Author Topic: 9 ways to know if you're middle class  (Read 25627 times)

Mickijune

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9 ways to know if you're middle class
« on: December 11, 2012, 09:25:46 PM »
http://money.msn.com/investing/c_galleryregular.aspx?cp-documentid=250284193

You make between $40,000 and $100,000 a year
You shop at Target
You're saving for college
You go on vacation
You own your home
You have a secure job
You have health insurance
You lean Democratic, but not all the time
You invest for retirement

c

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Re: 9 ways to know if you're middle class
« Reply #1 on: December 11, 2012, 09:36:15 PM »
No.
Never have, never will.
No.
Yes.
The bank owns more of it than I do.
Ha.
That I pay for.
Not all the time, sometimes they lean too far right
Yes.

sheepstache

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Re: 9 ways to know if you're middle class
« Reply #2 on: December 11, 2012, 09:37:14 PM »
Didn't the Pew research they're quoting also determine that like 85% of the country considers itself middle class?  That's America for you.  We're all average and we're all exceptional.

totoro

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Re: 9 ways to know if you're middle class
« Reply #3 on: December 11, 2012, 10:03:24 PM »
No
No
No
No
More than one
No
Of course, I'm Canadian
N/A
Yes

I suspect Mustachian is different from middle class




velocistar237

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Re: 9 ways to know if you're middle class
« Reply #4 on: December 12, 2012, 08:42:39 AM »
Yes
Rarely; Target is creepy with their customer tracking, but it's convenient by bike
Not specifically
Rarely
Yes
Yes
Yes
Yes
Yes

TheDude

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Re: 9 ways to know if you're middle class
« Reply #5 on: December 12, 2012, 08:46:28 AM »
I would say that describes me pretty closely. We dont really save much for college since I figure we will just bankroll it when it comes.

noob515

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Re: 9 ways to know if you're middle class
« Reply #6 on: December 12, 2012, 08:57:32 AM »
Hmm...

No - on an individual basis, yes, but combined we're over.
Yes, we have a Super Target and it's the closest grocery store to my house.
No kids, so no college to pay for.  Besides, I'm still paying off MY college.
Yes, but not frequently.
Yes.
Yes.
Yes.
Yes.
Yes.

I feel like "middle class" is too broad a term.  There's a big difference in what a $40k income household can afford and what a $100k income household can afford. 

Forcus

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Re: 9 ways to know if you're middle class
« Reply #7 on: December 12, 2012, 09:26:00 AM »
Didn't the Pew research they're quoting also determine that like 85% of the country considers itself middle class?  That's America for you.  We're all average and we're all exceptional.

You forgot, we are all "heroes". No, sometimes it's just doing what is right!

Erica/NWEdible

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Re: 9 ways to know if you're middle class
« Reply #8 on: December 12, 2012, 09:41:05 AM »
Actually that describes us really well, except for the Target shopping. I'm a Costco gal. ;)

Angelfishtitan

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Re: 9 ways to know if you're middle class
« Reply #9 on: December 12, 2012, 09:56:07 AM »
I feel like "middle class" is too broad a term.  There's a big difference in what a $40k income household can afford and what a $100k income household can afford.

This is what I hate listening to politicians/people in general talk about this. Almost everyone I work with has a median household income over $100K, but consider themselves "middle class". That's the top 15%, with people with a spouse that makes a similar wage possibly being in the top 5%! Even $40K/year for a family would almost put them in the top half of the country, if one person most likely does. The 50th percentile to 95 percentile is one hell of a middle to me, they didn't teach me that math in statistics.

They way the term gets thrown around in the media really drowns out how well some people are off in comparison. There needs to be education to slap these people in the face with the reality that they are plenty well off and need to stop being whinypants.
« Last Edit: December 12, 2012, 09:57:49 AM by Angelfishtitan »

tooqk4u22

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Re: 9 ways to know if you're middle class
« Reply #10 on: December 12, 2012, 10:17:44 AM »
I feel like "middle class" is too broad a term.  There's a big difference in what a $40k income household can afford and what a $100k income household can afford.

This is what I hate listening to politicians/people in general talk about this. Almost everyone I work with has a median household income over $100K, but consider themselves "middle class". That's the top 15%, with people with a spouse that makes a similar wage possibly being in the top 5%! Even $40K/year for a family would almost put them in the top half of the country, if one person most likely does. The 50th percentile to 95 percentile is one hell of a middle to me, they didn't teach me that math in statistics.

They way the term gets thrown around in the media really drowns out how well some people are off in comparison. There needs to be education to slap these people in the face with the reality that they are plenty well off and need to stop being whinypants.

Your point is well taken but it also ignores cost of living - so it cuts both ways - $100k in the northeast and california or for that matter just about any major or dense population/employment areas is not that much and is middle class and probably comparable to $50k in the midwest or south or such.  The majority of the difference can proabably be attributed to housing costs (and related taxes) but there are other things as well.  Median housing in the higher ares can easily be three times what it is in the other areas and because of that your income and down payment would have to be 2-3 times that to qualify. Yet people don't look at it this way. 

Jamesqf

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Re: 9 ways to know if you're middle class
« Reply #11 on: December 12, 2012, 10:50:27 AM »
You make between $40,000 and $100,000 a year - Usually, sometimes more.
You shop at Target - Nope.  Don't shop if I can avoid it, and (barring groceries) mostly on-line.
You're saving for college - Nope.  Done most of it, still working on the PhD, but the costs get paid out of current income.
You go on vacation - Not really.  Could, but I hate commercial air travel, hotels, etc. And when I do travel, I can take the laptop along and do a few hours of work whenever I have otherwise idle time.
You own your home - Yes.
You have a secure job - ? Self-employed, is that secure?  Is it even a job?
You have health insurance - No.
You lean Democratic, but not all the time - Nope.  Granted, my detestation for Democrats is outweighed by my utter loathing for the religious fundamentalist brand of Republican, but my real leaning is towards dropping a sizeable mountain on both.
You invest for retirement - Yes/no.  I invest, and take advantage of 401k/IRA tax deductions, but I hope never to actually retire.

