Can we have an 'honest' discussion about money and middle class income?

[RedHairedLady]

High income families are quite common here in DC and nearby counties, so I know plenty of people with HH incomes 250K and over. What I don't understand is how some of them consider themselves the solidly middle class and believe that 500K is upper middle class.lol

That's what I'm trying to figure out! Maybe in extremely high cost of living areas, like D.C., NYC, and the coasts, $250,000 is just middle class.

 

But here in the Midwest (I'm in Ohio), $100,000 can get you a nice upper class life style. $250,000 is wealthy. A 3,000+ square foot new home, on several acres of land, in an exclusive suburb with excellent public schools only goes for about $250,000 here.

 

I can't fathom earning $250,000 a year and thinking of myself as regular middle class. Maybe if the person earning that much is comparing themselves to the guy who makes a million a year, they might be "middle class". But compared to the average American family with a $60,000 a year income, they certainly aren't.

Edited March 14, 2013 by RedHairedLady

[encoder]

 

High income families are quite common here in DC and nearby counties, so I know plenty of people with HH incomes 250K and over. What I don't understand is how some of them consider themselves the solidly middle class and believe that 500K is upper middle class.lol

That's what I'm trying to figure out! Maybe in extremely high cost of living areas, like D.C., NYC, and the coasts, $250,000 is just middle class.

 

But here in the Midwest (I'm in Ohio), $100,000 can get you a nice upper class life style. $250,000 is wealthy. A 3,000+ square foot new home, on several acres of land, in an exclusive suburb with excellent public schools only goes for about $250,000 here.

 

I can't fathom earning $250,000 a year and thinking of myself as regular middle class. Maybe if the person earning that much is comparing themselves to the guy who makes a million a year, they might be "middle class". But compared to the average American family with a $60,000 a year income, they certainly aren't.

 

I grew up in Toledo. All my family is there, and I visit often, but not often enough. Where I live now, in San Francisco, the economic realities are vastly different. My wife and I make just over that $250k milestone when you include incentive pay and option vesting. While we are comfortable, especially now without children, we are certainly middle class. Here, assuming you want under 1 hour one-way commute to work, you cannot buy a 2br home -- condo included -- for under $700k in any decent neighborhood. If you want real selection in your home buying experience, you're getting close to, if not over, $1MM. At that size, mortgages are non-conforming, and you often need 10-20% down.

 

Moreover, prices and certainly taxes are generally higher. California state income tax is about 10% at our bracket, though that does include long term disability insurance.

 

But, of course, other things cost the same. The Mercedes we bought -- certainly not a trapping of conventional middle class life where I grew up -- costs the same here as it does in Ohio. Other consumer products like computers and TVs are the same.

 

I would not go back to Ohio and take the pay cut and cheaper housing for several reasons, so I'm not complaining, and even here we are well off and that is a product of some luck and a lot of hard work and tenacity. And some of our situation is, as you mentioned earlier, from the help of parents. But only some. My parents couldn't have paid for my school if they tried. In fact support in my family the last several years has flowed the opposite direction and I'm blessed that I can help my parents weather the storm of this recession. But my wife's parents did pay for her school, all the way through MBA, and for her to study abroad, and our wedding, and for her first car. But she has capitalized on that and she works incredibly hard -- often times when things blow up at work she works literally all through the night. She works harder than I do for, honestly, about 40% of what I make.

[RedHairedLady]

 

 

High income families are quite common here in DC and nearby counties, so I know plenty of people with HH incomes 250K and over. What I don't understand is how some of them consider themselves the solidly middle class and believe that 500K is upper middle class.lol

That's what I'm trying to figure out! Maybe in extremely high cost of living areas, like D.C., NYC, and the coasts, $250,000 is just middle class.

 

But here in the Midwest (I'm in Ohio), $100,000 can get you a nice upper class life style. $250,000 is wealthy. A 3,000+ square foot new home, on several acres of land, in an exclusive suburb with excellent public schools only goes for about $250,000 here.

 

I can't fathom earning $250,000 a year and thinking of myself as regular middle class. Maybe if the person earning that much is comparing themselves to the guy who makes a million a year, they might be "middle class". But compared to the average American family with a $60,000 a year income, they certainly aren't.

