Are You Middle Class?

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Are You Middle Class?

Are you middle class? Surprisingly, most people who think they are middle class, are not middle class. Being middle class is being able to afford what most would expect a middle class family of 4 or 5 can afford:

  1. Income (from job and/or investments) to financially support yourself and your family of 4 or 5 without resorting to government assistance when it comes to rental housing, food stamps, etc.
  2. Reasonable health insurance/health care for your family (with affordable co-pays and deductibles, assuming no major debilitating conditions).
  3. Reasonable dental insurance/dental care for your family (cleanings, the occasional crown, braces for a kid or two, etc. with affordable deductibles).
  4. Paid off all student loans within 10 years of graduating college.
  5. Savings for retirement, around 10% to 15% or more of income put into a 401(k), IRA, or other investments to cover retirement at age 65, medical expenses, possible nursing home care, etc. (With or without Social Security or Medicare, your choice, depending on if you think it'll be there.)
  6. Savings for both short- and intermediate-term goals (such as one replacement computer/notebook, television, or home appliance a year; a gently-used replacement vehicle every 7 years for each spouse).
  7. Savings for long-term goals (having a 20% down payment towards the purchase of a house near where you currently live within 10 years of entering the job market, having public college expenses at least half-covered within 18 years of each child's birth).
  8. Kids' stuff: school clothes, tricycles/bicycles, inline skates or other sports equipment, uniforms or musical instruments, allowances, help with a used car when they reach driving age, etc.
  9. A family vacation for a week, at least once every year or two; a family vacation for a week at least 2,000 miles away, at least once every 5 years.
  10. Taking the family out to a decent restaurant (not Denny's) at least once per week.
  11. Some new clothes and shoes each year - no need to shop for second-hand clothes.
  12. Debt-free except mortgage - i.e. credit cards completely paid off every month (or at most three months).

If you're on government assistance, if you've delayed health care or dental care because of costs, if you can't save 10% to 15% of your income towards retirement costs, if you aren't able to save the equivalent of a 20% down payment towards a house (yes I understand you may not want to own, but y'know what I mean), can't afford to take vacations, aren't able to pay off your credit card every month, etc. - then you're really not what traditionally would be defined as middle class. You're struggling or you're working class or lower middle class. Even if you might have an iPhone or some of the latest fashions, you're really deluding yourself.

This goes double if both spouses work and such a lifestyle still can't be afforded. Over 50 years ago, most middle class women didn't even work outside the home.

Feel free to share this. And feel free to mention some other things that would be expected of a typical middle class family, that many who think they are middle class, actually can't afford.

Poet

 

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Clarification

I'm not saying that you have to do all these things. But that you could do all of these things with your after-tax income if you wanted to.

Poet

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Meeting Middle Class Expectations With Today's Jobs

After I wrote this, I thought back on a New York Times article I had read a month or so back. It had come on the heels of a study on how much was the minimal necessary for a family to be able to not just "meet basic needs without relying on public subsidies" but also to know the "thresholds for economic stability rather than mere survival, and takes into account saving for retirement and emergencies."

Many Low-Wage Jobs Seen as Failing to Meet Basic Needs
"According to the report, a single worker needs an income of $30,012 a year — or just above $14 an hour — to cover basic expenses and save for retirement and emergencies. That is close to three times the 2010 national poverty level of $10,830 for a single person, and nearly twice the federal minimum wage of $7.25 an hour."

"...and a family with two working parents and two young children needs to earn $67,920 a year, or about $16 an hour per worker. That compares with the national poverty level of $22,050 for a family of four."
http://www.nytimes.com/2011/04/01/business/economy/01jobs.html

Obviously, the thresholds from the study deliberately do not factor in "luxuries" like vacations, gifts for birthdays or Christmas, or meals out. The study is "bare bones", for things like meeting basic expenses and saving for a down payment on a home, an emergency fund, children's college, etc.

Poet

 

maceves's picture
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9/12

9/12 of the way, so I am not quite comfortably middle class by this definition.  I own my house, and  I am also not raising children anymore.

i bet I'm doing better than many of the new African middle class we were reading about yesterday.

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Re: Are You Middle Class?

Well I'd say your criteria are pretty spot on, at least in terms of American living.  With my old job I would say our family solidly met those criteria, and probably considered solidly upper middle class in terms of income, though some might say we our lifestyle is closer to lower middle (simple 2-bedroom apartment with no garage, both cars are 5 years old or older, and we buy secondhand stuff frequently).