So probably not middle class, but I don't really fit anywhere else either.  A lot of poverty values (learned the hard way), combined with what is, to be bluntly honest, a high degree of elitism.  Which I suppose makes me a typicial Mustachian :-)
« Last Edit: December 12, 2012, 10:52:15 AM by Jamesqf »

DoubleDown

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Re: 9 ways to know if you're middle class
« Reply #12 on: December 12, 2012, 10:56:11 AM »

Your point is well taken but it also ignores cost of living in ... just about any major or dense population/employment areas ...

+1

This is one thing that annoys me about our tax code and arguments over what is "rich" in regards to paying taxes. There are a lot of arbitrary/artificial limits set up to what you can deduct based on income, but there is no consideration for where you live.  An example is being able to write off expenses for passive income like rental real estate which starts getting limited at $100k combined income for a couple. A couple earning $100k in NYC or Los Angeles is definitely middle class, and a modest rental property in those locations could easily cost $500k - $1 million.  Yet that couple is subject to the same $100k income limit as a couple living in Wichita, KS which would decidedly be considered wealthy land barons if they earn $100k/year and own $500k - $1 million in rental property.

I guess people could reasonably argue those are consequences of people choosing to live and own property where they do, but it strikes me as unfair and annoys me when politicians argue over what defines "rich people" who should be subjected to higher taxes without taking that into consideration. Particularly since major urban centers are where most of us live and work.

ketchup

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Re: 9 ways to know if you're middle class
« Reply #13 on: December 12, 2012, 11:00:11 AM »
You make between $40,000 and $100,000 a year - Household income, yes. Me personally? Absolutely not, but ideally in the future.
You shop at Target - Sometimes, and we don't buy stupid crap there.
You're saving for college - Yes, heading back next year, while working, and not taking out any loans at all.
You go on vacation - As long as a trip with a budget of under $100 including gas and lodging is considered a vacation, yeah.
You own your home -  Yep, I own my 500 square foot house. It cost less than the majority of new cars.
You have a secure job - Yes.
You have health insurance - Yes, through my parents' plan, for now.
You lean Democratic, but not all the time -  Something like that sort of.
You invest for retirement - Well yeah.

By this metric, I guess I am part of the mythical "middle class". Fun.

Angelfishtitan

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Re: 9 ways to know if you're middle class
« Reply #14 on: December 12, 2012, 11:41:49 AM »
Your point is well taken but it also ignores cost of living - so it cuts both ways - $100k in the northeast and california or for that matter just about any major or dense population/employment areas is not that much and is middle class and probably comparable to $50k in the midwest or south or such.  The majority of the difference can proabably be attributed to housing costs (and related taxes) but there are other things as well.  Median housing in the higher ares can easily be three times what it is in the other areas and because of that your income and down payment would have to be 2-3 times that to qualify. Yet people don't look at it this way.

I understand your point, but at the same time I live in CT, generally one of the top five states for cost of living, yet have a yearly budget of only $32K for a family of two ($28K not including student loans soon to be paid off). This includes my mortgage and high property taxes and do not shy away from going out to eat a few times a month. I live in the suburbs of Hartford and my town is one of the top for school systems in the area. I have a three bedroom house with over a half acre lot when there is just me and my wife. I live exactly how I want to live, all while making over $100K per year between me and my wife. I know I am upper class.

I also understand that there are different costs of living, but the median is the best way to discuss. NYC or So Cal is not the norm, not even close. Areas with higher COL generally have higher wages so acting like it is an apples to apples comparison is a bit of a stretch.

The fact is being different levels of the upper class does not change the fact that you are in the upper class. Being in the top ten percent in the midwest or the top ten percent in the northeast does not change how better off you are than your peers, whether one technically has more money than the other.

venkol

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Re: 9 ways to know if you're middle class
« Reply #15 on: December 12, 2012, 12:06:34 PM »

You make between $40,000 and $100,000 a year. - Yes, and Hopefully rising.
You shop at Target. - For Groceries, the 5% back adds up and I think it's worth them knowing exactly how many hot pockets I buy a month.
You're saving for college - Finishing off paying the student loan debt, only paying the minimums now since my interest rate is 2%and I'd rather make a bigger contribution to my retirement and savings.
You go on vacation - My Vice, I love to travel. 
You own your home - Nope, renter here.
You have a secure job - I'm looking to take bigger risks while I'm still young, so not as secure as it could be.
You have health insurance - Yes
You lean Democratic, but not all the time - Independent, political parties are for the weak minded.
You invest for retirement - Yes

tooqk4u22

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Re: 9 ways to know if you're middle class
« Reply #16 on: December 12, 2012, 12:18:40 PM »
Your point is well taken but it also ignores cost of living - so it cuts both ways - $100k in the northeast and california or for that matter just about any major or dense population/employment areas is not that much and is middle class and probably comparable to $50k in the midwest or south or such.  The majority of the difference can proabably be attributed to housing costs (and related taxes) but there are other things as well.  Median housing in the higher ares can easily be three times what it is in the other areas and because of that your income and down payment would have to be 2-3 times that to qualify. Yet people don't look at it this way.
I also understand that there are different costs of living, but the median is the best way to discuss. NYC or So Cal is not the norm, not even close. Areas with higher COL generally have higher wages so acting like it is an apples to apples comparison is a bit of a stretch.

The fact is being different levels of the upper class does not change the fact that you are in the upper class. Being in the top ten percent in the midwest or the top ten percent in the northeast does not change how better off you are than your peers, whether one technically has more money than the other.

This is exactly the point, which you are saying but at the same time are missing.  I don't disagree that the top 10% in any given region is better off than the rest but region to region matters a lot. 

So you like medians do you and stats:

                                               Hartford, CT                  NYC
Median HH Income                 $31k                               $65k
Average HH Income               $45k                               $125k
% HH Over $100k                    7%                                 14%
% HH Over $200k                    1%                                 32%


Median House                        $132k                              $653k
% of over $750k                     1%                                   41%

And medians are not averages - the distrubtion of the top half of the medians increase far greater in NYC than they do in NYC. 

