The Middle Class Life Style Is Putting You In Debt?

[dawnwes]

Hard compared to someone who didn't waste time in college due to good major selecting. The calculation I did clearly puts the time waster at a great disadvantage.

I don't consider it time wasted. It was time finding out who you are. My husband got his MA at age 30. That is fine. I got my first MA at 23 and my second at 33. No big deal.

Life cannot be reduced to a dollar amount.

And picking a major that isn't as highly lucrative is just fine. Again, money isn't everything. If you have 3M in the bank and die at 63, who cares about the money.

Life is here to enjoy. Of course you have to make a living, but you may as well enjoy it too. I would never, ever, ever choose a STEM career. It isn't in my nature, my aptitude, or my desire.

I had $0 debt out of undergrad and about $10K out of grad school, which I paid off within 3 years.

I haven't even worked for 10 years after having kids.....I don't consider that a time waster either.

We have a middle class lifestyle and aren't in debt as the article states.

[LivingAlmostLarge]

There are quite a few programs with a 4 years master's. Where I went there was. Second, many engineers in HCOLA start at $70k, I know a bunch. Did you ever read Mr MM how he retired after working 8 years? And I wasn't assuming dentist made $120k. I assumed that Dentist had large student debt like your $400k net worth.

http://www.mrmoneymustache.com/2011/09/15/a-brief-history-of-the-stash-how-we-saved-from-zero-to-retirement-in-ten-years/

Look I'm with dawn that what you do should make you happy. There are PLENTY of careers with professional degrees and or graduate degrees that pay very little. PLENTY. But people are happy.

Yes there are specialist making $200-300k. And there are many people without professional degrees making that much and more. But how many? Obviously not that many or it would be the top 1% of earners. How many drs are specialist versus primary care? Or lower paid speciality like pediatrics or emergency room? Have you looked at how long it takes to be a specialist that makes that much? internship, residency, fellowship? You don't start making that at the earliest mid 30s.

According to Mr MM a savvy engineer is retired, enjoying life or pretty much anyone who saves and earned a decent income is done before the specialist even got started making $300k and paying off their $200k student loans.

Without a degree it's hard to get ahead nowadays. And it's always better to minimize debt. But it doesn't mean that going to college to say teach kindergarten is a waste of time because it pays peanuts. My friend teaches 3rd grade with a masters (she went to two private universities) and started out making $32k. She's not after almost 10 years making $45k. I feel bad but she is doing something she loves and I bow down to her sacrifice and dedication. So because she makes very little money she shouldn't have gone to school? She was fortunate to have parents who could pay for it and no students loans, but seriously should we tell people "you can only go to college if you can get a job that will pay off your student loans?"

Seems like college should only be for those rich enough to afford it. Of course right now the number being able to afford it is getting less.

[amastewa93]

I don't think that college has to be expensive every time. It is about what you do while you are there. I got a degree in communications and spent my time in school interning, working full time and making sure I was the most marketable I could possibly be once I got out of college. If I spent my time just studying, I wouldn't have gotten anywhere. Regardless of how much money you spend going to school, if you don't put the work in while you're there, you won't get anywhere.

[Weird Tolkienish Figure]

we tell people "you can only go to college if you can get a job that will pay off your student loans?"

Not at all. But who is lucid enough at age 18 to realize the sacrifices that a lifetime of debt may come with?

[Singuy]

I value quality time(enjoyment time) more than anything. But there's a strong correlation between time wasted(at work/school) and lack of money.

Let me give you an example.

Person A and Person B has the same spending habits and will stay the same till they die. Lets assume there's no inflation and no taxes to make the math easier.

Person A is 25yo makes 50k/year
-35k for living expenses
-5k for vacations
-saves 10k a year
Need to work 45 years to retire at 70
Saved up 450k, yields 11 years of retirement fund till 81yo

Person B is 25 making 100k/year
-35k for living expenses
-5k for vacations
-saves 60k/year
Needs to work 23 years
saved up 1.38mil, enough retirement funds for 34 years till 82yo

(45 years - 23 years)x2080hours = 45760 hours in your life time extra you can spend with your family.

If you add 7 more years worked at 60k saved per year, then you'll have enough to travel the world and see new things

Most people are NOT working for "enjoyment". Most work related tasks are mundane. If you worked all your life, then you'll have a really hard time remembering the meaningful experiences on your deathbed because every working day felt the same.

Most will tell you "time is money", I argue that money is time. The more money you make, the more valuable time you save. Life is too short, you can't spend your entire life working. You guys are right, life is not about making money. It's about creating valuable time with your loved ones, travel the world, and do meaningful things you enjoy. But in order to create time, you have to make money.

[Weird Tolkienish Figure]

The more money you make, the more valuable time you save.

That may be possible, but I feel that people who hate their jobs (and lives) tend to fill the void with needless spending (toys, substances, etc.), or other forms of self destruction, which generally offsets the more money made.

