are you aware of inflation?

[rennigade]

In Maryland where I live, the median income is already $72K. Median!

Maryland also has the most millionaires out of any state. Not sure where you live in MD but anywhere within 40 miles of WDC in any directions is a bubble. Inflation is more seen in this little area. I live within that bubble. Cant wait to get out of this rat race of a place. T minus 2 years!

[disneysteve]

a family earning a median income of $52K is poor/lower class in a majority of the country in my opinion.

In Maryland where I live, the median income is already $72K.

I think "poor" might be exaggerating but I totally get your point.

In my town, the median household income is $68,000. Even though we earn well above that, we still struggle much more than we did 10 or 15 years ago. Prices of everything have gone up steadily over time although my income hasn't changed. Food, gas, utilities, entertainment, clothing, whatever, is more expensive today but income hasn't risen to keep up. You can't help but laugh every time the government comes out and says inflation is flat or 1 or 2% when the reality is much different than that.

[avil_saver36]

Maryland also has the most millionaires out of any state. Not sure where you live in MD but anywhere within 40 miles of WDC in any directions is a bubble. Inflation is more seen in this little area. I live within that bubble. Cant wait to get out of this rat race of a place. T minus 2 years!

Yup, I live in that bubble. Too much federal government money is being thrown away at mediocre people. If you want to see how your government wastes your tax dollars, visit our little WDC area.

Still, WDC is not a bigger bubble than other hotspots like NYC, SF, Seattle, and even LA. My house is very affordable ($370K). I do have a lot of debt (part of the reason I feel poor), but the larger issue is that incomes like $150K just do not go that far in any major metropolitan of this country WDC included.

P.S. I do like this bubble though. Perfect weather, free museums and zoo, lots of places to go to (NYC, Pennsylvania, Carolinas, Virginia...all within driving distance).

[avil_saver36]

I think "poor" might be exaggerating but I totally get your point.

In my town, the median household income is $68,000. Even though we earn well above that, we still struggle much more than we did 10 or 15 years ago. Prices of everything have gone up steadily over time although my income hasn't changed. Food, gas, utilities, entertainment, clothing, whatever, is more expensive today but income hasn't risen to keep up. You can't help but laugh every time the government comes out and says inflation is flat or 1 or 2% when the reality is much different than that.

Agree. 10 years of income stagnation can totally bring you a notch or two down in terms of "economic class". This is what I am trying to avoid - before income stagnation or even job uncertainty hits me, I want to be totally debt free and even have some substantial assets, so I can deal with the inflation better. I hope you are dealing with it OK (from your posts, you have a daughter already in college, so hopefully your debt obligations are over).

[disneysteve]

I hope you are dealing with it OK (from your posts, you have a daughter already in college, so hopefully your debt obligations are over).

Our frugal habits have definitely made it easier but even that has its limits. The rough part, that we don't really feel, is that we aren't saving as much as we used to. That's where the excess has come from. That will catch up with us eventually, like when the house needs a new roof or some other major expense comes along.

On the flip side, as you noted, our daughter is in college. She's entering her 2nd year so we have 3 more years of college costs. After that, we'll be done with those bills and that will free up money that can go to other things. That will help beef up the savings at that point.

[ua_guy]

Instead of looking at wages in comparison to prices, we should be looking at wages in comparison to productivity. US Labor has become incredibly cheap given productivity gains for US employers over the last 30 years. Wages haven't paced productivity, and that's an issue. Essentially we're doing more, producing more, harder, faster, smarter, better, and we aren't being paid for it.

But let's also talk prices. Here's a few that have risen out of step with inflation, and I can verify it with the seat of my pants, and my own expense tracking.

Food
Gas
Education
Housing and land prices (especially where highly skilled employees are needed)
Healthcare

In addition, the employment negotiation is increasingly favoring the employer. Healthcare and retirement are the two most egregious categories of where fortune 500 employers have shifted the expense, risk, and burden to employees. Pensions are a relic of the past.

So while we're arguing steak prices, or talking about 'buying power' and eschewing cable TV and other discretionary expenses in the same sentence, Retirement and healthcare saving and spending take 30% off the top of my annual income. Tell me that's historically normal, and I'll show you the door.

Inflation statistics are only a small and not very accurate picture of the cost burden on US Citizens....

[corn18]

Instead of looking at wages in comparison to prices, we should be looking at wages in comparison to productivity. US Labor has become incredibly cheap given productivity gains for US employers over the last 30 years. Wages haven't paced productivity, and that's an issue. Essentially we're doing more, producing more, harder, faster, smarter, better, and we aren't being paid for it.

But let's also talk prices. Here's a few that have risen out of step with inflation, and I can verify it with the seat of my pants, and my own expense tracking.

Food
Gas
Education
Housing and land prices (especially where highly skilled employees are needed)
Healthcare

In addition, the employment negotiation is increasingly favoring the employer. Healthcare and retirement are the two most egregious categories of where fortune 500 employers have shifted the expense, risk, and burden to employees. Pensions are a relic of the past.