Now we are a one-income household, at least until my entrepreneurial efforts yield fruit which I realistically expect to take a long while.  Long story short we still qualify in all your categories except for two, and it's hardly a shock that one of those happens to be number 2... health insurance (the second is dental insurance, though that's not a concern for us until the little one is much older).  We had our insurance through my job, and while my wife's RN job pays well she does not get health insurance through her position.  In the short term we are continuing my insurance through COBRA (or as I call it, the Bend-Over-And-Squeal-Like-A-Pig priced health insurance), and while we can afford it, it hurts to pay more for health insurance than we do for rent and it'll only last for 18 months.  And there aren't any better options for us, as all comparable health insurance plans available for us to purchase are about as expensive or more so.  I don't mean to sideline the discussion into a health insurance debate, but the simple fact is that this is our biggest challenge or predicament in terms of the listed criteria.

One thing that I think is particularly telling though, is that if we had bought into the 'American dream of home ownership' and bought expensive cars and the other crap that is expected of our income level, we'd have no ability to save or might actually be running a deficit now.  Living frugally and below our means has made all the difference in not only keeping our heads above water (or staying 'middle class' if one prefers) but giving us the ability to continue to save and pursue our own business interests.

Poet wrote:

Taking the family out to a decent restaurant (not Denny's) at least once per week

Hey, don't be knocking Denny's!  Why, there's no better place for taking your special someone on your anniversary for a Super Slam or Moons-Over-My-Hammy breakfast (no regular Grand Slam breakfast will do for such a special occasionLaughing)

- Nickbert

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great topic, Poet

As far as people thinking they are middle class when they are not, those who might have qualified by saving 15 percent of their salary often went out and bought fancy cars, luxury vacations, "stuff" and McMansions instead. Although if their savings were in the stock market or real estate they might be taking a hit now, they took the hit on depricating assets the minute they drove them off the new car lot or brought home that big-screen TV.

Nickbert is right: the key is to live below your means so there are assets to deal with entropy and Sh*t happening without going into debt. We qualify - barely - only because we live in a paid-off home and budget like crazy. (Thrift stores are nothing to be ashamed of Nickbert - they are tools to keep a budget on track!) I paid off my college loan within 10 years of going to school, and we have savings which worry the heck out of us as they are all company stock or dollar denominated, but I consider all the things i have done to make the house more energy efficient and out food supply more off the grid to be a form of saving for retirement, too.

I swear, sometimes my husband and I feel like hard-working ants in a sea of carefree grasshoppers. Now that the cold winter wind is starting to  blow, the grasshoppers are starting to worry. Their first clue will be when they realize that their standard of living is going the way of the passenger pigeon.

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This thread is now on the home page

This thread has been promoted to a feature on the home page and a lively discussion has ensued.  I suggest going there to post your thoughts.

http://www.peakprosperity.com/blog/are-you-middle-class/57730

Travlin 

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middle class

If you can afford the things you need and save for the things you want - thats how I've best heard the definition for eligibility.

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Poet wrote: "According to

Poet wrote:

"According to the report, a single worker needs an income of $30,012 a year — or just above $14 an hour — to cover basic expenses and save for retirement and emergencies. That is close to three times the 2010 national poverty level of $10,830 for a single person, and nearly twice the federal minimum wage of $7.25 an hour."

Hmmmm I make about $31,000 a year. After taxes it's around $20,000. I own my home, (making payments) but I'm struggling. just to keep up with expenses. I am the only one working. My GF is in college, which is 130 miles away, and I work 33 mile from home. Fuel is a large part of it. When I bought my home the economy was doing well and fuel was $2.15 a gallon or there abouts.

I'd say $40,000-$45,000 would put me where I could cover basic expenses and "save" for retirement.

Eric

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Economic Sustainability - Some Thoughts
ericg wrote:

Poet wrote:

"According to the report, a single worker needs an income of $30,012 a year — or just above $14 an hour — to cover basic expenses and save for retirement and emergencies. That is close to three times the 2010 national poverty level of $10,830 for a single person, and nearly twice the federal minimum wage of $7.25 an hour."