The reason why you feel like upper class is because in YOUR area you ARE upper class,  in NCY at best you would feel average and wouldn't be able to purchase a home.  And because the median income is $31k it shouldn't be shock that YOU are living on $32k.


Erica/NWEdible

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Re: 9 ways to know if you're middle class
« Reply #17 on: December 12, 2012, 12:19:39 PM »

I live exactly how I want to live, all while making over $100K per year between me and my wife. I know I am upper class.

Reminds me of this: 1% Must Stop Insisting They Aren't Rich


tooqk4u22

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Re: 9 ways to know if you're middle class
« Reply #18 on: December 12, 2012, 12:28:35 PM »

I live exactly how I want to live, all while making over $100K per year between me and my wife. I know I am upper class.

Reminds me of this: 1% Must Stop Insisting They Aren't Rich

That was not my quote, but I did kind of miss that even with my last post.  Funny....all while making OVER 100k.....

Erica/NWEdible

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Re: 9 ways to know if you're middle class
« Reply #19 on: December 12, 2012, 12:41:42 PM »
Ah, sorry Tooq, stripped out the wrong quote brackets on that.

Angelfishtitan

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Re: 9 ways to know if you're middle class
« Reply #20 on: December 12, 2012, 12:56:01 PM »
And medians are not averages - the distrubtion of the top half of the medians increase far greater in NYC than they do in NYC. 

The reason why you feel like upper class is because in YOUR area you ARE upper class,  in NCY at best you would feel average and wouldn't be able to purchase a home.  And because the median income is $31k it shouldn't be shock that YOU are living on $32k.

Looking at median income and adjusting for COL by state, we get a range of about $40K to $55K which really isn't that big of a range. And those low on the list are from all areas of the country with the bottom five being (with their rank by actual median income in parens): Hawaii (5), Maine (31), West Virginia (49), Mississippi (50), and Arkansas (48). That to me is a pretty big hole in the argument that if you make more money it means your COL eats it up, 4 out of 5 of the lowest adjusted median income are in the lower 50th percentile of actual median income. The highest in the lower 50th percentile of actual median income was Kansas (28) at number fourteen for adjusted median income. This was actually a little surprising to me as I figured it would be more even.

If I moved to NYC, I would expect to make much more than I would in Hartford. Assuming that I would make the same as I do now as I would in NYC means one thing to me: I shouldn't live in NYC unless I feel it is worth the extra expense. If I was in the top 10% in NYC, to me I should probably be just as well off as most people in other areas solely due to the fact that large ticket items other than housing (like cars, plane tickets, electronics, luxury items) should be relatively similar prices.

Also I am most likely not in the highest percentages of CT, full state median income is around $67K. Doesn't change the fact that I am rich.

Edit:
That was not my quote, but I did kind of miss that even with my last post.  Funny....all while making OVER 100k.....

The point of that statement was to show that I don't have to live on $32K/year but wouldn't spend any more even though I make $100K, hence the "I live exactly how I want to live" part. Not sure if you understood that with the caps, since you seem to be mocking my wording.
« Last Edit: December 12, 2012, 01:01:11 PM by Angelfishtitan »

jrhampt

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Re: 9 ways to know if you're middle class
« Reply #21 on: December 12, 2012, 12:59:34 PM »

I understand your point, but at the same time I live in CT, generally one of the top five states for cost of living, yet have a yearly budget of only $32K for a family of two ($28K not including student loans soon to be paid off). This includes my mortgage and high property taxes and do not shy away from going out to eat a few times a month. I live in the suburbs of Hartford and my town is one of the top for school systems in the area.

Ooh, another CT person!  Are you in W Htfd, by any chance?

Angelfishtitan

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Re: 9 ways to know if you're middle class
« Reply #22 on: December 12, 2012, 01:03:18 PM »
Ooh, another CT person!  Are you in W Htfd, by any chance?

Actually east of the river in Ellington. I would not want to commute across the bridge every day : )

jrhampt

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Re: 9 ways to know if you're middle class
« Reply #23 on: December 12, 2012, 01:29:32 PM »
Ah, I picked W Htfd since you said it was a good school district.  I am in New Britain (bad school district). 

tooqk4u22

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Re: 9 ways to know if you're middle class
« Reply #24 on: December 12, 2012, 02:01:54 PM »
If I moved to NYC, I would expect to make much more than I would in Hartford. Assuming that I would make the same as I do now as I would in NYC means one thing to me: I shouldn't live in NYC unless I feel it is worth the extra expense.

Absolutely right - but the demographic numbers suggest that the opposite is going on and that is because that the perception is there is increased opportunity to make considerably more than the medians, whether or not it works out depends on the person.

If I was in the top 10% in NYC, to me I should probably be just as well off as most people in other areas solely due to the fact that large ticket items other than housing (like cars, plane tickets, electronics, luxury items) should be relatively similar prices.
I also agree that areas other than housing and taxes (property, income) shouldn't be vastly different from one area to the next, but if you were in the top 10% you would not be just as well off as you are now in Hartford and the numbers above show it - the cost of housing is far greater relative to incomes and so are the income taxes and food and services also cost more. 

Also I am most likely not in the highest percentages of CT, full state median income is around $67K. Doesn't change the fact that I am rich.

So within your state you are rich and within your community you are super-rich - way to go Buffett. 


The point of that statement was to show that I don't have to live on $32K/year but wouldn't spend any more even though I make $100K, hence the "I live exactly how I want to live" part. Not sure if you understood that with the caps, since you seem to be mocking my wording.

Yes I know - your happy and not spending every dime, but that was not how it was written...still funny.  Look at it again and pretend someone else wrote it - I am sure you will chuckle.

Angelfishtitan

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Re: 9 ways to know if you're middle class
« Reply #25 on: December 12, 2012, 02:58:38 PM »
Absolutely right - but the demographic numbers suggest that the opposite is going on and that is because that the perception is there is increased opportunity to make considerably more than the medians, whether or not it works out depends on the person.

