Why households need $300K/yr to live middle class lifestyle...

[sokoloff]

https://www.financialsamurai.com/living-a-middle-class-lifestyle-on-300000-year-expensive-city/

Let me tell you a sad story. In order to comfortably raise a family in an expensive coastal city like San Francisco or New York, you’ve got to make at least $300,000 a year. You can certainly raise a family earning less as many do, but it won’t be easy if your goal is to save for retirement, save for your child’s education, own your own home instead of rent, and actually retire by a reasonable age.

(I did search, both here and on google and didn't see this previously posted for mockery here. My apologies if I missed it.)

[MrUpwardlyMobile]

https://www.financialsamurai.com/living-a-middle-class-lifestyle-on-300000-year-expensive-city/

Let me tell you a sad story. In order to comfortably raise a family in an expensive coastal city like San Francisco or New York, you’ve got to make at least $300,000 a year. You can certainly raise a family earning less as many do, but it won’t be easy if your goal is to save for retirement, save for your child’s education, own your own home instead of rent, and actually retire by a reasonable age.

(I did search, both here and on google and didn't see this previously posted for mockery here. My apologies if I missed it.)

Financial Samurai’s post is pretty accurate for manhattan. Middle class in my area outside the city is somewhere about 175k for a family of 3-4.  That said, it’s by no means mustachian. It’s not even live below your means.  It’s a discussion on middle class New York City with views that are similar to real New York City views. 

Recognize that New York City and San Fran are the twilight zone where reality is simply distorted, it’s outright been suspended.

[MgoSam]

https://www.financialsamurai.com/living-a-middle-class-lifestyle-on-300000-year-expensive-city/

Let me tell you a sad story. In order to comfortably raise a family in an expensive coastal city like San Francisco or New York, you’ve got to make at least $300,000 a year. You can certainly raise a family earning less as many do, but it won’t be easy if your goal is to save for retirement, save for your child’s education, own your own home instead of rent, and actually retire by a reasonable age.

(I did search, both here and on google and didn't see this previously posted for mockery here. My apologies if I missed it.)

Financial Samurai’s post is pretty accurate for manhattan. Middle class in my area outside the city is somewhere about 175k for a family of 3-4.  That said, it’s by no means mustachian. It’s not even live below your means.  It’s a discussion on middle class New York City with views that are similar to real New York City views. 

Recognize that New York City and San Fran are the twilight zone where reality is simply distorted, it’s outright been suspended.

Yup! I remember reading a thread about a place that offers a slice of their toast for $4. I asked my brother's wife (they live in SF) about it and she her response was, "I've been there, they have really good bread." I was trying to highlight the price tag and she shrugged it off. Things simply cost more there. That said, apart from the high price tag they both love living there so they're happy.

[redbird]

To be fair, it can be worthwhile to WORK in some of these HCOL areas to build a stash. I have never lived in San Francisco or New York, but I've definitely lived in HCOL areas. Some of those expenses could be cut down even taking looney tunes SF/NYC into account. Why are we spending $500/month on clothes, for example? Especially considering one of those hypothetical family members is a baby. Buy used clothes! You can get baby clothes for super cheap and babies grow so fast that they're generally gently used.

I've never cared for Financial Samurai, but every time he's linked here, it feels like he lives on another planet from your average financial blog reader.

[dang1]

hella fake article! no kids live in the city and county of san francisco. they all get brought in for the day from like walnut creek, lol!

[MrUpwardlyMobile]

To be fair, it can be worthwhile to WORK in some of these HCOL areas to build a stash. I have never lived in San Francisco or New York, but I've definitely lived in HCOL areas. Some of those expenses could be cut down even taking looney tunes SF/NYC into account. Why are we spending $500/month on clothes, for example? Especially considering one of those hypothetical family members is a baby. Buy used clothes! You can get baby clothes for super cheap and babies grow so fast that they're generally gently used.

I've never cared for Financial Samurai, but every time he's linked here, it feels like he lives on another planet from your average financial blog reader.

His views on how much you need and how much things cost is pretty typical of a middle class nyc dweller.

[dragoncar]

To be fair, it can be worthwhile to WORK in some of these HCOL areas to build a stash. I have never lived in San Francisco or New York, but I've definitely lived in HCOL areas. Some of those expenses could be cut down even taking looney tunes SF/NYC into account. Why are we spending $500/month on clothes, for example? Especially considering one of those hypothetical family members is a baby. Buy used clothes! You can get baby clothes for super cheap and babies grow so fast that they're generally gently used.

I've never cared for Financial Samurai, but every time he's linked here, it feels like he lives on another planet from your average financial blog reader.

His views on how much you need and how much things cost is pretty typical of a middle class nyc dweller.

I don't think our criteria here for accurate analysis is "views of typical people"

Otherwise, we would be promoting mass consumerism, zero retirement savings, etc.

[grmagne]

I've found that Financial Samurai usually gives good advice to high-income earners that want to retire early. At the end of the article he does explain that moving to a low-cost area for early retirement beats staying in the expensive city. He is a bit out of touch with what average incomes are in big cities, though. A $300,000 family income is not "middle class", even in NYC or SF.