 

I grew up in Toledo. All my family is there, and I visit often, but not often enough. Where I live now, in San Francisco, the economic realities are vastly different. My wife and I make just over that $250k milestone when you include incentive pay and option vesting. While we are comfortable, especially now without children, we are certainly middle class. Here, assuming you want under 1 hour one-way commute to work, you cannot buy a 2br home -- condo included -- for under $700k in any decent neighborhood. If you want real selection in your home buying experience, you're getting close to, if not over, $1MM. At that size, mortgages are non-conforming, and you often need 10-20% down.

 

Moreover, prices and certainly taxes are generally higher. California state income tax is about 10% at our bracket, though that does include long term disability insurance.

 

But, of course, other things cost the same. The Mercedes we bought -- certainly not a trapping of conventional middle class life where I grew up -- costs the same here as it does in Ohio. Other consumer products like computers and TVs are the same.

 

I would not go back to Ohio and take the pay cut and cheaper housing for several reasons, so I'm not complaining, and even here we are well off and that is a product of some luck and a lot of hard work and tenacity. And some of our situation is, as you mentioned earlier, from the help of parents. But only some. My parents couldn't have paid for my school if they tried. In fact support in my family the last several years has flowed the opposite direction and I'm blessed that I can help my parents weather the storm of this recession. But my wife's parents did pay for her school, all the way through MBA, and for her to study abroad, and our wedding, and for her first car. But she has capitalized on that and she works incredibly hard -- often times when things blow up at work she works literally all through the night. She works harder than I do for, honestly, about 40% of what I make.

Hello fellow Buckeye (or ex-Buckeye), ha, ha! I'm in the Cleveland area.

 

I used to work for a mortgage company back in the late 90's, that bought first time homebuyer loans from other banks around the country, to be serviced. One of our biggest programs was from California, mostly Northern California. It always amazed me when I'd see the loan files from California, and how $300,000 would only buy a 1,200 square foot shoebox like ranch house. So, I believe you about how expensive the housing is there.

 

My husband grew up in Ohio and Texas, and his father and youngest siblings moved to California, after his mother died, when my husband was 19. My husband came back to Ohio after that. His dad passed away some years ago, but his youngest sister and some other relatives still live in CA, I think in Inglewood. They love it there.

 

Now I feel the opposite way - I wouldn't move to California if someone paid me, LOL! I'm too afraid of all the natural disasters there, and with the kind of income my husband and I can earn, even taking into account the higher average incomes in CA, we would have a far lower standard of living than we do here in Ohio, and we would never be able to become homeowners, either.

 

Wow, your wife has been very fortunate to have parents who could help her so much! I'm glad she appreciates it, and works hard. And I'm glad that you are helping out your parents. I have 5 siblings, and ironically and sadly, the one who helps our widowed mother out the least, financially and otherwise, is the only one who is well off financially.

Edited March 14, 2013 by RedHairedLady

[encoder]

I don't usually share these sorts of details but then again, CreditBoards often breaks the barrier of what is usually considered "polite conversation."

First, once a buckeye always one. The OSU-Michigan game is still bigger than the Superbowl to me, 5 years after moving.

But your last comment is something I found I could relate to.

Growing up, we had a very close-knit extended family. My dad has 6 siblings and all but one lived within 2 blocks and we spent a lot of time together. My cousins are like my brothers.

Five of his 6 siblings are, like him, average middle class wage earners. They were making $25-35k, which was in the late 80s and 90s more like 40-50k is now, which is probably about what most of them earn. A good enough income. You can raise a family on it if you had a second income or were good at making a dollar stretch.

One of them, though, the oldest sibling, worked his butt off in the 70s and earned a Journeymans card and "got in" at the local Jeep factory. That's the mentality of good jobs where I grew up. If you were lucky, you "got in" some where. But nobody else in my family would have worked that opportunity like my uncle. He worked, often, 80-100 hour weeks. Now, a lot of this was because of the nature of his job as a millwright (fixing the machines when they broke) involved a decent amount of sitting around until something broke, making those long hours possible. But he was earning 75-100k+ which today is a good living and back then was simply fantastic.

