Poll

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5 votes (14.7%)
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34 members have voted

kewlj
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May 9th, 2015 at 10:38:43 PM permalink
I was having a discussion today with a friend, who just happens to work in the gaming industry (irrelevant to the point), and we got into just what 'middle-class' was. He contends that middle class is $50,000. I think it is more in the neighborhood of $75,000-$100,000.

Typing in the question, I get references of anywhere from $25,000 through $90,000. I see a 'median' family income of $48,000. Frankly I don't see how anything below 50K can be middle class for a family. I think a family of 4 qualifies for some different types of assistance, like food stamps and energy assistance, so how can that be middle class?

Of course the other issue is different incomes are going to mean a lot more depending on where you reside. I don't think $75,000 - $100,000 in NYC or California is going to go as far as half that in other places.

But just as a general question, I am asking what your definition of middle class is. Not what you make...but what you consider middle class. It also occurs to me that the population of this site may tend to be older and maybe better off that the average person, whoever that may be, so our results may be skewed a bit.
pokerface
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May 9th, 2015 at 10:56:41 PM permalink
another hot topic.
Funny in many red states, people earning barely above minimum wage consider themselves middle class.
winning streaks come and go, losing streak never ends.
Paigowdan
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May 9th, 2015 at 11:22:23 PM permalink
Depends where you live.

In New York City and in San Francisco, it is $150,000.
In Montgomery, AL, it is $45,000.

What we need is a shaded, color-coded map of the U.S. showing what it is for each locale.
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Face
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May 9th, 2015 at 11:28:54 PM permalink
Quote: kewlj


But just as a general question, I am asking what your definition of middle class is.



Definition is based on myself. Single dad, one kid.

$25k is about the cutoff between middle and poverty. So far for 2015, if I were to extrapolate, I've be living off what would be a <$21k a year income. It's the legit pits, but it's doable. $25k would mean I could eat twice a day, everyday.

$30-$40, one could actually start to have things. Go out to eat once a week, buy a toy, stuff like that. $50+ and you're downright loaded. Pursue dreams, travel the world, all that wonderful stuff. $70+? Scrooge McDuck. Wouldn't even know what to do with it all (but would be willing to find out)
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EvenBob
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May 10th, 2015 at 12:55:17 AM permalink
Quote: kewlj



But just as a general question, I am asking what your definition of middle class is. .



Totally absolutely positively depends on
where you live. It's a question with a
traveling answer. Where you can live
like a king on $40K, in other parts of
the country you'd be dumpster diving
to make ends meet.
"It's not called gambling if the math is on your side."
Dieter
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May 10th, 2015 at 1:40:37 AM permalink
$75k with lousy health insurance, $60k with good health insurance.

Increase these numbers for expensive places (New York, LA, etc).

The lousy vs good health insurance is a little subjective, but changes with your prescription copay, your office visit copay, maximum per-year out of pocket, your portion of the premium, etc. If you're paying $5 every time you go to the doctor, that's pretty good. If you're paying $200, that's kinda lousy.

A lot of places have a median income lower than this. That doesn't mean that "middle class" is somehow suddenly beginning at $30k.

Middle class requires your housing payment to be 30% or less of your gross income.

Middle class also means that you might not have to work until you die, that you can afford to retire at some point.

In my opinion, one earner being able to provide for the household is also part of middle class.
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AZDuffman
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May 10th, 2015 at 3:52:51 AM permalink
Middle Class would be any of the middle five quintiles of income level, IOW the 21-80% percentile rank of income.

"How you live" and "what assistance you qualify for" does not mean so much. In their desire to get as many people as possible dependent on government, the levels for various levels of assistance have been bumped up over the years. When I was a kid, "free school lunch" was for people really down on their luck and you were plain embarrassed to be on it. Today some schools just put the entire population on it. Seriously, you can't find $2-3 to pack your kid a lunch?

Then there is the concept of "lower middle class" and "upper middle class." There is the old concept of "they don't have a lot of money, they spend a lot of money." In my town, a single person could rent a fairly nice place for $6-700 per month. So $30K would put them not bad off, even if they had a car payment of $250-300. As you build a family things get different. But that should multiply the earning power as well.

What drives me nuts is when people say, "one income is not enough anymore!" One income was rarely enough! There was a golden age from about 1945-1970 where one income bought a suburban home and let the family live fairly well. But this is when suburban land was fresh and cheap. The family probably only had one car which was bought used. Vacations were less lavish than they are today. Kids clothes were handed down, and more kids shared bedrooms. But this has all been said before.

I put "middle class" at $30-70K or so. Below $30K would be "lower income" and below $18K might be where poverty starts to creep in. Above $70K would be "upper middle class" and above $150K you hit "affluent."
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odiousgambit
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May 10th, 2015 at 4:03:21 AM permalink
OK, I am going to say what I think and risk offending someone. Thus, you are warned, you may be offended. I'll try to mollify the insulted by saying those people just have a modern view - one I think is flawed though.

I have gotten into these arguments before, with my position being that most of the people who think they are middle-class in fact are not. This insults the people who I am talking about of course, as people figure out I am talking about them. I point out that I am declaring that I am not middle class either, but this does not seem to help.

