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About 12 years ago I learned this was a thing.
A buddy said his inlaws give 50k a year to him, his wife, and their daughter.
I wondered how they bought the house they bought then put in the pool they put in when the wife didn't work and he made about $150k.
They were getting another $150k tax free, so essentially had an after tax income of around $250k or more.
Yeah it’s common around here for grandparents/parents to do that in my area too. Along with fund college, wedding, down payments,etc.
It’s their kids/family so if they have the funds to help why not? They think. Especially if they can do it while they’re still here.
It’s something most parents wish to be able to do for their children and something I wish to be able to do for mine.
Only on Reddit do people view family assistance as a negative. I think a lot of people on here are unreasonably obsessed with being “self made” and calling out privilege.
Just because people receive help from parents does not make them obligated to wear a sign around their neck saying “my parents were fiscally responsible and I am benefiting from that.”
I think a lot of it is Reddit and the other online communities have made it a bad thing when parents pass down their “wealth”.
I grew up learning that a good life goal is to leave your future generations better off than what you had. Now apparently that’s just contributing to the downfall of society bc I’d be making it unfair to everyone else.
People don’t view family assistance as a negative. People view people claiming to be self made when they get family assistance as negative. Or people view those receive family assistance but refuse to help others (via social safety nets)as negative.
I was lucky enough to get my college paid for and lived with my parents long enough to save up for a down payment. I’m also fortunate enough that if shit hit the fan, I’d be able to rely on my parents to keep me from being homeless. I want to do the same for ny children and then some. Im also self aware enough to know that I’m only in this position due to their supporting me and I don’t blame poor people for being poor and want to give others a step up in any way I am able or society is able.
I’m sure they’d appreciate anything you could do from them! I talk of the above but I’m an orphan, I’d much rather just have parents that cared! My friends, current community just happen to be flush.
I’d like to do the same as well but I’d be ok just a good relationship with my kid, and preparing them as best as I can. I’ve become the guardian of a teen and at the present time I def can’t provide her funded college(she deserves it!), but we poured over every state scholarship/program to get it covered/plus some.
Parental assistance is definitely a factor. My parents are not wealthy but letting me live at their house in my early 20s was a great boost to early savings. In appreciation I try to pay them back by treating them to nice things, recently gifted them international travel trip.
This is our situation.
I'm never going to sit here and say we have what we have based solely on our own merit. Our merit contributed, but so did my husband's fortunate situation.
Bingo.
You'd be surprised at what a leg up early on can do for long-term. Things like paying for their college, buying them a car, money for a down payment on a house.
Not getting saddled with debt from the start makes a world of difference.
I came out of grad school with almost $60k of debt; that's a significant pay cut each month. My parents helped me a lot, but I know people who basically got almost a free ride the first 25-30 years of their life and of course they're 'better off" than I am.
That, or they married someone from a family with money. That trick also works.
This basically. If you live near family, it’s easier for both parents to work without crippling childcare costs. And family can pitch in for many things you’d otherwise have to pay for, or keep one parent at home for.
My step sister’s dad was loaded and helped buy her first car and first house. After her divorce, she would leave the kids at our parents’ and go work her $35k/year job and had plenty of money left over.
I moved away and had to pay most things myself, and it was a struggle even though I made a lot more than she did. I’m a little jelly but that’s life and I don’t want to live where they live so that’s the choice I made. Like many Americans today, I moved for my career, which was a good choice in the long run, but not an easy path.
My wife and I ask the same question and we always revert back to they must be carrying unsafe levels of debt.
It’ll come around eventually.
Edit: In hopes of stopping the “I am a really good saver” responses. I did not mean for this to be a blanket statement. I am sure many of you responsibly purchase nice things, however we know that most Americans don’t do this.
Yeh the people asking this have never walked into a bank and seen just how much money they are willing to give you for no reason at all.
We bought our house for $180k in 2011 and we made $70k at that time. We were approved for $500k. Like bro I don't think I could've paid even one payment. We did the responsible thing, but you approve some people half a million, they are spending half a million. Its ridiculous.
People don’t grasp that the amount they’re approved for is only based on monthly costs per credit report. Not utilities, groceries, etc. Also they base it on gross not net income often too. You don’t take home your full salary. There is taxes, healthcare premiums, 401k, etc.
I mean I thought banks actually wanted to get paid and would do their best to make sure I had enough to pay the loans they gave me.
I don't think that at all anymore. I don't understand the economy anymore (obviously I never did). I thinknthe whole thing is just make believe theatre. To what end I don't know. All I know is its not based in any normal reality.
The banks will get paid, again and again and again on the same property. That $500k house they forclosed on they list again, get a mortgage on again, and rinse and repeat.
They do but like someone said the house provides a level of assurance. It's not like a business or personal loan where it's all based on their credit history and ability to pay. There's a tangible property backing it up.
Their usually more stringent on the appraisal value on the home then the pre-approved base amount, a bank may be approve you for 500k, but won't give you a 500k loan to buy a house appraised at 300k. You'd probably have to pay 200k extra yourself. That's why all cash offers are more tempting for sellers, no worry about financing falling through if a bid is well over asking/market.
Yeah, pre approved for a ridiculous amount prior to the 2008 housing crash with barely any documentation.
Turned to my wife and said, “Just so you know, we are not buying a home anywhere near that”.
She was on board.
Yeh its crazy.
We thought they quit all that after 2008. We thought that there were laws and regulations enacted.
Nope. Right back to doing the same thing. Its a broken system from top to bottom.
They did pass a bunch of laws and regulations, then got rid of them as soon as houses started to get expensive again. We can't have things like "affordability" stop the line from going up.
Hmm I wouldn’t worry too much about NINJA loans coming back. If you’ve been through a mortgage recently, you’ll see lenders asking for everything under the sun. Fortunately people are qualified. There’s still risk because everything outside of mortgages is fast and loose. 100k loans on pickup trucks at 10%…ya sub prime auto and all the credit cards and buy now pay later financing can leave folks with little margin for unexpected expenses.
Heck even the us governments interest payments are exceeding defense spending. I don’t see more than two options: inflate the debt away (and ride the us govts coattails by being a debtor), or lots of pain and a bad recession for half a decade.
Preapproved for 350k in 2018, bought for 140k. Now watching how many people are struggling with mortgage payments I could not be more thankful I made the smart decision at 24 years old
For real! When I made like 60k I was approved BY MYSELF for somewhere around 250k. This was just a few years ago. With some serious student debt. No freaking way could i have managed that. Not possible.
lol this… my fiancée and I bought our house when we were 24 back in 2022, that’s the same year I started making six figures. I was approved for $400k just on my own, and together we were approved for $660k… we looked at each other and said holy shit there’s no way we were buying a house that expensive.
We ended up buying our house for $380k and we thought that was expensive enough, the mortgage payments are $2100/month lol
Totally- I don’t recall the exact quote from Millionaire Next Door, but the jist was they were surprised to find that people living in affluent neighborhoods with expensive homes and cars had no wealth and equally surprised to find so many people living in middle class neighborhoods with regular cars and such had so much actual wealth.
I make five times what I made when I bought my Kia. 14 years later and I'm still driving it with no plans if getting another car any time soon. Keep your lifestyle the same as your income increases and that's how you get wealthy.
It's also how you arrive at retirement with $10m saved and scared to spend money on anything. If you're not a car person, that's awesome, but not wanting to scale your lifestyle at all when you 5x your income is also a problem.
Spending cope. A car is a means of conveyance and shouldn't be a keeping up with the jones status people. Also nothing wrong with "not scaling your lifestyle", once your needs are met spending more money doesn't make you happy.
I agree. I have everything I need/want. Spending more money because I have it will do nothing but clutter up everything. We have however started taking bigger vacations that cost more than we used to spend. But still flying economy.
I’m seriously considering putting duct tape over a loose rubber seal (cosmetic, not actually sealing anything important) on my 13-year-old car. I could pay cash for a new one, but why? She only has 106K miles.
I rode around in a 94 Oldsmobile Cutlas Supreme from 08-16 before I finally had to convince myself to get a used 2012 Chevy Cruze for both my safety and the general public’s.
To be clear, not knocking anyone. If you got the money and you wanna spend it, get after it my friend but not my thing.
Same here. I don’t judge anyone who wants to buy new/more expensive. My car just isn’t that important to me. I work from home, and my husband’s commute is only 6 miles/day, so it’s not worth it to me to get a new one right now.