As a kid, I observed all this. His nice cars. His nice things. His nice vacations. And when my aunts and uncles, but not really my own parents, would have hardships any thought of asking him for a loan or a little cash to help out or a favor was always talked about in hushed tones and rolled eyes. "He'll tell you he doesn't have the money to help, that he would if he could." And of course that was absurd to these people and as a kid that made an impression on me.

Today, I'm fortunate to be in a position similar to his. I also work long hours (As a Software Engineer), and I also make quite a bit more than my siblings and cousins. And honestly for the most part I don't help out family financially. My parents and to a lesser extent my siblings, yes. And I try to give really great graduation and wedding gifts, things like that. But all this set-up was to make this point:

To my aunts and uncles, used to living pay-to-pay, used to literally having $100 or less in their checking account on a regular basis, used to not having any meaningful savings, used to running up credit card bills and paying them slowly down, used to filing bankruptcy, to these people, knowing that their older brother made six figures and surely had at least a few thousand bucks liquid in his account at any given time, to them, hearing him say he had "no money" is absurd and a little insulting.

But I get it now a little. I'm 31. I started my career almost exactly 10 years ago. The first 5 years or so, I lived that same way. I get paid, and try to "spread it out" till my next pay. I had student loans to pay and I wasn't earning all that much. My first job as a "programmer" paid $12/hr for 20-25 hours a week.

As I progressed in my career, and grew more skilled at salary negotiation, and knew how much I was really worth, that began to change.

And once I crossed that line, from paycheck to paycheck to always having money to having a few months expenses to having a few months income, once I progressed up that ladder... I am not interested in EVER going back to $10 checking account balances. You start to feel like you need it because of how valuable that security becomes. If a cousin, who is literally broke, asked me for a few hundred bucks, I'd do it probably. As a gift, never a loan with family. But a few thousand? No way. Because I no longer have that mentality that every dollary in my account is spendable. It's not. It's not.

Anyway, that's a lot of writing, sorry for going on so long. But I thought it could be an interesting POV.

Now, in his older age, my uncle does help his parents -- my grandparents -- and he has softened a little.

I hope this wasn't boring or seemingly callous. Somebody fortunate SHOULD help others. And I fully expect to: While we have earned a good living these last few years, I'm still just beginning this and I expect as we build more wealth into the future that I will find good uses for it. But yeah, your situation may be different, but this is how it was and is in my family and with me.

[RedHairedLady]

 

I don't usually share these sorts of details but then again, CreditBoards often breaks the barrier of what is usually considered "polite conversation."

First, once a buckeye always one. The OSU-Michigan game is still bigger than the Superbowl to me, 5 years after moving.

But your last comment is something I found I could relate to.

Growing up, we had a very close-knit extended family. My dad has 6 siblings and all but one lived within 2 blocks and we spent a lot of time together. My cousins are like my brothers.

Five of his 6 siblings are, like him, average middle class wage earners. They were making $25-35k, which was in the late 80s and 90s more like 40-50k is now, which is probably about what most of them earn. A good enough income. You can raise a family on it if you had a second income or were good at making a dollar stretch.

One of them, though, the oldest sibling, worked his butt off in the 70s and earned a Journeymans card and "got in" at the local Jeep factory. That's the mentality of good jobs where I grew up. If you were lucky, you "got in" some where. But nobody else in my family would have worked that opportunity like my uncle. He worked, often, 80-100 hour weeks. Now, a lot of this was because of the nature of his job as a millwright (fixing the machines when they broke) involved a decent amount of sitting around until something broke, making those long hours possible. But he was earning 75-100k+ which today is a good living and back then was simply fantastic.

As a kid, I observed all this. His nice cars. His nice things. His nice vacations. And when my aunts and uncles, but not really my own parents, would have hardships any thought of asking him for a loan or a little cash to help out or a favor was always talked about in hushed tones and rolled eyes. "He'll tell you he doesn't have the money to help, that he would if he could." And of course that was absurd to these people and as a kid that made an impression on me.

