The Definition Of A Middle Class Lifestyle Is The Same As It Ever Was

Definition of a middle class lifestyle is the same as it ever was

The definition of a middle class lifestyle has been consistent for over 50 years. Yet, for some reason, there is still debate on what consists of being middle class. Being middle class isn't about how much money you make. Being middle class is about what type of lifestyle your money can afford.

Whenever I publish posts with six figure household incomes and detailed expenses my comments section and social media light up with displeasure.

Instead of accepting the fact that higher income leads to higher taxes and that living in large metropolitan areas result in higher expenses than in less densely populated parts of the country, there is denial.

There's also a segment of people who display hatred for high income earners. It's as if living in a three bedroom house and wanting to eat healthier in order to be around to see their children grow up is an affront to their way of life.

Pushback Against Middle Class Definitions

Based on my observations, here are the types of people most outraged by others paying a lot of taxes while also trying to raise kids and save for retirement in an expensive city:

  • People who don't live in an expensive coastal city.
  • People who don't have kids.
  • Students who haven't even gotten a job yet.
  • People who see a $1.5M house price tag and scoff, but don't understand that if the median house price is $1.5M, then the house is quite average.
  • People who work 40 hours a week or less and think they should be far ahead of the game compared to their peers who work 60 hours a week or more.
  • People who are too afraid to make a change in their career or are too afraid to move for an opportunity.
  • People who don't tell the full story of how they make ends meet e.g. a reader claims to save $200K on a 300K income without explaining his taxes and housing situation.
  • People who have a tendency to discriminate against others, otherwise, they would be more accepting of other people's situations.
  • People who feel their reality is the only reality that counts.

What the heck is going on folks?! It’s OK to be skeptical and disagree, but to hate is unbecoming.

If you are easily triggered in a personal finance context, I've got a solution for you. Focus on achieving equality instead of being mesmerized by the numbers. 

A Middle Class LIFESTYLE Is All We Want

People who see others making $200,000, $300,000, and $500,000 a year are too caught up in the numbers. Instead, focus on the lifestyle.

If a household making $300,000 in New York City is living the same lifestyle as a household making $80,000 living in Des Moines, Iowa, why are the two any different?

There is no hate against the $80,000 household living in the Midwest. So why is there hate directed at the $300,000 household who is stuck living in New York City due to their jobs?

We've been fighting discrimination in America since the Civil War folks. Is there any wonder why Stealth Wealth is alive and well? Let's be more accepting of others.

Middle Class Income And Middle Class House

We all know what a middle class INCOME is. That's easy to find out from the government. The median household income is roughly $75,000 in 2023. Therefore, if you make +/- 50% of $75,000, or $37,500 to $112,500, you have a middle-class income.

The median home price in America is ~$420,000. Therefore, if you make +/-% 50% of the median home price, or $200,000 – $600,000, you likely own a middle-class home. Obviously, you want to take the median income and median home price of your city to get a better idea of whether you are middle class or not.

The below chart defines five social classes by 2014 incomes from the Urban Institute. Thanks to inflation, you should add 25% to every income figure.

Notice how the Urban Institute says a family of three who earns up to $349,999 are still considered middle class? And that was in 2014! Surely, the Urban Institute has raised the upper-limit of middle class income to over $399,999 ten years later.

It's nice to know a Washington D.C. based think tank founded in 1968 agrees with my $300,000 middle class lifestyle assessment.

Defining the middle class by income



Definition Of A Middle Class Lifestyle

  • Having a job that can comfortably, not extravagantly, support a family.
  • Being able to afford a safe car to commute to work and reduce injury and fatality from accidents.
  • Being able to take 2 – 4 weeks of vacation a year with the family.
  • Being able to retire when Social Security kicks in at 62, at the earliest.
  • Being able to save enough in your tax-advantaged retirement accounts in order for Social Security to be enough.
  • Being able to send your child to college, since college is fast becoming a minimum educational requirement to get many different types of jobs.
  • Being able to go out on dates and see friends once a week without feeling immense financial strain.
  • Being able to care for aging parents when they need assistance.
  • Being able to eat healthy foods to avoid being one of the 45 percent who are obese in America.
  • Being able to pay no more than 5X your household income for a two bedroom house.

If you'd like to argue why one of the bullet points shouldn't be part of a middle class lifestyle, please feel free to elaborate. I firmly believe that every decent human being who works hard deserves a middle class lifestyle.

Do not accept the pitiful deflationary state of the average American with $5,000 in retirement savings.

Confused About What You Don't Know

Here's Frank, a renter, who cannot see the $19,200 in property taxes and $3,600 in property maintenance expenses when he pokes at Catcoder for rounding up $24K in taxes. This is a discussion about my $300,000 household income budget.

I can promise you that if you are a homeowner who has to pay $24,000 a year in property taxes and maintenance expenses every year, you will know! In other words, judging people without being in their shoes isn’t productive.

you don't know what you don't know.

Since we obviously don't all live in the same part of the country, it's logical to assume that different levels of income are required to provide for a middle class lifestyle. Yet for some reason, people don't accept this logic.

If you define yourself based on an income or a net worth amount, then you either have low self-esteem or have a completely backward view about money. A middle class lifestyle is about living.

Geo-Arbitrage Is A No Brainer

Despite clearly stating that $300,000 is equal to $100,000 – $150,000 in non-coastal cities, some folks still cannot accept the equation. The national ideal income is around $125,000 based on the student loan forgiveness income threshold.

Here's one viewpoint from a reader who also believes living in a lower cost area of the country makes sense.

Perspective From Singapore

“I lived in Singapore for 5 years (consistently ranked no 1 in total cost of living worldwide). I came away from that (pricey) experience telling myself I will never live in a high COL area again if given the choice.

It’s incredible how many people in other countries have no choice but to live in their country’s high cost of living areas due to various factors outside their control. Geo-arbitrage is truly one of the mightiest tools in the US that many people elsewhere simply do not have, or not to the same degree.

Some people are forced to go where the work is. But is the quality of life in the expensive coastal cities so great to offset the total life cost? I’ve seen that lifestyle and for me it’s simply not worth it.

The number of life options given to me in a lower cost of living area far outweigh the downsides. If I reach financial independence far faster living in flyover country for a few years, I can then spend my time visiting expensive areas and enjoying their amenities.”

Earn your fortune in a city that pays you more and move, because you can. If you cannot, enjoy your low cost lifestyle and be happy with what you have.

A Higher Income Is Required To Live A Middle Class Lifestyle Due To Inflation

Below is a great chart that shows the cost of goods and services since 2000. If you want to live a middle class lifestyle and own a home and send your kids to college, you're going to have to get long real estate and save aggressively in your 529 plans.

Take Action To Improve Your Life

Please do something about your life if you are not happy with it. Hating on people who make and spend more than you is a waste of time. Your feelings will only make you more miserable.

Save aggressively, invest aggressively, take more calculated risks, and get neutral inflation by owning your own home. The animosity renters have towards homeowners and the real estate market will simply grow.

If you are easily offended by anybody for any reason, ask yourself the following questions:

  • Do I hate them because I hate myself?
  • Do I hate their achievements because I'm unwilling to work as hard as them?
  • Do I hate them because I'm prejudice against certain types of races, sexes, and cultures?
  • Do I hate them because I wish I had what they have?
  • What actions should I take to change my life?

Once you get down to the real reason for not being able to understand the difference between middle class income and middle class lifestyle, you can take purposeful steps to improve your situation. The only people who fail are those who take no initiative to change.

Long Live The Middle Class, Lifestyle!

For good measure, here's the updated spreadsheet for a $300,000 a year household of three after listening to everybody's feedback. Major changes include swapping out a Volvo for a Toyota Highlander, reducing the food budget from $2,100/month to $1,650/month, including a mobile phone family plan, and increasing charitable givings and 529 contributions.

Surely after making the changes, no one can argue that this is now a “more true” middle class lifestyle.

Why Households Need To Make $300,000 To Live A Middle Class Lifestyle Today

Related: How To Convince People You Are Middle Class When You're Actually Rich

Recommendation To Build Wealth

Sign up for Empower, the web’s #1 free wealth management tool to get a better handle on your finances. In addition to better money oversight, run your investments through their award-winning Investment Checkup tool to see exactly how much you are paying in fees. I was paying $1,700 a year in fees I had no idea I was paying.

After you link all your accounts, use their Retirement Planning calculator. It pulls your real data to give you as pure an estimation of your financial future as possible.  

I’ve been using Empower since 2012. Since then, I have seen my net worth skyrocket during this time thanks to better money management. Personal Capital has definitely helped our family live a solid middle class lifestyle.

Personal Capital Retirement Planner Tool

Build A Middle Class Lifestyle Through Real Estate

Real estate is a core asset class that has proven to build long-term wealth for Americans. Real estate is a tangible asset that provides utility and a steady stream of income if you own rental properties. If you want a middle class lifestyle, own your primary residence and invest in real estate.

By owning your own home, you will have covered one of the foundations of living a middle class lifestyle. To get to upper-middle class, you must build a solid investment portfolio that produces passive income.

Take a look at Fundrise, my favorite private real estate investment platform. Fundrise wisely invests in Sunbelt real estate with lower valuations and higher cap rates. The demographic trend toward lower-cost areas of the countries is here to stay. Technology, WFH, and the pandemic ensured this.

CrowdStreet is a way for accredited investors to invest in individual real estate opportunities mostly in 18-hour cities. 18-hour cities are secondary cities with lower valuations and higher rental yields. Further, 18-hour cities potentially have higher growth due to job growth and demographic trends.

I've personally invested $810,000 in real estate crowdfunding across 18 projects. My goal is to take advantage of lower valuations in the heartland of America.

My real estate investments account for roughly 50% of my current passive income. As a result, my family of four can comfortably live a middle class lifestyle without much difficulty.

Invest In Private Growth Companies

Finally, consider diversifying into private growth companies through an open venture capital fund. Companies are staying private for longer, as a result, more gains are accruing to private company investors. Finding the next Google or Apple before going public can be a life-changing investment. 

Check out the Innovation Fund, which invests in the following five sectors:

  • Artificial Intelligence & Machine Learning
  • Modern Data Infrastructure
  • Development Operations (DevOps)
  • Financial Technology (FinTech)
  • Real Estate & Property Technology (PropTech)

Roughly 35% of the Innovation Fund is invested in artificial intelligence, which I'm extremely bullish about. In 20 years, I don't want my kids wondering why I didn't invest in AI or work in AI!

The investment minimum is also only $10. Most venture capital funds have a $250,000+ minimum. 

183 thoughts on “The Definition Of A Middle Class Lifestyle Is The Same As It Ever Was”

  1. Hi Sam, small nitpick…your chart has a math error for the “car insurance and maintenance,” – $150 per month is $1800 per year (not $1200).

    Incidentally, I think the $1800 figure is more accurate than $1200. Insurance will be $700-800, and then we typically see about $100 per month on maintenance.

    Also, I don’t see a line item for parking! Did you include that in “gas”? Parking can be $200-400 or more per month in most large cities, especially if you have to commute in to work in the downtown area. Most of the time, because of unpredictable work schedules and child care requirements, taking public transportation is either impossible or impractical for these families.

  2. I wish I would’ve read this post earlier! This sums up my in-laws! We live in DC, and we make 270K per year, but we pay high property taxes, 2 car payments, a high mortgage, etc. Every time my in laws visit, they make infuriating comments about how we “pay too much” for things like hair cuts or a cleaning service. I’ve repeatedly told them that you can’t compare the prices they pay in AZ to DC, because of the higher overhead here, but they just give me blank stares. They also refuse to listen to a point where it’s sad, because they are so closed off, they will never learn anything new or fun. They think they know it all and give snippy responses to any new suggestions like online shopping! God forbid! They don’t understand that that’s the way most young people shop. Being around them is like being in a time warp.

    1. I’m in a similar financial situation to you but I live in a location where everything is nice & cheap. So while I’m feeding my retirement, my children’s education funds, and my belly you’re feeding the system. Good job. Keep hemorrhaging that cash!

  3. $76k fed+state+FICA total on $300k gross sounds extremely low to me. Are you using 2018’s tax bracket?

    Heck, I just finished my tax return, need to triple check if I’m paying way too much…You are making me nervous…

  4. Reality is if you live in a city where you make 300k ask around and you will see that the other 80% it’s making less than half of the 300k guess what they are doing just fine…. in San Francisco is no different, you wont die making 80k or 100k now if you make 300k and want to spend more than that person who makes 100k then to them you are doing 3 to 4 times their money what does that make you in their minds? Let’s compare this the 100k in Sf cant but you a property so if you make 300k it does… in the past few years you could have made 1 or 2 million dollars if you sell today? What does the 100k maker has? Exactly nothing. The person making 300k even if they spend everything but sold the property today and move out to the midwest could potentially retire if they want to in just the 6 years of appreciation in sf housing market. Also, to banks 300k would loan you whatever you want, and the 100k woulnt get the same advantage… I mean, what you are saying Sam it’s the same thing as someone making 1 million a year buying a 10 million home and they too potentially live pay check to pay check…? Why isn’t that person be referred as middle class even living pay check to pay check? It’s the same thing if you leave pay check to pay check making 50k or 150k? Or maybe 300k? Then it’s safe to call it low, middle and higher… it’s just decicions.

    1. How does someone buy a $1.5 million median price property making less than $100,000 a year? His stork all definition of a middle-class lifestyle is owning your property and paying it off through your career, and not paying $5000 a month for a two bedroom apartment for life. This is a big predicament for many people who live in expensive cities who want to raise a family.

  5. Hi, Thank you for this article. I really enjoy reading your blog posts. The one reason that I would dispute you assertion that this is a middle class budget is that it contains few tradeoffs. This hypothetical family can fully fund their 401k, pay for private school, and take 3 weeks of vacations. You might say they are not flying first class everywhere they are going and that’s a tradeoff, but I don’t think you would try to make that argument. Without a hard definition of middle class, we could probably argue this point forever. But for me, the lack of a need to make truly hard decisions is a luxury that puts this kind of income into the wealthy category.

  6. Thanks for this article. I live in a high cost of living area, Wash DC, with some of the highest per capita income state in the world. As someone who follows quite a few FI blogs, I had started to get the impression that every family in the FI community lives off of $30-$40K per year. I was sort of bummed out that our family of four was able to pull off a similar lifestyle for $107,000 per year. So this makes a perfect bookend. I think it would be kind of a cool idea if you could create some sort of survey where everyone could fill in their basic expenses and it would kick out an average that could be sorted by geography. I’ve found that once you solve the real estate issue, either by house hacking, owning your home outright, or staying in one place for 20 years it’s easier to manage the other costs like groceries, automobiles, education regardless of where you live.

  7. Sam,
    I have liked your blog for years. Aside for the fact that I live in MN in a McMansion and that you call where I live “fly over country” this is insulting. Call it the Midwest please.

    Separately, I think that it does not matter if you are part of the 2% at $300k or the median US resident at 50% with 40k. It’s just irrelevant. One chooses the weather and the beach, the other the low crime rate, or the quality education. It does not matter in the big picture.
    There is a great article by a California professor that showed that the 50% people are servants to the 1% people taking care of their food via restaurant or their kid’s day care or schooling as teachers… but those 1% people are themselves servants to the Uber rich. The $30M UHNW families which are 80,000 big. Those use private jets with net jets. Then there are the 100M class of a few thousands that have a plane, and finally the billionaires that are controlling the way the country functions.
    So, in the grand pictures it is sad to watch the poor servant arguing with the priciledged servant. They are both servants fighting over the crumbs.
    By we way, I am happy with the crumbs. I know where I belong. But it seems not every one here does.
    An analogy would be the average NFL fan complaining about the salary of the wide receiver that makes good money for only a few years and is judged while the franchise owner is accepted for his net worth. Very hypocritical.

    1. Hi FranceUSA – Thanks for sharing. I used “non-coastal city” in my article, not fly over country. But speaking of the name, can MidWest be used to identify states in the South or SouthEast? Or does one have to say “MidWest, South, Southeast, etc” to identify non coastal states?

      The NFL analogy runs true. Sorry about the Vikings last year. Go Niners and Raiders!

  8. First time reader and commenter here. Truly an interesting subject.

    A little background: I grew up poverty level poor in rural Maine in the 70s/80s. Neither of my parents finished HS. I was the 7th of 7 kids, and only the second to get a 4 year college degree–a BS in nursing. I married my husband (he’s a HS teacher) during college, and we were able to graduate with only $1800 in student loans, which we paid off very quickly. He grew up middle class midwest, but neither of us had parents who paid for college, and we both worked 2-3 jobs each while attending full time to pay for our own schooling. We proceeded to have 4 kids in 5.5 years and lived in a small city in North Carolina for the next 16 years. While our kids were home, I only worked part time with the exception of 3 years. For the first 12 years of our marriage, we never made more than 35K net between us, and never more than double that for the next 7 or so. I homeschooled for the early years, and then our kids attended the private school where my husband taught. We have always lived below our means: buying fixing upper homes, brown bagging lunches, cooking at home, shopping yard sales and thrift stores, saving to buy used vehicles, never carrying credit card debt, taking vacations that mainly consisted of visiting family and friends and staying local, doing our own routine car maintenance, etc, etc. We also always paid into our 401Ks to get the match from our employers, which obviously wasn’t a huge amount, but it adds up. Neither of us have ever felt deprived or jealous of those who make more, nor have we aspired to make a lot of money. We were/are pretty content with what we have, and also happy for those who choose to make more.

