$150,000/yr : the new minimum for financial security (funds, transfer, charge)

[Keim]

Originally Posted by Malloric

Middle-class is generally considered the top 40% to top 5% of earners, just looking at income although there are other considerations that are equally if not more important such as education, job responsibility, so on. In many parts of California, $100,000 is barely going to get you in the top 40%. The median family income in most of San Francisco is over $100,000. $100,000 just isn't middle-class for San Francisco... maybe if you're single, but not for someone trying to raise a family. $150,000 would be lower middle-class. That'd get you up above median income in neighborhoods that aren't desirable but aren't Hunters Point or Tenderloin. That's not true of everywhere in California. $150k in Sacramento is solidly middle-class, maybe not upper-middle but definitely not lower middle-class.

Census data doesn't back you up.

According to census.gov the median household income in SF is $71k; Sac is about $60k. That would seem to ensconce an income of $150k well into middle and possibly the lowest rung of the upper middle class for the areas.

[Malloric]

Actually, it does. Read: median family income. The median family income is over $100k, well over in much of San Francisco.

I agree, if you're single, $100k would put you at middle-class in San Francisco... just not if you're trying to raise a family. Most of San Francisco isn't family households, it's too expensive, and many of the family households that are there are DINKs.

[Keim]

Originally Posted by Malloric

Actually, it does. Read: median family income. The median family income is over $100k, well over in much of San Francisco.

I agree, if you're single, $100k would put you at middle-class in San Francisco... just not if you're trying to raise a family. Most of San Francisco isn't family households, it's too expensive, and many of the family households that are there are DINKs.

Yes, that is what my data shows. Family income.

Here is where my data comes from. Sources don't get much better! http://www2.census.gov/acs2003/Ranki...Income_160.pdf

SF Median comes in about $70k.

[SOON2BNSURPRISE]

Maybe what we need to figure out is what does everyone consider a middle class lifestyle.

here are my requirements for a middle class lifestyle:

1. Home ownership and the ability to maintain the home and pay that home off.

2. Funded retirement plan

3. Not having to go into debt to buy a consumer product. Paying cash as you go.

4. The ability to drive a nice new middle of the range or higher car and replace that car.

5. A yearly family vacation

6. Emergency fund of 6 months or more

7. Paying for the kids sporting and other activities, piano lessons, or what have you.

8. College education for the kids

9. Hobbies, golfing, or some other kind of activity.

10. Being able to travel, especially when you retire.

In my area I just don't see doing all of that on $60,000 or what ever the middle class income should be. I do see doing it all on $150,000 or $200,000. I also see my wife and me making that kind of cash flow within the next 3 to 5 years. My point is that if you have a goal you have to make that goal happen. Many don't ever see them reaching their goal in a specific geographic area so they end up moving somewhere else to make it easier on them. I get that. You won't hear any complaints from me. Back in 2007 i was planning on doing the same thing. What we decided to do was make it work on the coast where we love to live. It takes a lot of work but it can happen. It will not happen if you don't do anything to make it happen though and it won't happen overnight.

[ducviloxi]

Originally Posted by SOON2BNSURPRISE

In my area I just don't see doing all of that on $60,000 or what ever the middle class income should be. I do see doing it all on $150,000 or $200,000.

In the metro areas of California it's very difficult even on $150,000/yr.

Let's look at a typical family with 2 kids wanting to buy a home and start living the "middle class" life and making $150k/yr combined:

Net pay after 401k @ 50% limit of $16k, health ins. deduction and taxes (married, 4 allowances) is $93,593 or $7800/month

• A 1800sqft home in a nice safe neighborhood is going to be $250 sqft (used to be 400+sqft): $450,000, assuming that this couple has 20% down plus closing or $100,000 to bring to the table (BIG IF!!!!) that would be a PITI+HOA+maintenance of around -- $3000/month
• Cable/Utilities/Internet -- $150/mo.
• 2 Car payments @ $350/mo. each (basic cars like Toyota Camry or Honda Accord, nothing fancy) -- $700
• Auto insurance -- $200/mo.
• Fuel -- $500/mo. (Fuel is SUPER expensive in California compared to the rest of the country)
• Daycare -- $1500/mo.
• School and extracurricular expenses for kids -- $400/mo. ($200 for each child)
• Clothes for the whole family of 4 - $500/mo.
• Some extracurricular hobby for the adults -- $200/mo.
• Auxillary savings fund (for emergencies) -- $300/mo.
• Vacation fund (for yearly vacation) -- $500/mo.
• Food - $400/mo.
• Entertainment/occasionally going out dinner/movie/show here and there - $200/mo.

TOTAL : $8550 ($750/mo. in the RED)

Points to note - a lot of extremely optimistic assumptions here - couple has $100,000 cash starting out, plus money to furnish new home which can be $20,000 plus some starting emergency savings - another $20,000. So assuming the couple has $150,000 CASH TO BEGIN WITH, extremely unlikely considering the recent report that most Americans don't even have $2,000 in the bank LOL!!

In addition to finding $750 to haircut in this budget just to break even one also has no money for college savings.

WORSE, this couple is quite screwed if one of them loses their job as their burn rate is so high they will be bankrupt in just a matter of months and lose everything - it's a familiar story of what is happening to many today.

