is the upper end. Anything above that is not "basic"
And Asufan, you said that to be financially secure, one needs to be able to take a family vacation every year, and have a new car. I don't think either of those things are necessary to be comfortable.
So that is where the discussion comes in, in what is required to be comfortable and what is just gratuitous because we like nice things and think we deserve them.
I don't have kids, and I fully acknowledge that it takes a LOT of money to raise kids, but I think things like private school and a nanny fall pretty firmly outside of the "middle class" definition and really don't fit in this discussion, so I think $150k/year for 2 kids is ludicrous. I was raised in what most people would consider a middle/upper-middle class household. Our house was 6000+ square feet, had a pool table, tanning bed, basketball court, volleyball court and a pool. But my sister and I were either taken to work with mom when we we were little, or babysat by grandma, went to preschool at the YMCA, went to public school, and got scholarships for college, and when we went on trips, it was typically a road trip somewhere, and the cost wasn't much more for 4 than for 2. Most normal middle class families do something similar. I guarantee that my parents did not spend $150k/year on our care. Honestly, I strongly doubt that they spend $20k a year on expenses they wouldn't have had without us.
Now, my husband and I live in a nice townhouse in a nice area, we buy what we want, when we want, we go on a trip every 5 years or so, which is all we want, we have cars that aren't new, but were new when we bought them (6 years and 14 years ago), and honestly are still "like new", we have almost a year's expenses in savings, and a retirement fund, and intend to pay our house off by age 40, and retire by 55. How is that not comfortable, or financially secure? Oh, and we only make about $60k a year, gross, combined. Even with 2 kids, we could be very comfortable with around $90k-$100k, although we may not be able to pay off the house or retire quite so early then.
I say all this to make a point. Yes, a middle class family can EASILY spend $150k a year anywhere in the country, but it absolutely does not take that much to be financially comfortable, at least not outside of the highest cost of living cities. I acknowledge that for some places in the country, $150k might be the bare minimum for a family of 4 to get by, even without having a retirement fund, but for most of the country, it is just gratuitous. For most of the country, if it takes you $150k to feel comfortable, and you feel strained with less, you are being greedy and entitled with your "wants" category.
The average new-construction house is up around 2400 to 2500 square feet. Whether that's basic is a matter of interpretation. Personally, I don't that's a realistic size for a basic house... but it's what the basic (basic, as in average or non extraordinary) is here. I think something around 1400-1800 square feet is ideal for a family of four and 1100-1200 is perfect sufficient if a bit cramped. Go to many parts of the world and that'd be veritable estate. Habitat For Humanity requires housing here be under 1050 square feet for a 3bd house in the US/Canada.
No where in the country is $150k the minimum for a family of four to get by. Even in NYC or San Francisco Bay Area, most families of four don't make that much... and yet they survive. What they're probably not is financially secure. Why? Because as soon as they have money they go out and spend it on a nicer apartment or house, a vacation, buy a new car. Rather than chose to be financial secure, people chose to live in a nicer neighborhood in nicer housing, drive a nicer car, buy more expensive clothes, and so on. If you went out and polled people who actually made $150k (or the adjusted for where they live), most of them would tell you they needed more to be financially secure.
I certainly agree with others that cost of living varies by location. I also believe an argument can be made that most people need to make above average to be "financially secure." But, outside of the most extremely pricey areas, $150k buys a very comfortable lifestyle.
Beverly Hills, CA has a median family income of $142,000. Beverly Hills! I venture to say most of the US is lower. My town (which was recently listed by Businessweek as the best town for a family to live-in in the state) has a really low median household income of about $30k. Larger towns in my region are about $48k.
I'm 40, and gross about $80k. My frugal nature enabled me to save about 25% of my income last year. Family of four. Paid off house. Above average amount in retirement accounts. This is certainly made easier by where I live. As shown above, most others should still be able to save and provide well at significantly under $150k.
My wife and I are at the $130,000 range. We have 6 kids. live in a 1,670 square foot 50 year old home. We have 2 cars and a van that are all paid for. (One car is a 26 year old Porsche 911, does that count for excess?) We also own a very old sail boat and an airplane that I have had for a long long time. Our kids are in public school and are doing just fine. we do not think that we are in the middle class at all. Around here the middle class is making $350,000 or more a year.
Still we will be debt free, Home paid off in 12 years from now. Our retirement will be close to where we need it to be. I think we are doing OK, just not where we could be.
Around here the middle class is making $350,000 or more a year.
Not so. I have lived in the greater Los Angeles area since 1966, and I am also quite familiar with the Oxnard/Ventura area. Your "middle class" is not middle class at all, but consists of doctors, lawyers, CPA's, Ph.D.'s, and middle and upper management types. Did you note the median family income for Beverly Hills given by another poster? Around $150,000/year. I am just amazed at the total absurdities which enter into these discussions. "$350,000 or more a year" is better than upper middle class, even where you live.
The article is discussing how much it takes to be financially "secure".
Whether I could live on $18,000 a year is not relevant to the discussion on how much it would take to be "financially secure".
As far as I am concerned, financially secure allows you to live without debt, save money for retirement, and have an emergency fund in the bank for at least 12 months. You can pay a bill when it comes in, not when you get the money for it, and if you do pay a bill right when it comes in you don't have to decrease your grocery budget because of it.
Although, I do acknowledge that the higher the family income, the higher the "necessary" expenses run. Expenses that wealthier people consider "necessary" usually fall into the "that would be nice" category for less well off people.
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