The Middle Class Life Style Is Putting You In Debt?

[Weird Tolkienish Figure]

One thing I have noticed is that millenials are eschewing high responsibility jobs, like management, because they saw the stress it put their parents over, and for all of that you can buy a few more gizzmos a year, a few more square feet of house that you have to heat and clean. For what? I'm resisting management for now.

I have stuff, but all I need is a roof over my head, a good automobile, good music. I was at my happiest with just an apartment, car, laptop.

I need to eat but you'd ever see me you might think that's the last thing I need.

[Snydley]

My house cost 242K, is 30-45 minutes (depending on traffic) from Boston

Glad you clarified this in your later post because it didn't make sense to me either. You mean 30-45 minutes without any rush hour traffic.

I do not live far from you, and commuting to the Salem area from Boston itself could take close to 2 hours one way during rush hour(s). This is why your house is reasonably priced.

My commute to Boston is 25minutes without traffic, and 1-1.5 hours in rush hour (leaving my house ~6-9am, leaving work ~3-6pm). We bought a older (1961) 2100sf house in a middle of the road school district for $402K in 2011, the house is now probably worth ~500K. 1200-1500sq capes in my town probably sell in the high $300s now. New construction colonials are going for ~$700K.

[Weird Tolkienish Figure]

One reason I feel I live comfortably is that I feel that I can use technology to actually save me money. Consider:

1) A $500 laptop in 2015 dollars puts more information at your fingertips than perhaps anyone in the world was able to get in 1970 or so. I don't think anyone can deny that.

2) As a seasoned sysadmin, I am good at google-fu. I consider the best money-saving tool you have to be honest

3) Because of google, I was able to repair my washer machine, when the line plugged up, I was able to learn from google the proper technique for using a plumbing snake, and was able to unclog the line in 2011 without a plumber

4) Because of google, I was able to figure out why my dryer would not spin (belt snapped). Because of google, I was able to track down a supplier for hte belt and was also able to watch a video on youtube on how to thread the belts for my particular brand of dryer.

5) Because of google, I was able to find out why my washing machine later was not spinning. It was due to a bad sensor on the door. Through google, I learned that the best place to get a new sensor was sears, and I learned how to snip the wires, thread in a new wirenut, and wrap in electrical tape

6) because of google I was able to figure out why the dishwasher was not draining, that iw was most likely a jammed pump impeller. I was able to take apart the dishwasher and get out the screws that had jammed the impeller using tools I bought cheaply at harbor freight.

7) because of google I found out how to replace just the motor on my pool filter. I was also able to take a picture of how it was wired (220v, 2 hots, neutral, and ground) using my iphone, and then refer back to it later. I was able to find just a generic motor on Amazon for $110, instead of the whole filter for $1000+.

8) Through google was able to change the oil on my car by myself

9) through google i was able to change the lightbulb on my car by myself, instead of having to go the dealer (No joke, that is standard for my car, the lightbulb actually required the entire bumper to be taken apart). Someone on a forum for my car said they were able to go in through the wheel well and get out the light, and yep... I was able to go through the wheel well after removing the wheel

10) Through google I can properly maintain critical tools I own like snowblowers and I know how I will deal with problems like clogged carburetors if they come up in the future. Of course, I have kept the manuals, but I feel you get better advice online

11) through google, I open and close my pool myself. I did learn from my dad on this one

12) through google, I know where tradespeople hang out online, and I have account on all their forums (i don't "out myself" as a non-tradesperson). But they talk to each other a lot and you can learn a ****load from them (best brands, biggest pitfalls, best ways to do stuff). There is no way to learn more than from a professional. I heard a tradesmen say "better to have and not need, than to need and not have". I now buy all my tools whenever possible and consider the money an investment, and it pays off well IMO. "Measure twice, cut once". Best advice I ever heard. I had been doing it the wrong way for years.