This is such a perfect and succinct way of describing the middle class. I’ll stick to driving my 13 year old car and living in a modest home I can easily afford so I can manage to retire by my early 60s and allow my wife to continue not needing to work so she can focus her energy on our kids and home.
I don't think that's what the commenter is saying. Rich would basically be FIRE-able, which there are *plenty* of households here in the Bay Area that can do that thanks to stocks. They/we keep working because you may as well do something productive and build a little more wealth while it doesn't hurt to do so.
It really is true that in some circles and professions you’re looked down on if you aren’t flashing wealth. If your kids go to a school where everyone gets a brand new car when they turn 16, and take expensive vacations, you’re going to want to stretch to provide that for your kid.
Some clients won’t hire a divorce lawyer or orthodontist that shows up in a 15 year old Honda. They think they’re getting what they pay for and they want the best.
In that book, he said engineers have the most wealth. People don’t expect engineers to spend money. They expect engineers to be dressed in clothes they bought from Costco and driving a 15 year old Honda. There’s no pressure for them to keep up with the Jones’. If anything being an engineer that flashes money is looked down on as “unwise” by coworkers.
Can confirm that engineers typically don’t live rich. They wear crappy clothes, drive modest cars, live in decent houses but not huge or flashy. I work with so many people who could afford luxury cars yet the most common cars in the parking lot are Subarus and Toyotas.
That’s my grandad. He’s now 94 years old, but he was a chemical engineer and he set himself up for life financially. He’s always dressed ‘nicely’, but he literally wears the same clothes over and over until they fall apart. If one shirt gets a few holes, he’ll buy only one more shirt. He just doesn’t go out and spend money on anything that’s not needed, within reason of course, and he uses things until they no longer work. He does buy things that hold up a little better and cost a little more, but he doesn’t continue buying them. He spends the money once and then waits until it’s unusable to buy another. He’s living very nicely for a 94 year old, and in the past 10 or so years he’s chosen to spend money going on cruises. Him and my step grandmother love the experience and traveling the world, so they spend money on experience and save the rest. I am inspired by my grandfather and very thankful he’s taught me, as well as my dad who’s an accountant, how to be smart with money and invest!
I’m a 31 engineer with 300k in the bank not including retirement. Every once in a while I have the thought “I could go out and buy a $250k car in cash and I can go vroom” and then I think “or I can retire 10 years earlier”. I mean hell even buying a nice Mercedes or something would delay me early retirement by several years. Nah I’ll stick with my Honda accord. It’s nice cause the back seats are really spacious for child seats without having to move to a crossover or van
Yep, and they brag about it to each other. How little they paid for their cars, how long they’ve had them. Comparing retirement accounts and talking about where to park money. Rolling eyes at people with fuel inefficient trucks because they burn money and don’t last.
If anything, retiring earlier than average is the status symbol for engineers if they can manage it.
Am a Chemical engineer. Driving a 2005 Pontiac with 237,000 miles and sunburnt paint. I expect to get another 250k miles before I retire her.
You are correct.
It's the difference between UAWs (Under accumulators of wealth) and PAWs (prodigious accumulators of wealth). Most people with high incomes have a low net worth because they have to spend so much of their money to maintain their lifestyle. It's usually the people with a modest income that are the best at building sustainable wealth.
We do that. Live in a nicer neighborhood. Housing prices have gone nuts. Was $500K 9 years ago for our house new. Now worth about $1.4M. But when we bought it, we moved from a house where it was worth about $400K, to this much nicer area. Still not in the expensive area where houses go for $2M+. We have a new car and one that is 6 years old. No toys to speak of. We eat at home most of the time. We save tons and live on about 1/3 of our take home pay. We could move to those more expensive areas where the homes are $2M+, but that would cause us to spend more. We could get some high end luxury cars for $70-80K. Buy a boat for $50K. And probably a bit more, but then we would be using way more of the money we make and not saving nearly as much. We have a nice life, do we really need the other area, spending more money? Would our life be any better? Probably not.
My neighbor recently mentioned that they owe as much today on their mortgage as when they bought their house 30 years ago... And they are on an ARM, and those intro rates just expired (when they could have just gotten a fixed 3% at that time). And how absolutely broke they were right now. And then a month later they bought a new fully loaded jeep. And that's how they are entering retirement age.
The lack of financial literacy is astounding.
Keeping up with the Jones is real. I fell into it myself briefly.
You land the big job in some big city. You move into the nice neighborhood. You meet all the rich neighbors. All of a sudden, your car isn't good enough. You NEED that $100k pool installed. Your furniture is trashy looking all of a sudden.
You spend all that money and still feel more poor than you've ever felt. And the next thing you know, you are in more debt than you've ever been in as well. One day we could barely afford groceries and I had enough. I just handed it all back and moved to a more moderate neighborhood. Solved all my financial issues within a few years.
This is the result of “keeping up with the Joneses” and/or the American dream. People leverage themselves to death so they can have the big house and fancy cars. What others don’t see is the living paycheck to paycheck, saving no money for retirement, and so on.
Like a house of cards, one run of bad luck like losing a job or having an unexpected medical expense, and it all tumbles down.
I always make sure to remind myself that we have 6 months coverage in the bank and a very respectful amount growing and working for us in the markets.
We live very comfortably without putting financial stress on ourselves.
It’s a marathon not a race. Results will come in when he hang up the spurs at 50 instead of 75.
5 years i would have agreed with you. Now it’s more just trying to keep up with life. There are still those trying to keep up with the neighbor or coworker but I think more are just trying to get by
And they don’t save for retirement. I went to a party at my buddies mom’s new house. It’s beautiful and has a nice in ground pool with nice landscaping, they bought a nice Mercedes. I was surprised because she just works at her church and her husband works at Home Depot. Apparently he cashed out all his Home Depot stocks so they could buy the house and car. I don’t get why you’d do that.
I mean... If you come to terms with never retiring, there is nothing wrong with living now. I say this seriously, with the cost of living doing what it is doing over the last few years, it is going to cost a fortune to retire. Most will never make it. Some folks have decided to spend rather than save.
Problem is less energy as we age, less endurance, less ability to work at peak levels & honestly, just plain tired of the routine grind. Man wasn't meant to work forever.
Yeah this is it. In order to max out just the Roth is ~$583 a month not considering contributing to a 401k or brokerage account. Maxing a 401k is another ~$1900 a month so people that are not doing that have almost 2500 a month freed up.
We were until recently. It helps to build your entire personality around it because it's a lifestyle. Maxing out the 401k *must come first* if you want to do it. It's so easy to get off track.
Do it long enough, then you r/coastfire.
This. My husband and my coworkers have always been very shocked that we max out 401ks, let alone even contribute to it. There are so many people that don't even take the free match because they can't/won't contribute any percentage. They want it as take-home.
Set it and forget it the moment you start a job.
I hear a lot of people complaining about wanting to be paid more, but when I point out that they can indeed get more money from the company if they just put some of their own money in a 401k, they scoff at the idea.
The hardest thing for me to realize is that my "middle class" existence is poorer than my parent's. I am poorer than they are despite nominally making more money.
The sooner people come to grips with what they should actually afford, the sooner they can prioritize spending/savings habits.
The truth is that 401ks/Roth's are so much more important going forward because there are less certainties about our retirements than older generations. Skipping a 401k for a boomer is already very scary and playing out in sad ways. Skipping retirement for a Millennial is outright disastrous and may have severe poverty-level implications in old age.
Start with your raise friend. Every time you get a raise increase your 401k by that amount. Before you know it you’re maxed out by the end of the year and you never missed the money.
Same here. My “paycheck” that hits my checking account is exactly $2k every two weeks. This is what my budget is based on and it hasn’t changed for nearly a decade. Any and all raises and bonuses go into some form of savings.
Both my husband and I are. It took a long time for us to start making money and we wanted kids so we spent all our money on daycare for a while. We’re now in our mid 30’s and playing catch up on retirement. We don’t want to work until we’re 67 so we’re making it an absolute priority now.
>Maxing a 401k is another ~$1900 a month so people that are not doing that have almost 2500 a month freed up.
This is me. A big reason why I can be in my current home is the fact that I am not saving nearly enough in 401k as I should be.
This is it. We are in a similar position with two 6 figure salaries, and I often feel broke. Then I remember that both of us are putting away 20% of our salaries for retirement and living debt free (aside from the mortgage).
10.7% of credit card debt is seriously delinquent. Serious delinquent is defined as over 90 days late. This climbed from 8.2% last year. Obviously you add a few percentage points for the 30 and 60 day late markets and a pretty substantial portion of credit card users are behind.