When I went to find support for my position, I was puzzled to find it difficult. Finally I figured out the problem is, when I was coming up, Class Distribution thing was described as a pyramid, with the upper class thus being rarefied space, and not too many in middle class. Lower class, however, was thus the great preponderance. You can see the problem with "everybody" claiming to be middle class in this scheme. In my search, though, I kept finding class distribution being described as a cylinder [not necessarily in so many words]. Modern sociology may prefer this description, though to me it is idiotic. Clearly a lot of people can be middle class if one third are upper, one third middle, and one third lower!

Perhaps Sociology couldn't stand the reaction from insulted people either and changed to this touchy-feely description. Those same folks, though, are really keen on showing how the 1% tower over everyone else in assets and income. How can they have it both ways?

I don't like describing class in terms of income alone. Total assets are more pertinent IMO. A nice dividing line might be the kind of assets that allow you to live well without income, with demerits for lack of income. Just shooting from the hip here, I'd say 1 million in assets without much income is close to the dividing line. That much in assets with 6-figure income would make you middle class in my book; multi-millions without much income puts you there as well. I'm sorry but [bearing in mind I am a pyramid guy] if you make a family income even of 6 figures, but are hugely in debt, or maybe with just a few thousand in assets above debt, no, I cannot view you as middle class. What if the main wage earner lost the job?

I'm also sorry to say that if the cost of health insurance is a concern for you, well, go for the cylinder distribution model. A middle class denizen IMO could be brought down by a health catastrophe, but not by health insurance. Sorry.

Well, as I have learned, people get offended since they've made 'class' mean so much to them - that's my 2 cents is all. If offended, though, do not read up on what the 1% to 10% are about.
the next time Dame Fortune toys with your heart, your soul and your wallet, raise your glass and praise her thus: “Thanks for nothing, you cold-hearted, evil, damnable, nefarious, low-life, malicious monster from Hell!”   She is, after all, stone deaf. ... Arnold Snyder
Mosca
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May 10th, 2015 at 4:42:30 AM permalink
I analyze a lot of credit applications. A good income in NE PA is usually two people working, totaling around $75k, family of 4. Cost of living here is lower than major metro, but higher than most other small cities. Strong is two people over $100k. Rare is one person over $100k.

About half the applications I see total under $50k, with most single applicants between $2000/mo and $3500/mo. I see some under $2000/mo, most often struggling young adults.
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Mosca
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May 10th, 2015 at 4:51:29 AM permalink
Quote: odiousgambit

OK, I am going to say what I think and risk offending someone. Thus, you are warned, you may be offended. I'll try to mollify the insulted by saying those people just have a modern view - one I think is flawed though.

I have gotten into these arguments before, with my position being that most of the people who think they are middle-class in fact are not. This insults the people who I am talking about of course, as people figure out I am talking about them. I point out that I am declaring that I am not middle class either, but this does not seem to help.

....

Well, as I have learned, people get offended since they've made 'class' mean so much to them - that's my 2 cents is all. If offended, though, do not read up on what the 1% to 10% are about.




I don't think you posted anything offensive at all. Your reasoning is solid. But I will say that it won't convince anyone you are addressing, and also that won't be because you are right. It will be because you define the question differently.

Most people say they are middle class because they feel middle class.

That's really all there is to it. And before you start pointing out that how you feel is irrelevant, I will say that it might be irrelevant economically, but it is hugely important politically.
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odiousgambit
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May 10th, 2015 at 5:16:19 AM permalink
Quote: Mosca

Most people say they are middle class because they feel middle class.



Oh yes, absolutely, and a lot of things figure in for most people. Skin color, regional origin, and education level and some things I am forgetting no doubt. To a lot of people I know, if you graduated from college you are automatically at least middle class. Period.
the next time Dame Fortune toys with your heart, your soul and your wallet, raise your glass and praise her thus: “Thanks for nothing, you cold-hearted, evil, damnable, nefarious, low-life, malicious monster from Hell!”   She is, after all, stone deaf. ... Arnold Snyder
pokerface
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May 10th, 2015 at 5:35:25 AM permalink
Quote: Mosca


Most people say they are middle class because they feel middle class.


For quite a lot of people that's because they are still living in the past.
winning streaks come and go, losing streak never ends.
Mosca
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May 10th, 2015 at 6:02:28 AM permalink
Quote: pokerface

Quote: Mosca


Most people say they are middle class because they feel middle class.


For quite a lot of people that's because they are still living in the past.



Thats not the point. What is relevant is that you can define middle class either objectively or subjectively, and either way is accurate and useful depending on what you are discussing.
A falling knife has no handle.
RS
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May 10th, 2015 at 6:06:00 AM permalink
Another question to ask is -- how do you define middle class?

While others might say as long as you're surviving -- maybe you live in an apartment, aren't in debt, but are living paycheck to paycheck.

One person might say enough to make a little extra money so you can "go out" once a week at a restaurant, 1 vacation a year. But if you lost your job, you'd have 2 months to find another job, before you're "in trouble".

Others might say you can afford to eat out 3-4 times a week, go on 2 vacations a year, live in a 3+ bedroom house (not an apartment), and if you lost your job, you'd be comfortable for 6-8 months without finding another job before you're "in trouble".