Today, I'm fortunate to be in a position similar to his. I also work long hours (As a Software Engineer), and I also make quite a bit more than my siblings and cousins. And honestly for the most part I don't help out family financially. My parents and to a lesser extent my siblings, yes. And I try to give really great graduation and wedding gifts, things like that. But all this set-up was to make this point:

To my aunts and uncles, used to living pay-to-pay, used to literally having $100 or less in their checking account on a regular basis, used to not having any meaningful savings, used to running up credit card bills and paying them slowly down, used to filing bankruptcy, to these people, knowing that their older brother made six figures and surely had at least a few thousand bucks liquid in his account at any given time, to them, hearing him say he had "no money" is absurd and a little insulting.

But I get it now a little. I'm 31. I started my career almost exactly 10 years ago. The first 5 years or so, I lived that same way. I get paid, and try to "spread it out" till my next pay. I had student loans to pay and I wasn't earning all that much. My first job as a "programmer" paid $12/hr for 20-25 hours a week.

As I progressed in my career, and grew more skilled at salary negotiation, and knew how much I was really worth, that began to change.

And once I crossed that line, from paycheck to paycheck to always having money to having a few months expenses to having a few months income, once I progressed up that ladder... I am not interested in EVER going back to $10 checking account balances. You start to feel like you need it because of how valuable that security becomes. If a cousin, who is literally broke, asked me for a few hundred bucks, I'd do it probably. As a gift, never a loan with family. But a few thousand? No way. Because I no longer have that mentality that every dollary in my account is spendable. It's not. It's not.

Anyway, that's a lot of writing, sorry for going on so long. But I thought it could be an interesting POV.

Now, in his older age, my uncle does help his parents -- my grandparents -- and he has softened a little.

I hope this wasn't boring or seemingly callous. Somebody fortunate SHOULD help others. And I fully expect to: While we have earned a good living these last few years, I'm still just beginning this and I expect as we build more wealth into the future that I will find good uses for it. But yeah, your situation may be different, but this is how it was and is in my family and with me.

That was interesting - thanks for sharing that!

 

"He'll tell you he doesn't have the money to help, that he would if he could." That describes my sister to a tee, LOL! No one in my family asks for her for help, financially, but that's exactly what she would say if someone did!

 

You're probably right - maybe the mentality about money changes when someone is well off. My sister and her husband easily have a combined income well into the high six figures, which goes very far here in Ohio, as you know, but think that they are just regular middle class. Which is amusing to me, because my sister and I grew up poor, as did her husband. If I wasn't related to them, and just happened to meet them at work, in a social situation or whatever, I would assume that both of them had grown up in families with money, just from the way they act. I guess when you make more money, you want more things, and more expensive things - the bigger house, the nicer car, nice vacations, etc., and suddenly that big salary you earn doesn't seem so big any more.

 

Have you ever read a book called "Dough"? It came out a few years go. The author is a Jewish guy, who grew up in a working class family in NYC. His mother worked for free for decades, for her brothers, his uncles, who owned a bakery. He grew up thinking his uncles were poor, but after one uncle passed away, and the other had to be put into a nursing home, he found out that his uncles had millions of dollars in bank accounts, stocks, bonds, and cash. But here they lived an extremely bare bones existence, and never helped out his parents or him financially, and never gave his mother a paycheck for working in the bakery all those years. I can't imagine being that well off, and not helping out my family, but to each their own. I guess though, if they had been more generous with their money, they might not have accumulated all those millions in the first place though, so it's like a catch 22.

[encoder]

I'll check the book out. Aside from "rich dad, poor dad" I don't really remember any book reccomendations that didn't work out well.

 

I feel like "charity begins at home." My wife and I gave some to St Jude and other things I use like NPR and PBS, but most of the money we give is to my parents and siblings -- the former a couple of hard-working people who have been robbed of prosperity in their 50s by this awful recession. Not to mention the fact that most working class people have been experiencing many recessionary symptoms for an awful lot longer than the last 5 years. Real income growth totally flat for 30 years for middle class for example. The latter, my two sisters, trying to get a start, saddled by SL debt, unable to find the jobs now they always were led to believe were there if only they worked hard and graduated. I, too, couldn't imagine living around family growing up poor while I was sitting on untold wealth.

[RedHairedLady]

 

 

I'll check the book out. Aside from "rich dad, poor dad" I don't really remember any book reccomendations that didn't work out well.