Ah, but by the adjusted median income to account COL I was talking about above that is not the norm. Those states with lower median incomes also tend to have lower adjusted median incomes in spite of the low COL. Highly desired areas are the exception and when the media/politician/Joe Schmoe is talking about the "middle class" they aren't talking about the one percent of people that don't fit the norm, especially since the wealthier ones that live in NYC or So Cal choose to live there. It is their choice to make less equivalent money because of where they want to live, they shouldn't be pitied for it. Poorer people may not have a choice but that is not the people we are talking about here. I understand your point, but mine is about the general population not a small subset in the country.

It would be very hard to make a general argument about most public policy if you have to take every specific situation into account.

So within your state you are rich and within your community you are super-rich - way to go Buffett.

I live in the suburbs, not Hartford. So within my state I am rich and within my community I am merely upper middle class. More of the buffet type anyway.

Yes I know - your happy and not spending every dime, but that was not how it was written...still funny.  Look at it again and pretend someone else wrote it - I am sure you will chuckle.

I agree, even with the benefit of doing this over the internet instead of in person my lack of wordsmithing can come out. It does make me sound pretty ridiculous out of context.

I appreciate the discussion tooqk4u22.

Edit: I also want to know what you find wrong with my belief in general. Your argument originally started dense population/employment areas don't fit this bill. You proved it both right and wrong with NYC being a bad ratio while Hartford is a good ratio (sixth largest city in new england) and would imagine you would find similar ratios for Bridgeport, CT, Springfield, MA, and Worcester, MA (these are larger than Hartford, Worcester only being smaller than Boston).
« Last Edit: December 12, 2012, 03:07:29 PM by Angelfishtitan »

Jamesqf

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Re: 9 ways to know if you're middle class
« Reply #26 on: December 12, 2012, 07:17:57 PM »
Reminds me of this: 1% Must Stop Insisting They Aren't Rich

That link has it just backwards.  What they should be asking is why am I 'rich'*, even though I make less money than those not-rich folks?

*Of course a lot depends on your definition of rich.  Can I buy a large chunk of Montana?  No.  Can I start my own space program?  No.  Guess I'm not rich, then :-(

noob515

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Re: 9 ways to know if you're middle class
« Reply #27 on: December 13, 2012, 07:11:09 AM »
The COL issue is an interesting one, although I feel like to tends to lend itself to a lot of complainy-pants.  (Btw, "1% must stop insisting they aren't rich" = funny, although the new Mercedes comment made me want to throw up a little.)

I think the tax comment is a good point.  My mother lives in northern NJ, and makes $60k as a teacher.  Her property taxes are $10,000 a year.  My husband makes $60k, but our property taxes are $1800 a year.  Obviously that alone would make a significant difference in what you can afford.  Is that sort of thing taken into account when calculating the COL difference? 

Angelfishtitan

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Re: 9 ways to know if you're middle class
« Reply #28 on: December 13, 2012, 08:11:21 AM »
@tooqk4u22: I have a scenario for you, but unfortunately I couldn't find any hard data. Finding net worth by city seemed tough.

In general I would expect someone in NYC city to save less percentage wise, but more dollar wise than someone in Hartford. For example even if someone in Hartford saved 30% of their income and someone in NYC only saves half that, or 15% of their income, the comparison would still be $13.5K vs. $18.75K per year. Plus this is talking only about the averages you gave before, not the top ten percent that I don't consider upper class.

With that assumption we have NYJoe and CTJim. NYJoe has $700K in assets while CTJim has $500K based upon the ratio of savings rates above. You can do any ratio, either way the New Yorker should in general have more assets.

Scenario 1: Both stay where they are. CTJim is clearly better off in his area than NYJoe is in his. CTJim only needs to spend $132K on his house (~26% of his assets) while NYJoe would have to spend $653K (~93%). CTJim wins this scenario.

Scenario 2: CTJim moves to NYC. He now lives in the same place but has less money that NYJoe. NYJoe wins this scenario.

Scenario 3: NYJoe moves to Hartford. He now lives in the same place but has more money than CTJim. NYJoe wins this scenario.

Scenario 4: Both men move to Mississippi. Both now live in the same place and NYJoe still has more money. NYJoe wins this scenario.

My question is why should I only take Scenario 1 into account when deciding if someone is upper class?

That link has it just backwards.  What they should be asking is why am I 'rich'*, even though I make less money than those not-rich folks?

I am confused by this sentence, not exactly sure what you mean here.

I think the tax comment is a good point.  My mother lives in northern NJ, and makes $60k as a teacher.  Her property taxes are $10,000 a year.  My husband makes $60k, but our property taxes are $1800 a year.  Obviously that alone would make a significant difference in what you can afford.  Is that sort of thing taken into account when calculating the COL difference? 

That is why there are things like itemized deductions, to partially take things like this into account. Plus, I imagine here house is probably worth a bit more than yours, New Jersey's average property tax isn't that high.

venkol

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Re: 9 ways to know if you're middle class
« Reply #29 on: December 13, 2012, 08:53:13 AM »
@tooqk4u22: I have a scenario for you, but unfortunately I couldn't find any hard data. Finding net worth by city seemed tough.

In general I would expect someone in NYC city to save less percentage wise, but more dollar wise than someone in Hartford. For example even if someone in Hartford saved 30% of their income and someone in NYC only saves half that, or 15% of their income, the comparison would still be $13.5K vs. $18.75K per year. Plus this is talking only about the averages you gave before, not the top ten percent that I don't consider upper class.

With that assumption we have NYJoe and CTJim. NYJoe has $700K in assets while CTJim has $500K based upon the ratio of savings rates above. You can do any ratio, either way the New Yorker should in general have more assets.

Scenario 1: Both stay where they are. CTJim is clearly better off in his area than NYJoe is in his. CTJim only needs to spend $132K on his house (~26% of his assets) while NYJoe would have to spend $653K (~93%). CTJim wins this scenario.

Scenario 2: CTJim moves to NYC. He now lives in the same place but has less money that NYJoe. NYJoe wins this scenario.

Scenario 3: NYJoe moves to Hartford. He now lives in the same place but has more money than CTJim. NYJoe wins this scenario.

Scenario 4: Both men move to Mississippi. Both now live in the same place and NYJoe still has more money. NYJoe wins this scenario.

My question is why should I only take Scenario 1 into account when deciding if someone is upper class?