To each his own. To me it's more cost effective to have a job that I like, and get enjoyment in non-monetary or cheaper things.

[LivingAlmostLarge]

Maybe but your premise is wrong. You are assuming because you make less you save less. The basic premise of what everyone else I think gets is it doesn't matter what you make it only matter what you save and spend. There are many people already retired and already enjoying life without the income singuy you feel is necessary to retire or live comfortably. Ever read Jacob and extreme early retirement?

Now do most people want to live that way? Probably not. But there are many people who might make $50k and live on $25k or less. Also the $100k guy will pay more in taxes. It's more fair to make them both earn the same in your scenario. Because the $50k person is also getting extra income from earned income credit and stuff.

[Singuy]

Maybe but your premise is wrong. You are assuming because you make less you save less. The basic premise of what everyone else I think gets is it doesn't matter what you make it only matter what you save and spend. There are many people already retired and already enjoying life without the income singuy you feel is necessary to retire or live comfortably. Ever read Jacob and extreme early retirement?

Now do most people want to live that way? Probably not. But there are many people who might make $50k and live on $25k or less. Also the $100k guy will pay more in taxes. It's more fair to make them both earn the same in your scenario. Because the $50k person is also getting extra income from earned income credit and stuff.

I really don't think that's the case. People who makes less ends up spending a higher percentage of their income on clothing, housing, food, and other necessities.

I think the premise of thinking just because one makes more, one need to spend more (and vice versa) is wrong(and why everyone, no matter how much one makes end up in debt). My example above only accounts for bare necessities spending for both Person A and Person B. The only assumption I have is that both people have similar lives.

The person who makes 50k/year living on 25k/year shouldn't be any different from the person making 100k/year and living on 25k/year. The only difference is, 50% of the 50k/paycheck is gone while only 25% of the 100k/year person is used.

Yes we can factor in taxes but if you add in the fact that the person who makes more has better investment opportunities, this individual should come out ahead in the long run despite higher taxes.

[Weird Tolkienish Figure]

I really don't think that's the case. People who makes less ends up spending a higher percentage of their income on clothing, housing, food, and other necessities.

Not necessarily. Lifestyle often adjusts to fit budget.

[Singuy]

Not necessarily. Lifestyle often adjusts to fit budget.

Which is something we strongly discourage on this forum. It's savingadvice after all.

I mean the only way Disneysteve didn't end up in a mountain of debt and can retire at a reasonable time is because his lifestyle did NOT adjust to his income (or status). Tomhole's income did adjust to his lifestyle and got himself into mountains of debt...now he lives more modestly.

[corn18]

I was chatting with my DW yesterday about how we managed to live on $18,000 / year back in 1989 (about $40,000 nowadays). We had everything we needed and were happy. Then I asked if she would be willing to give that a go now so we could catch up on retirement. Still waiting on an answer.

[corn18]

Which is something we strongly discourage on this forum. It's savingadvice after all.

I mean the only way Disneysteve didn't end up in a mountain of debt and can retire at a reasonable time is because his lifestyle did NOT adjust to his income (or status). Tomhole's income did adjust to his lifestyle and got himself into mountains of debt...now he lives more modestly.

I often wonder what it would be like had I done everything right along the way and had a greater opportunity to do different things with the income I have now. Maybe it's all for the best as I get set for retirement.

[JoeP]

Not necessarily. Lifestyle often adjusts to fit budget.

Which is something we strongly discourage on this forum. It's savingadvice after all.

This forum absolutely encourages people to adjust their lifestyle to fit their budget...when that budget goes down!

What singuy said though is mostly true in more cases.

[amastewa93]

I don't know if you guys are giving people who are college-age enough credit. When I was 18, my parents had fully prepared me for the reality that I would be paying for school on my own. I think part of this is getting the "life" education you need before you are sent out into the "real world."

[disneysteve]

I think some different issues are getting blended together here. Let me separate out one of the, which Singuy touched on.

The costs of many necessities of life are regressive, meaning they suck up a higher percentage of income for folks earning less.

For example, a gallon of gas is the same price whether you earn $7/hr or $70/hr. When the price of gas shoots up, it has a much greater impact on the $7/hr person than it does on the $70/hr person.

Virtually everyone is guilty of some degree of lifestyle inflation. As income rises, we improve our standard of living. I would argue that that's kind of the point to some degree. I didn't go through 4 years of college, 4 years of medical school, and 3 years of internship and residency to live my life like a poor student. I did it so that my wife and daughter and I could enjoy some niceties that life has to offer. As I type this message, I'm sitting in a lovely 2-bedroom, 2-bath condo in Orlando on day 8 of a 14-day vacation. Necessity? Of course not. Could we instead have stayed home and put a few thousand extra dollars into our investment accounts? Sure. But that's not how we choose to live our lives.

As long as there is an appropriate level of balance and you take care of needs first - including preparing for the future - there's nothing wrong with spending and enjoying yourself.