tag:blogger.com,1999:blog-2980246226076317453.post7401301500774728010..comments2024-03-27T09:17:51.095-07:00Comments on Done by Forty: The Middle Class & Income by LocationDone By Fortyhttp://www.blogger.com/profile/06246597867355460723noreply@blogger.comBlogger50125tag:blogger.com,1999:blog-2980246226076317453.post-40348227650092219812016-10-19T14:14:09.840-07:002016-10-19T14:14:09.840-07:00I always know you're not trying to be adversar...I always know you're not trying to be adversarial. I honestly love debating these concepts but, as I suspect most writers are, it's tricky when it's your own writing that's the fodder for discussion...and it gets hard not to be defensive sometimes. Still, we trudge on. And no offense taken! Love it when you post a comment here.<br /><br />My very first job in San Diego was working at the WIC office, and it's a fantastic program. Still, as you noted, a lot of people qualify for benefits and I don't doubt many of them see themselves/are seen as middle class. <br /><br />However, we should call out that, at least way back in 2001 when I worked there, the benefits weren't tied to local cost of living figures, but national cut offs. <br /><br />And as you've pointed out before, the size of the family (and the makeup of the family) puts a lot of needed context into those figures. A single mother with two kids will have different needs for assistance than three adults who live in the same household, etc. etc.<br /><br />Trying to determine who's 'really' middle class is tricky. I'm fairly enamored with the concept though, and think I'll keep writing about it (one more post coming Monday).Done By Fortyhttps://www.blogger.com/profile/06246597867355460723noreply@blogger.comtag:blogger.com,1999:blog-2980246226076317453.post-44810489001563591612016-10-19T13:52:06.834-07:002016-10-19T13:52:06.834-07:00Meh bad example. Haha. I always forget how low-cos...Meh bad example. Haha. I always forget how low-cost stuff is here in Pittsburgh. At that median, though, families still qualify for WIC and I'd argue have a hard time functioning without state assistance depending on the size of the family---or waffling back into it. Even here. I guess measuring where the middle class is is different than assessing where the middle class currently is, if that makes any sense. <br /><br />Truly not trying to be adversarial here. You're just one of my favorite people to bounce these things off of.Femme Frugalityhttps://www.blogger.com/profile/07258982361804942329noreply@blogger.comtag:blogger.com,1999:blog-2980246226076317453.post-58214247474460949752016-10-16T11:00:57.358-07:002016-10-16T11:00:57.358-07:00Yeah, income is certainly only a piece of the tota...Yeah, income is certainly only a piece of the total picture. I wrote a piece on middle class wealth a while back, to focus on asset quintiles. As with everything, there's no one metric or area that gives a full picture, but the more of the things we can add to the analysis, the better understanding we get.<br /><br />I'm personally a big fan of student debt if you can finish, get your degree, and are pursuing a field that improves your income over what you currently make. Given those pretty reasonable parameters, I think that student debt is a preposterously good value, and has a fairly quick payback period. <br /><br />Still doesn't make cutting those interest payments any easier, I bet.Done By Fortyhttps://www.blogger.com/profile/06246597867355460723noreply@blogger.comtag:blogger.com,1999:blog-2980246226076317453.post-41736751029162353012016-10-16T09:34:54.990-07:002016-10-16T09:34:54.990-07:00I would say that we are definitely in the upper 20...I would say that we are definitely in the upper 20%. The problem is that we have a lot of student loan debt, particularly my wife, because her pursue of a doctorate. That will eventually go away, but in the interim I hate sending thousands of dollars to the government each year. But in terms of income and savings we are definitely up there compared to others. The sad thing is we have more savings than my wife's parents do. That is what motivates me even further.jasonedwards57https://www.blogger.com/profile/13725522432598704753noreply@blogger.comtag:blogger.com,1999:blog-2980246226076317453.post-24594082523333858082016-10-14T14:35:39.194-07:002016-10-14T14:35:39.194-07:00Good point about there being no ceiling on income,...Good point about there being no ceiling on income, but a hard floor. <br /><br />And good call about the local comparison not necessarily being the end-all, be-all, either. I suppose looking at both the local and the national comparisons provides the needed context, with a slant towards the local being a 'truer' marker of where your household fits.