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How to Gauge Your Middle-Class Status

Old 03-25-10, 03:31 PM
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How to Gauge Your Middle-Class Status

Seems like this discussion has come up in a couple of threads so I thought I'd give it its own thread/discussion...

http://finance.yahoo.com/banking-bud...d=bb-budgeting

How to Gauge Your Middle-Class Status
by Rick Newman
Tuesday, March 23, 2010provided byUSNews.com

Assessing Your Middle-Class Status

Despite the so-called recovery, many families continue to struggle, with income and other living standards slipping below thresholds that typically represent middle-class quality of life. We've assembled a variety of metrics to help determine whether you're getting ahead, holding steady, or slipping further than most.


Income

For the 50 percent of families in the middle of the scale, household income ranges from $51,000 to $123,000 for a typical four-person, two-parent family. The median is about $81,000. Those numbers are from 2008, and have probably fallen 5 to 7 percent since then, on account of the recession. Median income for a single-parent, two-child family is about $25,000.

Housing Costs

For two-parent families, the typical home is worth about $231,000, accounting for $17,600 in mortgage payments and other costs per year. Housing costs have risen by more than twice as much as income since 1990, a trend that may finally be reversing thanks to the housing bust.

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Home Size

The housing bubble was one factor that boosted housing costs, but the typical family also lives in a much bigger home. The median size of a new, single-family home jumped by 40 percent between 1979 and 2007, to about 2,300 square feet. That may now be declining, as families downsize and some get booted from homes they can't afford.

Medical Expenses

You've probably heard — healthcare costs are going through the roof. A study by the middle-class task force headed by Vice President Joe Biden says the median two-parent family spends $5,100 per year on health insurance and non-covered expenses—assuming an employer provides health insurance. Healthcare costs have risen far more than any other aspect of the family budget since 1990, with no end in sight.

Cars

They provide mobility and represent freedom, one reason the typical family spends about $12,400 per year on two medium-sized sedans or the equivalent, with a new-car value of $45,000. The recession may have dampened our love of the road, however: Americans are driving less and car sales are off about 40 percent.

College Savings

The typical family puts aside $4,100 for college expenses for two kids, estimated to cover about 75 percent of expenses at a state university. Financial aid helps with the rest. But if possible, toss more into the college fund: As states face budget crunches, tuition and fees are going up.

Vacations

One week at the beach or another destination is standard, at a cost of $3,000 or so for four. More affluent families can afford two weeks, at a typical cost of $6,100.

Retirement Savings

A median-income family that saved 3.2 percent of its income—roughly equivalent to the national saving rate—would sock away nearly $2,600 per year for retirement. Of course many families don't hit even that modest goal, and stock-market losses over the last several years have further shrunk the national nest egg.

Everyday Spending

Clothes, food, utilities, entertainment and other living expenses amount to $14,200 a year for a median-income family. Not surprisingly, this is one set expenses many families are trying to reduce, by buying more discount brands, using less or doing without.

Number of Earners

In 76 percent of two-parent families, both parents work. The higher the household income, the more likely it is that both parents are contributing.

Hours Worked

Few parents will be surprised to hear that Moms and Dads are working more than they used to. The total number of hours worked in a two-parent family is 3,747 per year, up 5 percent since 1990. The increased hours add up to more than four 40-hour weeks of additional work per family.

Education

The typical household head has a high school degree plus about two years of college education, up by more than a full year of college since 1990. Good thing—education is a key factor in lifetime earnings, and high school dropouts face a dim future by nearly every measure.

Free Time

What's your top priority? In a 2008 poll by the Pew Research Center, it wasn't healthy kids, a strong marriage or a great career; 68 percent of respondents said it was free time. (And just 12 percent said it was being wealthy.)

Household Net Worth

The typical household has a net worth of about $84,000, according to the Federal Reserve. That's down 30 percent since 2007, thanks to losses in stock portfolios and home values.

Debt

About 18 percent of disposable income, on average, goes toward mortgage payments, auto loans, credit cards and other forms of household debt. That's a bit higher than it was in the '70s and '80s. But since debt payments peaked at the beginning of 2008, at 18.9 percent of income, they've been steadily falling.
Copyrighted, U.S.News & World Report, L.P. All rights reserved.
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Old 03-25-10, 03:32 PM
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Re: How to Gauge Your Middle-Class Status

Saw that article earlier. Doesn't really help us single folk gauge our status.
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Old 03-25-10, 03:37 PM
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Re: How to Gauge Your Middle-Class Status

I read that and can only wonder why people have kids, let alone get married.

Speaking of marriage, I read an article in the WP the other day about how a lot of divorces have been put on hold in this area because it's just too expensive to get divorced (and how many who are separated still live under the same roof because they can't afford 2 residences).
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Old 03-25-10, 03:40 PM
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Re: How to Gauge Your Middle-Class Status

Originally Posted by Venusian View Post
Saw that article earlier. Doesn't really help us single folk gauge our status.
Or married people without children, or people who don't have much use for cars, let alone expensive ones, etc.
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Old 03-25-10, 03:41 PM
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Re: How to Gauge Your Middle-Class Status

And people that have paid off their cars
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Old 03-25-10, 03:41 PM
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Re: How to Gauge Your Middle-Class Status

Are they saying people spend $45K on one car or two combined?
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Old 03-25-10, 03:43 PM
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Re: How to Gauge Your Middle-Class Status

Originally Posted by wendersfan View Post
or people who don't have much use for cars, let alone expensive ones, etc.
Yeah - I saw the numbers on the cars and laughed. I haven't had a car payment in 5 years and probably fill up my tank 10-12 times a year. I think I pay more for car insurance than gas.
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Old 03-25-10, 03:45 PM
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Re: How to Gauge Your Middle-Class Status

This is median for the US as a whole, we all know the DVDtalk version would have us all debt free, 6-7 figure incomes and net worths
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Old 03-25-10, 04:03 PM
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Re: How to Gauge Your Middle-Class Status

Originally Posted by CRM114 View Post
Are they saying people spend $45K on one car or two combined?
That is the average of the new car they buy, and they tend to spend $12,400 a year on payments, etc. That's how I read it.