In order for this household to achieve financial independence, they’ve got to either up their 17% gross savings rate, figure out a way to reduce expenses, or boost income. Since boosting income probably hurts their quality of life due to more work and stress, the best way is to reduce expenses and diligently keep track of their finances online in order to continuously optimize their net worth. After 10 years of aggressive saving and earning, moving to a lower cost area to work or retire could be the perfect final move.

There’s a moving truck shortage in places like San Francisco because so many people are moving out of this expensive city. The trend is towards relocating towards the heartland, where valuations are cheaper and net rental yields are much higher. If you live in an expensive metropolitan area, consider relocating to a lower your cost of living or at least try and take advantage of the valuation differential by investing in Middle America. Thanks to technology, there’s no need to grind so hard in cities where the median home price is over $1M. The country is large. Go explore it!

[YoungGranny]

I understand some expenses will be more in a HCOL area but I think a lot of the inflated expenses are just making excuses. When I read "Coach instead of Gucci" I almost burst out laughing - how about a Target purse? lol

[mm1970]

https://www.financialsamurai.com/living-a-middle-class-lifestyle-on-300000-year-expensive-city/

Let me tell you a sad story. In order to comfortably raise a family in an expensive coastal city like San Francisco or New York, you’ve got to make at least $300,000 a year. You can certainly raise a family earning less as many do, but it won’t be easy if your goal is to save for retirement, save for your child’s education, own your own home instead of rent, and actually retire by a reasonable age.

(I did search, both here and on google and didn't see this previously posted for mockery here. My apologies if I missed it.)

Financial Samurai’s post is pretty accurate for manhattan. Middle class in my area outside the city is somewhere about 175k for a family of 3-4.  That said, it’s by no means mustachian. It’s not even live below your means.  It’s a discussion on middle class New York City with views that are similar to real New York City views. 

Recognize that New York City and San Fran are the twilight zone where reality is simply distorted, it’s outright been suspended.

Yep.

and note he didn't say that $300k was middle class

He said "middle class lifestyle" with the added requirement of saving for children's education and retirement and own a home.

Because let's face it:
- If you want your kid to go to college, and you make a lot of money, you have to pay it.  Need-based aid will not be yours.
- If you want to retire, you'd better save for it.  Who knows where SS will be.
- If you don't want to be at the mercy of the rental market (and have kids in school), you want to own.

Part of a "middle class lifestyle" is the THINGS (like vacation, meals out, a reliable car) and some of it is STABILITY and savings etc.

Of course, a lot of his numbers are high, because many people don't like making tradeoffs.  Thing is, if you live somewhere and your mortgage is $4000-5000 a month, then maybe you're not gonna have 2 new cars with $600 car payments.  But also that's keeping up with the Jones' there too.  You gotta make friends with the Smiths instead.

I've got friends all over the country - and those that live in places like Texas, or Arizona, or upstate NY, or Virginia (not DC), well - their "middle class" is a lot...BIGGER...than my "middle class" here in Coastal So Cal.

[honeybbq]

I'm sure I'll get punched, but... this is similar to my lifestyle (in SOME ways) living in a HCOLA.

Expenses that are similar to mine:
House and property tax- yep, similar pricing/payment.
Taxes- similar though I live in WA so no state level income tax
Max out retirement vehicles - check
529 - I do more, but similar.
I think our umbrella policy costs more but close
Childcare - kid goes to public school but summer camps are 300-400/week, after school care is a couple hundred a week, etc. It adds up. Maybe not quite that high.
Healthcare might be a little less
Vacations: Probably in this ball park. We travel a lot and love to. We usually don't do too fancy (camping, etc) but we do like to ski which is $$
Utilities: probably more. Our trash service alone is $80+

This that are not similar:
car payments and gas
Clothes- I don't have coach (or armani or gucci)
Entertainment - we go to a movie maybe once a month plus Netflix. No way could we spend $600 month, even when we see the nutcracker!
We save a lot into our after tax account, which they don't have here.
food - we still spend a lot more than MM people, but I cook at home almost every meal, and we eat really well.

But, I live high on the hog. I live close to where I work (so house == $$$) but I can bike, bus, or drive quickly and efficiently. When you have a high tax rate, a high retirement rate, and a high house payment, those are pretty much the big 3 that take you down.

I totally understand why people think this is ridiculous, though. And in many ways, it is.

[Fomerly known as something]

The thing is I have lived in NYC (granted not Manhattan).  You don't need $300,000.  You do need to make "frugal" choices though.  Maybe it was because I lived in nice but true good  middle class/working class neighborhoods and not in Upper class neighborhoods that think of themselves as middle class.

[Acastus]

My personal definition of middle class is 2/3 to 2X the median salary, or about 40-120k. I will grant a minor adjustment for location, perhaps 10-15% more for HCOL areas. Maybe max out at 150k. I don't usually pay for parking, but they will pay every day. Those making 2-3X are upper middle class. Those making more than 3X median income are upper class. Only 10% of households make more than 160k. Surely the top 10% should be called our upper class. 

If you can afford Manhattan or near the Bay in SF, you are upper class. End of story. Unless you cram 6 people into a flat or something.