That link has it just backwards.  What they should be asking is why am I 'rich'*, even though I make less money than those not-rich folks?

I am confused by this sentence, not exactly sure what you mean here.

I think the tax comment is a good point.  My mother lives in northern NJ, and makes $60k as a teacher.  Her property taxes are $10,000 a year.  My husband makes $60k, but our property taxes are $1800 a year.  Obviously that alone would make a significant difference in what you can afford.  Is that sort of thing taken into account when calculating the COL difference? 

That is why there are things like itemized deductions, to partially take things like this into account. Plus, I imagine here house is probably worth a bit more than yours, New Jersey's average property tax isn't that high.

A quick google search says that a $300K house in Edison, NJ would have a tax bill of around $13K while here in Nova, it would be closer to $3500.

tooqk4u22

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Re: 9 ways to know if you're middle class
« Reply #30 on: December 13, 2012, 09:20:26 AM »
@tooqk4u22: I have a scenario for you, but unfortunately I couldn't find any hard data. Finding net worth by city seemed tough.

My question is why should I only take Scenario 1 into account when deciding if someone is upper class?

Your scenario is more about mobility and to some extent you are making a valid point, in theory anyway.  It is possible in absolute number that people in high COL areas can save more dollars even if it is at a lower percent of income but as you point out then they have to move to capitalize on it.  Either way that is not relevant to the tax issue where $100K is considred top 10% so they are rich and can pay more. Where it is flawed is the income distribution is far wider in NYC than in CT.  In many areas stable or low/not dynamic employment areas the majority of the population makes close to the median income whereas in NYC the median is not real telling because there is greater population that makes much much more. Remember that the median is the middle - 50% make more and 50% make less.  So in Bumbleweed, USA the median income is $40k but 90% of the population makes between $35k and $45k.  In NYC the median income is $65k but 27% make over $200k so by shear math if you make $100K you are clearly not in the top 10% and you might note be in the top 30%. 


That is why there are things like itemized deductions, to partially take things like this into account. Plus, I imagine here house is probably worth a bit more than yours, New Jersey's average property tax isn't that high.

I live in NJ,  I assure you that the reports of NJ having the highest property taxes in the country are not a fallacy.  Not only does it suck to pay them, it also makes it hard to make the numbers work on rental properties.  A $200K house will have taxes of about $6,500. 


Bakari

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Re: 9 ways to know if you're middle class
« Reply #31 on: December 13, 2012, 09:53:49 AM »
In NYC the median income is $65k but 27% make over $200k so by shear math if you make $100K you are clearly not in the top 10% and you might note be in the top 30%. 

No, in Manhattan the median household income is $65k.  In NYC the median is only $48k for a household, and only about $35k per individual. 
What people do who aren't wealthy but work in Manhattan is they commute. 

I don't think the numbers can be adjusted by COL for a particular portion of a city - the fact of living there in the first place is itself evidence of a relatively high amount of wealth.

dragoncar

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Re: 9 ways to know if you're middle class
« Reply #32 on: December 13, 2012, 10:17:14 AM »
COL argument is total BS.  To each his own, but some people would rather be homeless in NYC than have 3 BR in the middle of nowhere.  If there is something drawing you to a high COL city, then that is a BENEFIT for which you CHOOSE to pay more.  I say this living in #2 COL city.

For us Mustachians, the #1 problem with high COL is housing.  Yes, my ground beef and milk may cost twice the national average, but that doesn't break my budget by a long shot.  Housing is easily rectified by renting until you save enough to retire in the country.  Oh, you don't want to retire in the country?  You want to retire in Manhattan?  Fine, but you aren't middle class.

*I have no animosity towards low COL cities... but my experience is that those who make COL arguments inevitably LIKE living in their chosen high COL city.  If they don't, they usually move and therefore do not complain about high COL.

Jamesqf

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Re: 9 ways to know if you're middle class
« Reply #33 on: December 13, 2012, 10:44:29 AM »
That link has it just backwards.  What they should be asking is why am I 'rich'*, even though I make less money than those not-rich folks?

I am confused by this sentence, not exactly sure what you mean here.

Basically, it's the Micawber Principle http://en.wikipedia.org/wiki/Wilkins_Micawber  I live comfortably, set my own working hours, and have those luxuries - an acre of garden, a plane, a horse - that I actually want, and also have managed to accumulate a mid-6 figure stash despite a lower annual income than those not-rich folks.  So doesn't that make me rich, at least by anything less than start-my-own-space-program standards of rich?

tooqk4u22

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Re: 9 ways to know if you're middle class
« Reply #34 on: December 13, 2012, 10:52:24 AM »
Bakari/dragon - I think the point is being missed.  The argument was that if you are in the top 10% of income for the whole US then you are rich (actually I think the number used was $100k)...my counter is that no that is not necessarily the case, it depends on where you live. 

I am not making the argument for or against COL adjustments, or whether or not there benefiting more or less from living in high COL areas, etc. 

And dragon - in prior posts I said the difference was primarily attributed to housing and related costs and also to some extent taxes.

In Manhattan or even the five boroughs in total - you are not a rich household if you make $100k and that applies to most of the high COL areas in the country - it doesn't mean your poor, so no tears should be shed.  But everything is relative. 

dragoncar

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Re: 9 ways to know if you're middle class
« Reply #35 on: December 13, 2012, 11:28:20 AM »
Bakari/dragon - I think the point is being missed.  The argument was that if you are in the top 10% of income for the whole US then you are rich (actually I think the number used was $100k)...my counter is that no that is not necessarily the case, it depends on where you live. 


Well I think we can agree there is something between "middle class" and "rich" -- something like "upper middle class".  But I disagree with your premise that "it depends on where you live."  My point is that housing in a high COL city is itself a luxury.  If you make 100k in Manhattan, maybe you spend a lot on housing and have to cut back on eating out.  But you are spending that money on a luxury good -- housing in Manhattan.  Spending on luxury goods is not something the middle class can afford to do.

Angelfishtitan

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Re: 9 ways to know if you're middle class
« Reply #36 on: December 13, 2012, 12:05:50 PM »
In NYC the median income is $65k but 27% make over $200k so by shear math if you make $100K you are clearly not in the top 10% and you might note be in the top 30%. 