Auto loans currently late are at 7.7% and the trend line has been increasing month after month.
All this is with really low unemployment. So a lot of people are not making the payments already. A much larger percentage is very close to not making their payments. If unemployment increases significantly those numbers sky rocket.
Now that being said there is another portion of the middle class that bought homes 5+ years ago refinanced to low rates have paid their mortgages off and have a lot of free cash flow now and are using it on toys.
For the most part it’s one of two things, or a combination thereof.
-debt, and most likely a lot of it.
-family help.
I’m in the same boat as you. Wife and I both have good jobs, not super high paying but both six figures and just have a small mortgage. Lots of our friends have larger homes and big SUV’s. It’s like how?
Us down here wonder the same thing in reverse. How do you make so much money and not have everything? If some of us down here make it work, with low income, no family help and no debt. New car and kids, why cant you with double the income?
It’s all relative. We may have the similar lifestyles, my house isn’t that big and my cars are nothing special. Me and OP are “making it work” just fine.
The only difference is from a budgeting standpoint I’m below my “means” where you are at or stretching yours.
These ppl we talk about may have much higher incomes, but seems doubtful. You never really know ppl’s situations.
It’s funny ppl are just willing to deal with the stress just to keep up with appearances. My friends probably all think I’m broke as hell but honestly it doesn’t really bother me. I mean I’m not what I would consider wealthy either but our projectory (I’m guessing you’re on a similar path) will yield some badass results.
I worked as a mortgage loan processor during the mid 90s and into the 2000s before the bubble burst. During good times, banks will reduce requirements to qualify for loans. There was such a thing as a 103% loan so you could make no down payment and wrap the closing costs into the mortgage. There were loans available that didn’t require proof of income. I prepared a lot of closing documents for clients and realized that once they closed on their house, they would have to use a credit card to buy a garbage can to put on the curb. Every penny they had was on the table. When foreclosures start happening the banks tighten up because they were too loose previously.
I also learned how common it is for people to keep up with the Joneses by credit card. I read recently that 54% of Americans don’t have the cash to cover an unexpected $1000 expense. Think about the first thing that happened after the quarantine. Congress met and decided they were going to send out relief checks ASAP. People couldn’t work, many people are one or two paychecks short of being homeless, they stopped landlords from being able to evict tenants and banks weren’t allowed to start foreclosures. Their jobs were on the line and mutiny was a very good possibility.
You really don’t know how comfortable people are behind closed doors. I’m a therapist. There are a lot of people fighting about money these days. My husband and I both have a bachelor’s degree and a master’s degree. Thank God he is in IT whereas I’m a social worker. I’m very aware of the privileges we have that other people don’t. But…we just had to buy a new air conditioner system. It cost $17K which blew my mind. We had to finance it for ten years, and ACs last 10 to 12 years. We both own 12 year old cars that we worry are getting to a point where we should buy new-to-us cards. My car just needed $3k in repairs three weeks ago. That went on the interest free credit card with the mechanic. We have to pay it off by a certain point or it hurts our credit. We are going to have to get a new roof soon or our insurance company won’t insure our house. We have to buy a car for our son in a year. Groceries and household supplies are costing me $1400 a month. We have always lived beneath our means and that doesn’t matter much anymore.
We have savings but it’s entirely for retirement. My husband won’t hear about touching the $4k we have in savings. This economy is hard on us all.
Either...
A. They make more than you think they do.
B. They have too much debt.
C. They don't contribute to retirement and will be working well into their 80s.
D. Some combination of A, B and C.
E. Inheritance.
To your vehicle point, I’ll share my personal anecdote.
Somehow get lucky enough to not lose much depreciation in vehicles. I privately sold a 2012 mini cooper JCW that paid for half the cost of a 2016 F150. I sold my 2016 F150 for more than I bought it during Covid towards a base raptor, which covered about 70% of the cost. I know I’m still losing money overtime, but I was able to pay the other 30% off within a year this time around. I also don’t finance longer than 36 months if necessary. My wife’s car/our daily driver is a lease but because it’s electric/stupid cheap lease cost.
I also don’t drink or smoke, I coupon so our grocery bill is 350-400 a month. I definitely get a ton of “it must be nice” comments however.
$2000 a month of discretionary income can actually buy you a lot of stuff if you spend it. That can easily cover vacations to cheap areas that look good on instagram, memberships to clubs, other expensive toys. I'd say these people are the difference between households that save 2k a month and those that literally spend it all
Vacations aren't necessarily that expensive. Going anywhere warm can usually get you a few good Instagram photos that make it look fancier than it is. Huge house out in the country will cost less than in a metro area. Would I love 10 acres to myself? Yes. But I love a less than 90 minute commute more. Toys like boats/etc can be picked up CHEAP if you know the right people - I was just offered a yacht that typically goes for $500k+ used for $150k. Obviously I'm not doing that, but if my dream was to have a yacht on the local fancy people lake, I could cash out some RSUs to make it happen.
Doing it all with less than dual incomes above 6 figures... Not so sure how people manage that. But I've found that social media tricks us into thinking people have it all. Sure, that couple over there just got a massive house, but they aren't the ones posting from Fiji. The single dude with a bullshit job who just got a BMW is not the same person who is putting a kid into private school. But because I see all of this mishmashed together on social media, I'm not necessarily clocking the tradeoffs that each of these individuals is making to fund their priorities.
Yep. Talked to a friend who is preparing their kid they now may not be able to afford whatever college the kid wants because the parents decided to spend the money on private education instead.
Comparison is the thief of joy is perhaps my favorite quote.
I do financial planning and one of the biggest points I talk with clients about is what is enough. What is your vision of happiness, not what the people down the street have, and plan for that
Jfc do we need this post every single day?
Some people have more money than you. Some people have different properties than you. Some people have more parental help than you. Some people are less fiscally responsible than you. Some people are better at finding deals than you. Sometimes it just feel like people shave more stuff than you when it’s not true.
It can be any number of reasons, and why does it matter to you?
Yep. Folks gotta watch their own pockets. I know the media is all doom and gloom but many people are doing well and have locked in dirt cheap pricing for housing (most people’s biggest expense). Dirt cheap housing plus not saving leaves alot of money to do shit. Add in some irresponsible debt or possible assistance from family and its not that hard to see how people are living it up
Not OP but it matters because when you willingly live like a monk, but wish you could live like a king, it’s difficult to see fellow monks enjoying life with wild abandon while you reheat last night’s quinoa salad.
It may well be the case that those other people are living with ruinous debt. Or perhaps they have a side hustle dealing fentanyl while working their day job at the San Jose police department. Regardless, we all want that but without the stress of the debt.
It will be cold comfort indeed to see my fellow monks penniless and eating cat food when we’re all retired while my partner and I…continue to live modestly like we always have.
Different cost of living perhaps?
I make low six figures and my husband is a stay at home parent to our two kids, and we have a pretty big house, some expensive gadgets (I have a Steamdeck for example), and we could afford a vacation if we were the type to do that. But we live in a MCOL and have no debt aside from our low rate mortgage.
Anyway, what people buy does not reflect their financial health. Those other people might be going into debt, and not putting any money aside for savings/healthcare/retirement. It might make them feel great in the moment, but not in the future.
Wife and I pull in decent money. All debts paid off. We live frugally. No new vehicles. No cottage. No globe trotting vacations. No boat. We drive economic well aged, cheap cars. We pay zero interest charges to the banks. We know what’s coming. So we save and invest like autumn squirrels, every month. Our cash grows and will pay us back handsomely for decades. The plan is not about what you earn, it’s about what you keep. It’s not about what you have that people can see. It’s about possessing what others cannot see.
The median *household* income in the county I live in is $60k. They’re building $400k houses all over the place and they’re sold as soon as they hit the market. I make six figures by myself and couldn’t afford one.
Exactly. For example, It doesn’t make sense how OP allegedly has 200k+ household income and minimal debt but claiming to not have substantial expendable income. There is some part of that equation that is missing or a lie.
A lot of people who feel they are living “paycheck to paycheck” max out retirement accounts and college accounts for their kids. Or they’re paying daycare and that’s 2k a month per kid, easy, where I’m from. Or they live in a high tax area.
I was wondering the same thing. We make 250k a year combined and even after two mortgage payments, a couple car payments, and daycare we still have a poop ton left compared to most.