Growing up, we almost always out ate for dinner (4 of us). Usually at a place on par with like Applebees, Chilis, Claim Jumper, etc. But it also wouldn't be unusual to go out and have a nice prime rib meal ($150-200) on the weekend. Rarely would we "eat in" at our house, but even then, it was usually because we ordered pizza & pasta from an Italian restaurant and picked it up. I don't think we ever had a "home cooked" meal. Well, occasionally we'd buy steaks at the grocery store and grill 'em. Oh, Sunday nights we would sometimes cook tacos and watch football (or maybe that was Monday nights?). Then again, my mom wasn't too great of a cook (sorry mom!)....and we almost never had any food in our refrigerator, except for leftovers....and power bars for some reason....we had plenty of power bars....ugh.....oh and yogurt and granola [not sure who ate that stuff, I sure didn't!].

But for me, that was part of middle class. Then again, my parents also refused to EVER use the air conditioning or heating. During the summer I'd be laying on the couch half naked with a fan going (those things are so noisy!!)....and during the winter I'd be wearing 2 pairs of sweats [okay, just 1 pair], a long sleeve shirt & a sweatshirt under a blanket. Maybe my parents thought it be better they spend money on eating out at restaurants instead of heat/air-conditioning [that's fine by me!].


I thought we were like lower middle-class since my parents never liked using heat or AC....our house was very much smaller than most of my friends' houses (but....lotta my friends also had really big houses ;) ). But it hadn't occurred to me, that if I wanted to do a sport (which costs money), go on a field trip [or vacation w/ friends], or do something that costed money, it was never an issue...whereas a lot of other kids (well, not A LOT, but some) would have to raise money/fundraise themselves to be able to pay to be able to play football or baseball...or figure out a way to pay for a trumpet or whatever instrument they wanted to play in band (I played the tuba....sh*t's bada$$).



So I guess a lot of it is dependent on your opinion/view and how you were brought up. I know some people who live in multi-million dollar homes and would probably say they are middle class....and others who live in $700-1000 rent homes and would say the same.

I think most people would say they are middle class -- not because that's what they are, but because that's what they believe. But if someone is struggling to get by and barely "hanging on", then at that point I'd say the person would classify themselves as lower class (I think). And if someone is so wealthy they can do whatever the hell they want, like spend thousands on clothes without batting an eye, or buying a $60K+ car with cash...or whatever else really rich people do....then I think they'd classify themselves as upper class.



For income/year, I'd say $50-80K is middle class. $40-50K is lower middle class. $80-150K is upper middle class. $150K+ is upper class. But that's like for a family (2-4 people).
pokerface
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May 10th, 2015 at 6:31:43 AM permalink
Quote: Mosca


What is relevant is that you can define middle class either objectively or subjectively, and either way is accurate and useful depending on what you are discussing.


I generally agree with you.
The issue is if people don't know where the other people are, how could they know themselves are in the middle?
My point is: "feel" is not enough, and is usually wrong.

Many people buying their decent clothes from Walmart, eating at fast food chain restaurants, and still think or feel they are in the middle.
Middle of what?
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teddys
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May 10th, 2015 at 6:45:14 AM permalink
Quote: odiousgambit

OK, I am going to say what I think and risk offending someone. Thus, you are warned, you may be offended. I'll try to mollify the insulted by saying those people just have a modern view - one I think is flawed though.

I have gotten into these arguments before, with my position being that most of the people who think they are middle-class in fact are not. This insults the people who I am talking about of course, as people figure out I am talking about them. I point out that I am declaring that I am not middle class either, but this does not seem to help.

When I went to find support for my position, I was puzzled to find it difficult. Finally I figured out the problem is, when I was coming up, Class Distribution thing was described as a pyramid, with the upper class thus being rarefied space, and not too many in middle class. Lower class, however, was thus the great preponderance. You can see the problem with "everybody" claiming to be middle class in this scheme. In my search, though, I kept finding class distribution being described as a cylinder [not necessarily in so many words]. Modern sociology may prefer this description, though to me it is idiotic. Clearly a lot of people can be middle class if one third are upper, one third middle, and one third lower!

Perhaps Sociology couldn't stand the reaction from insulted people either and changed to this touchy-feely description. Those same folks, though, are really keen on showing how the 1% tower over everyone else in assets and income. How can they have it both ways?

I don't like describing class in terms of income alone. Total assets are more pertinent IMO. A nice dividing line might be the kind of assets that allow you to live well without income, with demerits for lack of income. Just shooting from the hip here, I'd say 1 million in assets without much income is close to the dividing line. That much in assets with 6-figure income would make you middle class in my book; multi-millions without much income puts you there as well. I'm sorry but [bearing in mind I am a pyramid guy] if you make a family income even of 6 figures, but are hugely in debt, or maybe with just a few thousand in assets above debt, no, I cannot view you as middle class. What if the main wage earner lost the job?

I'm also sorry to say that if the cost of health insurance is a concern for you, well, go for the cylinder distribution model. A middle class denizen IMO could be brought down by a health catastrophe, but not by health insurance. Sorry.

Well, as I have learned, people get offended since they've made 'class' mean so much to them - that's my 2 cents is all. If offended, though, do not read up on what the 1% to 10% are about.