In Manhattan or even the five boroughs in total - you are not a rich household if you make $100k and that applies to most of the high COL areas in the country - it doesn't mean your poor, so no tears should be shed.  But everything is relative.

I never said if you make over $100K you were upper class, I said if you are in the top 5% (and possibly even the top 10-15%) you are and should consider yourself as such. I said that someone in the 90th percentile shouldn't be consider middle class because that is a very broad middle. I started with percentiles and continued as such. The only time in my initial argument I used $100K was when I was talking about my peers, which you agreed to that I was wealthy for my region. By your stats above chances are someone in the top 5-10% of NYC makes over $300K, if not significantly more. Would you not consider that upper class for NYC?

My scenarios are just to illustrate that even beyond my belief that percentiles are the ways to judge peoples economic rank, someone who makes more money is still better off in most paths they can take.

That link has it just backwards.  What they should be asking is why am I 'rich'*, even though I make less money than those not-rich folks?

I am confused by this sentence, not exactly sure what you mean here. People have choices they can make, and wealthier people have less holding them back from making those choices. I certainly don't pity them for choosing to live in a high COL area.

Basically, it's the Micawber Principle http://en.wikipedia.org/wiki/Wilkins_Micawber  I live comfortably, set my own working hours, and have those luxuries - an acre of garden, a plane, a horse - that I actually want, and also have managed to accumulate a mid-6 figure stash despite a lower annual income than those not-rich folks.  So doesn't that make me rich, at least by anything less than start-my-own-space-program standards of rich?

Okay, exactly! By net worth you may very well be in the upper class percentile even though you are not in income. Upper class (or rich, don't care what term you use) is not a negative term I am using, it is solely based on math and should hold no negative connotations. I just don't like people saying they are middle class like some sort of whinypants excuse for why they can't do anything they want when they are in the top percentiles of their community. A bit off topic but I would say any FI person, especially Mustachians, would consider themselves rich somehow whether in time, freedom, or obviously assets.

tooqk4u22

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Re: 9 ways to know if you're middle class
« Reply #37 on: December 13, 2012, 01:04:18 PM »
I never said if you make over $100K you were upper class, I said if you are in the top 5% (and possibly even the top 10-15%) you are and should consider yourself as such. I said that someone in the 90th percentile shouldn't be consider middle class because that is a very broad middle.

Your right I was focusing your $100k and I thought you saying if a person/household is in the top 10% nationally (regardless of where they live) then they shouldn't be considered middle class.  Well if that is the case then I think we generally agree - if you are in the top 10% in YOUR area then you are doing fine (like of $300k is the top 10% for NYC even if it is at the 10% mark then they not true middel class).  Where we might differ is I don't know that I would refer to the lower portion of the top 10% as wealthy - maybe upper middle class, there can be and usually is a major difference from 10% to 5% to 1% to 0.1%. 

Not to gum it up more anymore than we have, but something just popped in my mind that I am curious about.  I wonder if working people should be factored into this as well - lets say in one area it typically takes two people to make the median household income but in another area it only takes one. I say this because sometimes two income households put the house into that top 10% (the tax code penalizes this, but there are reduced housing costs because it is shared). This even works in the same area - say one of my neighbors is single earner that makes $100k and the other is dual earners that both work full time and make $100k - in my area this would put both households in the top 10% but only one individually would truly be in the top 10%. 

Think about it - there are pleny of single people on this board that make $50k and are squarely middle class - but then two of these MMMites meet and hook up and get married/unioned and now they are in the top 10% and nothing changed. For MMMites that would be great because their already awesome savings rate would become more awesome but it doesn't change that they are suddenly in the top 10%.
 

chucklesmcgee

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Re: 9 ways to know if you're middle class
« Reply #38 on: December 13, 2012, 01:14:38 PM »
I personally like the distinction made by Paul Fussell's book Class (note these are 1980s values):

Top Out of Sight - Billionaires and multi-millionaires. The people so wealthy they can afford exclusive levels of privacy. They live however they want.

Upper Class - Millionaires, inherited wealth. Those who don't have to work. They refer to tuxes as "dinner jackets." Typically "old money". Usually anglophiles, quiet with their money

Upper Middle - Wealthy surgeons and lawyers, etc. Professionals who couldn't be described as middle class. "new money" lifestyle. Usually own additional homes, flashy cars, may vacation in the Hamptons, sail, etc.

Middle Class - The great American majority, sort of. Secretaries, Accountants, Paralegals, Nurses, Teachers, Engineers, etc.

High Proletarian (or "prole") - Skilled workers but manual labor. Electricians, plumbers, etc.

Middle Prole - Unskilled manual labor. Waitresses, painters.

Low Prole - Non-skilled of a lower level than mid prole. Highly supervised, McDonald's and the like.

Destitute - Working and non-working poor.

Bottom Out of Sight - Street people, the most destitute in society. "Out of sight" because they have no voice, influence or voter impact. (They don't vote.)

The whole book is devoted to the subject, but he does break it down pretty well, admittedly with a 1980s style and bit of a glib approach. What I find most interesting is the mentality of each class and how much you can pick that up when talking to others today. He breaks this pretty squarely apart from income.

It's a great read, but what I particularly like is how cheap it is to affect an upper-class lifestyle just by avoiding the often costly middle and even upper-middle mentality.

Bakari

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Re: 9 ways to know if you're middle class
« Reply #39 on: December 13, 2012, 01:18:16 PM »
I said that someone in the 90th percentile shouldn't be consider middle class because that is a very broad middle. I started with percentiles and continued as such.

Excellent point, so lets simplify the entire argument by using the technical definition instead of making one up randomly.
After all, regardless of how you got your money, and regardless of how you choose to save/spend it, you have access to exactly as much purchasing power as you have income.  Some people may choose to spend that on cable TV and new cars, other may choose to spend it on living in Manhattan, and others may choose to spend it on investments to "buy" an early retirement.  Regardless, having more income means being able to buy more of whatever it is you want.