Hmmmm I make about $31,000 a year. After taxes it's around $20,000. I own my home, (making payments) but I'm struggling. just to keep up with expenses. I am the only one working. My GF is in college, which is 130 miles away, and I work 33 mile from home. Fuel is a large part of it. When I bought my home the economy was doing well and fuel was $2.15 a gallon or there abouts.

I'd say $40,000-$45,000 would put me where I could cover basic expenses and "save" for retirement.

Eric

EricG

As the quote from the New York Times article on the study is for a nationwide "baseline" threshold for a single person, your situation would obviously differ. Such a "bare bones" threshold doesn't include extras like vacations, gifts for Christmas or birthdays, etc. - which one would "expect" the typical middle class American to able able to afford.

For me, $45,000 would not be enough to care for me and my family (wife and twin babies). And oddly enough, the official U.S. poverty level is around $22,050 for a famly of four. Isn't that crazy?

I personally consider economic sustainability to be the ability for a family to have the means to not just survive, but also to thrive and to perpetuate itself by launching at least two children into the potential for at least similar economic sustainability while still being able to save for retirement.

And yet the jobs available for ordinary Americans pay increasingly less. What was it, McDonald's hat a nationwide hiring publicity event for 50,000 (mostly part-time) positions, and almost a million people applied. The company I work at - even a few years ago, when we were discussing employee pay - didn't use the phrase "the cost of living" that we employees used, but instead the phrase "the cost of labor". For them (and it's totally understandable) it's about how much labor costs not how much living costs, and the more people with more qualifications around, and the more desperate they are, the less pay they'll accept.

I think going forward, as things become more expensive, more Americans will hunker down and try to focus on only the most important things. This, along with the massive overhang of debt at all levels built up over the last few decades, will mean continual economic contractions... until we reach equilibrium with Third World countries.

I think most people don't realize it, but they're already not in the middle class.

Poet

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Welcome

Welcome to the forums Charity.  You'll find many interesting people and thoughts here.

Travlin 

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Boy does this hit home! 

Boy does this hit home!   My wife and went to a bbq on Labor Day with some close friends.  All have had exceptional careers with 15+ yrs in their fields.   All four were laid off  recently or "put on notice" that if no position was found for them in the next 90 days they too would be laid off.  All were in promoted management positions with many accomplishments.   Incomes well over $100k.  I have adjusted because I was laid off a couple of yrs ago and got another position but, with a significant pay cut.  They are just waking up to what is going on in our world. 

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Middle Class

I do not think very many people at all fit in the definition of the middle class presented at the top ppf the tread.  I would say to do the stuff outlined there would mean you are rich.  Part of it would be related to the location where you lived.  Some places are more expensive than others.  I would be willing to wager that only about 10% of the population would fall into that category.  I suppose that is a say story.  Does anyone around here disagree ?

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I Disagree, Dshields
dshields wrote:

I do not think very many people at all fit in the definition of the middle class presented at the top ppf the tread.  I would say to do the stuff outlined there would mean you are rich.  Part of it would be related to the location where you lived.  Some places are more expensive than others.  I would be willing to wager that only about 10% of the population would fall into that category.  I suppose that is a say story.  Does anyone around here disagree ?

Yes, I disagree that only 10% of the population would fall into the middle class category. My wife and I were living that middle class lifestyle with her working part time for $10/hour and me working full-time as I still do now - and we fit that definition while we didn't have children.

Before children, I was socking away 12% to 401(k), I had paid off my college loans and truck years ago. We paid off her credit card debt and her used car purchased for $18,000 in 2006, and we also paid for all the costs of our $7,700 destination wedding in 2007. We also managed to put aside an additional $3,000 per year to our Roth IRAs ($1,500 each). We did road trips, took vacations, etc. Never put off dental appointments, have PPO health insurance, etc.

Now she stays at home taking care of our babies - so no direct dollar income there - and the babies' upkeep take up a lot of our "disposable" remaining income. I wouldn't consider myself middle class now, and once we move out of our one-bedroom apartment to a two-bedroom place, things will get EXTREMELY tight - probably will have to start dipping into our savings.

I would say at least 25% of people still fall into the middle class category.

Poet

 

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What about changing

What about changing demographics?  For example, my grandfather supported a wife, home, Cadillac, and 13 children on his pay as an English teacher in 1940-something.  He was considered middle class, then.  Now, two people working is the norm for most families I know.  That's a huge downgrade, IMO.