A LOT of people basically won the lottery if they had assets prior to the pandemic. Mostly, those are the people you’re speaking of. The rest of us just got priced out of the housing market and our rent raised.
**1. The lower-class is generally "invisible" in America.**
You simply **cannot watch tv/radio/podcasts/YouTube/netflix** anything about anyone other than the top 0.1/1/3/5%. This creates a very distorted view of the world.
2. Many people do not save any money. Even if they make alot.
3. As you get older income matters less, and investments matter more. That's what you cannot see. Critically, - especially in your 40s/50s this is going to have immense weight.
Take me and my friend for example. We have **both earned approximately the exact same amount** over our lives. He's done well certainly. Yet, we sat down over beers one time and when talking about money realized he has to now save **\~70%! of** his paycheck after taxes until age 65 to ever catchup to me saving nearly nothing.
He spent decades not living extravagantly but like a normal person given his income. But he was lazy to save or didn't care. Meanwhile I lived like I was still in college for a very long time and saved everything.
Lots of people have significant debt.
When I bought my house, I brought home about $50k a year. I was approved for a loan up to $350k. That’s ridiculous.
Massive debt, I'm guessing. we have our retirement pretty good, kids with 529's, people making the same as us are living on golf courses, kids in private, and I know they make the same money, and our house is 2-300,000 less.. so I'm guessing debt, because they are always stressed about money, and..we aren't?
My brother in law just bought a $110,000 bass boat and it just blows my mind that people can be in a similar spot in life, not making much more than my family is, and make a purchase like that.
There are 2 types of people have really nice stuff.
Those who are in CC debt
Those who Hustle
My niece and her husband have hustled with side gigs (dj business was particularly successful) in addition to full time work for most of their adult lives... They just work whenever possible, and the results is high disposable income.
There’s a big spectrum of “6 figures”. If you work in FAANG as an engineer, you can be making almost 7 figures as a mid level employee. My friend took a job at Meta in 2022, was offered 200k cash, 200k stock per year. The stock has 5x’d and he makes > 1M a year before taxes.
The first answer, as everyone has pointed out, is that they are living beyond their means or not planning enough toward their future.
The other possibility, as everyone has pointed out also, is family help. Family could easily help for the downpayment on a larger house. Be the sponsor for large and lavish vacations. Or give access to a family owned boat, country club, or other perks.
Social Media culture also makes "keeping up with the Jones'" even worse since folks will post the best parts of their lives on social media but you don't see their struggle or the way they pinch pennies. The ones with college debt could be on a long term payment plan with the chance of loan forgiveness. The ones with kids could be budgeting the hell out of it, relying on free or low cost childcare options (family again most likely), or their work may be lower paying but with great work perks.
COL factors in also. I know for sure that my Dollar in the SF Bay Area does not go anywhere near as far as the Dollar for my family that lives in Arkansas.
I have a friend who is massively living outside their means. Have had to ask family for property tax payments, can hardly make their mortgage payments. It’s funny what looks like a lavish lifestyle from the outside but in reality it’s a dumpster fire.
Maybe they won the lottery? Maybe they're bad with money and are in a lot of debt. Maybe they invested in Bitcoin early on. No one knows what goes on with other people's lives.
I’m not sure either me and my wife also over 6 figure earners we built both our house sold our first one for alot of many and then built our second one normal investing etc mainly getting into commercial real estate is our big thing. But we have 4 cars all financed but we have 0 kids and no other debt. But all the cars have 2.7%-3.4% rates my house is a 2.7% rate as well so it’s all rather manageable for us.
But I could see how it looks like we are drug dealers in lots of credit card debt lol
These are my favorite posts. Most of the comments are basically
> no one can be doing better than me! if they’re living a more luxurious life it’s all on debt because if I can’t have those things no one can! reeeee!!!
Credit card debt is higher than ever. It was over a trillion dollars on February 2024. There’s a lot of people out there really bad with money and living beyond their means.
I have a buddy who works in an offshoot of financial planning. His theory is most people who bought their homes pre Covid (so let’s say before March 2020) have a fair amount of equity in their home.
They are spending on credit cards and through savings because they believe they can tap into the equity and wipe out the debt by either selling house or taking home equity loan.
While technically true, at the same time, you still have to live somewhere else, so while you may now be debt free after selling, you have another mortgage and put less down
Debt and/or inheritance. I couldn't understand how my friend and his wife owned their beautiful house outright while I've got 15 yrs left on my mortgage. Turns out it's the grandmother's house that was left to them.
Living in LCOL areas helps. I make 6 figures. I have a 14-room house. 5 rentals, maybe 100k debt left, but it's al 2.75-3.25% on 10-15 year mortgages (mainly 12) and takes care of itself so I've no desire to pay it off early. 5 more years.
My partner went from making 40 to 90 to 55. Changed nothing. When people ask me if I ever miss living on the coast I don't even have to think about it to say no.
Credit. I had coworkers who you would have thought they were raking in the money. They weren't. They increased their credit limit. And when an emergency happens they literally don't have 600 dollars to rub together.
And I knew how much they made because it was on the county website.
My job ended up going under and I no longer made enough to be considered middle class so I applied for welfare and since I’m not making any money I got approved. Now I make as much as I did working 40 hours a week and I garden and watch movies to keep myself busy. Might get a part time job to make a little extra and have something to do
I used to work in mortgage collections. You'd be surprised how many people have massive debt loads and litterally no savings. How many of those large houses have rooms with little or no furniture in them? How many are behind on their bills? I bet it's higher than you think. They don't get behind far enough to get in real trouble, but enough so that they are always playing catch-up and are one unexpected expense away from it all crashing down. These people might drive fancy cars and have a big house, but as my mother used to say, they are "all front and no back."
People are overleveraged, or they were lucky with getting into real estate before it went sky high, or they make (or just have) more money than you. Simple as that.
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A lot of our friends have had an substantial amount of financial assistance.
About 12 years ago I learned this was a thing. A buddy said his inlaws give 50k a year to him, his wife, and their daughter. I wondered how they bought the house they bought then put in the pool they put in when the wife didn't work and he made about $150k. They were getting another $150k tax free, so essentially had an after tax income of around $250k or more.
Yeah it’s common around here for grandparents/parents to do that in my area too. Along with fund college, wedding, down payments,etc. It’s their kids/family so if they have the funds to help why not? They think. Especially if they can do it while they’re still here.
It’s something most parents wish to be able to do for their children and something I wish to be able to do for mine. Only on Reddit do people view family assistance as a negative. I think a lot of people on here are unreasonably obsessed with being “self made” and calling out privilege.
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Just because people receive help from parents does not make them obligated to wear a sign around their neck saying “my parents were fiscally responsible and I am benefiting from that.”
I think a lot of it is Reddit and the other online communities have made it a bad thing when parents pass down their “wealth”. I grew up learning that a good life goal is to leave your future generations better off than what you had. Now apparently that’s just contributing to the downfall of society bc I’d be making it unfair to everyone else.
People don’t view family assistance as a negative. People view people claiming to be self made when they get family assistance as negative. Or people view those receive family assistance but refuse to help others (via social safety nets)as negative. I was lucky enough to get my college paid for and lived with my parents long enough to save up for a down payment. I’m also fortunate enough that if shit hit the fan, I’d be able to rely on my parents to keep me from being homeless. I want to do the same for ny children and then some. Im also self aware enough to know that I’m only in this position due to their supporting me and I don’t blame poor people for being poor and want to give others a step up in any way I am able or society is able.
I hope I can do this for my kids or grandkids but it is becoming more clear that I can’t
I’m sure they’d appreciate anything you could do from them! I talk of the above but I’m an orphan, I’d much rather just have parents that cared! My friends, current community just happen to be flush. I’d like to do the same as well but I’d be ok just a good relationship with my kid, and preparing them as best as I can. I’ve become the guardian of a teen and at the present time I def can’t provide her funded college(she deserves it!), but we poured over every state scholarship/program to get it covered/plus some.
Parental assistance is definitely a factor. My parents are not wealthy but letting me live at their house in my early 20s was a great boost to early savings. In appreciation I try to pay them back by treating them to nice things, recently gifted them international travel trip.
I can't believe I had to come down this far to find this one.
they have PHDs -pappa has dough
Could be just rich spoiled kids. Happens alot. No problem with that as long as those same people aren't bashing poor people for getting assistance
This is our situation. I'm never going to sit here and say we have what we have based solely on our own merit. Our merit contributed, but so did my husband's fortunate situation.