<br /><br />I can't say for sure whether being in the middle quintile in a place like Detroit is perhaps not putting you in a 'true' middle class. But FWIW, you have to earn more to be in the 50th percentile in Detroit ($50k) than you do in, say, Pittsburgh ($47.8k), at least according to the NYT tool from 2012. <br /><br />Which all goes to say that perceptions of what it means to be middle class are tricky and subjective. The metrics in the blog post are just one approach (and one from the hip, at that) to try to make the comparisons more objective and measurable. But I'm positive there is a better way to approach that kind of objective definition than the one I took.Done By Fortyhttps://www.blogger.com/profile/06246597867355460723noreply@blogger.comtag:blogger.com,1999:blog-2980246226076317453.post-31686157364187147422016-10-14T13:54:07.660-07:002016-10-14T13:54:07.660-07:00I hold no hatred for the wealthy. Just pointing ou...I hold no hatred for the wealthy. Just pointing out it is an economic phenomenon, and that when we're measuring income by median, the bottom has a floor of zero while the ceiling...<br />I guess another point is just because you're in the middle of income earners in your area, does that truly mean you're middle class? Not referencing the chart on this one, but Detroit in recent years comes to mind. In our case, we are solidly middle class, but for others the same may not true.Femme Frugalityhttps://www.blogger.com/profile/07258982361804942329noreply@blogger.comtag:blogger.com,1999:blog-2980246226076317453.post-67707537254149148382016-10-13T12:55:25.959-07:002016-10-13T12:55:25.959-07:00I hear what you're saying and spending is defi...I hear what you're saying and spending is definitely the easier part to get under control. But I think income is more important. <br /><br />While you're right in that no amount of income is going to help you if you spend every dime you make, you can only cut down on your spending so much. <br /><br />Frugality gets good press in the personal finance community because so many of us earn an above average income already. Trying to tell someone earning $25k to "save their way" to financial freedom isn't great advice. And, on the other hand, someone who's already earning six figures doesn't need to worry about income at all: they can just focus on spending and they'll be wealthy in short order.Done By Fortyhttps://www.blogger.com/profile/06246597867355460723noreply@blogger.comtag:blogger.com,1999:blog-2980246226076317453.post-40688126371164676122016-10-13T12:52:15.729-07:002016-10-13T12:52:15.729-07:00The Bay Area really is crazy expensive these days....The Bay Area really is crazy expensive these days. When I was moving out to CA, it came down to San Jose & San Diego. I had no job prospects in either place and, being a dumb 19 year old, just picked one at random.Done By Fortyhttps://www.blogger.com/profile/06246597867355460723noreply@blogger.comtag:blogger.com,1999:blog-2980246226076317453.post-30940571313310326842016-10-13T07:16:14.179-07:002016-10-13T07:16:14.179-07:00I consider income like exercise, you can earn or w...I consider income like exercise, you can earn or workout all your want but really matter is how much you spend or eat. I use to exercise all the time but until I changed my eating it didn't do much good. Now I just need to figure out the spending part! The Dreamershttp://www.dream2retire.comnoreply@blogger.comtag:blogger.com,1999:blog-2980246226076317453.post-20996157750172775102016-10-13T07:07:48.187-07:002016-10-13T07:07:48.187-07:00No need to go all boohoo for coastal folks...we ch...No need to go all boohoo for coastal folks...we choose to live here. But I'd take being able to buy a nice $250k house versus getting a mortgage interest deduction. There a lot of things about that tax code which can be frustrating. I don't live in Manhattan or hip part of NYC, but it's a good neighborhood with good schools. I rarely see houses under $700k. I