Sorry, I disagree with you OG. I do think you need to consider total assets rather than just income, however there's more to it. For example, anyone who bought a house in the San Francisco Bay, Washington D.C., the good boroughs of New York City, and some parts of Boston, Seattle, Chicago, and Los Angeles in the 70s or 80s is legitimately rich right now. I don't care what kind of income you were/are making. If you bought a place in say, Greenwich Village or Georgetown, your real estate has appreciated far, far faster than your income ever could. Also, $1 million in assets of any kind is rich. Remember, assuming you're earning 8% on those assets (even poor money managers can get that), that's $80,000 a year in income that's throwing off. Just because you are not "working'" in the conventional sense does not mean you are not earning income. Of course you should always subtract your liabilities from your assets when calculating net worth.

Where you live has a lot to do with it. Face can have a decent lifestyle in bum-f*** New York :) on very little. Down where I live, on the Ohio River, the barrier is very low as well. $30,000 a year will make you pretty well off.
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odiousgambit
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May 10th, 2015 at 7:02:12 AM permalink
Quote: teddys

Sorry, I disagree with you OG.

That's allowed !

as for your argument, again, depends on how you define it. An upper lower class family can live pretty well in the US, with all modern conveniences, great TV package, unlimited data and phone cell phone package, maybe smart phone too, a couple of cars ... hell, someone on food stamps might not deny themselves much of that.

But it gets back to that pyramid shaped thing to me. Where does the family fit in when you don't define it as 1/3, 1/3, 1/3 of the population for each class?
the next time Dame Fortune toys with your heart, your soul and your wallet, raise your glass and praise her thus: “Thanks for nothing, you cold-hearted, evil, damnable, nefarious, low-life, malicious monster from Hell!”   She is, after all, stone deaf. ... Arnold Snyder
ten2win
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May 10th, 2015 at 7:03:25 AM permalink
Quote: teddys

Face can have a decent lifestyle in bum-f*** New York :) on very little.


That's bum-f*** New York!
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kewlj
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May 10th, 2015 at 7:06:30 AM permalink
Some interesting thoughts posted in this thread.

I have to say that Dieter's qualification of 30% or less of income spent on housing doesn't make sense to me. Here in Vegas there are many inexpensive (cheapo) apartments for $500-$600. They are usually in the bad areas, often referred to as slums. I just don't see that $20,000 income, living in a cheap apartment in a bad area, qualifies as 'middle-class'.

Odiousgambit mentioned total assets. That's interesting. But I sort of think accumulating assets comes with time. As you get later in life, you are more likely to have accumulated a lot of assets. But an older person, living on a fixed income of social security that has managed to accumulate a lifetime of assets doesn't necessarily qualify as middle class do they?

Face and RS shared personal experiences and situations. That wasn't my intent, but was interesting. RS gave examples of eating out as a family almost everyday, some meals in nice restaurants ($2-300 for a family of 4)...that's certainly middle-class. But then skimping on both heat and air conditioning is not and is just weird. Speaks of some issue with priorities. Driving through a lower class neighborhood seeing $60,000 vehicles parked outside homes valued at half that comes to mind. Something 'screwy' there.

RS also got into the issue of how much money you have in reserve, as it relates to if you lost your job. I am not sure that goes to whether or not you might be middle-class at the current moment, as much to how quickly you might drop out of middle-class. ??

What has become clear is that middle class can't be measured in income alone. There has to be a second part of the equation, like income vs expenses, which lends itself to the idea of location and higher costs of living associated with different areas. Major expenses like health insurance would enter into that "vs expenses" second part of the equation. Related to the second part of the equation of 'expenses' would be 'debt', which is something I didn't really think about when asking the initial question. Interesting stuff.
Ibeatyouraces
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May 10th, 2015 at 7:13:45 AM permalink
$500-$600 will get you a whole block of houses in Detroit!
DUHHIIIIIIIII HEARD THAT!
vendman1
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May 10th, 2015 at 7:28:26 AM permalink
Quote: Paigowdan

Depends where you live.

In New York City and in San Francisco, it is $150,000.
In Montgomery, AL, it is $45,000.

What we need is a shaded, color-coded map of the U.S. showing what it is for each locale.



This is what I was going to say. Location is everything. I have some family in the midwest that earn 40K a year and they are rich by the standards of the area. By rich I mean nice 3 or 4 bedroom house on an acre of land (with a doable or no mortgage). A couple of cars, a couple of kids and no worries month to month how the bills are paid. They can afford to go to Outback for dinner instead of McDonalds. By the standards of the area ...they are rich. In NYC or most other major metro areas they'd be poor. Where they live, they feel like they are doing well.
DRich
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May 10th, 2015 at 7:32:53 AM permalink
To me middle class for a family of four would be equivalent to one and a half times the median income of a public school teacher in the area. In Las Vegas that would be about $50k.
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coilman
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May 10th, 2015 at 7:45:47 AM permalink
Quote: Ibeatyouraces

$500-$600 will get you a whole block of houses in Detroit!



You mean a whole block of USED FIRE WOOD ;)

Middle class in Ontario would depend greatly on the city

Windsor tries to sell itself to people from the Toronto area as a place to retire RICH

Sell that house you owned for 30+ yrs in Toronto for $800,000+++ buy a newer larger house in the Windsor area for $200-250,000 that will be 3 times they house you had in Toronto and free up $550,000 to 600,000 to do what ever you might want to in retirement
Dieter
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May 10th, 2015 at 7:46:51 AM permalink
Quote: kewlj

I have to say that Dieter's qualification of 30% or less of income spent on housing doesn't make sense to me. Here in Vegas there are many inexpensive (cheapo) apartments for $500-$600. They are usually in the bad areas, often referred to as slums. I just don't see that $20,000 income, living in a cheap apartment in a bad area, qualifies as 'middle-class'.