13) through google I heard the advice of warren buffett, who said "be fearful when others are greedy, be greedy when others are fearful" and I bought my house in 2011, when the economy was still really bad. I don't put much stock in Zillow, but it puts my appreciation value at $50k and the neighbor's house sold for more than the Zillow value.

14) Services like netflix and hulu can save quite a bit of money over cable TV.

15) I have also learned how to save money on heating... how it's way cheaper to just have several rooms warm than your whole house. My oil heat thermostat does not ever go above 45, except on the coldest days where I worried a pipe will freeze.

16) Every time I successfully repair something, my confidence goes up.

17) Through credit karma and online credit reports, have a good overview of expenses and debt. The more information you have, the better.

I would say that DIY for repairs has saved me thousands over the past few years, since being a homeowner. All based on stuff I learned through the internet and the laptop that my company gave me.

Might have been possible pre-internet but my guess is it would have been much harder.

My parents think it's impressive to do all this stuff myself but I told them I just know how to search for information on the internet. I don't consider myself outstanding in the slightest but I do have a positive attitude (when it comes to this stuff that is, have issues elsewhere)

[Weird Tolkienish Figure]

Glad you clarified this in your later post because it didn't make sense to me either. You mean 30-45 minutes without any rush hour traffic.

I do not live far from you, and commuting to the Salem area from Boston itself could take close to 2 hours one way during rush hour(s). This is why your house is reasonably priced.

My commute to Boston is 25minutes without traffic, and 1-1.5 hours in rush hour (leaving my house ~6-9am, leaving work ~3-6pm). We bought a older (1961) 2100sf house in a middle of the road school district for $402K in 2011, the house is now probably worth ~500K. 1200-1500sq capes in my town probably sell in the high $300s now. New construction colonials are going for ~$700K.

Not here, you can buy a very decent 1 story ranch for sub $300K in a decent neighborhood. School system may be sketchy, don't have kids yet.

[disneysteve]

I am using median household income only to define "middle class" because it cuts down on variables such as location and specifics

But that's a problem. You can't just toss out pesky little details like location. Location is critically important to this discussion. You can't lump together Wall Street financial executives with Nebraska farmers and Florida retirees and draw any logical conclusions. What constitutes middle class in Manhattan is very different than it is in Arizona or Michigan. And, as I illustrated, even looking at state figures doesn't tell you much. Within 5 miles of my house, you can find everything from trailer parks to multi-million dollar mansions. What is affordable by whom really depends on where you are looking.

Can the median household income even sustain a middle class lifestyle in the majority of the areas in the U.S? If not then did the median income sustain a this lifestyle 30 years ago?

My definition of middle class is:
1. Makes the median household income
2. Lives in an average size(for the year) house
3. 2 kids attending public schools
4. 2 average cars
5. Can have some kind of retirement funds
6. Health insurance that is average(not a Cadillac insurance)

This is really the key question - Can a median income earner today afford a lifestyle that is comparable to that of a median income earner in the past? I would argue that they can. The problem is that the lifestyle that median earner is trying to live today is far more luxurious than their counterparts in the past.

What is an "average size" house? Like I said, in my immediate area, we've got everything from trailer parks to mansions. We've got homes built during the American Revolution in the 1700s and homes built within the past few years. What's average?

What's an "average car"? I drive a Toyota Camry, one of the 5 best-selling cars in the country. Is that an "average" car? I sure don't think so. I would classify it as a luxury vehicle compared to anything we owned when I was growing up. Almost everybody I know drives a far, far nicer car than what any of us drove 30 years ago.

I totally agree that wages have been stagnant.

I totally agree that, in some places, home prices have risen far faster than wages.

I totally agree that government inflation numbers don't accurately represent what real people are spending and paying for things on a day to day basis.

I just don't agree with making broad generalizations using national statistics to come to overreaching conclusions about affordability.

[ua_guy]

But that's a problem. You can't just toss out pesky little details like location. Location is critically important to this discussion. You can't lump together Wall Street financial executives with Nebraska farmers and Florida retirees and draw any logical conclusions. What constitutes middle class in Manhattan is very different than it is in Arizona or Michigan. And, as I illustrated, even looking at state figures doesn't tell you much. Within 5 miles of my house, you can find everything from trailer parks to multi-million dollar mansions. What is affordable by whom really depends on where you are looking.