    Fast forward to 2012. We decided to take the plunge and work overseas at an International School. My husband applied and got several offers. At this point, our oldest was in college and our 3 youngest were in grades 9, 10 and 11. We ended up choosing Hong Kong, which consistently ranks first or second as the city with the HCOL in the world. When we moved, we sold our home in NC and paid off our family cabin in rural Maine. We came to HK with zero debt. While we moved for my husband’s job, after we arrived, I was able to work as the school nurse, but I get paid on a secretarial scale as I do not have a HK nursing license. Since arriving, we have been able to live very frugally, while still traveling extensively. Our school pays a housing stipend, and if you do not use it all, you can keep the difference, so we have always found the cheapest apartments available–we currently pay $1700 USD for 400sf, while many routinely pay 5-10K or more. We pay nothing OOP for health insurance, and our kids, (who have now all graduated and are in college) were able to attend a top notch high school for free. The school also pays to fly us home every other year, and we have very low commuting costs as we have chosen not to have a vehicle here. We have been able to save/pay for kids college/buy real estate with approximately 50% of our income. We still have zero debt, and we still barely cross the 6 figure theshold between us. We still cook at home most nights and brown bag lunches. I buy most of our clothes at thrift stores.

    I say this to say that no matter where you live, there are choices. I also understand that while most people who make a lot of money want to live a lifestyle that is equal to that choice, there are always ways to save more. Growing up amongst the poorest in the US, I rountinely saw people waste money on booze, cigarettes, and lotto tickets all the while collecting food stamps and disability checks. The choices that the rich make can sometimes seem equally puzzling to me, but we all have our reasons for doing what we do.

    Like you, what I have noticed is that the general population tends to blow off (or get downright ugly!)about any ideas you have about frugal living if you exhibit even a modicum of wealth (like traveling), little realizing that most of us who “make it’ do so through a series of choices. My only beef is with people who claim they can barely get by on $x, but choose to spend money on things that truly aren’t necessary for living. If you want a 80K vehicle, private education, 3 vacations a year, fancy meals out—great!! But please just own it, and don’t tell me how hard your life is.

    Just thought I’d share my story. Thanks for a great blog!

    1. Thanks for sharing! Having your kids attend the private school where your husband taught is truly one of the best benefits of teaching. I’ve thought about this for my son, I really have. And I probably will apply to be a teacher in Honolulu somewhere. My good friend got to go to Georgetown for free b/c his mom worked there! Not bad!

      HKIS? HK is so expensive… I couldn’t live there. But I did visit 11 or so times for the HK Rugby Sevens. What a blast! Where are your kids going to college?

  9. I was immediately reminded of an article I saw a while back on EarlyRetirementNow–the title was “This place has extreme wealth inequality, yet everybody is happy!” The author was, of course, talking about the world of personal finance bloggers and those who are striving for early retirement.

    A nice counterpoint to the experiences you’re relating here, Sam. Just remember that not everyone is a hater! :)

  10. Okay, I’ll be honest: I was an avid reader of Financial Samurai for years. But then I started feeling like I couldn’t relate to the numbers. As more articles started referencing “above average” people, I kind of checked out. I’m not at a point in my life where I’m pushing myself work/earnings-wise, and I’m okay with that (right now).

    Our Next Life got me thinking about “middle class” when she pointed out that the median household income in the US is $57,000. There were some comments that pointed to this blog, which piqued my curiosity. Reading the comments here has really gotten me thinking. So:

    I live on the outskirts of Indianapolis, Indiana. I’ve never looked in to where we rank cost of living wise, but I know where you are in the city and outlying areas makes a huge difference. Regardless, MUCH lower than coastal areas.

    I have a salaried income of $56,000/year. My fiancee is hourly, in a weather dependent job. He usually earns in the low 50’s, although this year is looking better.

    He has adult children that we don’t support; I have no children. We do provide minimal financial support for his mother.

    We bought a fixer-upper house at the end of last year, rolling the major renovations in to the mortgage. We bought the house for $55,000. With renovations, the mortgage is for $88,000. It originally appraised for $105,000. Property taxes are around $1,200/year. Our house is a 3 bedroom, 1.5 bath ranch, with a full basement, and large two car attached garage, on an acre of land.

    I drive a 2014 Ford Escape, that is paid in full. My fiancee drives a 2014 Chevy High Country, which we bought used a few years ago, and have a $639/month payment on.

    My first thought on the breakdown was that some of those expenses are high. But, that’s the same thought I have when I’m looking at our spending. We take 1, maybe 2 “real” vacations a year, spending $2,000-3,000 each. We don’t spend a lot at the grocery (>$100/week), but spend way too much at the bar (Not even gonna go there). I calculated a few weeks ago that we spend $50,000 per year to cover our basic lifestyle. That doesn’t include extra debt repayment (we’re working to pay off all credit card debt), home improvement projects, vacations, clothing, etc.

    If we’re trying to compare apples to apples, I might be “better off” than someone making $300,000/year in a HCOL area. I could see trimming some things from the breakdown above. But, I could equally trim things from my own budget.

    Of course, if we both contributed equal %s to investments, Mr. $300,000’s investments are going to grow much faster than mine, due to the larger dollar amount. But, then, if he stays in a HCOL area, he’d probably have similar buying power. So that’s probably a wash?

    Point being, I definitely don’t feel “rich”, or even “upper middle class”. So, by comparison, I guess I could understand the same for $300,000 in a HCOL area.

    1. Cindy – Is Our Next Life the couple that wrote a hundred blog posts telling their readers when they were going to reveal themselves like a count down? If so, it got very annoying and off putting, much like Lebron James trying to hype up when he was going to Miami. Like they are all egomaniacs or something.

      From their blogger manifesto, did they reveal how much they earned? I don’t think so.

      They don’t have kids either, which makes early retirement much easier.

      Bloggers who blog about blogging and incessantly promote themselves are incredibly banal. But that’s just my own opinion.

      1. They aren’t for everyone. I personally find that different blogs appeal to me at different points in time, depending on where I am financially/emotionally, and what the blogger is focusing on at that point. And I like varying points of view, even if they don’t match my opinions or situations.

        And the kids thing… I understand that kids have a huge impact on finances. I don’t have any children myself. I based my life around the fact that I would, but it turns out that I can’t. I’m kind of in between though, since my fiancee has two children in their twenties. So, we’ll still have weddings and grandkids and other costs associated with having adult children. A lot of personal finance blogs deal with having children, so it’s nice having some variety out there, for people who aren’t in that situation.

        I hope my comment didn’t come across as bashing Sam. I’ve always enjoyed his writing. It’s just that, for a while, I couldn’t relate. Sam concentrates on “above average” earners/savers. I’d end up feeling bad that I wasn’t even trying to be above average. That’s on me. Sam writes to a certain niche, and he’s very good at it. No blog can be everything to everybody.

        1. Fair enough. There definitely is no one site that fits all. But when a blogger writes incessantly about themselves, and then writes a blog manifesto telling people to be more transparent without even sharing their income, that is hypocritical and annoying.

          Do you really not think they are full of themselves?

          I don’t feel bad, I feel motivated. And that’s just two sides of the same coin.

          1. Isn’t every blogger kind of full of themselves though? I mean, really, blogging is a platform where you write about your life (or something that you consider yourself an expert on), with the idea that others will find it riveting enough to spend their time reading.

            And I say that with love, since I have my own little blog, where I write about my money life.

            I share my income a lot on my blog. I share my net worth numbers. I used to share my monthly spending; I might go back to that. It’s a little embarrassing lately, if I’m honest.

            That’s my choice to share all of that. I can read other blogs and gain a lot from them, even if they choose not to share all the details. I completely understand the reasoning for not sharing all of that information.

            All that being said, I can kind of agree with you.

            The thing I’ve always liked about Financial Samurai is that he’s always been very honest about who he is. He writes for a niche in the financial community. I know that I’m not his target audience (again, totally on me), but I can still gain valuable information from him. I know exactly who he’s writing for when I read his posts, and he doesn’t try to say otherwise.

            I think sometimes that blogs like Our Next Life (and many, many others out there) try too hard to be inclusive. While it’s great to acknowledge that your situation may not apply to everyone, if you spend too much time on that, it becomes a lot harder to handle the posts that definitely don’t apply to everyone.

            It’s great to acknowledge that a lot of retirees have to work, because Social Security won’t cover the bills. But that’s way different from choosing to work to pad your retirement, and finding freelance gigs that will take up less than 10% of your time, but cover all your expenses. Equating those two things comes across as a little tone deaf.

            And, there’s a lot of money to be made in successful blogs. I don’t always agree with the “high and mighty” attitude of not monetizing a successful blog. Call it a hobby all you want, but there’s still a lot of work that goes in to it. There’s no shame in making money off that work. And, if you’re a successful blogger, you most likely have other financial opportunities that are coming about because of your success on the blog. Maybe not making money off the blog itself, but definitely making money because of the blog.

  11. Hey Sam, just out of curiosity where did you get the $8,400 annual (employer subsidized) healthcare number? Reason I ask is because my wife and I (with a little one on the way) pay roughly 3k a year through her job. She won’t be heading back after the baby is born so I researched Obamacare unsubsidized plans and I’m looking at 8-10k.

  12. Yeah, $300k in NYC, SF or the like is decent money, especially with no residual debt (student loans, credit card debt, heloc etc) or if you bought your place more than 10 years ago, but its certainly not going to be luxurious living either for a family (maybe as a single person would be good $).

    I live in CLT & my income in NYC would need to be ~$700k to match what I make here (bit over $300k assuming bonus and RSUs at target). I’d label my family as lower upper-class by income but just upper middle class (but rising quickly) by wealth. In NYC the same salary we’d be just into upper middle class at best.

  13. It’s all about putting things into perspective. If there is a surgeon making $500k a year, well he’s studied his butt off, works crazy hours, nature of work has a high amount of risk and therefore pays a lot in insurance and other expenses too.

    In terms of coastal cities, I know people that work in DC and commute 2+hours to live in burbs for less. There are always trade-offs and you have to be willing to sacrifice for example time, money, family, etc.

  14. In the end, I think there is a big distinction between middle and upper middle class. UMC should be retitled as affluent. Think about the range the term “middle class” covers. It is way too wide. I believe that is part of what drives the emotional reactions. I have a unique perspective because I have been in all 4 ranges at some point in my adult life. Now, we are in the mid range of affluent (upper middle class) and I am out of the corporate rat race at least for now.

    I see no issue with Sam or anyone else driving a 60K car if they can afford it. Why pass judgement on anyone? In Sam’s case, he made a lot of money in Finance and still makes a great living. I did think contributions to charity could be higher and he clearly agrees with that.

    Also, the middle class (not the affluent/Upper mid class or high class) are getting squeezed. If they own their own business, the cost of health ins alone can be a back breaker. Then you have out of control (until recently) education expenses. 2 huge rocks that can kill any budget. These people do not believe that their concerns have been addressed. That leads to anger which leads to emotional reactions against “rich” people. It goes a long way towards explaining some of the politics in the country today.

    On the other side of the equation, nothing drives me more insane than the articles on the internet which state “Family of Four Survives on $12,000 a Year”. I guess it is technically possible if you have free housing but who in the world wants to live that way? I have seen other sites where the site own admonishes people who like to have a dinner out once in a while. He stated that he makes “delicious food at home”. Well, good for you. I am sure he is a blast to hang out with.

    Anyway, I get both sides of this since I have been on both sides. My advice to people is to work hard, take the role that looks hard but can be rewarding if you are tireless and smart, get the proper certifications and licenses for your profession and do NOT give up. If you do those things there is a very good chance you will be able to write an article like Sam that inspires emotional reactions as well.

  15. Mental point of origin and how it relates to lifestyle inflation certainly needs to be taken into account in everyone’s situation. I have the advantage of having been raised in a small midwestern town with a divorced family; financial struggle was a daily reality that felt impossible to overcome at times and certainly shaped my world view. Visiting family that lived in the nicer suburbs of cities such as Columbus and Indianapolis created the idea that living in a place with more than a Subway restaurant and around people who could consider flying for vacation was flabbergasting to me in my youth (I’m a millennial).

    The most challenging jobs I’ve ever had in my life were those in my teenage years, roofing, warehousing, masonry. I was paid no respect and the money was $8 per hour at best. Now my family’s hh income of $225k seems surreal. So does living in the Denver metro area in a suburb full of services seem like rich people stuff :). I literally make more while using the bathroom than I used to during the time it took me to carry 60 10” cinder blocks to the basement wall that I was building.

    Home costs-$24000 per year all utilities included. Value $465, mortgage balance $170k
    Cars-cash, 3600 for insurance, $300 maintenance (I do my own). No car loans. Gas paid by employer.
    Childcare-$12,000 for high quality pre-K, costs will soon be $6,000 for charter school
    Phone-paid by employer, $120 as gf is on family plan
    Food-$12,000 groceries and out for 3 people. No restaurants as my girlfriend’s cooking is the best meal of my life each time. We both grew up where there was only a subway so home cooked meals are the only way to go for our tastes.
    Vacations-two flying week long vacations per year paid in points from extensive work travels. No international, we like US destinations.
    Alcohol-$100 per year, barely drink
    Clothes/home furnishings-$2,000 per year, half come from goodwill.
    Gym-$0, built home gym from scrap wood and bar from Lowe’s.
    Hobbies- $500 for shoes and firewood- camping/hiking

    All this and we feel amazingly rich while saving 60% of take home pay. I travel to expensive coastal cities often for work and I can’t believe people agree to live there regardless of their financial situation. I’m not saying my mental point of origin is “right”, but I’m sure glad I have the one I have so I can feel rich while living the way I do.

    I agree that $300,000 per year in an expensive coastal is very fair.

  16. Here’s how my middle class situation fits your definition with a $70,000 income in the expensive eastern panhandle of West Virginia (still not expensive).

    * Having a job that can comfortably, not extravagantly, support a family.
    No problem here especially since we haven’t had to pay for child care for the last 15 years. We decided both of us working wasn’t worth the expense. Full time minimum wage barely covers the expenses it generates when you have 2 childcare age boys.

    * Being able to afford a safe car to commute to work and reduce injury and fatality from accidents.
    We have a $6000 used commuter vehicle and a $20,000 2016 family vehicle. The number one safety factor is the driver.

    * Being able to take 2 – 4 weeks of vacation a year with the family.
    We take 2 weeks of vacation in the states totaling around $4000.

    * Being able to own at least a two bedroom, one bathroom home or apartment.
    Own a 4 bedroom, 2.5 bathroom home at a cost of only about $85/sqft.

    * Being able to retire when Social Security kicks in at 62, at the earliest. * Being able to save enough in your pre-tax retirement accounts in order for Social Security to be enough.
    We’ll actually retire at 49, but could easily retire at 62 with only a 5% savings rate for 40 years at our current income level (at 8% growth it would be worth around $1mil)

    * Being able to send your child to college, since college is fast becoming a minimum educational requirement to get many different types of jobs.
    Local college will only cost us about $8000/yr after financial aid. We have some savings for this, but most will be paid as we go. Our kids (14 and 17) have seen that a comfortable happy life does not require a huge income, so they aren’t that motivated to make big money (this could be good or bad – we’ll see in about 10 years I suppose).

    * Being able to go out on dates and see friends once a week without feeling immense financial strain.
    We usually see a movie or go out to dinner as a family once a week. Most of our adult friends are online and we spend a few hours a week with them for basically free.

    * Being able to care for aging parents when they need assistance.
    Kids should be done with college before this happens.

    * Being able to eat healthy foods to avoid being one of the 45 percent who are obese in America.
    No problem. We eat at home 95% of the time and spend about $600/month on groceries.

    * Living in an area where the median home price is between 4.3X-6.3X your household income given the national median multiple is 5.3X.
    The median home price in my area is about $175,000 which is only 2.5 times our household income.

    We are doing very well on $70,000 for two reasons: low cost of living and being financially responsible. The only debt we have is our mortgage which was only $90,000 because we rolled our equity from a previous home into this one. Unfortunately, most people in this area making $70,000 are struggling even though the cost of living is so low.