Nope, it needs to be combined with the other parts.

Making $75k a year and spending $40k of it on mortgage doesn't put you into middle class.

Making $20k and spending $500 a month on rent is low income (in US society) no matter how you slice it.
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Gabes22
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May 10th, 2015 at 8:09:06 AM permalink
I haven't read the entire thread yet, but I work in the automobile sales and I do see more than my fair share of credit applications. I will qualify my findings giving the facts that I work in the Chicago Metropolitan area which has depending on where you draw the border between 9 and 12 million residents. I find it rare the person who purchases a brand new vehicle that has a family income under $125,000. Many times, even people attempting to finance a new car on their own they make over $100,000. This number makes sense. Most people say you should budget around 10-15% of your take home pay on your car. If you make $125,000 you are taking home probably in the neighborhood of $80,000 before you get some of it back when you fill out your taxes, which is let's just call it $6500 to make it easy. 15% of that is $975. That is two car payments in the high $400s pushing low $500s. $500 per month x 60 months is 30K. When you figure down payment, interest, taxes (9.25% in the City of Chicago, 8.25% outside the city inside Cook County) you are probably talking financing an amount in the upper 20s like 27K. This makes sense to me. Now, is a family that can afford 2 new cars middle class? That is another question altogether.

My typical pre-owned customer is a little more hard to peg as you have many more types of people. Some people have all the money in the world and just never buy new, some people are looking to get a car for their kid who just got a license and some people just don't make enough money and want a reliable car. From my experience, a typical used car family makes between 50-75K per year.
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Gabes22
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May 10th, 2015 at 8:10:32 AM permalink
Quote: Dieter

Nope, it needs to be combined with the other parts.

Making $75k a year and spending $40k of it on mortgage doesn't put you into middle class.

Making $20k and spending $500 a month on rent is low income (in US society) no matter how you slice it.


I would also like to know where you can find an apartment for rent for $500 that isn't in a rat-infested and gunshot riddled ghetto where it is 50/50 as to whether the landlord turns on the heat in the winter
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JohnnyQ
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May 10th, 2015 at 8:14:33 AM permalink
Quote: Paigowdan

What we need is a shaded, color-coded map of the U.S. showing what it is for each locale.


This comes pretty close to that.

Interactive Map of Household Incomes from NY Times

It doesn't account for age (for many jobs, pay increases with years of service). But at least to me, very interesting nonetheless. I am much closer to retirement than I am to the start of my career.

This map doesn't answer Kewlj's question. But it does allow you to see how your household income compares to other households in the same geographic area.

I think the middle class covers a broad range. Maybe the middle 60 % ? Or make it the middle 80 %, but then you subdivide so the top piece of that, the 60 to 80th percentile, is the upper middle class ?


Related 1 Percenters Article:

"The range of wealth in the 1 percent is vast — from households that bring in $380,000 a year, according to census data, up to billionaires like Warren E. Buffett and Bill Gates.

The top 1 percent of earners in a given year receives just under a fifth of the country’s pretax income, about double their share 30 years ago.

They pay just over a fourth of all federal taxes, according to the Tax Policy Center.

In 2007, they accounted for about 30 percent of philanthropic giving, according to Federal Reserve data.

They received 22 percent of their income from capital gains, compared with 2 percent for everybody else".
There's emptiness behind their eyes There's dust in all their hearts They just want to steal us all and take us all apart
Gabes22
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May 10th, 2015 at 8:24:41 AM permalink
IMO there are two different questions posed with what middle class income is. One, you can find the middle range of incomes like 40-60% or 30-70% or 25-75% or even 20-80%. However, I also believe that hidden in the root of the question is whether a middle class income is enough money to get you all the things living in the middle class used to get you.

Is that middle class income enough to get you a good house in a safe neighborhood, with two cars in good condition with enough money to save for retirement, and the college education of your two kids, furthermore never needing to really truly worry about where your next meal is coming from and not ever truly having to worry about the lights or water being turned off.

I personally think the two numbers for these two scenarios are quite different.
A flute with no holes is not a flute, a donut with no holes is a danish
teddys
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May 10th, 2015 at 8:39:55 AM permalink
Quote: Gabes22

I haven't read the entire thread yet, but I work in the automobile sales and I do see more than my fair share of credit applications. I will qualify my findings giving the facts that I work in the Chicago Metropolitan area which has depending on where you draw the border between 9 and 12 million residents. I find it rare the person who purchases a brand new vehicle that has a family income under $125,000. Many times, even people attempting to finance a new car on their own they make over $100,000. This number makes sense. Most people say you should budget around 10-15% of your take home pay on your car. If you make $125,000 you are taking home probably in the neighborhood of $80,000 before you get some of it back when you fill out your taxes, which is let's just call it $6500 to make it easy. 15% of that is $975. That is two car payments in the high $400s pushing low $500s. $500 per month x 60 months is 30K. When you figure down payment, interest, taxes (9.25% in the City of Chicago, 8.25% outside the city inside Cook County) you are probably talking financing an amount in the upper 20s like 27K. This makes sense to me. Now, is a family that can afford 2 new cars middle class? That is another question altogether.