The 2 major budget killers are housing and daycare. To make the $150,000/yr work with a comfortable financial margin you would have to cut out everything to the bare minimum - but then that is NOT a middle class lifestyle as many in America have had it for the last few decades.

Oh - btw, I forgot Auto maintenance which can be VERY pricey...I just replaced the brakes/rotors and all tires on my truck, grand total parts/labor was $900!!! hehe, all these surprising costs life throws at you that people heavily underestimate which is why they get into trouble!

Also, keeping social relationships can be VERY VERY costly to maintain but they are necessary to a certain extent...going to weddings, parties, birthdays etc (you have to buy gifts) or host others, going out with friends (have to buy SUPER expensive drinks)...the $200 I have in this budget is for the whole month for TWO people, one could easily blow $200 in just 1 get together by just buying one too many drinks

Another expense - major home repair, boiler breaks or roof leaks - SCREWED!

[SOON2BNSURPRISE]

ducviloxi,

Loved your budget. Mine would be similar but with some changes.

Lucky me we don't drink or buy for others. We don't pay for child care. My wife works 3 nights a week and I work during the day. Our clothing budget is not even close to yours but then my wife loves Ross. LOL Also with boys they seem to be somewhat easier to buy for than girls. My daughter, at 5 years old, has so many clothing needs that the boys never had. She has to have maybe 8 to 10 pairs of foot wear. We also live under 8 miles from work, both of us work at the same hospital, so our fuel cost is lower. Also our health insurance (Didn't see it on your list.) Is covered by our employer. Our home cost us $310,000 so we are also spending less there, but we do love our home though and we don't have an HOA. We do have 6 kids, One is 20 years old and for the most part does his own thing and makes his own money. Still that is a total of 7 people that we can count on our taxes.

Our home was furnished when we moved in. We allready had everything to furnish it. On top of that I do all the work on my cars and home. Then again I have the tools to do that. LOL

[Tracysherm]

The article lost me when I read this:

The survey asked respondents to choose which of four categories best described them:
I can’t even afford the basics;
I can barely afford the basics and nothing else;
I can afford the basics plus some extras;
and I can afford the basics, the extras, and I’m able to save too.

Just the fact that those were the choices annoyed me. Why do "extras" come before savings? There's no category for "I can afford the basics, and save some, but I can't really afford extras."

To me, this little tiny point says a lot about the bias of the survey creators, the writers, and perhaps a lot of people in general.

I am dismayed when I hear people say anything like "I can't save anything--After paying for all the basics and a few extras, there's nothing left to save." I'd also venture to guess that a lot of what these survey respondents refer to as "basics" are what I would call "extras."

[Lacerta]

I want to live in an 1800 square foot house with $150/month in utilties.

My house is only 1250 sqft, and only 9 years old, so pretty energy efficient, and our power company's rates are among the lowest in the country, and I have cheap, unlimited, unmetered city water, and my husband and I have the cheapest cell phone plans around... and our total utility bills are still closer to $350.

By the time you have power, gas, sewer, water, trash, phones, internet, and cable/dish, if you only pay $150/month for a family of 4, you are a super saver.

[Lincolnian]

That middle class lifestyle defined above does not start right out of the gate. It is built up over a couple of decades and the rewards come in the mid 40s and 50s. Many things can cause a detour such as taking on too much debt, poor career choices and/or job hopping, divorce, health problems, family crises, etc.

Many people who grew up enjoying a middle class lifestyle are not prepared or are unwilling to transition from a parent-supported lifestyle to one where they have to support what they are used to themselves. Perhaps this is the trap of the 21st Century since it was easier to move from a depression/WWII environment to a more prosperous post WWII environment than today where we are experiencing a period of no growth.

A young adult entering the workforce today who has gone to sports camps, traveled overseas, and had a new car given to them is going to have a hard time adjusting to a less enriched lifestyle unless they start off at the upper end of the middle class pay scale.

[ducviloxi]

some of the costs are more, like $500/mo. in clothing, because that takes into account growing children but also the cost of work clothes which wear out quicker, shoes, and I figured in cost of haircuts, grooming materials, soaps, shampoos and other non-food items, that doesn't come for free LOL! it may seem like little costs but as a whole they add up quite significantly.

In addition, there sometimes are other costs.. parking fees is one, if you work in some places like downtown Los Angeles you have to PAY upto $150/month to park your car which some employers do not subsidize. Eating out lunch is another expense that could add $300/mo. (for 2 @ $7/day x 22 workdays) At my workplace I see most eating lunch out with their colleagues, rarely I see anyone bring lunch from home so I am assuming this is what most spend.

And of course this family would not have any money for charity and they definitely would not have any capacity to help if an immediate family member (mother, father, brother, sister etc.) needed financial help.

In addition, if this family had ONE MORE child the finances would become much tighter and on the edge, but in my view a family with a six figure income should be able to comfortably raise 3 kids, at least it used to be that way...this shows that something has radically changed.

AND ONE FINAL MAJOR MAJOR expense I missed out - STUDENT LOANS. Add it to this mix and you have disaster! All I can say. Most educated people these days having significant student loan debt amounting to payments in the hundreds each month. WHERE is the money???

This is not MY budget, it's a hypothetical budget I came up with.

My idea was not to show that you can't live on $150,000/yr because certainly you can live but it's BARELY middle class and most definitely it isn't living lavishly if you're raising a typical family.