This is really the key question - Can a median income earner today afford a lifestyle that is comparable to that of a median income earner in the past? I would argue that they can. The problem is that the lifestyle that median earner is trying to live today is far more luxurious than their counterparts in the past.

What is an "average size" house? Like I said, in my immediate area, we've got everything from trailer parks to mansions. We've got homes built during the American Revolution in the 1700s and homes built within the past few years. What's average?

What's an "average car"? I drive a Toyota Camry, one of the 5 best-selling cars in the country. Is that an "average" car? I sure don't think so. I would classify it as a luxury vehicle compared to anything we owned when I was growing up. Almost everybody I know drives a far, far nicer car than what any of us drove 30 years ago.

I totally agree that wages have been stagnant.

I totally agree that, in some places, home prices have risen far faster than wages.

I totally agree that government inflation numbers don't accurately represent what real people are spending and paying for things on a day to day basis.

I just don't agree with making broad generalizations using national statistics to come to overreaching conclusions about affordability.

So are you denying the national statistics then? You just see it as an issue of (lack of) effort and (poor) money management?

[disneysteve]

So are you denying the national statistics then? You just see it as an issue of (lack of) effort and (poor) money management?

I don't think national statistics are wrong. I just don't think they really tell you anything. The national median household income is 52K. That's great. Except in my town, the median is 88K, 70% higher than the national number. So how does discussing the national median tell you anything useful about our local economy?

The same is true when you look at housing prices. They vary significantly from place to place. In some places, they're much more in line with incomes; in other places, they're not.

And I would not say the issue is poor money management. I think the issue is lifestyle inflation. That's not just an individual issue as much as it is a societal issue. We've said it many times. The distinction between wants and needs is much different today.

[LivingAlmostLarge]

I will list a few zip code and those are what I consider within 30 minutes of boston. Lynn, MA no one I know consider that a 30-45 minute commute into boston and I don't think you should count time on weekend.

02492 $1.5 for house, $800k for smaller SFH that needs gut, 02482 $700k for SFH (needs 2 new bathrooms, new roof), 02090 $500k SFH (needs 2 bathrooms and on route 1), 02478 2 bd condo $475k.

Friends sold in 02482 2 bd condo for $550k, 02081 3 bd condo for $330k, 02472 3 bd SFH $500k.

There is variance obviously based on school district and proximity. But also 2011 was close to the bottom of the market and the prices have skyrocketed. But no I'd say most people within 30 minutes of boston during commuting hours would not be under $1M for a SFH.

But Disneysteve the book middle class trap looks at a lot of data showing that we're less well off now than before. I think it really is a difference of depending on the second income. Now there is no pension and no health insurance when you retire. Before you were cared for by the company you worked for. That is a huge difference i think for the middle class.

[Weird Tolkienish Figure]

But Disneysteve the book middle class trap looks at a lot of data showing that we're less well off now than before. I think it really is a difference of depending on the second income. Now there is no pension and no health insurance when you retire. Before you were cared for by the company you worked for. That is a huge difference i think for the middle class.

I'll be getting a pension, 401k, SS, and medicare.

A lot of people die after they retire anyway. I plan to work for as long as I can.

Directions from Needham and Wellsley show that they are farther from Boston than Lynn. Then again, I don't mind driving necessarily... good time to clear my head.

I can't wait to see what the economy looks like after Lizzie Warren and Bernie Sanders "improve" it.

[disneysteve]

Now there is no pension and no health insurance when you retire. Before you were cared for by the company you worked for. That is a huge difference i think for the middle class.

That's true for many, but I also think it depends. My father was self-employed (an accountant). He had no company pension or health care. He was responsible for his retirement savings (other than SS) and he's been gone for 23 years and was retired for a while before that. My wife's father was also self-employed (owned a shoe store). No pension for him either.