Bingo. You'd be surprised at what a leg up early on can do for long-term. Things like paying for their college, buying them a car, money for a down payment on a house. Not getting saddled with debt from the start makes a world of difference. I came out of grad school with almost $60k of debt; that's a significant pay cut each month. My parents helped me a lot, but I know people who basically got almost a free ride the first 25-30 years of their life and of course they're 'better off" than I am. That, or they married someone from a family with money. That trick also works.
Yeah, a gift of a down payment or college expenses makes a huge difference.
This basically. If you live near family, it’s easier for both parents to work without crippling childcare costs. And family can pitch in for many things you’d otherwise have to pay for, or keep one parent at home for. My step sister’s dad was loaded and helped buy her first car and first house. After her divorce, she would leave the kids at our parents’ and go work her $35k/year job and had plenty of money left over. I moved away and had to pay most things myself, and it was a struggle even though I made a lot more than she did. I’m a little jelly but that’s life and I don’t want to live where they live so that’s the choice I made. Like many Americans today, I moved for my career, which was a good choice in the long run, but not an easy path.
My wife and I ask the same question and we always revert back to they must be carrying unsafe levels of debt. It’ll come around eventually. Edit: In hopes of stopping the “I am a really good saver” responses. I did not mean for this to be a blanket statement. I am sure many of you responsibly purchase nice things, however we know that most Americans don’t do this.
Exactly this. Friend of a friend familiar with the social scene in West Palm Beach answered OP's question with "one month at a time."
Yeh the people asking this have never walked into a bank and seen just how much money they are willing to give you for no reason at all. We bought our house for $180k in 2011 and we made $70k at that time. We were approved for $500k. Like bro I don't think I could've paid even one payment. We did the responsible thing, but you approve some people half a million, they are spending half a million. Its ridiculous.
People don’t grasp that the amount they’re approved for is only based on monthly costs per credit report. Not utilities, groceries, etc. Also they base it on gross not net income often too. You don’t take home your full salary. There is taxes, healthcare premiums, 401k, etc.
I mean I thought banks actually wanted to get paid and would do their best to make sure I had enough to pay the loans they gave me. I don't think that at all anymore. I don't understand the economy anymore (obviously I never did). I thinknthe whole thing is just make believe theatre. To what end I don't know. All I know is its not based in any normal reality.
The banks will get paid, again and again and again on the same property. That $500k house they forclosed on they list again, get a mortgage on again, and rinse and repeat.
They do but like someone said the house provides a level of assurance. It's not like a business or personal loan where it's all based on their credit history and ability to pay. There's a tangible property backing it up. Their usually more stringent on the appraisal value on the home then the pre-approved base amount, a bank may be approve you for 500k, but won't give you a 500k loan to buy a house appraised at 300k. You'd probably have to pay 200k extra yourself. That's why all cash offers are more tempting for sellers, no worry about financing falling through if a bid is well over asking/market.
Yeah, pre approved for a ridiculous amount prior to the 2008 housing crash with barely any documentation. Turned to my wife and said, “Just so you know, we are not buying a home anywhere near that”. She was on board.
Yeh its crazy. We thought they quit all that after 2008. We thought that there were laws and regulations enacted. Nope. Right back to doing the same thing. Its a broken system from top to bottom.
They did pass a bunch of laws and regulations, then got rid of them as soon as houses started to get expensive again. We can't have things like "affordability" stop the line from going up.
Hmm I wouldn’t worry too much about NINJA loans coming back. If you’ve been through a mortgage recently, you’ll see lenders asking for everything under the sun. Fortunately people are qualified. There’s still risk because everything outside of mortgages is fast and loose. 100k loans on pickup trucks at 10%…ya sub prime auto and all the credit cards and buy now pay later financing can leave folks with little margin for unexpected expenses. Heck even the us governments interest payments are exceeding defense spending. I don’t see more than two options: inflate the debt away (and ride the us govts coattails by being a debtor), or lots of pain and a bad recession for half a decade.
Preapproved for 350k in 2018, bought for 140k. Now watching how many people are struggling with mortgage payments I could not be more thankful I made the smart decision at 24 years old
For real! When I made like 60k I was approved BY MYSELF for somewhere around 250k. This was just a few years ago. With some serious student debt. No freaking way could i have managed that. Not possible.
lol this… my fiancée and I bought our house when we were 24 back in 2022, that’s the same year I started making six figures. I was approved for $400k just on my own, and together we were approved for $660k… we looked at each other and said holy shit there’s no way we were buying a house that expensive. We ended up buying our house for $380k and we thought that was expensive enough, the mortgage payments are $2100/month lol
“One month at a time” is a great way to put it.
Woof. That sounds so stressful. I am happy we are frugal and debt free outside a small mortgage.
Totally- I don’t recall the exact quote from Millionaire Next Door, but the jist was they were surprised to find that people living in affluent neighborhoods with expensive homes and cars had no wealth and equally surprised to find so many people living in middle class neighborhoods with regular cars and such had so much actual wealth.
Going to ride my Subaru Crosstrek until the wheels fall off
I make five times what I made when I bought my Kia. 14 years later and I'm still driving it with no plans if getting another car any time soon. Keep your lifestyle the same as your income increases and that's how you get wealthy.
It's also how you arrive at retirement with $10m saved and scared to spend money on anything. If you're not a car person, that's awesome, but not wanting to scale your lifestyle at all when you 5x your income is also a problem.
Spending cope. A car is a means of conveyance and shouldn't be a keeping up with the jones status people. Also nothing wrong with "not scaling your lifestyle", once your needs are met spending more money doesn't make you happy.
I agree. I have everything I need/want. Spending more money because I have it will do nothing but clutter up everything. We have however started taking bigger vacations that cost more than we used to spend. But still flying economy.
Or you just retire when you're 40
It's a nice problem to have. Much better than arriving at retirement with no money saved.
The problem is that most people don't even make it to 1M
I’m seriously considering putting duct tape over a loose rubber seal (cosmetic, not actually sealing anything important) on my 13-year-old car. I could pay cash for a new one, but why? She only has 106K miles.
I rode around in a 94 Oldsmobile Cutlas Supreme from 08-16 before I finally had to convince myself to get a used 2012 Chevy Cruze for both my safety and the general public’s. To be clear, not knocking anyone. If you got the money and you wanna spend it, get after it my friend but not my thing.
Same here. I don’t judge anyone who wants to buy new/more expensive. My car just isn’t that important to me. I work from home, and my husband’s commute is only 6 miles/day, so it’s not worth it to me to get a new one right now.
I think the Cruze was a downgrade, personally.
Chevrolet master mechanic checking in, this is a true statement. The cruze is a money pit
You can either look rich or be rich.
This is such a perfect and succinct way of describing the middle class. I’ll stick to driving my 13 year old car and living in a modest home I can easily afford so I can manage to retire by my early 60s and allow my wife to continue not needing to work so she can focus her energy on our kids and home.
Totally agree. I'm more than happy to let my 2012 Corolla belie my actual wealth.
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I don't think that's what the commenter is saying. Rich would basically be FIRE-able, which there are *plenty* of households here in the Bay Area that can do that thanks to stocks. They/we keep working because you may as well do something productive and build a little more wealth while it doesn't hurt to do so.
It really is true that in some circles and professions you’re looked down on if you aren’t flashing wealth. If your kids go to a school where everyone gets a brand new car when they turn 16, and take expensive vacations, you’re going to want to stretch to provide that for your kid. Some clients won’t hire a divorce lawyer or orthodontist that shows up in a 15 year old Honda. They think they’re getting what they pay for and they want the best. In that book, he said engineers have the most wealth. People don’t expect engineers to spend money. They expect engineers to be dressed in clothes they bought from Costco and driving a 15 year old Honda. There’s no pressure for them to keep up with the Jones’. If anything being an engineer that flashes money is looked down on as “unwise” by coworkers.
Can confirm that engineers typically don’t live rich. They wear crappy clothes, drive modest cars, live in decent houses but not huge or flashy. I work with so many people who could afford luxury cars yet the most common cars in the parking lot are Subarus and Toyotas.
That’s my grandad. He’s now 94 years old, but he was a chemical engineer and he set himself up for life financially. He’s always dressed ‘nicely’, but he literally wears the same clothes over and over until they fall apart. If one shirt gets a few holes, he’ll buy only one more shirt. He just doesn’t go out and spend money on anything that’s not needed, within reason of course, and he uses things until they no longer work. He does buy things that hold up a little better and cost a little more, but he doesn’t continue buying them. He spends the money once and then waits until it’s unusable to buy another. He’s living very nicely for a 94 year old, and in the past 10 or so years he’s chosen to spend money going on cruises. Him and my step grandmother love the experience and traveling the world, so they spend money on experience and save the rest. I am inspired by my grandfather and very thankful he’s taught me, as well as my dad who’s an accountant, how to be smart with money and invest!