 

I feel like "charity begins at home." My wife and I gave some to St Jude and other things I use like NPR and PBS, but most of the money we give is to my parents and siblings -- the former a couple of hard-working people who have been robbed of prosperity in their 50s by this awful recession. Not to mention the fact that most working class people have been experiencing many recessionary symptoms for an awful lot longer than the last 5 years. Real income growth totally flat for 30 years for middle class for example. The latter, my two sisters, trying to get a start, saddled by SL debt, unable to find the jobs now they always were led to believe were there if only they worked hard and graduated. I, too, couldn't imagine living around family growing up poor while I was sitting on untold wealth.

I never read Rich Dad, Poor Dad. My brother did though, and said he liked it. I read a lot of memoirs and nonfiction, along with books with my kids. My teenage daughter and I read a lot of the same books - yes, I like teenage fiction, LOL.

 

On another note, It is interesting to see how in some immigrant communities, how there's more of an emphasis on the extended family, and family members helping each other out financially, than there is in the U.S., among, I guess you'd say, the average American born Anglo-Saxon person. I read this book called Infidel (another good book - controversial, but good), a memoir from a Somali woman, who grew up in Somalia, Kenya, and Ethiopia, before moving to Holland and later the U.S.

 

She talks about how in Somalia, each member in a "clan" would help out each other member, whether financially, providing housing, or babysitting, or whatever. There was a leader in her clan who was well off financially, as he had a successful trucking business. She said that his wealth wasn't "his" in the way that an American or European person's wealth would be "his". His wealth was viewed as being for the support of the entire clan. I have a friend who immigrated to the U.S. from the Phillipines as an adult, and he told me something similar, as far as Filipinos go. I do think that the idea of the self supporting, independent, nuclear family is likely a foreign notion in many other countries.

 

I respect that you help your family out. And I very much agree with your last statement. It's definitely a different economy today than than it was 30-40+ years ago. The days when a man could get a good paying, likely union job, at the steel mill or the factory, straight out of high school, with no further education, and earn enough money to support a family, while his wife stayed home with the kids, is long gone. Even many college educated people can't find jobs, or have jobs, but don't earn what they should, for the education they've obtained. I know that all too well, unfortunately.

Edited March 14, 2013 by RedHairedLady

[hegemony]

I'll check the book out. Aside from "rich dad, poor dad" I don't really remember any book reccomendations that didn't work out well.

 

RDPD is snake oil all the way down.

[RedHairedLady]

 

I'll check the book out. Aside from "rich dad, poor dad" I don't really remember any book reccomendations that didn't work out well.

RDPD is snake oil all the way down.

Really? Now I want to read it just to see why, LOL. I'll check it out of the library of course - I don't buy books for myself unless they're something I know I'm going to read/use multiple times, like craft books. Edited March 18, 2013 by RedHairedLady

[hegemony]

 

 

I'll check the book out. Aside from "rich dad, poor dad" I don't really remember any book reccomendations that didn't work out well.

RDPD is snake oil all the way down.

Really? Now I want to read it just to see why, LOL. I'll check it out of the library of course - I don't buy books for myself unless they're something I know I'm going to read/use multiple times, like craft books.

 

this guy is a little too hard on RDPD but most of the points are valid

 

http://www.johntreed.com/Kiyosaki.html

[RedHairedLady]

 

 

 

I'll check the book out. Aside from "rich dad, poor dad" I don't really remember any book reccomendations that didn't work out well.

RDPD is snake oil all the way down.

 

Really? Now I want to read it just to see why, LOL. I'll check it out of the library of course - I don't buy books for myself unless they're something I know I'm going to read/use multiple times, like craft books.

 

this guy is a little too hard on RDPD but most of the points are valid

 

http://www.johntreed.com/Kiyosaki.html

I took a look at that link - I didn't read all of it, I just skimmed it, but yikes! I guess snake oil is right!

[Mo Munny Mo Problems]

I was gifted a six figure home at age 27 in an area where cost of living is bottom of the barrel.

 

Im 29.

 

I can say that this has definately given me a leg up against someone who would have had to go out and buy one and maintained it throughout that time period as well..