Certainly pensions used to be a lot more common but there were still many people who didn't have them and were responsible for their own retirement savings. Just as today, we constantly hear about 401k plans when the reality is that only about half of all workers have one. I don't. Never have. Probably never will.

Look, I'm not arguing that stuff isn't more expensive today. But I think, overall, we enjoy a much higher standard of living than we did 20 or 30 years ago. So when we try and say that a middle class income can't support a middle class lifestyle anymore, we're just not comparing apples to apples.

[Singuy]

Disneysteve, the reason why we are not looking at locations but using the national median is because it accounts for the majority of the people. Yes you can say that the median income for 90210 is 1.5million, but the majority of Americans just do not live in that area..so you can't based the entire argument on areas of outliers. Using this type of argument can lead to a 2million dollar house be considered as "middle class" for the area since that's the median price for all houses in that area (these are made up numbers but you get my point).

When we have an issue of wealth inequality, the median household income reflects what most Americans make. We use the median house pricing, and median lifestyle spending to compare. I believe it's the only way we can do an apple to apple comparison.

One can make the standard of living arguments (such as people now have convection ovens/60 inch tvs/ipads/iphones vs 20 years ago), but I actually believe electronics and certain goods are cheaper today than 30 years ago. What is NOT cheap today vs 20 years ago are houses/heathcare/retirement savings and higher education.

The average car is median price of the car sold for the year...and average sqft is the median sqft of all houses sold for that time. We are generalizing about the middle class, which is suppose to be the majority of Americans. No outliers are spoken for in my arguments.

[Fishindude77]

Steve's point about us enjoying a much higher standard of living is on the mark.

Everything in most aspects of our lives has improved immensely across the board. That comes at a cost. You can still live cheap, but most are unwilling to sacrifice all of the luxuries.

[ua_guy]

Steve's point about us enjoying a much higher standard of living is on the mark.

Everything in most aspects of our lives has improved immensely across the board. That comes at a cost. You can still live cheap, but most are unwilling to sacrifice all of the luxuries.

Like what?

[disneysteve]

the median household income reflects what most Americans make.

NO! It does NOT! That's where the problem arises, when people think that's what it means.

Median is just the middle number in a list of numbers. Let's say we look at 100 people. If 49 of them each earn 25K, 49 earn $1 million, and 2 earn 50K, the median will be 50K, but does that really give you an accurate picture of what's going on with that group? Of course not. Increase the sample size from 100 people to 300 million people and the same thing happens. The median still doesn't tell you what "most Americans make". It only tells you what the family in the middle of the list makes.

And the location still can't be ignored. The numbers vary dramatically based on geography. What constitutes middle class in one town might be much higher or lower than what it is in another.

[Singuy]

NO! It does NOT! That's where the problem arises, when people think that's what it means.

Median is just the middle number in a list of numbers. Let's say we look at 100 people. If 49 of them each earn 25K, 49 earn $1 million, and 2 earn 50K, the median will be 50K, but does that really give you an accurate picture of what's going on with that group? Of course not. Increase the sample size from 100 people to 300 million people and the same thing happens. The median still doesn't tell you what "most Americans make". It only tells you what the family in the middle of the list makes.

And the location still can't be ignored. The numbers vary dramatically based on geography. What constitutes middle class in one town might be much higher or lower than what it is in another.

Steve, when the results are skewed due to income inequality(as in the mean is much different than the median), then the median is a better indicator of what the actual "average" is on a bell curve. I know when you have a set of numbers like 1,5, 44, 45,1025. The median is 44 which means nothing in this case, but when you have a sample size of the entire wage earners population, then the number has ample statistical power to discuss the issue at hand.


You read a lot of statistical studies on healthcare and I'm sure you are more selective when it comes to the validity of article based on sample size. A study with 20 pts just doesn't have the external validity of a study with 2000 pts.

http://www.conceptstew.co.uk/pages/mean_or_median.html