My typical pre-owned customer is a little more hard to peg as you have many more types of people. Some people have all the money in the world and just never buy new, some people are looking to get a car for their kid who just got a license and some people just don't make enough money and want a reliable car. From my experience, a typical used car family makes between 50-75K per year.

This is very interesting to compare your customers versus Mosca's who are in the Northeast Pennsylvania area. Chicago is one of the greatest centers of wealth in the world. I'm guessing your dealership is in the North Shore or one of the other well-off surburban areas like Schaumburg, Barrington, or DuPage County. There, $125,000 is about average. It'll get you by in the lifestyle all your neighbors are living.

I hear the average price of a new car has hit above $30,000. Sales of big SUV's have spiked, but not as much as they did in the '90s. Those people are in for a rude awakening when oil prices push back up. Do you sell premium cars or garden variety Ford-GM-Toyota?

One more thing: No frickin' way a family with an income of $125,000 pays anywhere close to a 36% effective tax rate, even before withholding. The marginal tax bracket for a married couple filing jointly making $125,000 is 25%. Let's call that an effective tax rate of 16%. THEN, you have all the exemptions, deductions for the kids, deductions for the mortgage interest, your tax-loss harvesting on your investments, and every other tax shelter your high-priced accountant can put you in. I'd bet some of those effective tax rates can get down to 13-14%. Did you see Mitt Romney's tax return?
"Dice, verily, are armed with goads and driving-hooks, deceiving and tormenting, causing grievous woe." -Rig Veda 10.34.4
kewlj
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May 10th, 2015 at 8:40:24 AM permalink
Quote: JohnnyQ

This comes pretty close to that.

Interactive Map of Household Incomes from NY Times



That's a cool (or kewl) interactive map. That would have got right to the heart of my discussion with my pit boss friend. Averaging out my last 5 years income, I would be in the upper 23% for Las Vegas, which puts me pretty solidly in the middle class, as was my contention. (maybe even upper middle class) :)

While my friend argument that a dealer or floor person making 45-50 grand would put them in the lower 41%, which is also still 'middle-class', but maybe heading towards lower 'middle-class'.

Of course when you start factoring in my lack of job related benefits, health insurance being the biggie, I start to slide back closer to 'middle' middle-class. :/ Although maybe if I counted eating out daily as part of my income, which I don't really count, I begin to rise again. Seems to be a really slippery, sliding scale for someone like me. lol.
FinsRule
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May 10th, 2015 at 9:21:16 AM permalink
Gabes, I'm gonna need a minivan soon. Wanna sell me one?
teddys
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May 10th, 2015 at 9:27:23 AM permalink
Mission146 and I were talking about opening up a used car dealership. So please come to Mission & Ted's Crazy House Of Auto Deals for your next car purchase. You roll dice to determine your interest rate. One of the dice is already a two.
"Dice, verily, are armed with goads and driving-hooks, deceiving and tormenting, causing grievous woe." -Rig Veda 10.34.4
Gabes22
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May 10th, 2015 at 9:30:56 AM permalink
Quote: teddys

This is very interesting to compare your customers versus Mosca's who are in the Northeast Pennsylvania area. Chicago is one of the greatest centers of wealth in the world. I'm guessing your dealership is in the North Shore or one of the other well-off surburban areas like Schaumburg, Barrington, or DuPage County. There, $125,000 is about average. It'll get you by in the lifestyle all your neighbors are living.

I hear the average price of a new car has hit above $30,000. Sales of big SUV's have spiked, but not as much as they did in the '90s. Those people are in for a rude awakening when oil prices push back up. Do you sell premium cars or garden variety Ford-GM-Toyota?

One more thing: No frickin' way a family with an income of $125,000 pays anywhere close to a 36% effective tax rate, even before withholding. The marginal tax bracket for a married couple filing jointly making $125,000 is 25%. Let's call that an effective tax rate of 16%. THEN, you have all the exemptions, deductions for the kids, deductions for the mortgage interest, your tax-loss harvesting on your investments, and every other tax shelter your high-priced accountant can put you in. I'd bet some of those effective tax rates can get down to 13-14%. Did you see Mitt Romney's tax return?


I am talking about take home pay vs what you are actually paid. And as I am sure from your paycheck, everything withheld isn't solely tax. Yes, there is Fed tax, State income tax, Medicare, Social Security etc, but most people also have health insurance, vision, dental, perhaps some accidental death, 401K etc.

Also, I sell Subarus. Firmly not in the luxury line, but definitely not in the economy line of cars. But my dealership is not in the North Shore or in some well off suburb. It is roughly halfway between downtown and O'Hare in an area of town that not a ton of people even think about moving to when they come to Chicago. It sounds like you are familiar with the city. It is in an area of town called Old Irving Park
A flute with no holes is not a flute, a donut with no holes is a danish
Gabes22
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May 10th, 2015 at 9:47:26 AM permalink
Also the price of a new car, I would say is right around to slightly above $30,000 but when you factor in trim levels and stuff like that it gets a little murky. Take a Subaru Forester. They range in MSRP from roughly 23K for a base model with manual transmission, but a fully loaded XT is around 40K. The most popular trim levels, where IMO most people are, would be the Premium or Limited trim packages, MSRP for roughly 27K- 31K.