could move further out into the suburbs to find houses under $500k but then there are property taxes north of $10k. Andrew@LivingRichCheaplyhttp://www.livingrichcheaply.comnoreply@blogger.comtag:blogger.com,1999:blog-2980246226076317453.post-13036471388180826682016-10-11T16:07:41.860-07:002016-10-11T16:07:41.860-07:00Thank you for pointing out this tool! It's fas...Thank you for pointing out this tool! It's fascinating. It really, really drove home just how ludicrously unaffordable everything is here in San Jose. I plugged in $100,000 for kicks (I don't make that) and that is only the 44th percentile for this area. It's just insane to think how much more some people are making. No wonder this is one of if not the most expensive real estate market in the country. Alexhttp://www.takerisksbehappy.comnoreply@blogger.comtag:blogger.com,1999:blog-2980246226076317453.post-60023174409160590422016-10-11T15:33:52.451-07:002016-10-11T15:33:52.451-07:00That's a really neat example of how nuanced th...That's a really neat example of how nuanced the pressures can be between different locales (or in your case, different companies and, like you noted, two different people).<br /><br />We, too, are kind of struggling to come to terms with the fact that we're "rich". It's a weird feeling...some guilt is mixed in. We should probably give away more.<br /><br />My hope is that by focusing on objective measures (income, wealth) rather than subjective ones ("I feel like I'm middle class") that our behavior will improve. That we'll feel more gratitude, and give more.Done By Fortyhttps://www.blogger.com/profile/06246597867355460723noreply@blogger.comtag:blogger.com,1999:blog-2980246226076317453.post-18877501450191937872016-10-11T15:28:03.989-07:002016-10-11T15:28:03.989-07:00I hear what you're saying, but I have never th...I hear what you're saying, but I have never thought it was that much of a benefit for those people, even the wealthy. As you noted, the first $12,600 of deductions are worthless: that's just the standard deduction. So we're just talking about deductions above that figure.<br /><br />For a high earner in the 33% tax bracket, for every dollar of tax benefit they get from the home mortgage interest deduction, they're paying three dollars in interest on a huge home loan. It's still a crap deal for them, IMO. <br /><br />I'd be very interested to compare the average tax rates of different cities though.Done By Fortyhttps://www.blogger.com/profile/06246597867355460723noreply@blogger.comtag:blogger.com,1999:blog-2980246226076317453.post-25962608492839388632016-10-11T15:20:40.340-07:002016-10-11T15:20:40.340-07:00Before we go all boohoo for the poor coastal folks...Before we go all boohoo for the poor coastal folks with HCOLs, let's not forget that one of the biggest government subsidies of all, the home mortgage interest deduction, is overwhelmingly used by (in terms of the U.S. as a whole) wealthy households, particularly those with jumbo mortgages. Buying an average house in most parts of the U.S., it'll be tough to accumulate enough in interest to take advantage of that deduction.... But if you buy a big or expensive house with a large mortgage, it's a heck of a lot easier. <br /><br />Steps down off virtual soapbox. <br /><br />Sorry, that is my pet peeve tax issue. Mrs PoP @ Planting Our Pennieshttps://www.blogger.com/profile/03092406694266872975noreply@blogger.comtag:blogger.com,1999:blog-2980246226076317453.post-28926781027918242722016-10-11T15:13:36.792-07:002016-10-11T15:13:36.792-07:00I think Mr PoP and I tend to live a pretty middle ...I think Mr PoP and I tend to live a pretty middle class lifestyle, but it was a while ago now that I remember commenting to him that I had come to the realization that we were probably "rich" and that it felt kindof strange to come to that conclusion. <br />That said, it's also interesting how concentrated wealth can get geographically. We live right smack in between two metro areas, and Mr PoP and I do most of our work (and outside of work socializing) concentrated in those different areas. In the one Mr PoP goes to, our household income puts us in the top 5%. In the one I go to, we're in the top 10%. (Probably even lower if you just looked at the zipcode where I work, actually, since it's quite a wealthy area.) Not middle class in either case, but still