The term "middle" means right in the center of two other things.
Just like "middle age" would be the middle third of life (approximately 30 to 60, depending on life span), but people want to assign arbitrary numbers to it so they can personally identify with it (or not)- middle class should be the middle third of all incomes (nationwide, since everyone gets to choose where they live)

The 33rd percentile of US income is $34,000
The 66th percentile of US income is $75,000

http://www.nytimes.com/interactive/2012/01/15/business/one-percent-map.html

If the classes are lower, middle, and upper, then if you make under 34k you are lower class, over 75 you are upper class, and anything in between is middle.
Its simple math.
That should put an end to the debate...

but of course I know it won't
;P

[EDIT: this wasn't directed at the last post specifically - it was posted while I was typing - and I get the idea it's going for.  But what about a plumber who makes more than a teacher or secretary?  What about people who earned their own money, but don't have to work anymore?] 
« Last Edit: December 13, 2012, 01:45:03 PM by Bakari »

Angelfishtitan

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Re: 9 ways to know if you're middle class
« Reply #40 on: December 13, 2012, 01:36:30 PM »
Think about it - there are pleny of single people on this board that make $50k and are squarely middle class - but then two of these MMMites meet and hook up and get married/unioned and now they are in the top 10% and nothing changed. For MMMites that would be great because their already awesome savings rate would become more awesome but it doesn't change that they are suddenly in the top 10%.

Well I am glad that we used so many posts to realize that we agree : D

I also would agree that one person who makes $100K is better off than two people that make $100K combined, but would say it isn't that big of a difference to worry too much about.

At least for me, my residence is such a large part of my budget (around 45%) that I don't think there would be huge savings being alone (assuming I wouldn't be in a smaller place, which I don't think I really would be in anything much smaller). Utilities would be pretty similar, maybe a little less electricity. All car related things would be cut in half (a two car family, the sin I live in!) as would groceries and medical care. I'd expect to save overall 20-25% based upon some quick math for my budget. If I was actually a good mustachian it would be even less.

The problem is the really good mustachians on this board only spend money that they have to, which they would have to as a family of 1 or 4+. I would say the only things that would change for them are groceries and medical care, and those don't even increase linearly. A family at the bottom of the top 10% may not fully be upper class, but they aren't that far away.

Edit:
The term "middle" means right in the center of two other things.
Just like "middle age" would be the middle third of life (approximately 30 to 60, depending on life span), but people want to assign arbitrary numbers to it so they can personally identify with it (or not)- middle class should be the middle third of all incomes (nationwide, since everyone gets to choose where they live)

The 33rd percentile of US income is $34,000
The 66th percentile of US income is $75,000

http://www.nytimes.com/interactive/2012/01/15/business/one-percent-map.html

If the classes are lower, middle, and upper, then if you make under 34k you are lower class, over 75 you are upper class, and anything in between is middle.
Its simple math.
That should put an end to the debate...

but of course I know it won't
;P

I always liked the middle three quintiles to be considered the full middle class (then you can keep lower middle, middle, and upper middle). Puts it from $21K to $103K according to your link. Still pretty large, but not the absurd "anything under $250K" the media and politicians like to flaunt. Now to just get any household who makes over $64K call themselves upper middle class...that could be tricky. But it would help illustrate how good they actually have it.

[EDIT: this wasn't directed at the last post specifically - it was posted while I was typing - and I get the idea it's going for.  But what about a plumber who makes more than a teacher or secretary?  What about people who earned their own money, but don't have to work anymore?] 

That is what I was thinking until I read the last sentence in his second to last paragraph:

He breaks this pretty squarely apart from income.

Which I would generally agree with. Just take out the professions and this would be how people indentify themselves, not necessarily what they are from an income stand point.

Edit 2: Also Bakari, forgot to say that map is awesome, thanks for linking it.
« Last Edit: December 13, 2012, 01:52:17 PM by Angelfishtitan »

tooqk4u22

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Re: 9 ways to know if you're middle class
« Reply #41 on: December 13, 2012, 01:54:01 PM »
If the classes are lower, middle, and upper, then if you make under 34k you are lower class, over 75 you are upper class, and anything in between is middle.
Its simple math.
That should put an end to the debate...

but of course I know it won't
;P

Your right on both counts.....it should end the debate, but it won't. 

But that is the right way to look at but the long argument (agreement) that angel and I have been having means you would still have to apply that to the specifica area.  While you can choose to live anywhere theoretically you may not be able to choose how much you make anywhere....so spending on housing is not the same as spending on cable.....assuming the spending on housing is in line with the middle third of housing and not buying mansions and such.

dragoncar

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Re: 9 ways to know if you're middle class
« Reply #42 on: December 13, 2012, 04:34:53 PM »
If the classes are lower, middle, and upper, then if you make under 34k you are lower class, over 75 you are upper class, and anything in between is middle.
Its simple math.
That should put an end to the debate...

but of course I know it won't
;P

Your right on both counts.....it should end the debate, but it won't. 


Well, there are many operators in math.  For example I like to define middle class as one standard deviation from the mean, upper middle class as 2 stdev, etc.  Anyways, how do you pick the "middle" of the following?  Your definition of $34,000 as the lower bound doesn't even include the mode in middle class.

« Last Edit: December 13, 2012, 04:36:31 PM by dragoncar »

Bakari

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Re: 9 ways to know if you're middle class
« Reply #43 on: December 13, 2012, 05:07:06 PM »
Well, there are many operators in math.  For example I like to define middle class as one standard deviation from the mean, upper middle class as 2 stdev, etc.  Anyways, how do you pick the "middle" of the following?

Percentiles

We are talking about the middle of a population which has some number of dollars, not the middle of a mass of dollars which has some owner.

Mean isn't used because of the unevenness of the distribution.
Median prevents the numbers from being skewed by a relatively small number of multi-billionaires.