  17. Tuckerman Jones

    Wealth, and what it means to be middle class, is relative. It reminds me of the joke involving two runners out in the woods jogging when they come across a bear – which immediately starts chasing them. One runner says to the other, panting – “Can you outrun a bear?”, and the other says, “I don’t have to outrun the bear. I just have to outrun you.” What often makes the difference in our happiness is how well the person running next to us is doing (and how we define that person). Is someone living in SF really running against someone in Biloxi, MS? Choose your race, run it well, and finish strong. Measure your goals and achievements by your circumstances and opportunities, wherever you live or choose to live. Otherwise, you run a pointless race – and the bear wins.

  18. Hi Sam,

    I thought I would offer some real life examples of low-cost coastal living. I live with my wife in West LA (almost Venice but not quite, ~2 mi. from beach). We just had a kid. We are both 30 years old. Our monthly expenses are low.

    Rent for 1br $1,595
    Rent. Ins. $32
    Auto Ins. $30
    Umbrella $15
    Health/Dental $255
    Groceries $220
    Utilities $25
    Charity $100
    Other Stuff? $300

    We don’t own a car because everything is close and Uber is easy to use. I keep non-owner auto insurance for the one weekend a month that I need to travel for work or if we need to rent a vehicle for other reasons. Our kid is a recent addition, so we will play things by ear. My wife is stay-at-home. We still save a lot, we live close to the beach where I can surf and workout for free, and we are pretty damn happy. My situation probably needs more context but a low-cost, fulfilling life is indeed possible in expensive coastal cities.

    I don’t know that you would call this middle-class, but then it seems that the middle (or maybe upper-middle) is most easily characterized by some kind of neurotic status anxiety which I try not to have (I’m not always successful) and a mostly-fruitless overinestment in their children’s development. I would read “The Nurture Assumption” by Judith Rich-Harris ( or “Selfish Reasons to Have More Kids: Why Being a Great Parent is Less Work and More Fun Than You Think” by Brian Caplan ( for explanations as to why. In short, above a certain very low threshold like making sure your kids are fed and not locked in a closet, the shared environment (think your home life or upbringing) explains almost none of the variation in some of the common metrics we use for success. It does correlate a little bit with how much your kids like you and some short term impacts, but nothing long term. Genes play a big role.

    Overall, I think the lower, middle, upper class division have become pretty meaningless. It’s kind of crude and not clearly defined. Hence the hundreds of comments arguing back and forth. I do think people get overly hung up on the money dimension of class. You are probably a little to blame for the misunderstanding because the numbers play such a central part of your post. I think this generates clicks and conversation, so there’s a tradeoff being made here.

    If I can recommend one more book, Paul Fussell in “Class: A Guide Through the American Status System” ( divides people into 9 classes: Top Out-of-Sight, Upper, Upper Middle, Middle, High Proletarian, Mid-Proletarian, Low Proletarian, Destitute, Bottom Out-of-Sight. These classes are defined not just by wealth, but by dress, patterns of speech, and even the way people decorate their bathrooms. A person can be upper class without having a lot of money, and a person with a lot of money can still be high-prole. The book is about 25 years old and a little dated but still insightful.

    1. Thanks for sharing. How is it like with a newborn and living in a one bedroom? Where does the baby sleep and how is he sleeping? I found that if the baby is not sleeping, it’s important for the income producer to find a way to sleep because of lack of sleep really impacts the cognitive function.

      How long would you like to live in a one bedroom with a baby? And if you do decide to get a bigger place, how much does it cost to rent a two bedroom or three bedroom 4 x 2 or three bedroom house or apartment in Venice Beach nowadays?

      I think the majority would say that a middle-class lifestyle is living in a two bedroom apartment or house or larger once you have a kid. If you disagree, let me know why.

      1. Sorry for the slow response.

        In short, no. Whatever I’m doing is probably orthogonal to the middle class. I think maybe there is a market for class or status signals just like there’s a market for bonds or homes. I try to put money and effort into the things that provide both the greatest return to me in terms of goals, principles, or values and provide the greatest improvement in class or status in so far as I care about that, which is honestly a little but not a lot. Some people worry about the “optics” of their actions (or how other people will perceive them) but I’ve found not worrying about this too much to be a good way to save money and do the things I care about.

        Newborn was in the NICU for a bit as he was slightly premature but is now home. It’s only been a few nights. I sleep in the bedroom (with earplugs) and my wife in the living room with him. We switch for a couple hours in the morning so she can get more sleep, and I’ll look after him. Then I do some work which is easy to do remotely either from home or a coffee shop nearby. The amount of data is too limited to call this a “routine.” Things will adjust I am sure.

        Intend to stay in LA for at most 2-3 more years. Wife’s family is from the upper midwest and we will go there. The difference in value is just too stark. I can buy a beautiful, old house for cash in a nice neighborhood. In 2012 I would have picked Boise to move to, but I’m now reading that Californians are invading that and driving up prices. No one is fleeing to Milwaukee (knock on wood), so we’ll go there. Being near family is good too.

    2. Hi Ben:

      $1600 for rent in West LA seems like a great deal. I remember paying about $2k 15 years ago for a 2-bedroom in West LA, although it was more than 10 miles from the beach and it was spacious. I can’t imagine what it goes for now.

      Just some thoughts from someone with a preschool-age toddler:

      1. You will find that you start spending more on food once the baby starts eating real food, not just formula or breastfeeding. When is a baby is trying out different foods there is going to be wastage.
      2. Even with a SAHM, there may be some times in the first few years that you will want your child to socialize with other kids, which may involve preschool or other costs. Even meeting for playdates will cost you something usually, whether it’s for a cup of coffee somewhere or transaportation costs to someone’s house.
      3. Don’t forget to look at your local public schools and see what they look like. Time flies and before you know it the time for kindergarten will be upon you.
      4. Your travel budget (under Other Stuff?) will most certainly increase when it comes to getting on a plane.
      5. If you want your kids to be exposed to museums or other cultural artifacts they will start costing you as well.

      Basically the bar for happiness goes up a little more than just keeping the kid fed and out of the locked closet.

      I would be surprised if you considered any of these items products of a neurotic status anxiety. I classify them as pretty middle-of-the-road expenses for a middle-of-the-middle-class family.

      Best of luck

  19. Exactly BigJimDallasTexas, net worth rather than yearly income determines class. I’m not sure when people started using “yearly” income to determine class.

    The wealthy own assets that provide cash flow that is used to pay for their liabilities while a W2 workers exchange their time for money to pay for their liabilities.

    Someone can work to make $300k a year and have so many liabilities they have a negative net worth, if they become ill, they could lose everything. I wouldn’t consider this person rich. Even someone who considers themselves middle class may actually be poor. They may be living the middle class lifestyle but on borrowed money and no savings and investments. They have a negative net worth (they are poor).

    People who judge others based on one tidy number without considering COL and net worth imho shows their ignorance in financial matters. Worse, when anyone uses that lack of understanding to manipulate the masses shows their true colors.

    John… this is an excellent way to describe people’s mindset toward others and money…. (Quoting his post below).

    “Two guys riding in bus. They look out the window as they bump along and see a beautiful Porsche go by. The one guy says, ” someday I am going to get one of them and not ride the bus” and the other guy says ” I hope that someday that porsche owner rides the bus just like I “have” too.”

    People should really think about it and determine which of the two men they are. The first guy is positive and his mind is working trying to find a way, while the other guy who hopes the drive is on the bus is the naysayer, negative, who’s angry, I was in the I’m going to get one someday camp and that mindset was part of the reason I was able to move out of lower class. The ladder will stay in the same class they are in.

  20. BigJimDallasTexas

    To me, the distinction in class here misses the point. One’s net worth should determine class, not income from work. This is how “class” started. The landed gentry were the upper-class, and really did no “work”, they just owned things.

    Who would you rather be: a 62 year old teacher making $60,000 a year who invested diligently for 40 years and is worth $4,000,000, or a 62 year old doctor making $600,000 a year who blows it all/made bad investments/multiple divorces and is worth $500,000.

    Frankly, for purposes of FIRE and this blog, net worth as “class” should be the focus. It’s not what you make, it’s what you save.

  21. Vincent T Adams


    Great article I think people perspective and experiences will never change, I’ve spent 30 years in the military and travelled around the world and met people on both ends of the spectrum; from billionaire sheik to people who make as in much in a year as I made in a month. Unless you can walk in the other person shoes no matter how hard you try to explain your position to many $300k will never be middle class. Between my current job working for Air Force in Japan and my pension I make around $150k and when I explain to some how tight our budget is I get that look, can’t imagine making twice and still trying to get people to understand depending on where you live what you make do equal….being rich.

  22. MrFireby2023

    Great article Sam. I certainly see your points. Our nation is so divided, whether socially, politically, racially or classes (hence your article, middle class). So divided that I’ve put much thought into whether it was worth it to start my own financial blog.
    I reside in TX and plan to sell my home in the next couple of years (as TX residential home prices, at least in my area, are getting “bubbly!”) and relocate to Arkansas where cost of living will be greatly reduced. Property taxes alone!

  23. I think the real problem is not income inequality… it is financial literacy. There is no doubt that if everyone was paid the exact same amount in the same cost of living area there are some that would end up much better off. Those are the ones that can delay gratification, the ones that understand time-value of money, the ones that plan for the future. The ones that spend in the now would be just as bad off as they are now…

    I know anecdotal evidence doesnt prove anything… but a co-worker of mine is paid the same as everyone else in the same position… is in serious debt and knows it a problem… asks for help but ignores all advice… “now” is more important than any future… we all got a significant raise… i suggest that they put it towards paying down they debt since they were living paycheck to paycheck and this could be the shovel they needed to get out of debt. Instead…. they still live paycheck to paycheck and dont live any differently now than they did before… hard to tell where the extra money even goes…. to make matters worse for them/better for me… we all got ANOTHER large raise (we are talking over $5,000 a year for each of these raises in a LOW Cost of living area) … and STILL lives paycheck to paycheck… and STILL has nothing extra to show for it…

    While seemingly unrelated to this post… my point is… people that look at other peoples earnings and wealth dont understand how money works. I am better off because of people like Elon Musk and Steve Jobs and Bill Gates… they have a ton of money… but i live a better live because i use their products… if wealth was a pie and everyone got a slice… we would all still be living on farms and growing our own food… people are not poor BECAUSE other people are rich…. anyone that thinks this is the case simply doesnt get it… and probably will continue to be envious their whole lives and work into their 70’s because they arent financially literate…

    sorry for the rant…

  24. While many things are more expensive in certain locations, not everything and not to the extent that $80,000 in Iowa is truly the same as $300,000 in SF. Just ask any Iowan who has to save for several years to afford that DisneyLand vacation that costs her the same as the San Fran family but represents a much larger percentage of her income. Unless your local sales tax in SF is 200% then the same is true for anything purchased online, which these days is almost everything.

    1. True, but I hope people don’t get hung up on the $80,000 Des Moines, $300,000 SF example. Maybe the real level is $100,000 – $120,000 in Iowa.

      The point is to stop focusing on a middle class income, and instead, focus on a middle class lifestyle.

  25. It also never ceases to amaze me how many people just don’t want to accept how much more expensive these expensive coastal areas are. I grew up in one, and currently live in one, but went to school in the South, where it was dirt cheap to live. But I remember how hard it was for people from there to understand that my family wasn’t rich – my parents good a nice, solid chunk of money, but we had a large family, and healthcare/food costs through the roof, seeing as how it was in one of the most expensive places in the country.

    I still don’t understand how people manage to eat cheaply; I think a lot of people simply don’t care that the cheaper food in this country is garbage and bad for you, and if you’d like to eat well (aka veggies, decent meats, not necessarily organic grass-fed), you need to spend a lot of money. I’m a single 25-year old guy and I spend like $500 a month, and I cook it all myself.

    Mainly, however, I think a lot of people simply don’t want to deal with the fact that they could earn more if they applied themselves, or they could spend more money on healthier food if they cared about their health, or whatever.

  26. You can be hated for a lot less than $300,000 a year. $80,000-$100,000 in an area where that income secures a comfortable middle class lifestyle incites the same envy and resentment from those making less. It’s all relative and based on what I call the “line worker mentality.” You nailed it with these two examples:

    “People who work 40 hours a week or less and think they should be far ahead of the game compared to their peers who work 60 hours a week or more.”
    “People who are too afraid to make a change in their career or are too afraid to move for an opportunity.”

    People who don’t want to fully exert themselves at work and who don’t want to make changes or move for a better position don’t want anyone else to do those things either. Just looking at you is a slap in the face to them. You are taking away their excuse that getting ahead is not possible for the average person.

    The same thing happens to people who take excellent care of themselves and dress nicely. Every time the people who don’t do that see you, it reminds them that being fat and dressing like a slob is an option. Now they have to admit to themselves that they eat like unconscious pigs and don’t move enough, or that they substitute video games, tv, internet for necessary sleep. Or they can pretend that somehow it’s your fault and that they are victims.

    I once asked my husband why it is that men don’t like fat women and women with bad skin. His answer was that those are things that people can fix about themselves, so they indicate negative attitudes or character in a potential partner (not to minimize how difficult it can be to resolve these issues.)

    Envy is one of the Seven Deadly Sins. Covetousness and Sloth also apply here. When you think about what these “Sins” create in a person and a society, it’s rather obvious how bad it is to stir them up. Constant complaining about “inequality” without reference to effort and behavior will tear a family or a society apart, as we are experiencing in this country today. Yes, it’s good luck to be attractive or smart, but creating a successful and comfortable life is so much more than these.

  27. > So why is there hate directed at the $300,000 household who is stuck
    > living in New York City due to their jobs? We’ve been fighting discrimination
    > in America since the Civil War folks.

    I understand the tone behind this post, and I read through it in its entirety. And believe me, as someone who is in the top 10% of earners in this country, I also understand the mentality behind these sentiments.

    But let’s face it: high wage earners are probably never going to earn the sympathy of their working class counterparts. Indeed, this statement I quoted reminds me of something that Hooli CEO Gavin Belson said on the tv show Silicon Valley:

    Gavin Belson: Billionaires are people, too. We are leaders in technology, in industry, in finance. Look at history. Do you know who else vilified a tiny minority of financiers and progressive thinkers called the Jews?

    Walter Mossberg: Wait a minute. Did you just compare the treatment of billionaires in America today to the plight of the Jews in Nazi Germany?

    Gavin Belson: Absolutely. One could argue that billionaires are actually treated worse. (audience groans) And we didn’t even do anything wrong. (more groans) We’re an even smaller minority. (groans) There’s a lot more of them. (groans) These are facts.

    Every time I read that quote, I laugh out loud.

  28. You list eleven points in your definition of a middle class lifestyle, and I think they’re all reasonable points. I guess the way I’d look at it is that a household that meets 10-11 of those criteria is upper middle class. I’m not sure how many I’d say have to be met to be middle class and how many would indicate lower middle class, but my guess is that most (middle) middle class households probably can’t meet ten of them, though which ones they couldn’t meet varies greatly by household.

    In any case, I think either a list of points like yours or a list of financial data points much more specific than overall household income is a good way to look about it since, as you point out, $200K is rich in some places and solidly middle class in others.

    On a separate note, it concerns me that median home prices are about 5.5 times median household incomes. Has that always been the case? Obviously, when mortgage interest rates are low, you can handle a higher multiple, but my rule of thumb for the last twenty years has been not to take out a mortgage that’s more than 2.5 times my salary. I live in a HCOL area, but there are parts of the area where housing costs are relatively modest. I’m concerned that a 5+ multiple is going to push a lot of people to spend a disproportionate amount on housing, making it impossible for them to retire at 62 or 65 or even 70.

  29. The feeling of how “rich” you are definitely is massively dependent on where you live.

    Our household income of around $250k in “mid-north” Indiana allows us to essentially have a very “rich feeling lifestyle”.

    However, we can definitely see when we travel it wouldn’t take us nearly as far in coastal cities.

  30. TruthBeTole

    While I do not agree with some price points listed out in the budgetary – i think my biggest issue is that we may need to shift the thinking a little bit as well first. The middle-class lifestyle in SF is an anomaly – the fact that you chose to live in SF center – is the definition of rich. Middle-class lifestyle should not afford you the right to live in the most expensive house where average is 1.5 Million. Having and executing that choice on its own is the definition of a rich lifestyle. Those that cannot – and are middle class lifestyle choose to live further away from the city if they MUST live in the city choose to scale down. By choosing to live in the most expensive place and asking for the same amenities of a cheaper place is absurd. It’s the same as saying its the same to stay at a four-seasons room vs a residence inn/hampton inn – they’re the same square footage right?

  31. Brandon Wood

    I have never lived in the midwest but I do live in Las Vegas metro (4 hours from the coast) now originally from coastal southern CA. I could tell you why I think there are many bitter people out there. Many of the people I have met from CA or coastal areas in general are very elitist because of the “numbers”. They tend to view themselves as more intellectual and of a higher class than other people that live in the midwest or “the sticks”. I think focusing on lifestyle equality per location is the correct way to look at things because there are many reasons why people live where they do. However, I do think there is a bit of this elitist superiority attitude in many coastal areas where people come off as high maintenance and “better” than those who live in Ohio for example.. I am with you though I don’t really understand the overreaction of hatred and bitter responses.

