What is your perception of wealth?

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33anda3rd
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Re: What is your perception of wealth?

Post by 33anda3rd »

Arthur Dent wrote:
GeddyWrox wrote:Rich people can buy boats and BMWs, have second homes, and go to Europe or Tahiti every year. That is definitely not us.
That's exactly what I mean. Everyone can always look up, and given the massive inequality at the top, there's always long way to look, but you will find exactly this sort of statement from people who own second homes: I'm not rich because I know people who own planes etc.

Obviously, there's a semantic issue here, but $140k+ is a high income and is definitely not just middle class.
Depends.

If you make $140K/year in Pekin, IL you are rich, and maybe fit into the wealthy bucket. You probably do own two cars, a truck, a Harley, a cabin/fishing lodge/lake house as a 2nd home, and you take a lot of those vacations to beach resorts in Mexico and Jamaica and stuff.

If you make $140K/year in Boston and have 2 kids you are middle class. You can't do the 2nd car and you're sweating your kids college tuition.

If you make $140K/year in San Francisco, have no kids and are unwed, you are just getting by. You have no car, you pay $5K/month in rent, you really wish you could take a vacation.

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Re: What is your perception of wealth?

Post by Michael »

33anda3rd wrote:
Arthur Dent wrote:
GeddyWrox wrote:Rich people can buy boats and BMWs, have second homes, and go to Europe or Tahiti every year. That is definitely not us.
That's exactly what I mean. Everyone can always look up, and given the massive inequality at the top, there's always long way to look, but you will find exactly this sort of statement from people who own second homes: I'm not rich because I know people who own planes etc.

Obviously, there's a semantic issue here, but $140k+ is a high income and is definitely not just middle class.
Depends.

If you make $140K/year in Pekin, IL you are rich, and maybe fit into the wealthy bucket. You probably do own two cars, a truck, a Harley, a cabin/fishing lodge/lake house as a 2nd home, and you take a lot of those vacations to beach resorts in Mexico and Jamaica and stuff.

If you make $140K/year in Boston and have 2 kids you are middle class. You can't do the 2nd car and you're sweating your kids college tuition.

If you make $140K/year in San Francisco, have no kids and are unwed, you are just getting by. You have no car, you pay $5K/month in rent, you really wish you could take a vacation.
Personally I think cost of living adjustments are overrated when determining wealth. Living in a places like Manhattan or San Francisco is an upper middle class/wealthy privilege. Sure, you may not have a huge living space or a car, but the option is something most people don't even have.
Last edited by Michael on May 23 18, 8:20 am, edited 2 times in total.

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Re: What is your perception of wealth?

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elitist!

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Re: What is your perception of wealth?

Post by Michael »

I'll also add - the median household income for San Fran is $78,378. I'd still categorize 140k as upper middle class even if you account for cost of living.

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Re: What is your perception of wealth?

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Michael wrote:I'll also add - the median household income for San Fran is $78,378. I'd still categorize 140k as upper middle class even if you account for cost of living.
So the average household in San Fran has no hope of being able to afford a house in San Fran.

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Re: What is your perception of wealth?

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Michael wrote:
Personally I think cost of living adjustments are overrated when determining wealth. Living in a places like Manhattan or San Francisco is an upper middle class/wealthy privilege. Sure, you may not have a huge living space or a car, but the option is something most people don't even have.
Housing differences can be huge. Outside of that idk. Our utilities are higher, our groceries are higher, local restaurants are higher then comparable establishments in bigger cities, we spend way to much in gas getting to stuff because we don’t have close options. None of this is intended as a complaint just as an observation that I’ve decided that I don’t think our cost of living, outside of a mortgage, is considerably different.

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Re: What is your perception of wealth?

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Popeye_Card wrote:
Michael wrote:I'll also add - the median household income for San Fran is $78,378. I'd still categorize 140k as upper middle class even if you account for cost of living.
So the average household in San Fran has no hope of being able to afford a house in San Fran.
Yeah, for sure. When we lived there from 2002-2006 we made comfortably more than the amount listed as median and didn't feel anywhere close to upper middle class, even living well below our means in a 800 square foot apartment, selling our car when we moved there, and spending very little on entertainment so as to not interrupt our savings plan.

What Michael said earlier about living below his means is important I think. I've always done that and have always been a saver. We maxed out our 401Ks and Roth IRAs and bought stock instead of going out to eat and drink or buy clothes or pay more for rent than we absolutely needed to in our 20s-early 30s. By doing that, we've more than made up for what we missed in that ~12 year span over the last 12 years, and we'll make up for it again a few times over before the ol reaper comes to collect. I feel wealthy now not because of our combined household annual income because of what I have saved as a result of not spending it when I was younger.

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Re: What is your perception of wealth?

Post by AWvsCBsteeeerike3 »

Arthur Dent wrote:
GeddyWrox wrote:Rich people can buy boats and BMWs, have second homes, and go to Europe or Tahiti every year. That is definitely not us.
That's exactly what I mean. Everyone can always look up, and given the massive inequality at the top, there's always long way to look, but you will find exactly this sort of statement from people who own second homes: I'm not rich because I know people who own planes etc.

Obviously, there's a semantic issue here, but $140k+ is a high income and is definitely not just middle class.
$140k is a high income, but I would disagree with the categorization of 'rich' by a long shot especially for a family of 4. Just doing some general breakdowns, here's how the cash flow works out.

$140k - 15% for retirement = $119k
- $18k in fed taxes
- ~$8k in SS
- $1725 Medicare
- state taxes ($10k)
= $81,275

That's $6770 in cash flow every month coming in.

Then there are expenses that have to be paid just to live:
Housing (ncluding mortgage, insurance, property taxes) - $1800
Utilities - $400
Food - $750
Car - $500
Gas/maintenance - $150
Insurance - varies wildly, but let's just say $150
Phone - $100

Obviously this is ballpark and all these costs can be trimmed, but I don't think they're really out of line.

This leaves a little less than $3k in excess cash flow for anything else that has to be paid like childcare and student loans which can vary wildly but it's not absurd to think childcare for 2 kids is $1500/month and who knows what student loans payments are. There's also home maintenance which also varies wildly but obviously a new AC unit or something like that can eat into that excess very quickly. There's also entertainment ($80 to eat out), sports ($300 to join a kids league plus equipment), etc etc etc that costs money.

In short, and I guess my real point is, money can get tight even at $140k depending on extenuating circumstances. And, when I think of 'rich' I think of people that don't (despite probably doing so) really need to worry about money.

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Re: What is your perception of wealth?

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Re: What is your perception of wealth?

Post by GeddyWrox »

Well put, AW. This is exactly where I was coming from. I just didn't have the time to break it down so clearly.

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