a pretty big difference. <br />We're different people, with different jobs and expectations, but I think the relative wealth of the two areas also plays into how much social pressure we feel to conform to the average consumerist lifestyle, but counter-intuitively. I think I get less social pressure in terms of consumerism since as a young working person it's not really expected that I have and display the same level of wealth as wealthy retirees who have had a lifetime to accumulate their millions. Whereas Mr PoP is in an area where people are mostly still working professionals, and are comfortably spending money as they go along through life, but there's kindof an unspoken expectation that he do the same. Mrs PoP @ Planting Our Pennieshttps://www.blogger.com/profile/03092406694266872975noreply@blogger.comtag:blogger.com,1999:blog-2980246226076317453.post-37104398811233618082016-10-11T13:55:40.115-07:002016-10-11T13:55:40.115-07:00Makes sense. You can't hit a homerun if you do...Makes sense. You can't hit a homerun if you don't swing away.Done By Fortyhttps://www.blogger.com/profile/06246597867355460723noreply@blogger.comtag:blogger.com,1999:blog-2980246226076317453.post-10966564815746927982016-10-11T12:27:28.283-07:002016-10-11T12:27:28.283-07:00Nice posts Emily. Like your husband, my wife is a...Nice posts Emily. Like your husband, my wife is also in the life sciences field (pharma) and that is indeed a tough field to do much with (long term) in Seattle. Most things either fade away or, when they get remotely successful, get bought up and shipped out. That's why we pretty much live bicoastal now, because my consulting gig gives me great flexibility. <br /><br />DBF, I totally get where you're coming from, and am normally right there with you. Still, when you see a 10-bagger (to use Peter Lynch terminology), particularly when the stock market is anemic and likely in a bubble of its own, you jump on such opportunities.Tinhttps://www.blogger.com/profile/17710280020482764792noreply@blogger.comtag:blogger.com,1999:blog-2980246226076317453.post-81481478386647093362016-10-11T12:16:30.999-07:002016-10-11T12:16:30.999-07:00I hear you, Tin. I'm a homeowner & rental ...I hear you, Tin. I'm a homeowner & rental property owner, too. With higher cost of living areas though, I at least point people to consider renting. Often, it's the better financial move. You don't know until you run the numbers, so I'll usually just point people to the NYT calculator: http://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html<br /><br />Like Emily noted, if she's not going to be there for a long time, the transaction costs of buying/selling might wipe out any gains, and the risks of owning an asset for a short time are more pronounced.<br /><br />Still, rapid housing appreciation can certainly make a home purchase look like a fantastic idea: who doesn't like making five or six figures in a short amount of time? Done By Fortyhttps://www.blogger.com/profile/06246597867355460723noreply@blogger.comtag:blogger.com,1999:blog-2980246226076317453.post-42873398235755155222016-10-11T12:08:06.262-07:002016-10-11T12:08:06.262-07:00I don't believe so. The market is just too ti...I don't believe so. The market is just too tight. If one rents (right now anyway) one is likely to fall behind the buyers, particularly in the SFH (single family home) part of the market. Rents have been rising steadily and Zillow predicts Seattle will be #1 in rent growth next year as well. If one can afford to buy, and plan to live there for any length of time, one should buy not rent. I'm biased of course, I rent out two places and live in a third, all in King County. The rents basically pay their own mortgages and the appreciation has been virtually immediate (one I bought only 4 months ago). That being said, location still very much matters (good schools, access to main roads, or main employers, etc.).<br /><br />There are always "bubble" risks, but the fundamentals of that particular market are just too sound (huge job growth (not just Amazon, all tech, including Bay Area tech setting up satellite offices for access to PNW tech talent that doesn't want anything to do with living in California), international investment, limited land, good schools and good environment, etc.).