    1. Any type of elitist attitude from coastal city residents is disappointing. But like eating a $100 steak instead of a three dollar cheeseburger, you’re going to 10 to justify your decision to spend 30 times more when I food that is probably just as tasty.

  32. Another good perspective-setting article.
    We’re in an outside suburb of Washington DC, driving 10-year-old BMWs and each have ~130K/year jobs. We’re a “dime-a-dozen” out here where many people have 3 hour of commuting each day so they can afford a place to live on “common” income for the area. Our house in the suburb was purchased in 2002 for 360K–it would be a $1M home in downtown DC or an inner suburb. It’s going on the market soon for 520K.

    I’m retiring next month at 57 and we’re moving to a suburb north of Austin, TX–where the average income is 56K, the average house is 210K and people’s biggest concern is well water drying up and the coming asphalt plant. We can’t wait to be middle class, but in a much lower cost of living area!

  33. I love the post and I admit that I have come a long way on this subject. I grew up with father making $55k a year in rural Georgia with six kids. My mom stayed at home and we didn’t have health insurance. I was a very happy kid and had all that I needed. My vacation every year was visiting my two grandmas. It wasn’t until I was 21 in college when I first went on an airplane. I paid my way through college with a state scholarship and I worked 20-40 hours a week minimum.

    Fast forward and I’m now 33 with three kids and make just under $200k in Atlanta’ area.

    I should know my numbers a little better but here are the highlights.

    Home utilities are $3600 annually.
    Mortgage with Escrow is $1750 monthly $21000 annually. (350k value)
    Three kids preschool is just over $6k annually.
    Cell phone $1500 annual.
    Auto insurance $1500 annual.
    My wife drives a 2010 Honda Odyssey and shocker alert I drive a 1998 Lexus with over 200k miles.
    Maintenance is about $3500 annually.
    Dry cleaning, house cleaning is about $3000 annually.
    Gym we spend $3000 annually.
    Healthcare we spend about $6000 annually out of pocket which is not bad given we have 3 kids.
    What I call “day to day” is about $22k. We withdraw about $1900 a month and cash and that is used for groceries, restaurant, haircuts, entertainment, babysitting, etc. I will say we earmark about $200 a week for grocery and that’s plenty. We shop at Aldi and that lowers are bill by 50%.
    We give 11% of our money to church/charities. So that was just about $20k last year. We have consistently given 10% since being married and this has really helped with the material “pull” in our society. I remember doing this while making $19k a year in salary 11 years ago when we got married.
    Last year we maxed out 401k Roth at $18k. I also bought an investment property with a partner 100% cash that I had been saving. That gives me now $1000 a month in passive income but it’s so new I can’t even count that yet.
    Savings rate after 401k is about 10-15%. That savings rate is what allowed me to buy an investment income.
    The rest is taxes and some Misc.
    Sorry it’s not more specific and I know I’m missing some details but these are the highlights. I’m a very low “attention to detail” sales guy. Having 3 kids does create more expenses and you have to sacrifice in areas. I chose my car and our eating out. We also have never spent more than $5k on vacation a year.
    We are purposely not saving for our kids college. I have recently see the light and I am on a passive income hunt. My kids can do what I did to earn an education. I wouldn’t change that situation for anything. It tought me to be frugal.

  34. Daffytheowl

    I must say I looove these voyeuristic journeys into people’s actual spending!!!

    I live in NJ now and spent 10 years in NYC. So I certainly sympathize with the HCOL budget shown here.

    Isn’t it ultimately about what this family prioritizes? You want to eat out and actually enjoy the best restaurants in the world? – knock yourself out! Those can be wonderful experiences – and what’s the point of all the struggle to live in a major world city if you DON’T partake ;)

    When they want to prioritize early retirement, they will find the fat and cut it out. Right now, you could say they have a perfectly balanced budget, probably get to collect some good life experiences with a vacation and good food. You can see what families prioritize but what they actually do! Also some people’s risk tolerance is different and they may not be nervous about the future and some of us FIRE-types tend to be ;)

    I’ll avoid putting a class label since that seems to be everyone’s trigger – but whatever this class is, it sounds pretty cool to me!

  35. If you are buying a Volvo and thinking of sending your kids to private school you are not middle class. If you think Volvo is the safest car that is great, but middle class people don’t get the luxury of buying the absolute safest car in the world. They buy a used car that they can afford, not a new one with a $700 per month payment. Just the fact that you live in such an expensive city at all means you are upper class. Middle class people in the Bay Area are now buying RVs to live in on the outskirts of town. Buying that small 2 bedroom apartment and struggling to get by on 300k a year is a dream to them. And yes I am jealous of people who earn that much money and get to live in cool cities! But I’ll be happy if I can get to 80k a year in my not cool city.

    1. I agree that paying full tuition sending your kids to private school is not a common middle class activity.

      Regarding the car, the median household income is $59,000. Meanwhile, the median car price is now about $34,000. That is a income / car cost ratio of 1.7. A $300,000 household buying a $60,000 car is a 5:1 ratio = a more frugal expense than the national median household income. It’s important to look at the ratio/percentages, not just the absolute figure.

  36. Sam – Haters gonna hate.

    Is $300k a lofty (or seemingly unobtainable) ambition for the average person? Yes. But I don’t think your blog is aimed at the average person – it’s aimed at those hoping to achieve above average results both professionally and personally.

    Your last article set out examples of various different ways people can earn $300k a year and you have written about lots of side hustle, entreprenurial, business and investing ideas over the years that should help to build income and wealth. You’ve given your readers the benefit of your opinion, expertise and experience. What they choose to do next is up to them.

    The fact that you don’t shy away from uncomfortable truth is why I’ve been reading your content for all these years and why I keep pushing myself to achieve more in my life.


  37. Sam,

    Why the negative attitude. I think most people were pretty reasonable last post. You asked if you were out of touch and we gave our opinion. Just because we don’t agree with you doesn’t mean that we hate you or we are triggered (I’m not even sure what that means). Most people here are doing well, GOD knows the responses you will get if the bottom 50% see this post. I think Bernie Sanders will have a heart attack if he sees your post haha.

    The chart from Urban Institute puts you in the upper class, actually you are well into the upper middle class and almost in the rich class. So lets at least establish you’re income is an upper middle class income.

    I think the problem is the way you define middle class lifestyle. Middle class lifestyle means
    that you make a middle class income. Therefore that will change city to city, because its very common for people to own cars and have a house in the country, but in a big city like NYC its not as common. The median income in San Francisco is 78k. Middle class can be defined as earning 67% to 200% of the median household income, therefore your salary even in San Francisco is upper middle income. I think what you really should say is that in a big city you need a upper middle class income to live the same lifestyle as a middle class earner in the middle of the country. I hope this clears things up.

    BTW I sent the essay to your email, I hope you got it.

    1. Not sure why there has been such a negative attitude towards these posts. I’ve always stayed positive and open-minded. But it is fascinating to observe the responses and I always believe how someone responds is a reflection of their own happiness in state of mind.

      Regarding the urban Institute, even though the number Says upper-middle-class for income that’s $50,000-$80,000 more than $300,000, why do you think $300000 is considered upper class?

      1. It is very simple Sam, only 2 percent of Americans make more than $300,000. and your trying to equate that with middle class.

        I guess the 98 out of a 100 people who don’t make that much and disagree with you is a reflection of our state of mind. Give me a break!

        I love your blog, but perhaps I’m not happy, smart, or open minded enough to think a family making 300k is not leading a upper class life.

        BTW, I’m apart of that 2 percent so I’m not arguing in favor of myself.

  38. Sam,

    I can agree with your analysis that less money goes a long way in cheaper cities. We live in Sydney and I can tell you a household income of $250k plus is definitely not wealthy. I could easily sell up and buy a property in cash in say Brisbane or Adelaide and still have enough left so one of us can quit our jobs. Whereas In Sydney we still have a mortgage. Just the cost of housing is so much more.. forget about the quality of life like long commutes, expensive grocery, food and entertainment. Why we don’t do it? Because I won’t get the same quality work in my profession. It’s great for someone who is retired or has skills that work in every there is consideration of friends and family and having to build that support network from scratch…but your articles are thought provoking and backed by real life experiences and analysis.. well done.

  39. I agree with Sam, be happy with what you have. Comparing ourselves to others is silly, as everyone is living their lives and we all have our own situations, emotions and finances to deal with. Be generous, especially if you have very little.

  40. Two guys riding in bus. They look out the window as they bump along and see a beautiful Porsche go by. The one guy says, ” someday I am going to get one of them and not ride the bus” and the other guy says ” I hope that someday that porsche owner rides the bus just like I “have” too.

    Also, housing arbitrage is very real as an enormous influx of Californias into Oregon and specifically to the Portland burbs and Bend. Most are coming from San Jose, S.F., Santa Cruz and San Diego. Lots of local dummies here bemoan the change instead of capitalize on the great opportunity. These people arbitrage housing price difference and quality of life. Go figure!

  41. I think your original post would’ve been harder to “hate on” if you downgraded a few items in the budget namely: food, car, clothing and travel. Seems a lot of people get caught up on the Volvo, coach brand, destination vacations and eating out. Those things add up to around ~40k. So cut that in half (or more even). They can cook at home/avoid going out, not have a car (very possible in a large city such as NYC), only travel domestically and buy cheaper clothes. But then, I’d give them less home equity- assume they are more recent buyers. You’ll still end up with them needing a 300k income but it will be even harder to argue with.

    For extra bonus, have them move out to the suburbs. You could cut the home price by maybe a 1/3rd but then double the property tax to around 2%. Add back a car (could even be 3 year old Ford Explorer worth around 20k) and commuting fare (will be around $300/month). My guess is you’d still be close to your 300k number.

    By the way, I live in NYC (manhattan) and fully agree with your assessment. Just suggesting ways to make it even more airtight/ easier to understand for those who don’t live in these areas and more identifiable as “middle class”.

    1. Fair enough. When do you think Volvo became an upper-class brand? I’ve always viewed it as a middle-class brand that has great reputation for safety and for families. I don’t know many rich people who go out and crave a Volvo, nor do I know many college graduates think Volvo as their dream car or aspirational car.

      I don’t think I mentioned the destinations for these vacations either. They can be anywhere really, like the Grand Canyon. When you have to pay for three tickets and a bigger room, everything gets a little bit more expensive.

      I can make things more “air tight” but where’s the fun in that? I don’t know anybody who doesn’t have some areas where they want to spend more money than others.

      1. I think Volvo has always been an upper middle class brand. It’s more the 60k price that got the negative reaction. Just make it a 3 year old Volvo for 20-30k.

        And yes I agree – it’s easy to pick apart certain line items with any budget or estimate. Was just trying to answer your question as to why the post got negative reactions and point out that even without those items it’s easy to show how this family makes 300k while being decidedly middle class.

        1. I don’t understand the obsession with the “expensive” Volvo in the comments. Anyone can drive a used Volvo for under $15K or buy a new Ford pickup for over $60K and throw in another $15K in add-ons.

  42. Defining class is made more difficult by the emotion that people apply to it. I was raised middle class by every definition. I still consider myself very much middle class, but by every definition my income is above what most people would consider “middle class.” But I feel middle class if that makes sense.

  43. I think haters are just gon’ hate, regardless of what’s going on. People often times don’t stop to consider other peoples perspectives or lives and simply assume that their experience of life is just what life is for everyone. I think those types of people are definitely less happy in life because they’re walking around mad all the time.

    I used to be like that. I would hate on people (silently, thankfully) that had more and made more than me. It wasn’t until I stopped thinking ill of them and instead started thinking about what they’re doing right that got them ahead in life. If I could learn from them instead of hate on them, I would probably make my life better in the process! I was definitely less happy of a person back then. Thankfully it only takes a simple change of mindset/perspective to be happier in life! :)

  44. Hi Sam,

    I totally disagree with your middle class definition.

    Middle class is puting 4 or 5 percent in your 401k. Middle class is going out for a pizza on a friday night. Middle class is public schools. Middle class is going on a camping trip once or twice a year. Middle class is Target or Macy’s. Middle class is Ford or Chevy. Middle class is hiring the neighbor lady to watch your kids.

    Middle class is being able to afford what you need, not what you want.

    Thanks, Bill

    1. Paper Tiger

      Bill, I kind of get your point but can’t totally agree with your premise. The classic “Millionaire Next Door” is high net worth living a middle-class lifestyle, as you describe it, which is one of the keys to achieving a high net worth.

      In my case, I have a net worth approaching eight figures and I do everything you listed, including shopping at Costco and Walmart. I ate a hamburger at McDonald’s tonight which was cheaper than pizza. I have a 20-year-old Jeep and “splurged” on an 8-year-old BMW, (cost less than 18K when I bought it 2 years ago). My kid went to Boys and Girls Club at the end of the school day after attending her public schools which was cheaper than a neighbor lady watching her.

      The only difference is we were able to max out our retirement plans and have done so over a long period of time which has significantly contributed to our savings. We also had more after-tax money to invest because of what we made and how we chose to live.

      In a nearly 40 year career, I have lived in Atlanta, Raleigh, Greensboro and Charlotte, NC, Princeton, NJ, East Bay SF, outside Milwaukee, WI and now Scottsdale, AZ. How well money stretches has been all over the map in these places. You maintain a lifestyle in high-cost areas by watching your expenses and making choice tradeoffs.

      I guess my point is that lots of people choose to live a middle-class lifestyle even if they can afford a higher standard of living. My bank account says I’m wealthy but most of my friends would say our lifestyle is solidly middle class.

      1. Can you share how you were able to get that kind of wealth? What type of job/jobs did you have? How did you invest your money? Thanks

        1. If you are familiar with the blog ESI Money, my full story is part of his Millionaire Interview series. I am #27. In short, my wife and I both had careers in Medical Devices each with six figure incomes, investing about 1/3 of our take home in diversified index funds and alternate investments over 25+ years. We also have over a million dollars in our primary home equity contributing to our net worth.

      2. Mr. Tiger,

        I think you made my point. Burgers, Costco, and Jeeps. That”s middle class. The fact that your were able to achieve great financial success is your ability to live middle class and save the difference. That’s far different than spending all of your upper class income to live a so called middle class lifestyle.

        My congratulations on your success!

        Thanks, Bill

        1. Paper Tiger

          True, I think net worth is a better measure of class than income. I could afford an upper class lifestyle and have all kinds of debt making me lower class overall on the net worth scale. I think it really always comes down to savings and spending rates once you achieve a certain income level as to where you actually are on the scale.

    2. Marie Jacobs

      Bill’s list is the reality of middle class in my Great Lakes state major metro area and for my family of 5 which is why I found the original article out of touch when it claims a middle class lifestyle. I’ll add that weekly date nights don’t happen because parents can’t afford both a sitter and to eat out, saving for college looks like an associates at community college plus 2 years at in state public university while living at home, and nobody middle class here realistically expects to be able to do all of the things listed in the example budget every single year but picks some things one year and postpones others. Child care could also be daycare center when you find out the neighbor lady just parks them in front of the TV all day, but definitely not a private nanny dedicated to a single child. Helping parents means taking time to help them on errands or around the house. If they need financial help you probably let them move in and share expenses with you even if it means getting a bigger place together. Especially if they can provide child care.

    3. Bill – that’s more a definition of working class IMHO. In the cities, there is no lady next door available to help you watch your kids.

  45. Lol I’m sorry if I don’t add much value to the conversation but are you venting frustration that sub 35 folks (Soft commies millennials) have a backward view about money, really? Isn’t that self-evident?

    To me the most relevant question such folk should rhetorically ask is “Do I hate them because I wish I had what they have?” and we all know the answer.

    To leave with a constructive note if you really want it the way to get it is having discipline, integrity and willingness to sacrify the present (take risks).

  46. We live in the Buffalo area, and my husband is a physician. Our COL is way less than living in Manhattan, and my husband probably earns about 80%-90% of what he would earn in the NYC area, so in our case, we are using geo-arbitrage to get ahead. It does depend on your job obviously, doctors tend to earn about the same across the country (depending on specialty) give or take.

  47. Sam, I think you should be more relaxed about what other people think. Your blog is great with so many fresh ideas and insights – You inspire me and help me on my way to FI. You don’t need to justify your views.

  48. The problem with the “middle class lifestyle” is that not even the middle class wants to live it. People want hardwood floors, three cars, Manolo shoes and Rolexes, and Veuve Clicquot and Johnnie Walker Blue. On the Business Insider website today was an article by someone who makes about $1700/ week PRETAX, and spends $800/week POSTTAX on food:

  49. Wow, this post hit home just in my own family. I come from a family of 13 siblings, half seemed to have struggled, and the other half did very well mostly with college degrees. I have one niece who lives in San Francisco, started two startups one , and lives in an old Victorian house. Both she and her husband do quite well.