My brother-in-law makes $50K/year in the Bay Area and is barely keeping his head above water.

Personally, I consider all Americans "rich", considering how the rest of the world lives.  Many of our homeless are fat!

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fat = fed?
tictac1 wrote:

Personally, I consider all Americans "rich", considering how the rest of the world lives.  Many of our homeless are fat!

The above statement indeed raises an interesting point.  A friend of mine from a third world country related how someone else he knew in that third world country once said, "I would love to live in a country like America where the poor people are fat."  Granted, I understand that being well fed does not mean one is well nourished but there is still a stark contrast between American poor and the poor in many other less fortunate countries.

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culture shock

 When I used to live in Mexico, I would come home to the states sometimes.  There was always culture shock regarding what poverty is.  

After all these years, I  still remember hearing an argument over a dressing room wall over a kid wanting expensive tennis shoes and his mother telling him that wasn't what the welfare check was for.  In Mexico there wasn't any welfare, they sure wouldn't be trying on expensive tennis shoes, and the kid would be happy to get some cheap ones.  At any rate, the kid won.

So then I would go back to Mexico. Even the middle class would  avoid waste in general.  It was recognized that some folks had a hard time getting enough food on the table, and it was a good thing to be generous.  I found that I could not outgive my neighbors; in some way they always gave me more than I ever gave them.

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family

 I'll add to that last post that the safety net in Mexico was not the govenment.  Outside of Social Security, which is socialized medicine and hospital insurance, the government is not expected to help much.  The safety net I always saw was the family---the extended family.  If a member of the family needed help, someone in the family would be expected to take care of it.  We had a designated homemaker--the grandmother---who had a meal on the table every day and took care of the children who weren't in school so the others could work.  We had one in a private university, and the whole family paid a portion of his tuition and examined his report cards.  The family was  very tight knit and always spent holidays and weekends together.

The truly poor often attatched themselves to a family that was doing better.  Maybe they were friends, "comadres" or "compadres", or employed in the household and therefore part of the family.

That said, at that time there were always homeless sleeping in the streets in the cities.  For whatever reason, they had come to the city looking for a better life.  Only the really brave ventured noth to the U.S. off the farms if they didn't know anyone else who had done it--and they usually didn't take their families.  They were people who really knew what povery was.

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"Are You Middle Class?" Blog Link, Also: Children Pictures

Just a quick reminder, this forum/thread was also elevated to a "What Should I Do?" blog post, so there are many comments worth reading. Here's the link below:
http://www.peakprosperity.com/blog/are-you-middle-class/57730

That said, take a look at these pictures and tell me what you think:

Children From The Turn Of The Last Century
"In the early twentieth century for children's rights were somewhat lacking and many of them could not even enjoy a real childhood."
http://goo.gl/86e84

Sample image below of a girl working in a factory:

Is this a glimpse of the future?

Poet

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guess we are .

So I guess we qualify . Never considered us so and you would never know it by  the cars we drive or clothes we wear .    Like  this week  I bought a whole set of tires15 x 10 ply  at  half price  to store for when we need them next year .  This will put us close to the limit on what  we have budgeted for extra  spending .  We do not spend on vacations and expensive dinners .  We draw names for Christmas and have a $30 limit . 

  Guess I  always had in my mind that middle class did not have to live by a budget .

 FM

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middle class and budgets

Full Moon,

Of course people who are careful with what they have are better off than those who spend their money or time or things foolshly. Maceves saw that with the "middle class" in Mexico. It's how you get ahead--for values of getting ahead that mean being comfortable enough to give to the community or employ others who need a job (again, like in Mexico)--or at least tread water and not become needy yourself.

I commented earlier in this thread on my childhood. There, I rejected the definition in the original article Poet quoted as a subjective definition, colored by the expectations and biases of the writer.

Definition of Objective and Subjective
Objective is a statement that is completely unbiased. It is not touched by the speaker’s previous experiences or tastes. It is verifiable by looking up facts or performing mathematical calculations.
Subjective  is a statement that has been colored by the character of the speaker or writer. It often has a basis in reality, but reflects the perspective through with the speaker views reality. It cannot be verified using concrete facts and figures. 

Your definition of "middle class" may not be my definition. It certainly isn't a third world or developing world definition. I have to laugh at what some people think is "middle class." As with Mexico, context is important: the middle of what?

