Smart Reasons to Save, Use and Invest Money

A Frugal Middle Class Assessment

I was in twitter when I noticed that SeeJaneGetRich.com tweeted a link to a U.S. News article on yahoo called “How to gauge your middle class status“.  Since I love feedback and statistics, I thought I’d check it out.

It was interesting read so I decided I’d write about how I was doing.

Income: We are very close to the midde-middle income level for a 2 parent, 4 person household.  We are a bit above that $81,000 dollar number, but still less than $100,000.

Housing: Our house is assessed at $200,000, but it’s only 2,100 square feet.  It’s good size for my family though.

Medical Expenses: First, we are doing a HSA, so it’s kind of like it’s still our money.  But we are much lower than the $5,100…   We are more like $500…

Cars: We have 2 cars, both were bought new, but only cost about $30,000.  That period in time may be the last time we buy new cars.  Our expenses around them are less than average, because I telecommute a few times a week and car pool with a buddy occasionally.

College Savings: This is one area that I am very average.  My savings rate is around $4,000 a year.  To date, I have a total of $65,000 saved for my kid’s college expenses in a 529 plan.

Vacations: We’re pretty typical here too!  Although we usually only spend about 75% of the $3,000 amount the average middle class American spends.

Retirement: I save about 15 to 20% of my gross income in this area.  I got hit hard during the recession, but it’s coming back nicely!

Everyday Spending: This is one area we use to really win at (being frugal and all), but kid’s sports, and other needs has had this number slowly rise over the last 5 or so years.  We have been going thru a bit of a lifestyle creep for our kids.  But at least our kids are happy…  Our cost are still far less than the average though!

Number of Earners: For the past 9 years, it’s been primarily me, but since my daughter started kindergarten, my wife now works a side job for about 6 to 8 hours per week.  She works mainly to keep her skills fresh.  Since it’s not critical, the job she works has a high degree of flexibility.

Hours Worked: With my wife working now, we still work less that 50 hrs a week, but definitely more than 40.

Education: Both my wife and I have college bachelor degrees.  I play around with the idea of going back for an MBA, but so far, I’m too busy.

Free Time: We are fortunate that we have an adequate amount of free, but busy time, no big complaints here.

Household Net Worth: I don’t think this number is for the average 4 person middle class family…  When compared to a similar socio-economical family like ours, we are higher than average.  Hopefully in the near future our spread will continue to expand, since we are totally debt free (no house mortgage).

Debt: I have no debt (credit card, auto or mortgage) at this point in my life.  I’m actually surprised that the payments towards debt is only 18% of the disposable income!  I was thinking the percentage would at least be over 20%.

Well, they you have it!  My assessment for how I’m going verse the average middle class American!  Overall, I’m very happy with our progress.  In fact, I believe we are going better in every area above, at least in a positive sense (for example, our hours worked isn’t over 70 per week, and I view that as very positive).

How are you doing, do you have any weak spots with your financial armor?  Are you developing a plan to rectify any deficiencies?  Reading personal finance blogs helps, on my home page, check out my Yakezie links in the sidebar to the right, it’s under “Best of MR”, I’m sure you’ll find someone that was in the same situation you may currently be in.

Enjoy the weekend!

-MR

15 Responses to A Frugal Middle Class Assessment

  1. @moneyhoneysf
    Yeah, it was interesting. I’m kind of surprised that the networth number was sooo low!

    I’m wondering if the difference between my family’s networth and the average is because we were so frugal for so long…

  2. A very interesting look at the average. In many respects we are right there. We definitely over did it on the house and we are way behind on the college savings. What really caught me off guard was how much people spend on vacations. I would barf if my wife suggested that we spend even half of the $3000!

    Luckily (or more accurately through hard work) our net worth is considerably higher as is our savings rate.

    Next up for us is the mortgage, I literally dream of the day we pay that off!
    .-= LeanLifeCoach´s last blog ..Combat the Closing Techniques – The Make It Affordable Close =-.

  3. @Stay at Home Mom CFO
    I have the utmost confidence that you will (just by reading your blog…). 🙂

    My sin is that I’m a financial worrier… I was worried about my son’s college fund the moment he was born (my daughter too for that matter).

    In today’s market place, I don’t think I would pay down a mortgage. To be honest, I’m tempted to buy a bigger house just to capitalize on the low interest rates, then take the money from the sale of my current house and invest the money…

  4. @LeanLifeCoach
    Most years we spend less than $1,500 on vacation. Last year, we went to Disney World and Hilton Head, so it cost over $5,000. It about made me sick too! Both were great vacation, but still…

    I love statistics, and I thought this would be great fun. But after starting I now realize that, while I’ve been playing great defense (frugality), my offense (earning income) is just fair or really middle, middle class… 🙂

  5. I’m hoping to have about $100,000 saved for each kid.

    If there is a change of plan, I would have to pay penalties and taxes on the amounts if I took them out, or I would transfer it to another relative (including myself).

  6. Sounds like you are doing pretty well for yourself, and are staying solidly middle-class. Keep up the great work saving!

    My biggest deficiency right now is a lack of income, which due to its recurring nature, has also managed to drain my emergency fund dry (not that I had enough money in said e-fund, anyway, but that’s a complaint for another day…). If I can get some regular income flowing, I should be able to spackle up the holes in my armor, but it’s a tough spot at the moment.
    .-= Roger, the Amateur Financier´s last blog ..Book Review: Rich Dad’s Guide to Investing =-.

  7. @Roger, the Amateur Financier
    The funny thing is that I was pretty happy with my personal income until I read the US News post… I definitely need to work on the earning more income part! That said, we are doing okay, but we could be doing a lot better.

    It’s an interesting time for us, and even considering the “Great Recession”, this is our best year to date!

  8. $100k for each kid? What’s the procedure for adoption in US? 🙂

    I heard about the skyrocket cost of health insurance in US all the time. How come yours is extremely low? I mean, it’s great. I’m just curious on how you defy the trend.

  9. Bytta@151DaysOff
    lol, college is crazy expensive over here… and the $100,000 estimate is based on just a decent public college.

    If they decide to go to a private college like my sister did, I don’t even thing $200,000 per kid would be enough… Hopefully if the did get accepted to a private college, they would also have some type of scholarship to help with the costs.

    As for healthcare, we’re still a relatively young healthy family. It helps that the company I work for has great benefits. Certain things are free with our healthcare plan at work: Annual physicals, the kids yearly checkups, etc…

  10. In Australia, it’s estimated that each kid could cost up to $250k until they’re 18. If you decide to fund their university, that’s another $50k – $100k. Yikes!

    Another alternative I’ve been thinking is to teach them German and send them there for free top notch quality university. Not a bad idea, huh?

  11. Bytta@151DaysOff
    We’re pretty close on the cost to raise a child over here. Last year, Time magazine reported it would cost about $221,000 to raise a child until they are 18 (not including college of course). A little less, but still outrageous. Oh well, that the price we pay…

    I like the idea of sending them to Germany! It would be interesting to know how many non-Germans actually do that… 🙂