So while we're arguing steak prices, or talking about 'buying power' and eschewing cable TV and other discretionary expenses in the same sentence, Retirement and healthcare saving and spending take 30% off the top of my annual income. Tell me that's historically normal, and I'll show you the door.

Inflation statistics are only a small and not very accurate picture of the cost burden on US Citizens....

Well said.

[disneysteve]

Something that isn't often mentioned around here is taxes. That's one thing that kills us.

Property taxes go up every year. When we bought our house, we paid a little over $3,000/year. Now, it's over $7,000/year.

Social Security tax has gone up steadily. The rate hasn't changed, so the politicians love to say how the tax has been flat for years. But the income cap changes annually so more and more and more of my income has been subject to that tax. In my mind, that's the same as if the rate had gone up. The end result is I pay more in taxes. Since I began working in 1993, the cap has gone from $57,600 to $118,500 so where I used to pay the tax for part of the year, I now pay it for the entire year, essentially doubling my tax.

[avil_saver36]

What's "also" hitting the middle class very hard is the insane taxation system. The single biggest increase from 15% to the 25% bracket takes place at incomes around $75K. That's insane. $75K income is nowhere close to being comfortable enough to give away a quarter of additional dollars earned to the federal government alone.

The very top tax rates of 33% kick in too much later. Most people will never earn that kind of money.

Also, the phasing out of the SS taxes at $117K (or something like that) makes the middle class bear the entire brunt of that pyramid. Together, the federal and SS taxes totally crush incomes around $125K. You need to earn either less than $80K or more than $200K as a household to get a "tax relief". The taxes are designed to wipe out the middle class.

And finally, there are some states where property taxes are sky high and continue to rise. So your typical average homeowner Joe Schmuck is taken to the cleaners by his local county as well.

Edit: Combining all points mentioned on this thread, a middle class Joe Schmuck will pay an effective tax near 30% on incomes around $125K. He will probably pay 25% on housing if he is lucky, and 10% on healthcare (again if he is lucky). He should be thinking about retirement and saving at least 10%. So That's 75%. Just gone like that.

What's left is 25% or around $30K per year or around $2.5K. This is for the student loans, car loans, food, clothing, activities for kids...so and you are also supposed to take vacations right?

[corn18]

The very top tax rates of 33% kick in too much later. Most people will never earn that kind of money.

All great points. Just wanted to clarify that the top federal tax bracket was reinstated at 39.6%

[LivingAlmostLarge]

Yes i am a little stunned honestly how much annually health insurance premiums go up every year. Its more than our raises. That alone negates the raise honestly.

Not talking about the rest of retiremnt savings, food, gas, utilites. But just that one little thing in thr paycheck.

[Fishindude77]

Taxes are my biggest beef too.
A reduction in taxes would put a whole bunch of real, spendable money back into all of our pockets and back into the economy.

[disneysteve]

Yes i am a little stunned honestly how much annually health insurance premiums go up every year.

I'm long past being surprised by those hikes but they still hurt the wallet, especially when there is no annual raise. So each year, my take home pay gets lower and lower as insurance premiums get higher and higher.

This year, when we were policy shopping, my partner was attracted to one plan that definitely had better coverage than our existing plan. He said it was "only" $100/month more. That's very nice but I told him that unless he was raising my pay by at least that much, I'd stick with the plan we had. I'm not sure where he thought I would magically come up with an extra $100/month.

[Joan.of.the.Arch]

The stats on the income side mean absolutely nothing if you aren't taking debts in the equation.
Student debts in the last 7 years alone have increased something like 220%. Credit card debt has exploded.

I don't know about student loan debt, but I don't think you can say that credit card debt has exploded. Take a look at these graphs and charts which look at credit card debt from many angles over time. The sources of info are noted with each. http://www.cardhub.com/edu/credit-card-debt/

Sorry, it is just one of my pet peeves that people talk about how highly in credit card debt are USAmericans. Well under half of USAmericans even have credit card debt. I do not like to reinforce the idea that "everybody has debt; it is just how things are done." Because those who do have debt that they ought to work on paying down don't need to be told that it is an expected, normal thing, that they are just like everybody else.

[snafu]

This year inflation has been slamming me in the wallet nearly daily. Yesterday gas went up .25 [cents] per litre, that's about $ 1. a gallon and we live in the oil patch. Oil has dropped from around $ 100. per bbl to $ 43. per bbl, rigs are shutting down as quickly as they can and unemployment has doubled since the drop.

The cost of food has escalated beyond belief, I'm no longer buying beef but checking the ads noticed a good T-bone steak is now $ 32. kilo about $ 14.50 lb., poor quality chicken $ $ 3. lb,, lettuce $ 3. a head etc.

I've recently been discharged from hospital having had a serious heart attack and a couple of lessor which resulted in surgery. The new type/brand blood thinner I'm prescribed is not covered on our medical plan and I nearly stroked when I learned 30 tablets cost $ 300. I'm trying to find out if I can switch to the common kind that's covered...this is scary.