<br /><br />My 2 cents!Tinhttps://www.blogger.com/profile/17710280020482764792noreply@blogger.comtag:blogger.com,1999:blog-2980246226076317453.post-80755980514763812362016-10-11T12:06:33.626-07:002016-10-11T12:06:33.626-07:00Thanks for your welcome, Tin! Seattle is not our &...Thanks for your welcome, Tin! Seattle is not our "forever city" (http://evolvingpf.com/2015/10/living-in-someone-elses-awesome/), so we're not planning to buy here. Also I would be hard-pressed to give up my husband's 3-minute walking commute (http://evolvingpf.com/2015/08/apartment-search-in-seattle/) for anything! ;)Emily @ evolvingPFhttp://evolvingpf.com/noreply@blogger.comtag:blogger.com,1999:blog-2980246226076317453.post-79716563168156705402016-10-11T11:49:37.649-07:002016-10-11T11:49:37.649-07:00I totally skipped over that but, yes, financial ai...I totally skipped over that but, yes, financial aid is a place where people whose parents live in expensive cities are getting the short end of the stick when it comes to financial aid, which seems particularly unfair...since it's being passed down a generation onto some teenager.Done By Fortyhttps://www.blogger.com/profile/06246597867355460723noreply@blogger.comtag:blogger.com,1999:blog-2980246226076317453.post-60006626418708098652016-10-11T11:44:32.439-07:002016-10-11T11:44:32.439-07:00With costs what they are for real estate, do you t...With costs what they are for real estate, do you think personal finance folks (i.e. - those who would invest the difference, rather than spending it) would be better off renting in Seattle?Done By Fortyhttps://www.blogger.com/profile/06246597867355460723noreply@blogger.comtag:blogger.com,1999:blog-2980246226076317453.post-35713489248841304062016-10-11T11:42:36.035-07:002016-10-11T11:42:36.035-07:00Welcome to Seattle Emily! A great city but you ar...Welcome to Seattle Emily! A great city but you are absolutely correct that the cost of living has gone insane in just a few such years. Not just because of Amazon, but that certainly is a contributor.<br /><br />If you haven't already, get your real estate purchase in (near good schools of course), because the forecasting growth/demographic models show no let up for decades to come. Another 800,000 people by 2030, I just heard.Tinhttps://www.blogger.com/profile/17710280020482764792noreply@blogger.comtag:blogger.com,1999:blog-2980246226076317453.post-25847546195420573312016-10-11T11:40:58.084-07:002016-10-11T11:40:58.084-07:00I hear you, which is why I think the income quinti...I hear you, which is why I think the income quintiles for your specific city are way more helpful in determining if you're middle class, than those at a national level.<br /><br />I like the take on debt in the middle class, too. I suspect that when people feel they're "middle class" based on some unscientific definition, then their purchases are likely to follow suit. (e.g. - I'm middle class and I can prove it, because I have two nice cars and take a vacation every year with the kids.) My (naive) hope is that defining middle class by strict income levels, or wealth levels, that might replace the need to prove you're middle class via showy purchases of cars, home upgrades, vacations, etc.<br /><br />Good point about the wealth gap increasing. It's not a huge issue for me personally (I really want to be one of the people acquiring wealth, so I can't be too hypocritical about it). But still, there's a problem when nearly half of Americans have no retirement savings whatsoever, and maybe very few assets altogether outside of their home equity.Done By Fortyhttps://www.blogger.com/profile/06246597867355460723noreply@blogger.comtag:blogger.com,1999:blog-2980246226076317453.post-77766640221168882872016-10-11T11:35:38.936-07:002016-10-11T11:35:38.936-07:00Yeah, our puppy's pretty high class. And we sp...Yeah, our puppy's pretty high class. And we spend a lot of our hours waiting on her hand and foot...so I guess in some ways, we're her servants. It's like Downton Abbey up in this piece.<br /><br />AZ has been a godsend for us, as we also moved her from southern CA. Everything's so cheap, and we're somehow earning a lot more in AZ than I was in San Diego (probably a function of me just getting more experience in my field than anything else). Still, we love it here: a fantastic place for early retirement.Done By Fortyhttps://www.blogger.com/profile/06246597867355460723noreply@blogger.com