I am below average on a number of categories there and above on a few. I expect a pity party and for people to share their wealth with me.
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Old 03-25-10, 04:08 PM
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Re: How to Gauge Your Middle-Class Status

Originally Posted by kvrdave View Post
I expect a pity party and for people to share their wealth with me.
Not gonna happen. All my disposable income goes to guitars, CRM's to taxes, and if we gave you money your wife would blow it on horses.
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Old 03-25-10, 04:09 PM
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Re: How to Gauge Your Middle-Class Status

$45K car is not a middle class car. That's a BMW.
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Old 03-25-10, 04:12 PM
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Re: How to Gauge Your Middle-Class Status

Originally Posted by CRM114 View Post
Are they saying people spend $45K on one car or two combined?
Cars

They provide mobility and represent freedom, one reason the typical family spends about $12,400 per year on two medium-sized sedans or the equivalent, with a new-car value of $45,000. The recession may have dampened our love of the road, however: Americans are driving less and car sales are off about 40 percent.
I have to vote for the 45k being for two cars combined. I don't think the typical family has two cars valued at 45k each.

It would cost more than $12,400 to pay notes on 90k worth of cars. It also isn't clear whether that $12,400 number includes insurance, gas etc.
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Old 03-25-10, 04:13 PM
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Re: How to Gauge Your Middle-Class Status

Originally Posted by CRM114 View Post
$45K car is not a middle class car. That's a BMW.
Or a 'tricked out' Grand Cherokee.
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Old 03-25-10, 04:23 PM
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Re: How to Gauge Your Middle-Class Status

Originally Posted by CRM114 View Post
$45K car is not a middle class car. That's a BMW.
It's a pretty nice truck or SUV and lots of people seem to have those. But it could be for both. My wife's was $30,000 and mine was $20,000 so maybe I can move to above average on 1 more category.
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Old 03-25-10, 04:34 PM
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Re: How to Gauge Your Middle-Class Status

$45K for a car??!! If I ever lost my mind and decided to buy a car, I wouldn't spend more than $3K.
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Old 03-25-10, 04:43 PM
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Re: How to Gauge Your Middle-Class Status

Originally Posted by Tracer Bullet View Post
$45K for a car??!! If I ever lost my mind and decided to buy a car, I wouldn't spend more than $3K.
When I got laid off a few years ago I spent my accrued vacation pay (about $2500) on a '94 Civic, in case I found a job that required me to drive to it. I ended up getting a job even closer to my home, and now I drive the car a few times a year. I haven't actually driven it yet this year, I just start it every couple of weeks and let it idle for a few minutes.
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Old 03-25-10, 04:46 PM
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Re: How to Gauge Your Middle-Class Status

This may be the source of the data: http://www.commerce.gov/s/groups/pub...d01_008833.pdf

Check the table on page 9
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Old 03-25-10, 05:01 PM
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Re: How to Gauge Your Middle-Class Status

Originally Posted by CRM114 View Post
$45K car is not a middle class car. That's a BMW.
Or a 4Runner.
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Old 03-25-10, 05:03 PM
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Re: How to Gauge Your Middle-Class Status

Originally Posted by wishbone View Post
Or a 4Runner.
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Old 03-25-10, 05:07 PM
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Re: How to Gauge Your Middle-Class Status

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Old 03-25-10, 05:17 PM
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Re: How to Gauge Your Middle-Class Status

Originally Posted by CRM114 View Post
$45K car is not a middle class car. That's a BMW.
Or a mid-sized/full sized SUV. That way, you at least look middle class.
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Old 03-25-10, 06:32 PM
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Re: How to Gauge Your Middle-Class Status

Originally Posted by Nugent View Post
I have to vote for the 45k being for two cars combined. I don't think the typical family has two cars valued at 45k each.

It would cost more than $12,400 to pay notes on 90k worth of cars. It also isn't clear whether that $12,400 number includes insurance, gas etc.
Originally Posted by Venusian View Post
This may be the source of the data: http://www.commerce.gov/s/groups/pub...d01_008833.pdf

Check the table on page 9
Based on that document it looks like it is $45K for BOTH vehicle.

"Two medium-sized sedans each with $20,000 purchase price, driven a total of 25,000 miles/year."
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Old 03-25-10, 07:08 PM
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Re: How to Gauge Your Middle-Class Status

Originally Posted by Tracer Bullet View Post
$45K for a car??!! If I ever lost my mind and decided to buy a car, I wouldn't spend more than $3K.
How do you get to the cows' summer pasture?
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Old 03-25-10, 07:44 PM
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Re: How to Gauge Your Middle-Class Status

Originally Posted by kvrdave View Post
How do you get to the cows' summer pasture?
Is that a new bar in the East Village?
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Old 03-25-10, 08:37 PM
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Re: How to Gauge Your Middle-Class Status

Originally Posted by wishbone View Post
Or a 4Runner.
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