 

I was able to party and blow all my paychecks every.single.month without the worry of "oh but i need to pay the rent and insurance".

 

Looking back i wish i had purchased (more) education and spent more time in class and studying instead of playing Socom on PS3 and drinkin liters of Dr. Pepper and chain smoking marlboro lights between bowls of hydro...

 

Oh and swiping that dang Penfed card lol

 

At least, i have snapped out of it and paid off my CCs, my cars, and have nothing but taxes to pay!

 

Looking forward, I hope to save more and further my education.

 

I opened an IRA, although its barely got anything in it...but thats because i diverted everything to paying off outstanding debt first. At least im getting started now..

 

I am used to just blowing 3k+ every month...now that im going to have that extra ....im going to try and invest it into real estate as long as rates are relatively low.

 

I just bought house #2 at a very very good price. $30k for a 2br/1ba with a 1 car garage. Needs a LOT of work..but a 1000 sq ft 2/1 in this area goes for bare minimum $50k . And if i could upgrade it here and there.. probably north of 60k. Today. Tomorrow who knows if i rent it out and hold onto it.

 

Im taking some risk but really i think it could be a great stabile way to build my wealth early on.

Edited June 17, 2013 by Mo Munny Mo Problems

[Mo Munny Mo Problems]

^^^after reading how much yalls houses cost yall are crazy lol. Down here you can get a full blown mansion on acres+ for under 300k. Another 30k will get you two full time waitstaff and a psrt time cook for a couple years lol.

[Athena53]

Slow and steady, and don't let yourself get discouraged. I think one of the reasons people don't save is that they look at that big number that the experts say they'll need at retirement, figure it's impossible, and then don't save at all. It's pretty easy to send it all instead- there are so many bright, shiny things out there just begging for you to buy them.

 

I'm 60. In 1991 (age 38) I had $91,000 in investments, excluding the equity in the house my then-husband and I had. I now have $2.4 million. It was not a smooth and straight path. In 1992 my husband lost his job and never recovered from it. I divorced him 5 years later after dealing with his alcoholism and abuse and financial irresponsibility. With no child support, I got DS through a private boarding school for HS and then through college. It helped that my share of the equity in the house at the divorce was $100K but I immediately put that into a down payment on another house and added a $250K mortgage. I sold it 7 years later for a $200K profit when I changed jobs, married and moved to a LCOL area from Bergen County, NJ. DH came into the marriage with $100K equity in the house and about $12K in savings. So, no trust funds, lottery wins, handouts from parents (paid for my own daycare- in-laws deceased, parents lived 500 miles away). DH and I have even enjoyed some of the money along the way aided by judicious use of mileage and hotel credit cards (we always PIF). We just went to Paris last May.

 

What worked:

 

1. The savings/investment accounts are a one-way street. Money goes in. It doesn't come out.

2. I've been steadily employed- the only exception was 6 weeks of unemployment in 1995. I've had to scramble to get out of jobs that weren't working out a few times- most recently I got a new job last year that's a great job but at a 10% pay cut.

3. Living in a LCOL area for the last 10 years. I admit I lucked out on making a big profit on the house in NJ. I never want to have that % of my income (almost 50% of take-home pay) tied up in fixed costs again.

4. Having only one child and staying in the workforce.

5. Cars are a very low priority. DH is 74 and does a little freelance work for home and we have one car- a boring sedan, bought used. The last time I bought a new (current-year model) car was 1991. I doubt I'll ever do it again.

6. Zero debt except for a mortgage we're on track to pay off when I hit age 65.

7. Being VERY careful about anything with a monthly payment. I cringe at our cable/TV/Internet bill but if we had to pare it down we could. You can't do that with a lease payment on a shiny new SUV.

 

Don't get discouraged. Just do it.

[IAmOnMyWay]

I don't usually share these sorts of details but then again, CreditBoards often breaks the barrier of what is usually considered "polite conversation."

 

First, once a buckeye always one. The OSU-Michigan game is still bigger than the Superbowl to me, 5 years after moving.

 

But your last comment is something I found I could relate to.