    But the jealousy in my family between the haves and the have-nots is amazing – the have-nots usually because of the choices they made. I even thought of having a mortgage burning party but changed my mind when I thought of the jealousy among other family members.

    I have one sister who is one of the top software engineers in her field, and makes great money. There was really no direction in my family so it was always up to the individual whether or not they ended up making a good salary or not.

    I find that if everyone is susscessful, there is less bitterness, less rivalry and everyone rooting for the success of the other members. That’s the way it should be.

    If someone feels envy about the success of someone else, then that person should get off his duff and find a way to become as successful.

    That’s the nice part about this country. The opportunity is out there for anyone if he or she is healthy and willing to do what is necessary to get ahead. In my wife’s country Nicaragua, if you are born poor, that is most likely how you will die, poor.

    I told my children. You don’t need to win the lottery. Just by being born in this country, you won the lottery.

  50. The problem I have with this is that you’re comparing a HCOL-area lifestyle with baby childcare and entertainment to a LCOL-area lifestyle without baby childcare and entertainment.

    You’re comparing apples to oranges and then blaming your readers for not being rational.

    Yes, you’re right that $300K is a middle-class lifestyle in a HCOL area. But no, you’re wrong that $80K is the same middle-class lifestyle in a LCOL area. You’d still need a $150K income there for the same lifestyle.

  51. Exactly, Sam’s definition of middle class has been the same it ever was. There was a time in US (post WWII until 1980) when any high school graduate can easily get a secure job for live and afford 2 cars, put 2 kids thru college, and own 2 houses (1 primary, 1 vacation), with a stay home wife! When my aunt first came to US in the 1980s, she remembered there was never any sales, and people didn’t negotiate on prices because everyone has money to pay for the good quality stuff, and everything used to be made in USA.

    What happened since 1980? The breakup of union, globalization, outsourcing and offshoring manufacturing jobs, the MFN status of China and NAFTA, giant sucking sound of manufacturing jobs leaving this country. As an immigrant in Silicon Valley, I’m the main beneficiary of this movement (my company derives 50% of its revenue and profits from overseas), and the downside of globalization on others who (used to) be middle class but now isn’t.

  52. Well your rationale makes complete logical sense. People have a choice where to live and work. Someone who lives in New York City naturally makes more than someone that works in Buffalo NY doing similar jobs.

    At the end of the day it is someone’s choice where to live, if you think you can make more working in NYC than Buffalo you are free to move.

  53. OK I’ll play. I noticed that I live in one of your ‘Cities in consideration’ in your expense table footnote, and my W2 topline is slightly above your target, so let’s see who’s surprised.

    My 401k contribution is 6% because that’s my employer’s maximum match. I file 6251 so I take the standard deduction. After investment income (interest, dividends, and capital losses) my annual income tax is a bit into six figures.

    I rent (and am looking to buy) at 24K per year. Food (including restaurants) is less than 4K per year, perhaps because I don’t shop Whole Foods. My workplace health plan sucks but it’s cheap; I kick in 2K per year including dental and AD&D. I live in a city that’s a vacation destination so my time off is spent locally at about 2K/yr. I own my car but my insurance/maintenance is a bit higher, call it 2K/yr. I live close to work but most days I work from home so my gas is less than 1K/yr. Utilities including internet and cell are about 3K/yr. Clothes and entertainment are also less than 1K/yr each.

    Add it up and I’m spending about 40K per year beyond income taxes.

    The biggest differences? My 24K rent is far less than your 70K of mortgage, property tax, insurance, and maintenance. True I buy renter’s insurance but that’s less than $100/yr so I didn’t bother to count it. I don’t have kids, so that’s another major savings to the tune of 40K, let’s call it 50K to include the effects on other line items. This leaves a total of ~50K of expenses I’m saving beyond housing and childcare compared to your table.

    My point is that geo-arbitrage may not be necessary or even desirable if you are willing to live simply and if these places offer you substantially greater income opportunities. You can sprint towards FI then ER into Margaritaville years ahead of schedule.

    1. In other words, renting a cheap place and being child free expedites financial independence. I don’t think anybody can disagree if you are saving on the biggest expenses a typical middle class family spends.

      Where is the epiphany in your view? And do you plan to run forever?

  54. My area is becoming one of the fastest growing tech areas in the nation and projected to have a California-esque economy with in the next 10 to 20 years. All my friends bitch about the rising cost of everything and the failing middle class. They don’t see that this is a huge opportunity. I am excited for it.
    I am watching my net worth climb fast (Thanks to personal capital). Higher wages, house values going up and more income going into retirement. And as a bonus, with all the growth, there’s tons of new restaurants and fun things to do popping up.
    The rising high cost of living is welcome when you plan to pull the plug and move somewhere cheaper when your done working.

    Thanks Sam, for showing us the way!

  55. Agree with your points! People who attack your posts usually didn’t read the article thoroughly, missed the points, don’t have relevant experience etc. You clearly said lifestyle and expensive metropolitan area but some people will still not see what’s clearly written.

  56. Sam – most people don’t live in large, expensive coastal cities. Most people don’t live in NYC, SF and LA. There are 330mm people in the US. There are lots of places to live that offer a much better quality of life than those three cities. All that glitters is not always gold.

    I lived 4 hours north of NYC for a long time. I can only share my experience. The absolute vitriol towards me that was evident from people that lived in NYC was constant…for no other reason than where I lived. The standard line was, ” how on earth can you live there?”

    Keep in mind that I never spoke like that to anyone from NYC. However, if you choose to live among the constant smell of urine, traffic, expensive housing, complication and extreme summer heat, that’s your choice. I don’t see a reason to talk down to someone that doesn’t share your same desire or experience.

    I don’t have any animosity towards those that live in big expensive cities. It just gets a little old when I’m constantly being told that I should be ashamed of how I live in the face of a head scratching decision on their part.

    That may be why some people respond to your post in a negative way. For some reason, to each his own isn’t necessarily the stance of those that live in HCOL areas.

    The other component that stirs angst in people is the constant desire to place people into a class. This is also probably a reason why you get a lot of negative feedback. I’m all for profit motive, but determining someone’s worth based upon the size of their wallet is foolish.

    We’d be a lot better off if we praised and focused on the content of someone’s character instead of their leased Ferrari they ride around in.

    1. I couldn’t agree more. The bent of my post to encourage people to GET OUT of big urban centers that swallow your paycheck and leave you stressed due to the grind every day.

      I definitely can see the elitism go your way by those who say “how can you live out there.” Screw them as you save more to become financially free.

      Thanks for sharing.

    2. While there are certainly some snobby people in the Coastal cities that thumb their noses at some other areas, it works both ways. When I tell people I am from Los Angeles and/or California, I’ve heard derogatory remarks, although that is even true in CA – LOL.

      It is not just those three cities. You can throw DC, Seattle, San Diego, Boston and to a lesser degree Portland, Denver, and Austin into the discussion. When you add all of that up, it is a significant portion of the USA. Remember, one in eight Americans live in just California.

      Also, these cities produce a lot of the new ideas and technology moving the U.S. forward. No one has to live there, but if you want to work for Tesla instead of GM you aren’t going to do it out of Detroit.

      No one is feeling sorry for anyone making $300k no matter where in the US. It isn’t necessarily a picnic nor easy street. Even in HCOL places, you have to work pretty hard for $300k and end up paying a lot of federal taxes. The good news is if you bought a well located house or condo and have held for a quite a few years, you likely have a ton of equity in one of these cities and can cash out when you feel like it.

  57. I think a little fat can be trimmed from the expenses portion of the budget you put together — but I take your point generally. It’s all about COL. A million dollar salary is not going to do you any good if where you live requires $950K in expenses.

    What these high COL cities DO provide, however, is the resume material that can allow you to leave a high COL area and move to a lower-expense area, while still maintaining a high(ish) income. Yes, you might have put up with the initial B.S. of slaving away for 10 years right after school, but you’re building a personal brand and a skillset that will allow you to make that move when the time is right. I’m sure GS provided Sam a work ethic and skill set that just doesn’t go away once you leave — maybe he can comment on that.

  58. Coming from a very expensive country (Switzerland) I can identify with the higher expense lifestyle of the middle class in coastal cities of the United States. I would agree with you that taxes are pretty much fixed (beyond the listed optimizations, e.g. max 401k contributions) and to a certain extent, so is real estate if you live in a coastal city or expensive country. Other items however do seem extremely high. For example, spending 25k for food a year seems like a luxury to me. Average food and especially restaurant prices in Switzerland are a lot higher than in the US (even in coastal cities) and even here, spending 25k on food would be considered a luxury. We’d literally have to go and do our shopping at some of the most expensive stores and eat at expensive restaurants regularly to even get close to that number.
    At the end of the day, I think this budget represents the lifestyle of a slightly wasteful e/luxury oriented (depending on your values) family in the upper middle class living in a large coastal city fairly well. I don’t judge believe people should spend their hard earned cash however they like. But at the same time, I do think it’s important to realize that the budget you show can’t be considered as “normal”.
    Most people in the middle class belong to the lower- or middle section of it and that’s why I believe people are shocked by the budget. When we think of the middle class, we usually think of the middle part of it. Obviously there are a wide range of different incomes/life styles within the middle class.
    Thank you for all the posts. I really enjoy reading your blog. Keep up the good work.

    1. I had a $11 Burger King Whopper in Zurich at the train station back in 2014. It was tasty. But the $12 raclette was even tastier.

      Switzerland is so expense… but at least education is much less than in the US. Even public schools now cost families $160K over 4 years.

      Housing, healthcare, and education just keep going up. How much do you spend on these items?

      1. Yeah. And if you order the meal, you’ll pay approximately USD 20. It’s incredible how expensive life is in Switzerland, isn’t it? Next time you come for a visit, try fondue (all of the varieties). :)

        Education is cheap in Switzerland. Typically USD 800 – 1200 per year in tuition for the individual. Of course, we tax payers subsidize students and make all of that possible.

        Since you asked, here my current numbers (1 person, in USD, monthly):

        Rent: 1550
        Healthcare: 280
        Transportation (Train): 275
        Food: 525
        Holidays: 275
        Electricity: 50
        Insurances: 15
        Phone, Internet & TV: 120
        Discretionary: 350

        So I pretty much live an average middle class life here in Switzerland, though I am sure I spend a lot less than others in my income range do (and for that matter, less than people who earn less than me as well). I’ve tried to optimize my living expenses to the point where I only spend money if I actually believe it’s going to make me happy in mid-/long term.

        Housing is incredibly expensive in Switzerland. I read somewhere that the median (not average) home price is approximately 1.3 MIO (and that’s for the entire country). Zurich area is much, much higher (close to 2 MIO), and that’s where all the good jobs are. I work in Zurich, but live in a small town approximately 1.25 hours away (by train). Thus I commute 2.5 hours every single day which is crazy. And still, USD 1550 is considered a decent deal for a 2.5 bedroom flat in my small town, 1.25 hours away from Zurich. Absolutely crazy!

        Healthcare will be USD 400-500 for the typical Swiss. I’m healthy and thus chose the highest deductible plan. In addition, I live in a low-healthcare cost area (yes, location actually matters a lot here). I am also in one of the lowest tax areas (the difference between the lowest and highest tax area is huge, I’m talking multiples in some cases, e.g. in area 1 I pay 1x, in area 2 I pay 2.5x)

        Food is incredibly expensive here so USD 525 is not high. I’d say about average perhaps.


      2. Yeah. And if you order the meal, you’ll pay approximately USD 20. It’s incredible how expensive life is in Switzerland, isn’t it? Next time you come for a visit, try fondue (all of the varieties). :)

        Education is cheap in Switzerland. Typically USD 800 – 1200 per year in tuition for the individual. Of course, we tax payers subsidize students and make all of that possible.

        Since you asked, here my current numbers (1 person, in USD, monthly):

        Rent: 1550
        Healthcare: 280
        Transportation (Train): 275
        Food: 525
        Holidays: 275
        Electricity: 50
        Insurances: 15
        Phone, Internet & TV: 120
        Discretionary: 350

        So I pretty much live an average middle class life here in Switzerland, though I am sure I spend a lot less than others in my income range do (and for that matter, less than people who earn less than me as well). I’ve tried to optimize my living expenses to the point where I only spend money if I actually believe it’s going to make me happy in mid-/long term.

        Housing is incredibly expensive in Switzerland. I read somewhere that the median (not average) home price is approximately 1.3 MIO (and that’s for the entire country). Zurich area is much, much higher (close to 2 MIO), and that’s where all the good jobs are. I work in Zurich, but live in a small town approximately 1.25 hours away (by train). Thus I commute 2.5 hours every single day which is crazy. And still, USD 1550 is considered a decent deal for a 2.5 bedroom flat in my small town, 1.25 hours away from Zurich. Absolutely crazy!

        Healthcare will be USD 400-500 for the typical Swiss. I’m healthy and thus chose the highest deductible plan. In addition, I live in a low-healthcare cost area (yes, location actually matters a lot here). I am also in one of the lowest tax areas (the difference between the lowest and highest tax area is huge, I’m talking multiples in some cases, e.g. in area 1 I pay 1x, in area 2 I pay 2.5x)

        Food is incredibly expensive here so USD 525 is not high. I’d say about average perhaps.


  59. Most of the items in this budget are close to ours as a family of 4 in the NYC area, but with a few exceptions. We’re able to get by comfortably in a very HCOL for a lot less with a few tweaks:

    Childcare – Only slightly less than $24k. Private school is $10k/year for each kid. Optional of course but city public school isn’t ideal for us.

    Mortgage – no mortgage and we live in a multi-unit building so rent coming in is close to $50k/year. Can’t really do this affordably in NYC anymore, but we were lucky to buy at the right time and got a bargain.

    Car payment = car is paid off. Bought a used, reliable, low maintenance car for cash and plan to keep it at least 10 years. There is a cost for parking though, about $2k/year in the city.

    529 = already superfunded

    Vacation = hard to vacation with young kids, mostly staycations, so it closer to $2k vs $7.8k

    Baby/toddler = much less than $6k, closer to $1k with hand me downs, buying used, sales, etc

    Clothes = Also much less than $6k. A few hundred a year at most

    Food = Closer to $12k for groceries (Whole Foods, organic, etc) and dining out

    Everything else seems to be spot on. How about some tips from other HCOL “middle class” folks on how to get these expenses down?

    1. Here are some suggestions from a HCOL middle class engineer:

      1) Homeschool your children – you can kill $40K of expenses with that alone, more once the kids are older and you’re tempted to put them in a $50K/year private school
      2) Get rid of what you think you need vs. what you truly need – Check out the USDA’s guide for food budgets and adjust yours accordingly. It will be easier with your wife (presumably) staying at home and making much cheaper, healthier meals. That’ll save another $10-15K a year while increasing your life expectancy
      3) Get rid of “3 weeks of vacation” and replace with quality & quantity time with the kids (never go anywhere, ever).

  60. Brian McMan

    I think I missed the point with the last post, so I’m gonna take another honest shot at it because Financial Samurai says you can get educated reading finance blogs.

    It looks like they added middle class to the upper class. I mean, like, there is a class between middle class and rich, ya? In my town its the doctor’s and lawyers etc that make $100,000 per year, in other words the upper class. They got the pools, can afford retirement, can afford vacation, can afford to eat healthy, etc. Teachers making $40-60K here can’t do that, I mean my goodness they are fat so they clearly can’t afford to eat healthy.

    So I figure there are two points. The first point is that $300,000 in a big city equivocates to $80,000+ in a smaller city. Well ok that is the concept behind cost of living I guess. But don’t the people living in the cities have to give up lifestyle because more people want to be there?

    The second point is that you want to have an upper (middle class) lifestyle. That is a mindblowing point, because in the poor class we’re always being that you have to make sacrifices to your time, health, relationships etc to get other things you want like money or shelter. The dream that you don’t have to keep sacrificing your life, thank you for that.

    Why do I hate them? I hate them because I gave my best efforts and followed all the rules, but was still passed over when it was time to pick the best of my generation and teach them the skills needed to succeed in life and at work. I hate them because they cheated and lied and stole while I did things by the book, but they are the ones who get the benefits. Immoral and unethical scum win their popularity contests, but how did that translate into rewarding them for better performance which they clearly did not deserve. I hate them because this has demoralized me into not trying anymore. I hate them because the opportunity cost is so great that I’ll never get my just rewards, and my ability to take action and learn new things has diminished to near zero. I hate them because my behavior is right while theirs is wrong and despicable, and I will not change my behavior because that would mean I was wrong and that being good is not desirable. I hate them because I don’t have the ability to change, no matter how much I might want to. I hate them because until I give up my socially acceptable addiction my life will never improve, but these people never gave up their unacceptable addictions to greed, lust, envy, control, etc and still were given more then me. Oh my goodness you are so right I hate their guts.