Let me give you an example. When I was working as an office temp, right after my ex left me with three small kids, I was driving a used car. The car had a decal for the college of the previous owner. One of the architects who visited this construction site commented on my going to that college. When I corrected him  the concept of it being a used car and not my school sticker was totally out of his experience. His idea of the middle would not be my idea of the middle.

And although I rather despise the whole concept of upper, middle and lower classes as it feeds into the "calss warfare" model, here is another example of differing ideas of class.This is a true story. A financial advisor to a new NBA star went over his finances with him, mainly stressing the fact that he only worked a few months out of the year and needed to budget (there's that word again) enough to live on for all year and save for his retirement. The athelete was now making several million dollars a year. "You're rich now, you know," commented the financial advisor. The NBA star simply could not believe it, in his case because he'd always believed the rich were somehow evil. Again, what he thought of as his "class" was not what the financial advisor thought.

So here is my take on it. Middle class, to me, means you try not to be a burden on society. You have a skill that you worked hard to aquire that people want and need, and can therefore pay for your own food and shelter, your own clothes and reasonable funitire, and some leisure time and entertainment. By my definition a college proffessor living on a small stipend with university housing - who enjoys chess tournaments and concerts at his university and an occasional night out at a pub--is just as middle class as a doctor (general practitioners make a lot less than you think, btw), a union steamfitter (who makes more than you think), a reasonably successful restautant owner, or a reasonably sucessful organic farmer. You get to choose a lifestyle and a career based on your abilities and what society needs. Entertainment for that lifestyle may mean Broadway plays if you are a sucessful reviewer, or it might mean fishing at the lake if you're a park ranger. (Weekly dinners out? A vacation at leat 2,000 miles away every 5 years? The defiinitions in the quoted article are the writer's opinion on what he or she considers "middle class" entertainment and vacations.)

Once you've "made it" I was taught you have a responsibility to give back to the community, personally. (Note to the big government types reading this: I was taught we do not simply pay our taxes and let a faceless bureaucrat do our charity for us.)  My father volunteered to "mainstream" disadvantaged and handicapped children in his classroom and gave them tutoring (which he charged others $35/hr for) for free. In his retirement he worked with a charity called David's House, sort of a private Ronald McDonald house in Dartmouth, NH. I won't give my list of volunteering here except to say that just last week I revamped the resume of a neighbor who has been unemployed. Hubby is a building controls tech and he recently fixed a heat pump and a water heater for friends who could not afford the repairs. You give back. You help others.

I think of where I am now as pretty average. Husband has a job and his health. I'm healthy, too, and I work part time as an engineer. We are in our late 50s and our small (1,1000-SF) house is paid off.  Like so many others doubling up in this rotten economy we have two adult children living with us, getting bacl on ther feet, and our bills still get paid on time. We visit nearby relatives for most vacations and have an occasional trip out for ice cream, athough we are much more likely to just sit on the porch and watch the sun set. We could go on fancy trips or eat out more often but we choose to invest in a sustainable future. We manage to prep even though hubby pays alimony to his ex, because we budget.

But to the article-writer who is quoted at the beginning of this thread we are not middle class. Does that mean we are poor? Balderdash. We're incredibly happy and have everything need. Wealth does not consist of accumulating "things" and couting coop on others by having brag-worthy vacations and dining experiences. It certainly does not consist of having fancy clothes (note, we dress well enough), the latest electronic toys, the most expensive car, or a McMansion. Wealth is not conspicuous consumption. Wealth is your skills, your peace of mind, and your ability to help others. By that set of criteria I'm as middle class as I hope you are.

Peace,

Safewrite

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 Today we have many of our

 Today we have many of our wants easily met, but often not our basic needs. It's a cwazy mixed up woild! 

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Middle class

Yes, I'm middle class and I'm Canadian. I earned an above average salary during my working years, paid 5% to pension and my employer contributed 10%. I also put a little away for my wife's pension. Over the last 7 years managing my pension fund it has grown by 25% not accounting for withdrawals, so I'm keeping up with inflation.

Now that I'm retired I find we often spend as much on our drug bills as food, and the prepaid drug insurance is basically a break even proposition. However we both have had significant medical issues requiring clinic or hospital treatment that due to our medical system does not impact our finances.

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