 

Growing up, we had a very close-knit extended family. My dad has 6 siblings and all but one lived within 2 blocks and we spent a lot of time together. My cousins are like my brothers.

 

Five of his 6 siblings are, like him, average middle class wage earners. They were making $25-35k, which was in the late 80s and 90s more like 40-50k is now, which is probably about what most of them earn. A good enough income. You can raise a family on it if you had a second income or were good at making a dollar stretch.

 

One of them, though, the oldest sibling, worked his butt off in the 70s and earned a Journeymans card and "got in" at the local Jeep factory. That's the mentality of good jobs where I grew up. If you were lucky, you "got in" some where. But nobody else in my family would have worked that opportunity like my uncle. He worked, often, 80-100 hour weeks. Now, a lot of this was because of the nature of his job as a millwright (fixing the machines when they broke) involved a decent amount of sitting around until something broke, making those long hours possible. But he was earning 75-100k+ which today is a good living and back then was simply fantastic.

 

As a kid, I observed all this. His nice cars. His nice things. His nice vacations. And when my aunts and uncles, but not really my own parents, would have hardships any thought of asking him for a loan or a little cash to help out or a favor was always talked about in hushed tones and rolled eyes. "He'll tell you he doesn't have the money to help, that he would if he could." And of course that was absurd to these people and as a kid that made an impression on me.

 

Today, I'm fortunate to be in a position similar to his. I also work long hours (As a Software Engineer), and I also make quite a bit more than my siblings and cousins. And honestly for the most part I don't help out family financially. My parents and to a lesser extent my siblings, yes. And I try to give really great graduation and wedding gifts, things like that. But all this set-up was to make this point:

 

To my aunts and uncles, used to living pay-to-pay, used to literally having $100 or less in their checking account on a regular basis, used to not having any meaningful savings, used to running up credit card bills and paying them slowly down, used to filing bankruptcy, to these people, knowing that their older brother made six figures and surely had at least a few thousand bucks liquid in his account at any given time, to them, hearing him say he had "no money" is absurd and a little insulting.

 

But I get it now a little. I'm 31. I started my career almost exactly 10 years ago. The first 5 years or so, I lived that same way. I get paid, and try to "spread it out" till my next pay. I had student loans to pay and I wasn't earning all that much. My first job as a "programmer" paid $12/hr for 20-25 hours a week.

 

As I progressed in my career, and grew more skilled at salary negotiation, and knew how much I was really worth, that began to change.

 

And once I crossed that line, from paycheck to paycheck to always having money to having a few months expenses to having a few months income, once I progressed up that ladder... I am not interested in EVER going back to $10 checking account balances. You start to feel like you need it because of how valuable that security becomes. If a cousin, who is literally broke, asked me for a few hundred bucks, I'd do it probably. As a gift, never a loan with family. But a few thousand? No way. Because I no longer have that mentality that every dollary in my account is spendable. It's not. It's not.

 

Anyway, that's a lot of writing, sorry for going on so long. But I thought it could be an interesting POV.

 

Now, in his older age, my uncle does help his parents -- my grandparents -- and he has softened a little.

 

I hope this wasn't boring or seemingly callous. Somebody fortunate SHOULD help others. And I fully expect to: While we have earned a good living these last few years, I'm still just beginning this and I expect as we build more wealth into the future that I will find good uses for it. But yeah, your situation may be different, but this is how it was and is in my family and with me.

I really learned something from your post. If I hadn't spent the majority of my life "helping" family and friends out I woukd be in a much better place financially.

[PhoenixDown]

I can relate to encoder's post ... no matter how healthy you are, you can only donate so much blood before you suffer and eventually die from a lack of it.

 

I feel blessed to have a good job and don't mind picking up the tab for dinner when we go out, or giving them a gift card to get some new clothes or something for the kids. My resources, like everyones are finite and if I am going to help out in any 'big' way then I prefer that help to come in the form of something that would have long term gain - like a college education.

[SnowdIn]

Here's where I'm at now:

24 years old, work full time, go to a university part time at night, paid for a $14k car in cash 2 years ago, $25K in retirement, ~$9,000 in savings and hopefully closing on my first house in a month.