Can you find good new cars under 30k? Of course, you will probably trade some space, performance, perhaps a few safety features, but there are many good cars under 30K. The days of getting a new car under 20K are quickly disappearing. Yes you can get a Honda Fit or base Ford Focus or something like that under 20K but nothing resembling a full size or mid size car for the most part
A flute with no holes is not a flute, a donut with no holes is a danish
ontariodealer
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May 10th, 2015 at 9:52:38 AM permalink
when I went to school long ago, there were three rooms 1,2 and 3.........#2 was middle class.
get second you pig
FinsRule
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May 10th, 2015 at 9:59:07 AM permalink
My brother is looking for a Subaru. Is there a wizard of Vegas friends and family discount?
Gabes22
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May 10th, 2015 at 10:00:45 AM permalink
LOL!!
A flute with no holes is not a flute, a donut with no holes is a danish
teddys
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May 10th, 2015 at 10:36:46 AM permalink
Quote: Gabes22

Also, I sell Subarus. Firmly not in the luxury line, but definitely not in the economy line of cars. But my dealership is not in the North Shore or in some well off suburb. It is roughly halfway between downtown and O'Hare in an area of town that not a ton of people even think about moving to when they come to Chicago. It sounds like you are familiar with the city. It is in an area of town called Old Irving Park

That's a nice area. Do you live there? More people should think about moving there in my opinion.

You are the closest Subaru dealer to the City so I bet you get a lot of city folks. They love their Subarus :) Peer badge.
"Dice, verily, are armed with goads and driving-hooks, deceiving and tormenting, causing grievous woe." -Rig Veda 10.34.4
Gabes22
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May 10th, 2015 at 10:44:35 AM permalink
It actually is the city, and in fact, is the only Subaru dealership within the city's limits. It is a nice area. I hang out there now that I know more about it. 75% of my customers are from the city I would say, but I live out in the suburbs in Downers Grove.
A flute with no holes is not a flute, a donut with no holes is a danish
EvenBob
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May 10th, 2015 at 12:03:53 PM permalink
In HS we were taught there were
three levels of middle class. Lower,
mid, and upper. Doctors and lawyers
were in the upper middle class,
businessmen were in the middle, and
factory and retail workers were in
the lower middle class.

There were 3 branches of lower class
and upper class also. Has that changed?
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djatc
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May 10th, 2015 at 12:42:07 PM permalink
Quote: teddys

Mission146 and I were talking about opening up a used car dealership. So please come to Mission & Ted's Crazy House Of Auto Deals for your next car purchase. You roll dice to determine your interest rate. One of the dice is already a two.



Horrible idea. Watch all the dice influencers clean out your inventory.
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FinsRule
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May 10th, 2015 at 12:45:43 PM permalink
Quote: Gabes22

It actually is the city, and in fact, is the only Subaru dealership within the city's limits. It is a nice area. I hang out there now that I know more about it. 75% of my customers are from the city I would say, but I live out in the suburbs in Downers Grove.



Hey neighbor. I can see Downers Grove from my house (almost). I live in Woodridge.
Gabes22
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May 10th, 2015 at 1:05:34 PM permalink
Quote: FinsRule

Hey neighbor. I can see Downers Grove from my house (almost). I live in Woodridge.


Hi neighbor as well. I can basically see Woodridge from my place as I am on the far south end of DG
A flute with no holes is not a flute, a donut with no holes is a danish
teddys
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May 10th, 2015 at 1:11:14 PM permalink
Quote: Gabes22

It actually is the city, and in fact, is the only Subaru dealership within the city's limits. It is a nice area. I hang out there now that I know more about it. 75% of my customers are from the city I would say, but I live out in the suburbs in Downers Grove.

It is amazing how much wealth is concentrating in the center city -- River North, West Loop, Bucktown, Wicker Park, Lincoln Park, Uptown, etc. Most of the younger generation doesn't want to move out to the suburbs (or they are delaying it). My sister lives in Lincoln Park. Suffice it to say you guys would be doing backflips over each other to get her sale if she ever came through the door :) But she doesn't have a car. Good for her. She takes the El to work.
"Dice, verily, are armed with goads and driving-hooks, deceiving and tormenting, causing grievous woe." -Rig Veda 10.34.4
Gabes22
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May 10th, 2015 at 1:24:47 PM permalink
Quote: teddys

It is amazing how much wealth is concentrating in the center city -- River North, West Loop, Bucktown, Wicker Park, Lincoln Park, Uptown, etc. Most of the younger generation doesn't want to move out to the suburbs (or they are delaying it). My sister lives in Lincoln Park. Suffice it to say you guys would be doing backflips over each other to get her sale if she ever came through the door :) But she doesn't have a car. Good for her. She takes the El to work.



Yeah, the tearing down of Cabrini Green 20-25 years ago and the creation of the enterprise zone has really changed the economics of the city. Just take a drive from downtown out to the United Center. I would feel safe making that walk today, 20-25 years ago it resembled a demilitarized zone. Many of the people who have been displaced by the demolition of places like Cabrini Green or the Robert Taylor Homes (although that area is still pretty empty and will be an area for development down the road) has created a bunch of transplants into places like Joliet or Plainfield or Aurora and has created a whole new set of problems in those areas. Me, I am 36 years old, and you couldn't pay me to live in the City. From my experience, most people in their 20s to early 30s continue to live in the city. When they move out to the burbs is when they have to start sending their kids to school. If you have the money to live in a place where your kids don't go to a Chicago Public School you get the hell out of dodge
A flute with no holes is not a flute, a donut with no holes is a danish
Face
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May 10th, 2015 at 2:45:33 PM permalink
Quote: ten2win

That's bum-f*** New York



Indeed. I edited it.