    1. I moved to this country as an immigrant, couldn’t speak the language, and lost both parents shortly after moving here. I was only 5. Grew up on food stamps, got beat up every day, ridiculed and outcast until I went to college. I had almost an 8 figure net worth by my 30s and well into 8 figures now. Please, keep working at it, don’t ever give up. You can do anything in this country if you put your mind to it.

  61. I’m single and live in the burbs of NYC in Long Island. LI has one of the highest property taxes and sales tax in the country. A similar priced home in Queens part of NYC compared to the burbs actually has lower property taxes. A lot of people commute into the city for work.

    The people that I know that are single that have a place in Manhattan, have like 2 other room mates or have rent controlled apartments which are impossible to get. Then you are living in a shoebox. So you don’t have to make 300k if you commute in a coastal city. If I wanted to live in Manhattan or Brooklyn, then yes you’re going to have to pay. But there are other options.

  62. MrLovingKindness

    I live in an expensive coastal city, and I have no quarrel with anyone making $300K per year. However, some of these expenses seem to be above a middle-class lifestyle.
    – safe reliable car – Volvo SUV – safe yes, reliable no, expensive yes. Many cheaper alternatives that are more reliable and just as safe.
    – $2,100/month to “eat healthy” – children aside, the healthiest though least popular way to eat is as little as possible, i.e. calorie restriction
    – $2M umbrella policy – you only need a 2M policy if you have 2M in liquid assets, definitely not middle class
    – clothing – Coach is not middle class
    – retiring before 62, not middle class, 65 would be middle class
    – there are other examples

    That said, maybe these seem like middle class if you are comparing your lifestyle with the other rich people in expensive coastal cities.

    1. Do you think there is a type of car that defines one between middle-class and upper middle-class? For example, you can only define yourself as middle class if you only buy a Toyota Highlander or less?

      Why do you think people are so focused on labeling themselves by class?

      Regarding the umbrella policy, it depends on your line of work and your risk of getting sued. Do you want for net worth coverage plus some bc presumably you’re always growing your net worth if you’re working.

      1. $2MM liquid net worth sounds like a lot, but at a safe withdrawal rate of ~3%, that gives you $60k to live on if you don’t work. I’d hardly consider that rich nowadays.

  63. I hate any of these terms that have a large degree of subjectivity to them. It just opens up arguments and hate/vitriol from others solely based on their interpretation or opinion. Take for instance the populist rallying cry regarding Federal Income Taxes – “the rich don’t pay their fair share”. According to the OMB, the top 20 percent of households by income pay 88% of federal income taxes.

    Now, is that their “fair share”? According to who? What is a “fair share” then? Some probably feel the top 20% should pay ALL taxes and everyone else none. Others feel that contributing 88% of Fed taxes is already more than their fair share.

    My guess is those two camps can debate till the cows come home but they’ll NEVER see eye to eye. They just have VERY different political perspectives, and also jealousies/prejudices/backgrounds/experiences etc.

    Same thing here. The debate as to “what’s a middle class income” could go on forever, but it comes packaged with thousands of nuances (besides where you live) that everyone will have a different opinion on.

    Bottom line, live your own life, stop comparing to others, try to improve yourself, and stop trying to bring people down. Lift people up.

  64. Great post! You can also add the .009 additional Medicare tax that the Affordable Care Act gave us as it would apply to this couple and make a note that the self-employed pay double the FICA (and if are both self employed, then each of you must pay double the FICA —that’s over $30K right off the bat in taxes if each of you make more than $118K in 2018). You can also adddisability insurance to the list of expenses. And frankly, that is probably not enough life insurance- it would only give you $60K per year (since life insurance proceeds are not taxable, that is replacing (on a generous estimate) about $120K of income); that will leave a $180K ish gap.

  65. Damn Millennial

    Lots of trade offs in life, have to “pay to play” in the larger cities. When you are getting a start and young you just have to suck it up for a while.

    Imagine not being able to have all the luxuries of life right away and depriving yourself to save. Everyone says they will do this but in reality they don’t.

    I was literally using a $50 budget a week for living beyond housing, bills, debt pay down when I started out of school.

    Just have to grind in the beginning and it gets better. Much easier to save and live a balanced life now.

  66. While not perfect, if anyone punched those numbers into an online comparison calculator, the $300,000 in NYC and SF gives a lifestyle much higher than one would think of as “middle class.” I realize those are based on complicated formulas, and dont take into consideration everything, but if you are looking for a middle class lifestyle, you would operate somewhere in the middle. In other words, you likely dont live in the best neighborhood/suburb, don’t drive luxury automobiles (ie no volvo), go out to eat very often, and most likely cannot max out retirement (of course if you live in a cheaper area, you dont need as much on the backend either), etc.

    By your own example, to maintain the same $80,000 lifestyle in Des Moines needs about $200,000 in NYC and $160,000 in San Francisco, and not $300,000. The problem with that previous post isnt simply that it takes more money to live in NYC or SF than in flyover country (where I live), but the fact that the calculations were over the top. I did a comparison of $300,000 in NY and SF to my area and it was more than i currently make and, at worst, I currently live a very upper middle class lifestyle (newer cars, bigger house in a great school district, maxing out retirement, could belong to a CC if I so chose, good vacations, etc).

    See online calculators

    1. Online and calculators are a good starting point, but can you share where you live, how many children you have, and what your actual expenses are? You can download my spreadsheet at the bottom of the post.

      Nobody is living in the best neighborhood if they are paying the median price home for a house. The best neighborhoods Trade at 2 times or more the median, at least here in SF.

  67. Im was the commenter who lives in san jose, ca making approx 300k and saving approx 200k.
    My numbers
    Income 338k
    Tax Fed- 46k state 16k total tax 62k
    Housing- 3bed 2bath in nice part of san jose – cambrian park – good public schools
    Zillow estimate 1.4mill purchase for 750k
    Mortgage int- 9k
    Property tax 12k

    General Living expenses 36k
    home improvement 2.5k
    Computer 1k
    Vacation $1400 – We travel hack – went to Jamaica, Canada, New Orleans, Lots of National Parks
    Vehicle maintenance $1400
    Grocery $6100
    Dining out $2980
    Entertainment $1400
    Cash spending $1400
    Clothes and Misc $3100
    Gifts $1100
    Insurance $1500
    Utilities $2000
    Internet $900

    Total general expense $35,700 with housing $56, 500 with tax ~ $118k
    Total Income 338k – 118k expenses = $220k savings

    This may look frugal but my lifestyle is upper middle class. We travel plenty and the best things in live are free!. I do not have kids so many thousands saved from that.

    1. This is great and exactly what I was looking for. Thanks for sharing! Congratulations for getting your house at a low price. Getting your housing cost down is the key. How old are you guys and do you plan to retire anytime soon or do something different with such a low cost of living?

      Can you share how you pay a 13.6% effective tax rate on Federal and a 5% CA state tax on a 338K income? This will be VERY helpful as I’m finishing up my taxes this month. Thanks!

      1. We are mid-forties and like are work as it is rewarding. We could retire quite easily but we would need to find something to retire to that would give our lives meaning. I feel like alot of the money people spend could easily be saved and invested if they just became more creative and not as consumer oriented. Like i said the best things in life are free. Good relationships, nature and community, and life experiences. My guess if we had two kids we would avg 40k a year in extra expenses on avg for 20 years to put them thru college. That leaves us still $180k a year in savings.

      2. > Can you share how you pay a 13.6% effective tax rate on Federal and a 5% CA state tax on a 338K income?

        There are quite a few strategies for minimizing federal and state and local taxes: Municipal bonds don’t pay any taxes on the interest income. Treasury bonds are exempt from state and local taxes (useful in high-tax states and cities). Qualified dividends are taxed at a much lower rate. Long-term capital gains are taxed at a much lower rate. If you have business income, you can itemize the deductions for legitimate business expenses.

    2. Much more than many thousands saved annually if you don’t have kids. If you make around $300,000 on one income and the other parent stays home, that’s materially different than if your ~$300,000 income is a combination of two salaries, because you’ll need daycare or a nanny for at least 5 years, then after school care and summer camps once they are in school. You likely won’t qualify for any financial aid, so you’ll need to save a lot for college. People who make less money than you do but live better in less expensive cities (they probably live in a nicer house than you, for example) will qualify for financial aid, and their kids will graduate with little to no debt. Your kids, however, will have a huge debt burden if you didn’t save for their education. On top of that, there’s health care, braces, and sports or music lessons, if you feel that is important. And the cost of travel goes up a lot when you have to buy more plane tickets, and larger accommodations when you travel. And if you were unlucky enough to have bought in a bad school district, you may feel pressure to move to somewhere better so your kid has better opportunities in life. It adds up really fast with kids in an expensive city. Even without imported cars, coach, and international travel, for a dual income household, a middle class life style (3 bed, 2 bath home in a good school district, a few domestic vacations to national parks, college savings, retirement savings, childcare) can quickly eat up a $300,000 income in certain parts of the country.

    3. How do your taxes work out to only 62K on that kind of income with no deductions for kids? Do you own a business with lots of deductions? State tax is over 10%.

      1. Im just getting on a plane (free with points) to head to LA for 5 days. I dont have the numbers with me but can provide when i get home. I took the total tax directly off our state and federal tax returns. We both have 6% matching in our 401k with also profit sharing that is tax deferred. Around 65k in total tax deferred savings if i recall. Thats more than most can defer unless they have a business. Also itemized deductions propert tax, mtg int, etc. i can provide a detailed acct later:)

        1. I’d appreciate more details, it would be a great learning aid for me. I also live in Silicon Valley and wish my expenses could more resemble yours. I am 2x above your spending including housing even though I own my house outright, but I do have a 5 year old in pre-school ($18,000 a year). We live a very middle class lifestyle.

          Your tax deferred savings benefits are amazing, I wish I had that available. I have no match and only a typical 401k limit.

          How do you pay only $1500 in total insurance? My auto insurance is $2000, homeowners $1200, earthquake $1000, health insurance $15000, umbrella insurance $500. That’s ~$20k just for insurance.

          1. Hi Joe,
            For insurance we have usaa. We pay $800 for 2 automobiles (Liability and Injury coverage only) Homeowners is $700. No earthquake. Health insurance provided by employer in full with dental and vision. No umbrella insurance. We had 71k in tax deferred savings. Above i mentioned 65k but that didnt include HSA of 6k. Our itemized deductions were 45k on top of that. We have most of our money in equity in our primary house, rental house, and tax deferred accts which provide great tax shelters. Very little in taxable accts …maybe 250k. Hope that helps

            1. Your income less tax deferred income will still hit AMT. Under AMT, assuming your income has little to none of qualified div, LTCG or Muni bonds, your adjusted total income for AMT purpose is roughly gross – deferred – Mortgage interest which worked out to be $258k. Further assuming you’re MFJ for tax year 2017, your Fed tax under AMT rate is $51,621.

              Your number was $43k. It means you also have some tax friendly income within the $258k, and some charity donation which brings down your AMTI further.

              I wish I have such huge amount of tax DEFERRED income:)

              Since you use USAA, are you a service member?

    4. How do you only have 46K or a 13.6% federal tax rate on 338K of income and only 4.7% state tax in CA? You must have some significant write-offs and deductions to make that work.

    5. Do you have a mortgage? I didn’t see a monthly mortgage. Mortgage and kids are the biggest expenses.

  68. You just have to recognize and accept that there is a HUGE difference between “middle class” and “upper middle class.” They are not even in the same universe. Most of the things you listed as reasonable desires of the “middle class” are unobtainable to the former – even for those living in the good ol’ Midwest. You don’t seem to recognize that. Maybe that’s the cause of the disconnect.

    1. Feel free to list out the key differences you define between upper-middle-class and middle-class.

      Will people realize that there is a huge range of cost of living as well?

  69. not super rich

    I think that many of us who say that 300k for a family of 3 or 4 even in san fran IS rich are reacting to the out of touch nature of the post. At my university (University of Michigan) a student wrote an editorial where she said her family made 250k a year and was “middle class.” She was from palo alto, CA. It caused a mini internet uproar. I’m very aware that there is a difference between middle class lifestyle and income. I have family in areas that are MORE expensive than san fran.

    But just like the U of M student, sam is ignoring the fact that a 300k family in san fran can, in many cases, move from san fran to MI and become upper class overnight.

    Not in all cases, mind you. Not everybody has a flexible job.

    People in my line of work have 11 yrs of post HS education, make about 230k gross on average, and are “selfless” workers in our field since there are those who make 300-400k with just one more year of training. But even IF 300k is Sam’s definition of higher end middle class in san fran, it’s not something you write a post about. Some of us have lived under mosquito nests, without running water, in gang-infested areas, and make MORE than a “middle-class” income for individuals. But it’s not something you should write a sensationalist post about.

    It’d be better to write as a headline, “you need 300k to make an upper middle class income for a family of 4 in san fran.”

      1. not super rich

        Current income: 57k gross as medical resident. In a few months I’ll make about 230k with benefits. Have close to 200k in debt with substantial retirement funds. Single without kids.

        Age around 30.

        Lived around POVERTY line for most of my life. Savings rate has been around 50-70% of net income.

        Didn’t have a car for part of med school; used bike for everything. Lived in third world without running water, electricity.

        If memory serves you have one child. It’s a choice to send children, if applicable, to boarding schools or private high schools.

        I have family, once again, from areas MORE expensive than san fran in addition to family living in san fran. I’m well aware what things cost.

        The new XC90 hasn’t been reliable at all. It’s 60-90k. Definitely not “middle class.”

        700 a month for food per person is definitely much more than the average.

        The budget you posted is upper middle class.

        1. Cool. I’m excited to speak to you as as a medical resident before you go off on your journey to being a practicing physician, potentially buying a home, and potentially starting a family.

          I’d love for you to revisit this post in 10 years and see if your outlook on taxes and cost of living changes.

          I hope I can keep FS going for another 23 years until my son goes to college and tells me he doesn’t want to work on the online business :)

          1. not super rich

            No it won’t change. I keep it real. I’ve lived without anything so I know how most people in the third world live. I live in an average COL state btw.

            You’re not that much older than me; I’m around 30 and you’re 40. Most of my colleagues have luxury cars in residency and I lived with roommates until recently because I liked having roommates. Beint frugal is an asian or confuncian trait btw.
            To me real happiness can’t be bought. I want to accumulate enough money to die with 5-10 million in today’s dollars to establish a scholarship fund.

            I’m very objective and know what things cost in different cities.

            1. im a physician and I find your holier than thou, wanna be buddha like attitude phenomenally condescending. FS is describing a reality he sees in SF through his experiences. if you cant understand that as a doctor, and get triggered/ want to seek external validation over something like this, be prepared for burn out son.

            2. As some one who lives in a HCOL area there is a ton of anxiety among high earners. I went to U of M, I’m well aware of the liberal trite you are spewing. People in SF, NYC, LA, Chicago, DC literally are scratching and clawing to make a life for their families despite having a high income. They are working 70-80 hours a week to make a 150k, cannot afford to buy a home, are worried about saving for retirement and college, there is a high level of stress, and worry the fear of job loss is omnipresent. Sam is right that 300k income allows a family to live with some level of comfort. Poor people in europe have more security than 150k earners in SF of NYC, they don’t have the liability.

              What you aren’t learning at U of M is that the math around progressive income tax doesn’t work, the professional class already is paying too much in taxes and it is the truly wealthy who don’t pay. We made 450k one year and wound up paying 126k to the feds and another 30k in state income tax, add in the property tax of 30k, FICA of ~30k(half is from employer) we had to give the government back almost 40% of our earnings and somehow the government thinks we should pay more. Worse than that is that compensation is variable so we may not see those sums again for years but in MI someone earning a steady 150k is taxed a whole lot less on a percentage basis. Our federal budget is in shambles because Obama failed to fully repeal the bush tax cuts, it was the lower income tax cuts that cost the most. I know this isn’t popular but unless you want the USA to be like IL, or NJ progressive taxes only lead to wealth flight and budgetary disaster, they don’t work.

        2. I would love to know more about your background. Several things intrigue me:

          – Substantial retirement funds by age 30 but lived around the poverty line for most of your life. How? Were you a highly-paid professional for a few years before you went to med school and saved quite a bit?
          – Say you lived in a third world country. Is that where your family is from/lives? When did you come to the US? Or was it something like the PEace Corps?
          – You have family who live in more expensive places than SFO and SFO, presumably with some money of their own if they can live in these places. Have they provided any financial assistance to you along the way?

          I think it’s great hearing about how you have achieved so much at a young age!

          1. not super rich

            Fast food jobs worked for many yrs help a lot. We’ve had an extended bull run so that’s helps a lot.

            I contributed to my retirement funds while letting student loans grow modestly during residency. I lived, at times, with two roommates in a 2br, 1 ba apartment in the “cheap” apartments. I don’t drink alcohol which saves a lot. I wasn’t a highly paid professional…I’ve made very little in my life until my “big” residency income.

            I moonlight which has helped a lot.