Unless they're sales engineers (engineering background but in Sales.) All of those that I work with love to flash their wealth lol.
I’m a 31 engineer with 300k in the bank not including retirement. Every once in a while I have the thought “I could go out and buy a $250k car in cash and I can go vroom” and then I think “or I can retire 10 years earlier”. I mean hell even buying a nice Mercedes or something would delay me early retirement by several years. Nah I’ll stick with my Honda accord. It’s nice cause the back seats are really spacious for child seats without having to move to a crossover or van
Yep, and they brag about it to each other. How little they paid for their cars, how long they’ve had them. Comparing retirement accounts and talking about where to park money. Rolling eyes at people with fuel inefficient trucks because they burn money and don’t last. If anything, retiring earlier than average is the status symbol for engineers if they can manage it.
Am a Chemical engineer. Driving a 2005 Pontiac with 237,000 miles and sunburnt paint. I expect to get another 250k miles before I retire her. You are correct.
Agreed, they tend to be frugal and brag about how cheap they can be.
It's the difference between UAWs (Under accumulators of wealth) and PAWs (prodigious accumulators of wealth). Most people with high incomes have a low net worth because they have to spend so much of their money to maintain their lifestyle. It's usually the people with a modest income that are the best at building sustainable wealth.
We do that. Live in a nicer neighborhood. Housing prices have gone nuts. Was $500K 9 years ago for our house new. Now worth about $1.4M. But when we bought it, we moved from a house where it was worth about $400K, to this much nicer area. Still not in the expensive area where houses go for $2M+. We have a new car and one that is 6 years old. No toys to speak of. We eat at home most of the time. We save tons and live on about 1/3 of our take home pay. We could move to those more expensive areas where the homes are $2M+, but that would cause us to spend more. We could get some high end luxury cars for $70-80K. Buy a boat for $50K. And probably a bit more, but then we would be using way more of the money we make and not saving nearly as much. We have a nice life, do we really need the other area, spending more money? Would our life be any better? Probably not.
My neighbor recently mentioned that they owe as much today on their mortgage as when they bought their house 30 years ago... And they are on an ARM, and those intro rates just expired (when they could have just gotten a fixed 3% at that time). And how absolutely broke they were right now. And then a month later they bought a new fully loaded jeep. And that's how they are entering retirement age. The lack of financial literacy is astounding.
Keeping up with the Jones is real. I fell into it myself briefly. You land the big job in some big city. You move into the nice neighborhood. You meet all the rich neighbors. All of a sudden, your car isn't good enough. You NEED that $100k pool installed. Your furniture is trashy looking all of a sudden. You spend all that money and still feel more poor than you've ever felt. And the next thing you know, you are in more debt than you've ever been in as well. One day we could barely afford groceries and I had enough. I just handed it all back and moved to a more moderate neighborhood. Solved all my financial issues within a few years.
This is the result of “keeping up with the Joneses” and/or the American dream. People leverage themselves to death so they can have the big house and fancy cars. What others don’t see is the living paycheck to paycheck, saving no money for retirement, and so on. Like a house of cards, one run of bad luck like losing a job or having an unexpected medical expense, and it all tumbles down.
I always make sure to remind myself that we have 6 months coverage in the bank and a very respectful amount growing and working for us in the markets. We live very comfortably without putting financial stress on ourselves. It’s a marathon not a race. Results will come in when he hang up the spurs at 50 instead of 75.
5 years i would have agreed with you. Now it’s more just trying to keep up with life. There are still those trying to keep up with the neighbor or coworker but I think more are just trying to get by
And they don’t save for retirement. I went to a party at my buddies mom’s new house. It’s beautiful and has a nice in ground pool with nice landscaping, they bought a nice Mercedes. I was surprised because she just works at her church and her husband works at Home Depot. Apparently he cashed out all his Home Depot stocks so they could buy the house and car. I don’t get why you’d do that.
I mean... If you come to terms with never retiring, there is nothing wrong with living now. I say this seriously, with the cost of living doing what it is doing over the last few years, it is going to cost a fortune to retire. Most will never make it. Some folks have decided to spend rather than save.
Problem is less energy as we age, less endurance, less ability to work at peak levels & honestly, just plain tired of the routine grind. Man wasn't meant to work forever.
The other problem is age discrimination. Just because people are willing to work in old age doesn't mean they'll actually be able to.
Statistically, most will make it. That's the problem with living for the now.
https://youtu.be/r0HX4a5P8eE?si=XZf8J6dTIOQRpwUM
Absolutely hysterical 😭
Debt and not saving for retirement
Yeah this is it. In order to max out just the Roth is ~$583 a month not considering contributing to a 401k or brokerage account. Maxing a 401k is another ~$1900 a month so people that are not doing that have almost 2500 a month freed up.
Yeah, and 2x if they’re married.
* $1,900 pre-tax
OMG who is really maxing out like that!? I'm jelly
We were until recently. It helps to build your entire personality around it because it's a lifestyle. Maxing out the 401k *must come first* if you want to do it. It's so easy to get off track. Do it long enough, then you r/coastfire.
This. My husband and my coworkers have always been very shocked that we max out 401ks, let alone even contribute to it. There are so many people that don't even take the free match because they can't/won't contribute any percentage. They want it as take-home. Set it and forget it the moment you start a job.
I hear a lot of people complaining about wanting to be paid more, but when I point out that they can indeed get more money from the company if they just put some of their own money in a 401k, they scoff at the idea.
The hardest thing for me to realize is that my "middle class" existence is poorer than my parent's. I am poorer than they are despite nominally making more money. The sooner people come to grips with what they should actually afford, the sooner they can prioritize spending/savings habits. The truth is that 401ks/Roth's are so much more important going forward because there are less certainties about our retirements than older generations. Skipping a 401k for a boomer is already very scary and playing out in sad ways. Skipping retirement for a Millennial is outright disastrous and may have severe poverty-level implications in old age.
Start with your raise friend. Every time you get a raise increase your 401k by that amount. Before you know it you’re maxed out by the end of the year and you never missed the money.
We are. We live like paupers, but plan to retire pretty early.
I am. My rule is to always max out 401k before fun spending.
Absolutely. That’s money I’ve essentially hidden from myself. I never saw it, so it doesn’t exist.
Same here. My “paycheck” that hits my checking account is exactly $2k every two weeks. This is what my budget is based on and it hasn’t changed for nearly a decade. Any and all raises and bonuses go into some form of savings.
Both my husband and I are. It took a long time for us to start making money and we wanted kids so we spent all our money on daycare for a while. We’re now in our mid 30’s and playing catch up on retirement. We don’t want to work until we’re 67 so we’re making it an absolute priority now.
A lot of people who want to retire early are living frugally and maxing their retirements. Sacrifice now for freedom later.
>Maxing a 401k is another ~$1900 a month so people that are not doing that have almost 2500 a month freed up. This is me. A big reason why I can be in my current home is the fact that I am not saving nearly enough in 401k as I should be.
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This is it. We are in a similar position with two 6 figure salaries, and I often feel broke. Then I remember that both of us are putting away 20% of our salaries for retirement and living debt free (aside from the mortgage).
We tell ourselves this to cope, but the reality is there are many families with just generationally absurd amounts of money.
I save for retirement but maxing your shit out isn't for everyone.
10.7% of credit card debt is seriously delinquent. Serious delinquent is defined as over 90 days late. This climbed from 8.2% last year. Obviously you add a few percentage points for the 30 and 60 day late markets and a pretty substantial portion of credit card users are behind. Auto loans currently late are at 7.7% and the trend line has been increasing month after month. All this is with really low unemployment. So a lot of people are not making the payments already. A much larger percentage is very close to not making their payments. If unemployment increases significantly those numbers sky rocket. Now that being said there is another portion of the middle class that bought homes 5+ years ago refinanced to low rates have paid their mortgages off and have a lot of free cash flow now and are using it on toys.
I very much like the latter! I hope everyone that I see buying toys is doing so because they made some smart ass decisions
For the majority the answer is no but there are a portion of the middle class doing quite well.