 

How I got there:

I moved out at 18 and back in at 20 and was sick at myself for all the money I had spent and had nothing to show for it, so I decided to turn it around. I pay my mom $300 a month, which is equivalent to renting a 2 bedroom apartment and splitting bills with 1 roommate- so although I live with mom it didn't really save me money. I had help getting my job, and a condition of my employment is that I remain in school until I have a bachelor's degree, which my employer pays for. Now the people I know may have helped get me in the door at the company- but the only reason I'm still here 5 years later is because I'm good and worth it. I had to prove myself, it wasn't handed to me. My grandma had given me a car when I was in high school so I could drive myself to my summer job that my parents forced me to get and didn't want to drive me 20+ miles to- and it was a beater when she gave it to me. I realized it wasn't going to last forever so I started saving to pay cash for a new car. I was following the Dave Ramsey rule of thumb that cars shouldn't be worth more than half your annual income, so because I was making $30k at the time of purchase I knew I wanted to be under $15k. At the same time I joined my company 401K plan at $20/week because they employer contributes 7% of gross regardless of employee contribution, and I opened a ROTH IRA contributing $350 a month. I finally had a car in mind so I cut back on retirement and piled all my money into my car fund. All in all, my dad gave me around $1,500 towards it- but I paid the other $12,500. After I bought that I went back to contributing to 401K and Roth IRA, and I started an emergency fund too. I had a plan to buy a house in 2015 but my mom decided to sell her house sooner, so rather than bother with a roommate while I kept saving for another 2 years I decided just to go get a house. I started looking in January of this year, and I finally have closing in about a month. I'm qualified up to around $150K, but I went with a modest house costing $70K. It's going to wipe out almost all my savings for a down payment and closing, so I have decided to stop contributing to retirement for a year. I've been paying $300 a month rent and savings $800 a month towards the house, my mortgage is just under $700 so I know I can afford that and savings on top of it. I'll use this year to throw every extra dollar I have towards an emergency fund. I want to have around $10K saved up just for emergency repairs. Then I'll resume car savings, I plan to buy another used car in about 3 years, and resume retirement savings as well. By the time I graduate college at 27 I expect my net worth will be $15,300- accounting for the approx $106,700 I will have left on the mortgage. At that point my boss will give me a raise to put me closer to market value, and I can really get intense with working on my financials.

 

Help I've had: given first car for first job, worth maybe $2K, given $1,500 towards second car, employer pays for school. None of this was handed to me on a silver platter- if I hadn't shown my grandma I was responsible she wouldn't have given me that car. If I hadn't shown my dad how serious I was about saving for my second car, he wouldn't have helped me. If I didn't bust my butt every day at work at every night at school my employer wouldn't pay for college. I'm not saying these opportunities are available to everybody- but they are out there if you look hard enough and can get your foot in the right door. When I go out with my friends who are still grossing in the mid $20Ks, you'd think I make less than they do with how frugal I am with my money. Every time I get a raise, 90% of it goes towards savings and the other 10% goes towards increased costs of living. I haven't raised my lifestyle one bit since I started working at the company I'm at now for $12 an hour 5 years ago.

Edited August 23, 2013 by SnowdIn

[Guest]

One theme among my friends who seemingly have more than I do is how much their parents helped them along their way. I wouldn't want their debt levels.

 

Lose a job? Move in with parents. Need daycare when little ones come along? Call your mother/MIL to sit for free. Need a downpayment for your house? Call the parents. Need a co signor for student loans? Call the parents. Need someone to pay for your private college? Call the parents. Need a vacation? Ask if the parents time share or condo is available.

 

While I'm envious of some of the income, there's no way I would want those mortgage or vehicle payments. Similarly, I would not want to own rental properties currently. While there is talk of how much of a 'rental boom' that's coming, in my area, even Section 8 rentals are standing vacant. People are doubling up and giving up even their subsidized units.

 

Perhaps moving in with the parents.

 

+1

[LogicalNoMore]

Bravo for some folks who have a sensibleness in saving and refraining from the Toys in life...

 

I am by no means middle class...most friends tell me I have no class

 

So I'll sit around reading here in awe that those who want more security in the tender years are setting the foundation...Well done. May you never know the day to day angst of trying to make do...( meant sincerely)