            My parents made MUCH less than 300k and I define our household income as upper middle class even if it’s nothing like 3x more than the median income for the area.

            People can do whatever they want but when you work in actual third world countries you can really see how most people live. Even now I’ve had my own apartment for less than a year and my neighbors make less than 40k a year in blue collar jobs, have been in prison, etc. We keeps it real.

    1. The Alchemist

      Why is Sam “out of touch” rather than the people in Michigan? It’s just a matter of understanding context. Yes, in Michigan, where the COL is significantly lower, $300k is indeed rich. But in SF, $300k truly IS middle class (and not really the top end of upper middle class—Sam never claimed that), because so much of that $300k goes down the drain to cover basic expenses, not luxuries.

      You say that, “a 300k family in san fran can, in many cases, move from san fran to MI and become upper class overnight.” The trick is: Can that family continue to earn $300k per year once they move to MI? That’s highly doubtful. The pay scale just isn’t there– BECAUSE the general COL is lower. So they would likely end up getting jobs that pay at the standard Michigan middle class level, and then would indeed be middle class there as well.

      Specific to the SF area, consider the sheer insanity that Silicon Valley and the tech economy have wrought here. The neighborhood where I grew up was basically a big post-WWII housing development, very middle class. We all regarded ourselves as salt-of-the-earth middle class types, nothing special about where we lived. My parents paid $47,000 for our boring 5-bed 2-bath house (big family, lots of kids) in the late ’60s. Today, houses on our street are going for $1.8-2million. It’s eye-wateringly inSANE. The only people who can afford to buy there now are the Facebook and Google yahoos who make those $300k+ incomes. But the houses are still nothing special, less than 2000 square feet, most of them no more than 4 bedrooms. The people who don’t make those $300k salaries are faced with trying desperately to snap up the lesser $1.1m 2-and-1 pieces of crap in the sketchier parts of town near freeways and surrounded by apartment buildings and run down rentals.

      So yes— here, $300k for a family here IS middle class!

      1. not super rich

        Nope. Wages don’t scale proportionally just because you’re in san fran. They ARE higher than MI but not proportionally so in general. Once again, in 2016, 96k was the median household income in San fran. 300k is upper middle class in midwest (normal COL area and not boonies like iowa) and still solid income in san fran.

        Some of us have families in both expensive and inexpensive areas; we know what things cost. And some of us live well below what colleagues live on in mid west.

      2. Thanks for sharing! I’ve always wondered why some folks believe their reality is “more real” than other people’s reality. Why can’t we be more understanding and accepting of others? It’s one of the best ways to learn.

        This family is lucky for buying a house at a lower price years ago. To try and buy a house now truly is insane without help from parents or a hefty income.

      3. Here’s the thing:

        Living IN EssEf, in an owned property, is a luxury good. It’s the equivalent of buying a $150k car.

        Sure, one would say “can only get this job here, and it demands 70+ hours/week, and so I *must* have a short commute”–there are *three* choices in there, that all scream UMC/LUC, given that they involve spending multiples of the housing cost (and private school = housing cost imo, bc you can avoid by living in a ‘good’ school district) for less space.

        When one isn’t even aware that choosing to spend that much more on housing cost is a choice (and a luxury choice at that) creates the basis for the agita or Flyover Folks (I’m in Chicago; I’m one of ’em). It’s not about EsEff v. Cedar Rapids, it’s about EsEff v. San Ramon (and yes, San Ramon is still VERY expensive) v. Tracy (and yes, Tracy is VERY far away, and still not Iowa-cheap).

  70. I think it comes down to perspective.
    Most haters probably don’t live in a high cost city like San Francisco. In most of the rest of the country 100k is upper class. In SF 100k is poverty. It’s hard to separate out the value of money from your local anchoring point. In many parts of the country 300k per annual would pay for the lifestyle and house in cash in less then two years.

  71. Eric Lindberg

    I think the hate you were getting was perhaps because people thought you were trying to make the “woe is me! I’m so poor on $300k so don’t raise my taxes” argument. That doesn’t seem to be what you’re saying, rather you seem to be saying if you don’t like your high-tax, high-COL situation then move.

    1. That’s not what I’m saying. I lay out the expenses in detail so people can see where this money is going to. Some people don’t realize taxes are huge. Others don’t realize that childcare is huge etc.

      The more people can see a real example, the better understanding people have of each other, whether it’s worth living in different parts of the country, and make better decisions.

      It’s just so interesting how some people interpret whatever I write or the chart as an offense. I’m pretty sure that the more easily triggered you are, on happier you will be.

      1. Sam

        This is a very good post. I think people get triggered not because of the post, but they this so called middle class lifestyle is becoming harder and harder to attain. 30 years ago it seemed easier as there were more middle class jobs and pensions helped those people retire reasonably well. Sadly though that’s getting harder to achieve given higher cost of health care, education and less stability in jobs.

  72. Great post!

    and yeah, very often we only see (and read) stuff through our own prism… and very often the reason why some external stuff bother us is because it is “acting” as a mirror…

    and you are right, it is all relative…

    Thanks Sam!

  73. Great post, as always. We are defined by the choices we make. I chose to go to a professional school that incurs a lot of debt, but doesn’t pay well (in fact, our professional society just published that our overall salaries are down as a profession). The choices you make today define your tomorrow; and while you can’t change the past, you can change the future. Choose wisely.

  74. i think my net worth is the final stage but my income is upper middle class which makes me upper middle class i suppose. it is hard to have nowadays with the huge wave in asset inflation over the past 10 years. it is so much easier to make more when your assets produce as compared to when your labor produces for you. i been all three stages throughout my life poor middle and the final so i understand all the outlooks too. it is just the times we live in….thanku samurai

  75. Here’s maybe an interesting 4am observation.

    I live near Seattle which Sam listed as a represented city in his breakdown of lifestyle cost. I can sorta quibble about specific figures he uses for each line item but I can also see that the basis for each isn’t totally unreasonable. What I wonder most is how “middle class” is living in the actual city for these costal areas vs a cheaper suburb?

    Seattle real estate and housing costs have gone up approx 100% since 2012 (massive growth of high paying tech jobs). What many middle income households with kids do to adapt is move further away from the city where they can afford more house, more yard, more childcare, cheaper restaurants. In Seattle the median home is around $750k (much higher for a nice neighborhood), but in maple valley 30 miles away, the median is $450k and I guarantee the cost per square foot is proportionately even lower. Also the public schools are better, bars and restaurants are cheaper, and childcare is about half the price as in Seattle.

    So, at least in Seattle, middle income people (especially with kids) are much more likely to buy in the burbs. I think in today’s version of Seattle, having a Seattle address (especially in a nice hood) is more upper class than middle class.

    1. I’m from Seattle too. My friend bought a house in 2013 and it’s doubled in value now.

      I heard Maple Valley was great for families (we almost moved there) but the kids tell me it’s boring because there’s nothing to do. Seattle has really good schools in the posh neighborhoods.

  76. I’m in the nowhere in the US is a family that makes 300k a year middle class camp. Those that live in Manhattan make a lifestyle choice afforded to them by their 300k a year salary, irregardless of expenses, taxes and amount of kids. You missed a nice opportunity for a nice survey on this one. :)

  77. Not sure the financial wherewithal to retire before age 62 is a valid marker of a middle class lifestyle. Full retirement age is and has long been defined as 65 YO and for many/most people full social security retirement age is later than that since the eligibility standards have been raised. So for most people having financial resources to leave paid employment at or before turning 62 is a very EARLY retirement, and not realistic given constraints and expenses of a typical married individual with a family.

    Also the necessity to earn several hundred thousand dollars to live in a HCOL area is skewed-no offense but because you find it necessary and customary to take yearly 3-week(!) vacations that cost almost $8K annually, live in a house and state that features homes costing $4K monthly, spend $600/month on ‘Coach’ clothes and accessories etc….doesn’t mean everyone does! It’s a circular argument and one that is utterly subjective. Your numbers certainly may be accurate but only for a specific set of upper middle class, well paid highly educated tech workers or professionals and/or folks who have a 1% wealth accumulation level allowing them cash flow to support that life-sound like a blogger we know?

    Guaranteed there are plenty of folks living in San Francisco, NY, LA, Chicago, DC etc who don’t pull in $300K and manage to live very satisfactory middle class lifestyles.

    1. I’d love for you to elaborate on your thoughts regarding how many vacations the middle class should be entitled to take a year. I think this could be a great post in itself.

      I also think you’re right about retirement. Retiring around age 62 to 65 is about right, not by 62. But the difference is not that huge, especially if you come up with a game plan earlier.

      Care to share your income and expenses and family situation?

      1. Sure-husband and I are both administrators in education with combined W2 income of $200K and adult (financially independent) kids so just the two of us in household. Additional $30K net from a rental property we own that’s fully paid off. We also own our primary home outright and last year bought a vacation/retirement waterfront home so now have a mortgage, payments on which are covered by rental income. No other debt. We both have pension benefits and ~1M in 403b accounts depending on what Mr. Trump has done lately, it’s been fluctuating lol.

        Vacations: husband isn’t into traveling and I used to take a week annually to go to the beach with daughter, haven’t done that since buying vacation house. Now vacations and holidays are at the second home where we host family and friends. I drive an 8-year old Ford sedan, husband a 12-year old Ford truck. We shop at Macy’s, although I do like a Coach bag every few years :)and I’m not into jewelry so don’t spend on that. Groceries run $200-300 monthly, fine dining is occasional takeout We have a boat that is 30 years old although we put in a new engine a year ago and paid cash for the $24K cost. I have a housecleaner twice a month for a cost of $200.

        I track our spending and we live very comfortably on after tax income of $100K which includes ~$20K in annual savings=leftover money we don’t spend that sits in our joint savings acct at the bank by every December. So, voila, we are actually living a very comfortable lifestyle on $80K annual net income.

        We are upper middle class in income but per my too-long detailed post above, don’t need or want to spend on many of the items you list as necessary for a middle class lifestyle. We cash flowed private school tuitions for both kids at a prep school and some years the cost was literally 50% of our net income, so we’re not averse to spending big on expensive items we consider necessities–we just don’t include Volvos and European vacations in that category.

        Apologize that my first reply was somewhat accusatory; living well is a very personal and individual/couple perspective. However I do stand by my original premise that the lifestyle you describe and have lived is very, very rarified. HCOL places and high incomes are simply not what the majority of people experience. My generation had a rock song title that comes into play here: what were once vices are now habits. If you live in NYC or SF and wanna run with the high status high vis crowd you are going to be paying to do it.

  78. I do not disagree with what you are saying above, in a general sense, but do think your use of terms bears criticism.

    Throughout, you talk about “middle class.” As the Urban Institute Chart makes clear, however, the middle class is not unitary — and the group you are really referring to is the “upper middle class” (which historically has been comprised of doctors, lawyers, accountants, et cetera and quite distinct from the much larger middle class). The sad fact is that the “middle class lifestyle” you describe is increasing only affordable to the upper middle class, whereas in the past is was also attainable by the actual “middle” class itself (cops, teachers, nurses, et cetera) while the lower middle class could also attain some aspects of it.

    I would guess that you would catch far less flak for this type of post if you were clearer about you are really talking about: the upper middles. Otherwise, you are painting with too broad a brush, and the assertions you make ring hollow for many folks in the actual middle.

    1. Is it still upper middle if you move the $300,000 income to a city that has the median home price of 1.5 million, or 5X the income?

      Think about it this way. If the median household income is $59,000, how would that household feel if the medium priced home was $300,000? I would think somewhere in the middle as well.

      Care to share your income expenses, location and family situation?

      1. My household income is right around $300K. Dual-income, no-kids household. I am in a traditionally upper-middle class occupation (law) while my significant other runs a small business that generates revenues under $50K per year. We are in city (Charleston, SC) that is HCOL for the region (the Southeast) but comparatively LCOL compared NYC and the Bay Area.

        We can afford all of the items you ticked off as hallmarks of the “middle-class lifestyle” but consider ourselves fairly well-off and it would certainly not be possible on $59K — and the median home price around here is probably not far off from $300K.

        1. Gotcha. To be able to earn 1X the median home price should be considered rich IMO. That would be making $1.5M/year in SF, which I would consider rich.

          Kids will change your expenses and alter your view of how you’ll spend money. But only you will know until you go through it.

          1. Good point, though we certainly do not feel rich in the “more is never enough” society that we live in.

          2. I think people strongly underrate how kids will change how they think about spending and saving pre-kids or post-kids.

    2. Andy Cromer

      In my humble opinion, Aurelius summed this up perfectly.

      “I would guess that you would catch far less flak for this type of post if you were clearer about you are really talking about: the upper middles (emphasis added on the “upper middles”). Otherwise, you are painting with too broad a brush, and the assertions you make ring hollow for many folks in the actual middle.”

      Furthermore, I’d agree that generally upper middle class historically comprises of doctors, lawyers, accountants, finance, etc., however as Sam has pointed out in this post and previous posts, one can obtain the upper middle class if one desires to work hard whether or not they are a doctor, lawyer, or accountant, these have just been historically well known ways to achieve upper middle middle class status. For example, someone could be a nurse who runs a successful blog, or a teacher who after school runs a tutoring company, or simple put a small business owner who has found their niche in society, providing a desired good or service.

      Keep up the good work Sam and thanks for providing sound financial advice for a young millennial! I owe a lot of financial training and motivation directly from this site.

      1. I think identifying it as ‘upper middle’ probably avoids a lot of the controversy. Mathematically speaking, we’re dividing a very skewed distribution into three sections. Even adjusting for things like COL, it’s going to be a difficult line to draw.

        I think one of the bigger gulfs in America — which is represented in all this vitriol over the numbers here — is the urban/rural split. Historically across nearly all post-industrial societies, these groups don’t see life eye to eye. COL is very different. Way of life is different. Value systems are different. Landscapes are different. It’s easy to live in the middle of the country and hate on coastal elites. It’s easy to be a coastal elite and not think much of the middle. It’s important to reach for understanding.

  79. *In before the storm*
    Upper middle is a pretty crappy place to be socially. You don’t get to claim hardworking middle class, salt of the earth kind of people who make just under 6 figures without someone going “noooo you’re rich.” Once you’re over 6-figures, even by a little like $30k, wham the hammer hits you. You’re now rich.. except to the actual rich, to them you’re middle class. Just wonderful.

    I filled out a “middle class survey” on Twitter recently and maybe my memory betrays me but the survey didn’t ask for my geography. PEOPLE: learn from my overlook, do not submit anything asking you what you consider middle class is if they don’t ask you for your location/geography first. It’s just an invitation for bad data collection. I withdraw my response if I could.

    1. Calamity Jane Austen

      No one ever likes the bourgeoisie — as you said, they get scorn from both above and below.

    2. Nobody knows how much you make in real life, though. My casual acquaintances assume I don’t make much money from blogging. As long as we live the middle class lifestyle outwardly, we’ll fit in and nobody will judge. My readers know more about my personal finance than my neighbors.

      The only opulent thing we have is my stay at home dad status. Most dads probably can’t afford to stay at home.

      1. Joe, do you ever worry your neighbors will read the blog and find out though? I guess that’s what I’m worrried about if I ever reveal my identity. Not that I even show my NW online but there are hints to it

    3. Finally, someone who gets it. After all, don’t we encourage our kids to study and get a good education so they can make good money? And when they do, people have an attitude about it.

      Up until I was in my late 40’s I made a $70k then I took a huge risk (debt), started a business that took off and I was making $350k-400k. I worked from home and people were curious. I live in fly over country (Trump country) and the people were genuinely happy for us, you could see the wheels turning thinking about what they could do. Country wide, I was “shocked at the vitriol and hatred” toward people who made a high income.

      I couldn’t believe the taxes we had to pay (it was depressing and demoralizing), dispiriting, even after maxing out our 401k and HSA’s.

      When you start a business, there are the naysayers, then when you become successful there are the “you didn’t build that” attitudes. It felt like we became the enemy, as if they think you took something off them without their approval when in fact a business becomes successful when you provide a product or service that people are willing to pay for and you serve your customers well.

      People don’t know the difference between high income and high net worth. Making high income in a year doesn’t mean you are rich, sure it can lead to becoming rich but there are good years and bad years and failed businesses. When someone has a net worth of $3-$5 Million that throws off a middle class income, then I’d say they were rich.

      Although our standard of living increased a little I’ve learned that the good times typically don’t last so we focused on pre and post saving and investing for retirement. We also paid off the mortgage (probably not the best for such a low rate interest period) but I was wearing many hats already.

      Back on topic…. a business friend who lived in NYC, living in a high COL state. We talked about his having to make a higher income to live the same lifestyle as I do. A couple years back he finally got fed up with NYC COL and taxes and moved to West Palm Beach Florida.

      Bottom line is, I get you Sam but this attitude has been going on for a long time. I’m surprised you weren’t aware of it before.

  80. So, how do folks on the median income survive then? An article on that would perhaps be relevant for those being called “haters” (but I would call sceptics).