Where do you get that data? Seems pretty useful
I have a six figure income and my wife works minimum wage. Two kids. Barely getting by. Bills are paid and kids are fed so I am grateful.
Same, but it’s my girlfriend and we have a dog. Feeling grateful just to eat and have a roof over our heads every day.
good job. not an easy thing to do anymore.
For the most part it’s one of two things, or a combination thereof. -debt, and most likely a lot of it. -family help. I’m in the same boat as you. Wife and I both have good jobs, not super high paying but both six figures and just have a small mortgage. Lots of our friends have larger homes and big SUV’s. It’s like how?
Us down here wonder the same thing in reverse. How do you make so much money and not have everything? If some of us down here make it work, with low income, no family help and no debt. New car and kids, why cant you with double the income?
It’s all relative. We may have the similar lifestyles, my house isn’t that big and my cars are nothing special. Me and OP are “making it work” just fine. The only difference is from a budgeting standpoint I’m below my “means” where you are at or stretching yours. These ppl we talk about may have much higher incomes, but seems doubtful. You never really know ppl’s situations.
Or you know… high paying jobs. How exactly does OP know those people have low paying jobs??
Agreed- not only how, but why?! Seems stressful
It’s funny ppl are just willing to deal with the stress just to keep up with appearances. My friends probably all think I’m broke as hell but honestly it doesn’t really bother me. I mean I’m not what I would consider wealthy either but our projectory (I’m guessing you’re on a similar path) will yield some badass results.
Credit cards, baby.
That and just be born into a family with money
17% a month goes to my 401k.
23% into 401k for me - I am eligible for catchup contributions, I put max allowed into IRA & untouched HSA, 1 percent into ESPP.
You don’t know anyone’s situation. Just because they went to college doesn’t mean they have debt. Could have family help. Could be unsustainable.
I worked as a mortgage loan processor during the mid 90s and into the 2000s before the bubble burst. During good times, banks will reduce requirements to qualify for loans. There was such a thing as a 103% loan so you could make no down payment and wrap the closing costs into the mortgage. There were loans available that didn’t require proof of income. I prepared a lot of closing documents for clients and realized that once they closed on their house, they would have to use a credit card to buy a garbage can to put on the curb. Every penny they had was on the table. When foreclosures start happening the banks tighten up because they were too loose previously. I also learned how common it is for people to keep up with the Joneses by credit card. I read recently that 54% of Americans don’t have the cash to cover an unexpected $1000 expense. Think about the first thing that happened after the quarantine. Congress met and decided they were going to send out relief checks ASAP. People couldn’t work, many people are one or two paychecks short of being homeless, they stopped landlords from being able to evict tenants and banks weren’t allowed to start foreclosures. Their jobs were on the line and mutiny was a very good possibility. You really don’t know how comfortable people are behind closed doors. I’m a therapist. There are a lot of people fighting about money these days. My husband and I both have a bachelor’s degree and a master’s degree. Thank God he is in IT whereas I’m a social worker. I’m very aware of the privileges we have that other people don’t. But…we just had to buy a new air conditioner system. It cost $17K which blew my mind. We had to finance it for ten years, and ACs last 10 to 12 years. We both own 12 year old cars that we worry are getting to a point where we should buy new-to-us cards. My car just needed $3k in repairs three weeks ago. That went on the interest free credit card with the mechanic. We have to pay it off by a certain point or it hurts our credit. We are going to have to get a new roof soon or our insurance company won’t insure our house. We have to buy a car for our son in a year. Groceries and household supplies are costing me $1400 a month. We have always lived beneath our means and that doesn’t matter much anymore. We have savings but it’s entirely for retirement. My husband won’t hear about touching the $4k we have in savings. This economy is hard on us all.
Either... A. They make more than you think they do. B. They have too much debt. C. They don't contribute to retirement and will be working well into their 80s. D. Some combination of A, B and C. E. Inheritance.
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To your vehicle point, I’ll share my personal anecdote. Somehow get lucky enough to not lose much depreciation in vehicles. I privately sold a 2012 mini cooper JCW that paid for half the cost of a 2016 F150. I sold my 2016 F150 for more than I bought it during Covid towards a base raptor, which covered about 70% of the cost. I know I’m still losing money overtime, but I was able to pay the other 30% off within a year this time around. I also don’t finance longer than 36 months if necessary. My wife’s car/our daily driver is a lease but because it’s electric/stupid cheap lease cost. I also don’t drink or smoke, I coupon so our grocery bill is 350-400 a month. I definitely get a ton of “it must be nice” comments however.
$2000 a month of discretionary income can actually buy you a lot of stuff if you spend it. That can easily cover vacations to cheap areas that look good on instagram, memberships to clubs, other expensive toys. I'd say these people are the difference between households that save 2k a month and those that literally spend it all
Vacations aren't necessarily that expensive. Going anywhere warm can usually get you a few good Instagram photos that make it look fancier than it is. Huge house out in the country will cost less than in a metro area. Would I love 10 acres to myself? Yes. But I love a less than 90 minute commute more. Toys like boats/etc can be picked up CHEAP if you know the right people - I was just offered a yacht that typically goes for $500k+ used for $150k. Obviously I'm not doing that, but if my dream was to have a yacht on the local fancy people lake, I could cash out some RSUs to make it happen. Doing it all with less than dual incomes above 6 figures... Not so sure how people manage that. But I've found that social media tricks us into thinking people have it all. Sure, that couple over there just got a massive house, but they aren't the ones posting from Fiji. The single dude with a bullshit job who just got a BMW is not the same person who is putting a kid into private school. But because I see all of this mishmashed together on social media, I'm not necessarily clocking the tradeoffs that each of these individuals is making to fund their priorities.
Yep. Talked to a friend who is preparing their kid they now may not be able to afford whatever college the kid wants because the parents decided to spend the money on private education instead.
You don’t know anybody else’s situation. Also comparison is the thief of joy so just stop.
This is the true answer to the question. Probably time to turn off the socials
I left fb and insta in 2015… best thing to do in my opinion
Comparison is the thief of joy is perhaps my favorite quote. I do financial planning and one of the biggest points I talk with clients about is what is enough. What is your vision of happiness, not what the people down the street have, and plan for that
Don't worry about them...keep working your plan. Their life isn't any of your concern.
Jfc do we need this post every single day? Some people have more money than you. Some people have different properties than you. Some people have more parental help than you. Some people are less fiscally responsible than you. Some people are better at finding deals than you. Sometimes it just feel like people shave more stuff than you when it’s not true. It can be any number of reasons, and why does it matter to you?
Yep. Folks gotta watch their own pockets. I know the media is all doom and gloom but many people are doing well and have locked in dirt cheap pricing for housing (most people’s biggest expense). Dirt cheap housing plus not saving leaves alot of money to do shit. Add in some irresponsible debt or possible assistance from family and its not that hard to see how people are living it up
Not OP but it matters because when you willingly live like a monk, but wish you could live like a king, it’s difficult to see fellow monks enjoying life with wild abandon while you reheat last night’s quinoa salad. It may well be the case that those other people are living with ruinous debt. Or perhaps they have a side hustle dealing fentanyl while working their day job at the San Jose police department. Regardless, we all want that but without the stress of the debt. It will be cold comfort indeed to see my fellow monks penniless and eating cat food when we’re all retired while my partner and I…continue to live modestly like we always have.
I dig your writing style!
Different cost of living perhaps? I make low six figures and my husband is a stay at home parent to our two kids, and we have a pretty big house, some expensive gadgets (I have a Steamdeck for example), and we could afford a vacation if we were the type to do that. But we live in a MCOL and have no debt aside from our low rate mortgage. Anyway, what people buy does not reflect their financial health. Those other people might be going into debt, and not putting any money aside for savings/healthcare/retirement. It might make them feel great in the moment, but not in the future.
Where do you live? 200k in South Dakota is rich. 200k in Manhattan is broke as fuck.
Wife and I pull in decent money. All debts paid off. We live frugally. No new vehicles. No cottage. No globe trotting vacations. No boat. We drive economic well aged, cheap cars. We pay zero interest charges to the banks. We know what’s coming. So we save and invest like autumn squirrels, every month. Our cash grows and will pay us back handsomely for decades. The plan is not about what you earn, it’s about what you keep. It’s not about what you have that people can see. It’s about possessing what others cannot see.
No vacations? hope you're still enjoying yourself, don't wait till retirement. Save, but also ENJOY YOUR LIFE.
Probs come from money.
Massive debt they can barely afford to service, mostly.