Of curiosity, do you have the numbers for what would constitute 1 std dev in either direction?

dragoncar

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Re: 9 ways to know if you're middle class
« Reply #44 on: December 13, 2012, 07:15:17 PM »
I wish I had the number.  A quick google told me not.  For a normal distribution, it would be mostly right (but the number below are obviously incorrectly skewed at the bottom)

0.15% would be destitute (>0th percentile)
2.35% would be poor  (>0.15th percentile)
13.5% would be lower middle class (>2.5th percentile)
68% would be middle class (>16th percentile)
13.5% would be upper middle (>84th percentile)
2.35% would be rich (>97.5th percentile)
0.15% would be filthy rich (>99.85th percentile)

Jamesqf

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Re: 9 ways to know if you're middle class
« Reply #45 on: December 13, 2012, 08:31:54 PM »
If the classes are lower, middle, and upper, then if you make under 34k you are lower class, over 75 you are upper class, and anything in between is middle.
Its simple math.
That should put an end to the debate...

but of course I know it won't

Yeah.  For one thing, it doesn't consider how much you have - that is, the size of your 'stash - which among other things does tend to affect one's perception of wealth.  That is, if you're making and spending say $250K per year, so that you're one or two paychecks from financial disaster, you probably don't think of yourself as rich, maybe not even middle class.  While if you make $50K but live comfortably by spending half that, so you've accumulated a $250K stash, you may think you're one of the rich.

Even by quintiles... well, I figure that I'm somewhere in the 4th quintile of income, most years (it does vary quite a bit), but well into 5th quintile of assets.  So referring back to that earlier post about class definitions, I'm an interesting hybrid betwee destitute, prole, and rich.  Which I'd expect to be true of a lot of Mustachians.

Erica/NWEdible

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Re: 9 ways to know if you're middle class
« Reply #46 on: December 13, 2012, 08:53:42 PM »
Yeah.  For one thing, it doesn't consider how much you have - that is, the size of your 'stash - which among other things does tend to affect one's perception of wealth.  That is, if you're making and spending say $250K per year, so that you're one or two paychecks from financial disaster, you probably don't think of yourself as rich, maybe not even middle class.  While if you make $50K but live comfortably by spending half that, so you've accumulated a $250K stash, you may think you're one of the rich.

Even by quintiles... well, I figure that I'm somewhere in the 4th quintile of income, most years (it does vary quite a bit), but well into 5th quintile of assets.  So referring back to that earlier post about class definitions, I'm an interesting hybrid betwee destitute, prole, and rich.  Which I'd expect to be true of a lot of Mustachians.

Well this is the heart of the problem with people who bitch about not being able to scrape by on a quarter-mil a year income. They don't FEEL like they are rich, so they say they aren't rich. But it is their financial actions and not their income that is driving that feeling of not-richatude, and if they got a $100k a year raise they'd STILL feel like they were barely scraping by...you know, because then the boat moorage fee would be so high. ::eyeroll::

Angelfishtitan

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Re: 9 ways to know if you're middle class
« Reply #47 on: December 14, 2012, 06:25:04 AM »
Yeah.  For one thing, it doesn't consider how much you have - that is, the size of your 'stash - which among other things does tend to affect one's perception of wealth.  That is, if you're making and spending say $250K per year, so that you're one or two paychecks from financial disaster, you probably don't think of yourself as rich, maybe not even middle class.  While if you make $50K but live comfortably by spending half that, so you've accumulated a $250K stash, you may think you're one of the rich.

Even by quintiles... well, I figure that I'm somewhere in the 4th quintile of income, most years (it does vary quite a bit), but well into 5th quintile of assets.  So referring back to that earlier post about class definitions, I'm an interesting hybrid betwee destitute, prole, and rich.  Which I'd expect to be true of a lot of Mustachians.

Well this is the heart of the problem with people who bitch about not being able to scrape by on a quarter-mil a year income. They don't FEEL like they are rich, so they say they aren't rich. But it is their financial actions and not their income that is driving that feeling of not-richatude, and if they got a $100k a year raise they'd STILL feel like they were barely scraping by...you know, because then the boat moorage fee would be so high. ::eyeroll::

Exactly, this is why it is important to use math and not people's feelings or assets to indentify what income bracket they truly are in. It should be an eye opener to them when they moan about ONLY making $100K/year and can barely scrape by when you point to the data that says they are in the top 15% so they are upper middle class. What is their excuse when apparently everyone below them are capable of living on less? This can be preceded or succeeded by a face punch as needed.

Now the key to really teaching people is objectivity, but the way to get them to actually hold onto an idea is examples. Hence why people like us are so great!

Gerard

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Re: 9 ways to know if you're middle class
« Reply #48 on: December 14, 2012, 07:25:53 AM »
Exactly, this is why it is important to use math and not people's feelings or assets to indentify what income bracket they truly are in.

I think we're all having two different discussions here, though. Class and income are much less correlated than we think they are, especially in non-meritocratic societies. Aside from the issue of assets vs. income, there are all those other class signifiers and behaviours that affect people's sense of who they "are" much more than their income does. You see this playing out in some really odd ways these days, as creative-class (thank you Richard Florida) cities maintain housing values, look to collective solutions, turn "blue", bla bla, while working-class towns and people watch the bottom drop out of their previously-valuable jobs and homes. Presumably there are ways for Mustachians to benefit by playing this distinction, or by choosing not to identify fully with one group (e.g., define for ourselves what constitutes a "good" neighbourhood). Especially as so many of us are actually members of the Nerd Class, and thus unwilling to chase after social distinctions that we see as superficial or pointless.

Angelfishtitan

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Re: 9 ways to know if you're middle class
« Reply #49 on: December 14, 2012, 09:43:31 AM »
I think we're all having two different discussions here, though. Class and income are much less correlated than we think they are, especially in non-meritocratic societies.

But that depends on what type of class structure you are talking about. I would say most of this thread's discussion is in regards to the generally used three class system of lower/middle/upper class which really is by income when we are talking about current issues being talked in the media. When you go to a different class descriptions (like chucklesmcgee's above) then income becomes less correlated, but it is not the topic du jour at least in the US at the moment.

With the current political climate here being big on either blaming our financial woes on the rich for not contributing their fair share or the poor for leaching the system I think it really adds truth to the discussion to make people honest for where they actually fall in the spectrum, along with helping actually burn the strawmen to the ground. The discussion seems to always center on saving the "dying middle class", but when your middle class is 80% of the country it must have been damn near everyone before it supposedly started dying.