Quote: kewlj


Face and RS shared personal experiences and situations. That wasn't my intent, but was interesting.



Just doing so so you can see where I was coming from. I know where "they" say poverty, middle, rich, etc fall. It does not fit what I see around me. I remember being totally independent with bills and rent and car payments and all that jazz, making $9/hr with a g/f that made around $14/hr. Despite her having her own set of bills, we never really struggled and had enough left over for me to buy a street bike. First "new" thing I ever owned. And still had money to pay for the gas for the 11k miles I put on it in 6 months, and all the customizing I did to it, and fixing it when I wrecked it. When I bumped up into the $20/hr territory, I had a house and a big truck and that bike and an ATV... where you live makes a big difference.

Even as bad as divorce crippled me financially, I was still able to keep my boat and all my guns, reduce my $40k debt down to $5k, fix being $3k underwater on my truck, start a race team, sail the Caribbean... I ain't never made more than $46k p/yr. "They" can say middle class ends at $150k. I'm saying give me less than half that and I wouldn't even know how to spend it all. With $60k/yr, I'd have two race cars and a hauler and two ATVs and a bigger boat and would be building my new truck and running a small business out of my garage and hunting elk in Wyoming every Fall and sailing the Caribbean every winter and buying fancy dijon ketchups, and, and, and... I'd be rich.

Quote: teddys

Mission146 and I were talking about opening up a used car dealership. So please come to Mission & Ted's Crazy House Of Auto Deals for your next car purchase. You roll dice to determine your interest rate. One of the dice is already a two.



BWAhahaha! OMG, I'm dying XD

You sound like my kind of people. If you need a mechanic, gopher, lot monkey, or whatever, I am on the market XD
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petroglyph
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May 10th, 2015 at 2:52:34 PM permalink
Expenses rise to meet income.
Face
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May 10th, 2015 at 3:11:57 PM permalink
Quote: petroglyph

Expenses rise to meet income.



Do they ever. I realized that almost instantly, and plan to live accordingly.

Like I said, I've been moseying around on a $21k/yr income since 1/01. It is not fun, but I'm not in danger of defaulting. Granted, if I was the type to address separated shoulders and/or broken bones, that $21k wouldn't be possible. And anything worse, even a blown tranny, and I'd be in some serious s#$%. But if I can live "normally" on so little, god, how much could I be saving when I'm regularly employed? How much have I been wasting just because it was convenient, or because I needed to fill some hole in my soul for a moment?

Forget living within means. Time to live well below*

*Does not apply to guns, race cars, or fishing gear ;)
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AZDuffman
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May 10th, 2015 at 4:39:14 PM permalink
Quote: teddys

Mission146 and I were talking about opening up a used car dealership. So please come to Mission & Ted's Crazy House Of Auto Deals for your next car purchase. You roll dice to determine your interest rate. One of the dice is already a two.



Hey, come to my town and count me in! Until drilling picks up more I need a fallback! There is a perfect place right on the main drag!

Quote: Gabes22

I haven't read the entire thread yet, but I work in the automobile sales and I do see more than my fair share of credit applications. I will qualify my findings giving the facts that I work in the Chicago Metropolitan area which has depending on where you draw the border between 9 and 12 million residents. I find it rare the person who purchases a brand new vehicle that has a family income under $125,000. Many times, even people attempting to finance a new car on their own they make over $100,000. This number makes sense. Most people say you should budget around 10-15% of your take home pay on your car. If you make $125,000 you are taking home probably in the neighborhood of $80,000 before you get some of it back when you fill out your taxes, which is let's just call it $6500 to make it easy. 15% of that is $975. That is two car payments in the high $400s pushing low $500s. $500 per month x 60 months is 30K. When you figure down payment, interest, taxes (9.25% in the City of Chicago, 8.25% outside the city inside Cook County) you are probably talking financing an amount in the upper 20s like 27K. This makes sense to me. Now, is a family that can afford 2 new cars middle class? That is another question altogether.

My typical pre-owned customer is a little more hard to peg as you have many more types of people. Some people have all the money in the world and just never buy new, some people are looking to get a car for their kid who just got a license and some people just don't make enough money and want a reliable car. From my experience, a typical used car family makes between 50-75K per year.



I did auto loans for awhile and was totally shocked. First, we would pre-approve people for 50 large, though this was before the Panic of 2008. And what people figured was a reasonable car payment? $400 a month on income of $30K? That really stretches people to the point of being a flat tire away from real problems.

The car market it wildly tilting to luxury and upname brands the last few years. My standard has become your drive-off price should not be more than 50% of your annual income. So you make $30K a year and $15K is your limit, which means you have no business even thinking new. But so many people do. LET THEM! Sharps like myself who refuse to buy into it all save more and more cash!
All animals are equal, but some are more equal than others
Dieter
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May 10th, 2015 at 9:55:52 PM permalink
Quote: Gabes22

I would also like to know where you can find an apartment for rent for $500 that isn't in a rat-infested and gunshot riddled ghetto where it is 50/50 as to whether the landlord turns on the heat in the winter



It's doable, but you're looking at an efficiency for college juniors.
May the cards fall in your favor.
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