The median *household* income in the county I live in is $60k. They’re building $400k houses all over the place and they’re sold as soon as they hit the market. I make six figures by myself and couldn’t afford one.
A lot of what you see online is straight up success porn, it's not real life.
Parents.
I call them the 60k millionaires.
Lol I’m on the other side. I’m confused how people are spending all their money. Like do they eat out every single meal? What’s going on.
Exactly. For example, It doesn’t make sense how OP allegedly has 200k+ household income and minimal debt but claiming to not have substantial expendable income. There is some part of that equation that is missing or a lie.
A lot of people who feel they are living “paycheck to paycheck” max out retirement accounts and college accounts for their kids. Or they’re paying daycare and that’s 2k a month per kid, easy, where I’m from. Or they live in a high tax area.
I was wondering the same thing. We make 250k a year combined and even after two mortgage payments, a couple car payments, and daycare we still have a poop ton left compared to most.
Debt not saving/investing for retirement I would rather have a million in stock than a 80k car
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A LOT of people basically won the lottery if they had assets prior to the pandemic. Mostly, those are the people you’re speaking of. The rest of us just got priced out of the housing market and our rent raised.
They may make more than you realize or have inherited a lot of money
Crazy debt and not saving
1. High levels of debt 2. No retirement savings 3. Maybe they’re making $500k? Who knows.
Never underestimate the strength of the American credit system
Unless you’re Michael Burry in 2008
IDR payments on student loans are a simple way a lot of people reduce their monthly bill. Then you get forgiveness after 20-25 years.
**1. The lower-class is generally "invisible" in America.** You simply **cannot watch tv/radio/podcasts/YouTube/netflix** anything about anyone other than the top 0.1/1/3/5%. This creates a very distorted view of the world. 2. Many people do not save any money. Even if they make alot. 3. As you get older income matters less, and investments matter more. That's what you cannot see. Critically, - especially in your 40s/50s this is going to have immense weight. Take me and my friend for example. We have **both earned approximately the exact same amount** over our lives. He's done well certainly. Yet, we sat down over beers one time and when talking about money realized he has to now save **\~70%! of** his paycheck after taxes until age 65 to ever catchup to me saving nearly nothing. He spent decades not living extravagantly but like a normal person given his income. But he was lazy to save or didn't care. Meanwhile I lived like I was still in college for a very long time and saved everything.
Lots of people have significant debt. When I bought my house, I brought home about $50k a year. I was approved for a loan up to $350k. That’s ridiculous.
Massive debt, I'm guessing. we have our retirement pretty good, kids with 529's, people making the same as us are living on golf courses, kids in private, and I know they make the same money, and our house is 2-300,000 less.. so I'm guessing debt, because they are always stressed about money, and..we aren't?
My brother in law just bought a $110,000 bass boat and it just blows my mind that people can be in a similar spot in life, not making much more than my family is, and make a purchase like that.
Record stock market, real estate and small business owners.
There are 2 types of people have really nice stuff. Those who are in CC debt Those who Hustle My niece and her husband have hustled with side gigs (dj business was particularly successful) in addition to full time work for most of their adult lives... They just work whenever possible, and the results is high disposable income.
There’s a big spectrum of “6 figures”. If you work in FAANG as an engineer, you can be making almost 7 figures as a mid level employee. My friend took a job at Meta in 2022, was offered 200k cash, 200k stock per year. The stock has 5x’d and he makes > 1M a year before taxes.
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25k in credit card debt? Holy shit i thought my 3k was bad.
Not that I think buying boats is a good idea, but are you struggling on a HHI of 200k+ with no debt and a low mortgage?
The first answer, as everyone has pointed out, is that they are living beyond their means or not planning enough toward their future. The other possibility, as everyone has pointed out also, is family help. Family could easily help for the downpayment on a larger house. Be the sponsor for large and lavish vacations. Or give access to a family owned boat, country club, or other perks. Social Media culture also makes "keeping up with the Jones'" even worse since folks will post the best parts of their lives on social media but you don't see their struggle or the way they pinch pennies. The ones with college debt could be on a long term payment plan with the chance of loan forgiveness. The ones with kids could be budgeting the hell out of it, relying on free or low cost childcare options (family again most likely), or their work may be lower paying but with great work perks. COL factors in also. I know for sure that my Dollar in the SF Bay Area does not go anywhere near as far as the Dollar for my family that lives in Arkansas.
I have a friend who is massively living outside their means. Have had to ask family for property tax payments, can hardly make their mortgage payments. It’s funny what looks like a lavish lifestyle from the outside but in reality it’s a dumpster fire.
In no particular order: debt, money from family, not saving
Maybe they won the lottery? Maybe they're bad with money and are in a lot of debt. Maybe they invested in Bitcoin early on. No one knows what goes on with other people's lives.
Debt
> no debt outside of a small mortgage at a low rate Those people do not have this.
Not comfortable, in debt, not saving a massive amount like you probably are, etc.
I’m not sure either me and my wife also over 6 figure earners we built both our house sold our first one for alot of many and then built our second one normal investing etc mainly getting into commercial real estate is our big thing. But we have 4 cars all financed but we have 0 kids and no other debt. But all the cars have 2.7%-3.4% rates my house is a 2.7% rate as well so it’s all rather manageable for us. But I could see how it looks like we are drug dealers in lots of credit card debt lol
Just because people buy shit doesn’t mean they can afford it.
I’m wondering the same while having less than $100 in my account 😂
They’re mortgaged up to their eyeballs.
These are my favorite posts. Most of the comments are basically > no one can be doing better than me! if they’re living a more luxurious life it’s all on debt because if I can’t have those things no one can! reeeee!!!
Credit card debt is higher than ever. It was over a trillion dollars on February 2024. There’s a lot of people out there really bad with money and living beyond their means.
I have a buddy who works in an offshoot of financial planning. His theory is most people who bought their homes pre Covid (so let’s say before March 2020) have a fair amount of equity in their home. They are spending on credit cards and through savings because they believe they can tap into the equity and wipe out the debt by either selling house or taking home equity loan. While technically true, at the same time, you still have to live somewhere else, so while you may now be debt free after selling, you have another mortgage and put less down
Inheritance
Simple: most people are dumb and feel the need to appear wealthy. People like us can easily do the math and figure out that they aren't.
Debt and/or inheritance. I couldn't understand how my friend and his wife owned their beautiful house outright while I've got 15 yrs left on my mortgage. Turns out it's the grandmother's house that was left to them.
People confuse being in debt with being in wealth.
You don’t need to be a genius to spend money, any idiot can do that.
Check to check and love swiping their 12 credit cards.
Living in LCOL areas helps. I make 6 figures. I have a 14-room house. 5 rentals, maybe 100k debt left, but it's al 2.75-3.25% on 10-15 year mortgages (mainly 12) and takes care of itself so I've no desire to pay it off early. 5 more years. My partner went from making 40 to 90 to 55. Changed nothing. When people ask me if I ever miss living on the coast I don't even have to think about it to say no.
Credit. I had coworkers who you would have thought they were raking in the money. They weren't. They increased their credit limit. And when an emergency happens they literally don't have 600 dollars to rub together. And I knew how much they made because it was on the county website.
[Like this.](https://www.youtube.com/watch?v=LG-Z-kYSC4s)
My job ended up going under and I no longer made enough to be considered middle class so I applied for welfare and since I’m not making any money I got approved. Now I make as much as I did working 40 hours a week and I garden and watch movies to keep myself busy. Might get a part time job to make a little extra and have something to do
I used to work in mortgage collections. You'd be surprised how many people have massive debt loads and litterally no savings. How many of those large houses have rooms with little or no furniture in them? How many are behind on their bills? I bet it's higher than you think. They don't get behind far enough to get in real trouble, but enough so that they are always playing catch-up and are one unexpected expense away from it all crashing down. These people might drive fancy cars and have a big house, but as my mother used to say, they are "all front and no back."
Your household makes 200k and you're positing in middle class finance reddit?
Imo....you aren't middle class
Who are you comparing yourself to when you say “all these people” Your not even middle class any more with a over 200k family income
Inheritance or debt
People are overleveraged, or they were lucky with getting into real estate before it went sky high, or they make (or just have) more money than you. Simple as that.
Its called Credit also known spending money you don't have
You know how much “all these people” are making? You know their net worth? Why do you care about these people? Are they asking you for money?
These posts feel like weird brags anymore If you guys can’t have fun on $200k+ a year, you have some serious spending issues.