    I am not American and am not familiar with how Americans define class but in my world “upper middle class” (which your 300k/year income is at the top end of according to the table in the article) is a luxury lifestyle. Private schools or childcare, luxury European cars, foreign holidays, branded clothing, etc. Most of which you include in your budget.

    1. It’s a good post write. The key is having a stable enough job to pay for housing. If you can keep housing cost down, that is one of the best ways to keep expenses down.

      I lived in a studio for two years in New York City with another guy, and then shared a rundown two bedroom one bathroom apartment with two other people in San Francisco in the beginning.


      Housing cost has truly become the biggest source of angst in expensive cities. I’m trying to tell people that you don’t have to live and on in places like New York City in San Francisco because America is so big and so great, there are other places to live for much less in a much better lifestyle.

      I really hope people can see this message, especially the people who feel they cannot get ahead in an expensive city.

      1. Thanks Sam for the reply. It would be interesting to put a budget together for some of the families in the following article, which mentions that $105k or below is considered “low income” in San Francisco and qualifies you for subsidized housing:

        Their budget would definitely not include a Volvo or Coach handbags. But in the table above, at $105k you would still be “upper middle class”. The danger of national averages…

        San Francisco is on a whole different level of insanity from much of the rest of the planet given the super-heated tech job market and prevalence of stock-based compensation. It’s a little bubble of its own, and you’re lucky enough to be on the inside of it. :-)

      2. You may not be forced to live in a big city like NYC or San Fran, but if you family is there, it is not an easy decision to just leave. For me, there is not many things more important than being close to family. I could pack up and move away from NJ, but then my children will not have a good relationship with their grandparents, cousins, and aunts/uncles.

  81. I think the issue most people had was because you didn’t specify it was for HCOL cities in the title and they were upset at that. There are also much cheaper large vehicles than $60k Volvos.

    Living in NYC, I can see how $300k is middle class. The amount of taxes paid + median tiny 2bed apartments in Manhattan that are $1.5M+ is insane. I hope to have 3 kids, but a 3 bed in Manhattan is even higher. Add to that bidding wars a while ago. Yes, $1.5M anywhere else in the nation is a giant 4,000 square foot McMansion, but the kinds of jobs you get in NYC that pay high salaries are not really available outside of extremely HCOL cities.

    Schools are extremely difficult to get into compared to the rest of the nation and preparation for public school tests takes time and money. Childcare is outrageously expensive.

    Also, when you’re working 60-80 hours a week, you really want the absolute shortest commute possible and might be willing to pay more to find a closer apartment.

    There were multiple people in HCOL cities who agreed. I think saying $300k is middle class is not fair though and the previous title should be updated so it’s accurate just for HCOL areas.

    1. I wonder if it’s because people don’t bother to read the first paragraph of the post and the title in the spreadsheet? I wonder what percentage of people this is.

      You can only make the post title so long before it ruins the flow and hurts the layout on mobile.

      What I’m hoping more people do is actually share their income and expenses and where they live. Is the fear of sharing due to the fear of ridicule? I hope we can be more accepting of others, but it looks like we have a long way to go.

      What is your definition of a middle-class lifestyle?

      1. Hi Sam, long time reader. I always enjoy reading your articles, even if there are things I don’t always agree with.

        I think Olivia is partially right and that some people just look at the income and attempt to picture that income in a lower cost area because if my household income was 300k, I would be able to life an upper class lifestyle, however there are some things that I just don’t seem to think are accurate. Maybe some of it is just the differences in realities between our two areas, but some I just find hard to believe they aren’t a matter of wasteful spending

        I wanted to share my perspective as someone who lives in the midwest, just south of Minneapolis, Minnesota. I will go further into detail on my situation and income/expenses but just to start, we are a 3 person family (2 working adults 1 child). I understand that in HCOL locations such as San Francisco the cost to purchase a home is much larger and your examples of a $1.5M home are reasonable, but other things are cheaper (as a percent of income) because they really don’t cost more, your vehicle as an example.

        There are a few things that don’t make sense to me on your list as truly “middle class”. I don’t think a Luxury SUV is necessarily an accurate depiction of someone living a middle class lifestyle. While I understand the urge to keep your child(ren) you can just as easily purchase a $30,000 Ford Explorer and have them be just as safe.

        Another thing that didn’t seem accurate was the $2100/month budget for food for a family of 3. I know food costs are more expensive in HCOL areas, but most of the major food items did not appear to be that much more compared to my area in the basic research I did. According to Personal Capital, between my 2 categories Groceries and Restaurants, we spent $1250 for the entire month of February, this is an inflated number compared to what it should be due to the fact that we are currently in a unique situation in that we are currently supporting an entire additional family (1 adult 2 children) when it comes to providing breakfast and dinner. The Grocery amount above also includes us putting 2 months worth of money into my child’s school lunch account.

        The vacations are another area that I do not fully agree with. While I believe that everyone should be able to receive 3 weeks paid time off from work, I don’t think you will find most people who consider themselves middle class to be taking 3 weeks worth of vacations to other destinations. I am fairly blessed in that my employer provides plenty of paid time off, however there is no way that I would ever be able to consider using it all for destination vacations, many of my days off are used to to go on short road trips to visit with family who lives 4 – 5 hours away, or just take a day off to relax and get some work done around the house. My family took its first real vacation (10 days in Washington DC) this year and even though a large portion of the hotel and flight expenses were covered by my wife’s employer, it was still expensive enough that I don’t know if we will be able to do it again this year when we have an opportunity to go to Florida with the hotel and partial flight expenses covered.

        I also do not understand the need to send your kid(s) to private school and pay tens of thousands of dollars per year to do so. This may just be a difference in the quality of public schools between Minnesota and California, but to me it sounds more like “My child deserves the absolute best in education and money is no object” which I would venture to say most people would say is upper class territory, even though yes just about every parent would do so if they could afford it.

        1. My wife and I are from Minnesota and we have family in the Twin Cities suburbs. We now live in Brooklyn and will likely move out to the NJ suburbs for more space. I can testify that Sam’s “middle class” numbers are close to reality with respect to living in a coastal city with a high cost of living.

          My sister, husband and toddler live in a new four bedroom home in the Twin Cities suburbs. Their home is worth around 380k (2800 sq ft). They have two cars (Honda CRVs, 25k each?) and send their son to daycare (1.2k/month). Their property taxes are around 3k per year.

          For my wife and I to have a similar lifestyle in NJ it’s more than double the cost for a worse qualify of life. At least 800k to 1M for a much older home with less space (2000 sq ft), higher day care costs 2k, and obsurd property taxes around 20k per year or higher. We might be able to get away with 1 car with a train nearby. A good lifestyle out here isn’t as good as in MN despite the much higher costs. Schools in NJ are probably as good or worse than in MN.

          Forget about Brooklyn. A Brownstone in our neighborhood goes for 4M. I’ll never be able to afford it with my current job. I wouldn’t send my son to any of the public schools around here. Private schools nearby are 40k and probably as good as what you’d find in the better Twin Cities suburbs.

          We’ve thought about moving back to MN to be closer to family, but I work in a specialized area of software development. I can’t find a similar job in MN (I’d have to do something totally different) and the pay would be much lower even after taking into account cost of living adjustments.

          My wife and I are frugal. We only occasionally eat out. We don’t own a car. In fact, we don’t own anything too expensive. 300k sounds about right for aiming for an middle class to upper middle lifestyle. 200k for middle class and “frugal” living.

          1. You are talking about moving into my hood, we recently moved to suburban Essex county and had a bunch of our friends move to Westchester, the experience has been pretty similar. Public Schools in NJ are great, best in the USA outside of MA, the schools up in Westchester, CT and the nice towns out on LI are excellent as well hence the ridiculous property taxes. Yes the daycare here is more it is approx 22k per child annually for an all day school, but you need to apply to get a spot before the child is born, I think the parents in the HCOL areas are much more competitive and thus demanding on the daycare providers(they want longer hours and more of an educational setting it really adds to the cost and explains some of the disparity in pricing). The same is true for eating out here, the cost is higher than middle america but then again so are the customer’s demands, so the food is a higher quality vs. smaller cities in America the food here is amazing.

            Unfortunately home prices seem to be tied to the price of a 1 bedroom apartment so 500k for a shed seems to be the standard rate and they sell in a week, property tax is 3%. The house across the street from me was totally original from 1948, 3 beds/2 bath, 1 car garage, quarter acre, 2200 sqft the listing literally listed new exterior paint(when I say original I mean even the roof appears to be 50 years old) it sold for 569k in 6 weeks and has 15k property taxes. It is the epitome of middle class housing the person buying it needs to put in at least 100k and that not even to put in nice finishes(that is for updating plumbing, electrical, heating, the roof and the windows) to do builders grade finishes kitchen and baths is probably 35k extra, to do it up to the standard of the area is probably 75k. A move in ready home is 750k-800k in my neighborhood.

            In Michigan, Detroit suburbs, a nice town with good schools that house is 225k tops with 4k in taxes. Pretty much the people moving in need to make $150k income to have the same lifestyle as someone with a 75k household income in MI.

            That being said besides the crushing property taxes, the quality of life is good. The commute is a good bit longer, but the space is much better than you’d get in the boros, the schools are better, the groceries are way cheaper, when we visit family in MI I am always amazed that organic groceries and ethnic items are WAY more expensive in MI than they are here, it has everything to do with consumer demands and being close to a large port.

            What we lack is space for inexpensive newer housing, my wife has family in the twin cities and their house cost the same as ours(1.2m), the taxes are a little bit less(28k vs 36k) and their neighborhood is very similar(big old tudor style homes), even in MI the fancy neighborhoods are similarly pricey(property taxes are way less though).

            You can live well on 200k here but it isn’t easy 300k secures a much nicer lifestyle but in neither case are you living rich, by the time you get fleeced by the feds, the state, and your property taxes you have a lot less money than you’d expect after your fixed expenses.

            That being said vs. the midwest most people out here take international vacations(10k per week on average), dine out more frequently, have more domestic help, have landscapers, send their children to more enrichment programs and work a lot more. It’s a different lifestyle but there are microcosms of it in most cities but here everyone is on the treadmill.

            True middle class is 150k household income out here, someone earning 150k here lives exactly the same as a person making 75k in the midwest although their house is probably a bit worse and their commute a bit longer. It is not linear though so a 300k income isn’t 150k in middle america, once you pay for the housing disparity the other expenses don’t rise as rapidy and there is more discretionary income left over.

        2. My wife and I are from Minnesota and we have family in the Twin Cities suburbs. We now live in Brooklyn and will likely move out to the NJ suburbs for more space. I can testify that Sam’s “middle class” numbers are close to reality with respect to living in a coastal city with a high cost of living.

          My sister, husband and toddler live in a new four bedroom home in the Twin Cities suburbs. Their home is worth around 350k (2800 sq ft). They have two cars (Honda CRVs, 25k each?) and send their son to daycare (1.2k/month). Their property taxes are around 3k per year.

          For my wife and I to have a similar lifestyle in NJ it’s more than double the cost for a worse qualify of life. At least 800k to 1M for a much older home with less space (2000 sq ft), higher day care costs 2k, and obsurd property taxes around 20k per year or higher. We might be able to get away with 1 car with a train nearby. A good lifestyle out here isn’t as good as in MN despite the much higher costs. Schools in NJ are probably as good or worse than in MN.

          Forget about Brooklyn. A Brownstone in our neighborhood goes for 4M. I’ll never be able to afford it with my current job. I wouldn’t send my son to any of the public schools around here. Private schools nearby are 40k and probably as good as what you’d find in the better Twin Cities suburbs.

          We’ve thought about moving back to MN to be closer to family, but I work in a specialized area of software development. I can’t find a similar job in MN (I’d have to do something totally different) and the pay would be much lower even after taking into account cost of living adjustments.

          My wife and I are frugal. We only occasionally eat out. We don’t own a car. In fact, we don’t own anything too expensive. 300k sounds about right for aiming for an middle class to upper middle lifestyle. 200k for middle class and “frugal” living.

      2. Posting again so I can provide more detail about my household income/expense situation for a better understanding of my views above.

        My household consists of 2 working adults and 1 child who is ~10 years old
        Our family income is ~110k/year W2 income with no side income (though i am working on trying to correct that)

        We live in a 4BD, 2BA 2100 sqft home that would be valued at ~250k my mortgage was ~180,000 and between the mortgage, property taxes and home owners insurance we pay $1300/month my wife drives a 2012 mazda 3 with no loan, i drive a mazda6 that I pay $490/month for the loan (should be paying ~$400 but due to negative equity in a previous stupid vehicle purchase this is higher). Our grocery bill (including restaurants) for the last full month (february) was $1250 and that was to feed 3 adults and 3 children.

        Because both of us work, my son attends a before school daycare (provided at the school) which costs ~270/month + 40/day for full release days where there is no school (like now, when they are on spring break)

        If anyone is curious about other costs in the midwest area, I would be happy to explain more.

        1. Having a house worth a little over two times your annual gross income is fantastic. One might even say you are rich. That would be equivalent to earning about $700,000 here in the San Francisco Bay area.

          Looking at household income to a multiple of the median household price in your area is a good way to look at things.

          1. Responding to both you guys.

            I think you have middle class lifestyle defined correctly, but the 60k car is upper class. I agree with his ford comment.

            Otherwise, for HCOL areas 300k for 1 kid is not a lot of money. For 2 kids, I shudder to imagine the cost of a 3bed here in Manhattan.

            The problem with places like Manhattan/SF is top schools only take a certain number of kids from each geographic location in order to achieve diversity. When all the other families are sending their kid to private school and fancy extracurriculars, if you don’t, your kid might not progress as far as others. This kind of mentality is upper middle class to upper class I feel though.

            If great public schools were easy to get into, I think the city residents would be happy to send their kids there.

            1. Jesus Christ, you think the family earning 1M a year considers a $60K car upper class? Part of the problem here is I don’t think many of you know any rich people. Upper class families drive 100k to 120k Porsche’s (911) and Benz’s (S550).

              And remember, middle class is a range and it’s relative. Even if you reduce the expenses in some categories and they go to the bottom line, what…the family pockets an extra 20K and it goes to the bank account. They aren’t retiring after 5 or 10 years saving a couple hundred k more.

              It’s amazing how so many of you have an opinion yet so many of you clearly read this blog. But then when he presents a logical viewpoint backed by stats, because it doesn’t jive with your perception of the world, suddenly you think you know better.

            2. Re:Ridiculous

              @Ridiculous – depends on the family.

              I know decidedly middle-class families that blew cash on a Lexus etc because they “deserve it”. And I know richer folks that can’t get past the idea of a car being a depreciating asset. I’m sure you do too, if you are honest for a second.

              “because it doesn’t jive with your perception of the world, suddenly you think you know better” – come on man, that is exactly what you are doing too and even Sam.

              Let’s face facts, budgets are subjective within a range. Your entertainment cost will be different depending on your idea of entertainment. You might be ok with wearing Old Navy or you might consider fashion more important. To eat healthy, you could eat tofu and seasonal vegetables or you could have grass-fed organic ribeye.

              It’s absurd for Sam (and ‘me-too’ commenters like yourself) to assert that for all people, car A is trash and car B is acceptably middle-class. And a lot of this rebuttal post really just sounds like sour grapes over exactly what you’re describing. “It doesn’t jive with your perception of the world, suddenly you think you know better”

      3. Long time reader first time poster…

        First I would like to share: Sam has accrued a following base of thoughtful, opened-minded readers, and most replies here have a cogent point.

        To sum up my thoughts: There is a growing disconnect of understanding btwn the “haters” and the hated, and no matter what bucket you’re in, we all (as a country) could do a little better to understand and appreciate the perspective of the other side.

        Sam’s definition was a reality for many in this country not long ago (hence “same as it ever was”,… I think?). There are a lot of people still alive today that remembered that period of time as the status quo and there are a lot of people holding onto but failing to achieve that lifestyle. Failure to reach expectations creates frustration, and failing, but pretending, to meet expectations creates even more frustration. We have a middle class facade.

        There are “haters”. If you make a 1% income, and think you’re humble and it doesn’t show to those less fortunate, it does. It comes out in little things you say and don’t even realize. And the people who realize you have more than them will judge you for it. If all the people earning 1% + incomes had to wear a “1%” sign like a scarlet letter, I can only imagine stories we’d here on the 6pm news.

        One the other side, there are a lot of 1%ers (well not “a lot” by definition :) ) who sit at home and are like WTF is the definition of rich bc I fall in that category and am struggling to pay my cover my overhead. Some of these people debate with their spouse about moving out of the HCOL area for a better life, even if they make less. I haven’t gone through the math, but do believe Sam could have increased the income numbers and came to the same conclusion in certain for certain areas. Though, the pushback would have been greater, I’m sure.

        It’s worth considering why this state of angst exists. I have lots of thoughts, but most beyond the scope of this blog posting.

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