And with the house, don’t forget inflation. That 3.5x is really 2.3x unless you already adjusted.
How much for the house? How much for property taxes? There is variation throughout the state but here it would be reasonable to expect that it would be $350,000 plus for the house and $10,000 a year in property taxes.
That’s one of the big deals on class based off either income or lifestyle. In the very early 90s I worked with a guy who was my Dad’s age, He owned a house right on Mount Curve in St. Paul - a block off the river - you know the neighborhood (it sounds like it might be yours). He had two teenager daughters. But there is no way he could have bought that house off what he was making in the 1990s - he’d bought it in the early 70s.
With the way we work class - off of income and/or I “feel” middle class, age and the decisions you make when you are young can go a long way to defining which class you are in. Few American middle class people start middle class out of school - because middle class is income based - or lifestyle based - and coming out of school most of us don’t have the assets or income to pull off what feels middle class. But, if you don’t have a ton of student loan debt, put off kids for a bit, and are in a position to take advantage of a good time to buy you can probably get into a house you wouldn’t be able to afford once you have kids and the house appreciates in value. And you’ll maybe switch jobs and get a few decent raises in doing so become middle class. - and that is sort of the way its been working since WWII in our country - and maybe before that - and one of the reasons its worth protecting the middle class and the idea of upward mobility - not into wealth (although that idea is there - few achieve it) but the more real version of “you get out of college searching the couch cushions for beer money and by the time you are middle age, don’t need to worry about beer money.”
Christ, that’s a lot of property tax. It’s about half that here in Chicago. Our $250K house we pay under $3K for.
So far as I can tell, looking around the Internet at tax estimators and Zillow’s property tax history, a $350K house in St. Paul would be around $4-$5K in taxes.
I’m single, I live on NYC ( not even Manhattan but still in a desirable neighborhood ) and I couldn’t live on $85,000.00 a year pretax.
But I’m self-employed so my tax burden is higher. But I still pay almost 20K a year in insurance alone ( health, homeowners, auto, business liability). And my mortgage, common charges and utilities are another 30K a year. Then figure at least 25K for taxes. There just not much left. Last year, despite my platinum level $775 a month health insurance, I still racked up $3500 in uncovered medical expenses.
Now that I’m easing into retirement and not working as much as used to, I stress constantly about my high cost of living.
I don’t live in one of the higher property tax areas of New Jersey and I’m paying over $5,000 a year in property tax. That’s for a $215,000 two bedroom condo that doesn’t actually have any property. My last house with my ex-girlfriend it was pushing $18,000. Same town.
Yipes. $18K. Mother of god.
Financially speaking, middle-classedness is also keyed to cost of living. I make in the low six-figures but live in New Jersey, which has the highest property tax in the U.S. and car insurance/general living expenses.*
In sociological measures I’m in the upper-middle class because of my education and career; salary-wise in NJ I’m middle class. In Manhattan and San Francisco I’d go down a few rungs.
*We do have cheap gas and don’t have to pump it ourselves!
Yups, ours is around 12K - we pay 1/3 more in taxes than the mortgage.
I could live in a mansion on my salary somewhere else.
Here’s a remarkably detailed set of income stats about NJ with comparison to national. Seems to date from 2015
23% of US households had incomes >$100k v. 35% in NJ. That’s a noticeable but not gigantic difference. Though in my town in NJ it’s over half. I think people are often thinking closer to home than their whole state when they consider what’s normal or average. It’s 38% in New York County (aka Manhattan) on another page in the series.
Although, a ‘middle class lifestyle’ is genuinely more expensive a few 1,000 ft from us in Manhattan if someone doesn’t have a far below market stabilized/controlled rent (possible in either place). But again people who are working class and born in the US don’t move to NYC, or even NJ very much. Working class US born people around here are from here and either stay or leave. Lower class US born people don’t come here that much either, though govt benefits make them somewhat more mobile. And immigrants come to the area not necessarily straight into the US middle class. But US born people thinking of moving to NYC or NJ are generally middle class, upper middle aspirationally at least, just from the fact they’d be considering moving in that direction.
I guess it could be solved by sticking to a term like middle income where all could agree it was just a matter of statistics. But a less interesting question if just stats.
I agree. Simply looking at the income distribution doesn’t really speak to the more interesting dynamic of American class structure. As you pointed out, people typically move TO New York or New Jersey because they are attracted to potentially lucrative jobs in finance, tech, media, entertainment, pharma or high-end dining/service. If you are working or middle class and don’t have those aspirations, you would be better served working almost anywhere else in the country. Which is actually a problem, because New York still needs schoolteachers and firemen and bodega clerks. San Francisco is experiencing this problem right now.
When looking at class, you need to account for potential mobility, social and economic power and other factors. For example, one way I might break down class in America is as follows:
Upper Class - The people who own, control and finance corporate assets. Their worth and income is typically in the millions, if not billions. Board members and C-level executives of major corporations. Partners in investment banks, hedge funds and VC firms. Extremely wealthy people.
**Upper Middle Class **- The managers and executives who run these businesses. Also high-net worth professionals and independent consultants and small businessmen. Income typically six figures to low millions.
Barrier to next class - requires you start your own successful business or get placed in a very senior C-level executive role.
Middle Class - The vast number of educated and skilled working professionals. Teachers, programmers, engineers, salespeople, accountants and so on. Typically mid five to six figure jobs.
Barrier to next class - Difficult to transition from “doer” to “management”. Next tier is often highly competitive based on specific education or corporate credentials. Can require years of grinding through corporate attrition.
Working / Service Class - People who work in jobs supporting the upper classes. Unskilled corporate jobs with no management track (receptionists, admins, etc). First responders, restaurant staff, nannies. Typically shift or hourly pay.
Barrier to next class - No direct career track. Jobs are often structured as a separate class from “management” or “corporate”.
Poor - People without access to steady or meaningful work. Typically barely able to make ends meet.
Barrier to next class - Lack the time or resources to train or prepare for better jobs. Jobs may not be available locally.
**Destitute **- Homeless people. People unable to survive without assistance.
Barrier to next class - Mental illness or drug addiction.
That’s about the property tax rate here in “tax free” New Hampshire. Looking at Zillow, the closest I can come to 350k is a house valued at 339k, and its property tax for 2016 was $9,000.
We often don’t think about noncash compensation. $85k with on-your-own health insurance is very different from with employer-provided insurance.
If I moved back to rural Ohio I could buy a castle! I’d much rather pay NJ property taxes on my non-mansion.
My wife bought, with a small inheritance from her mom as down payment, a spectacular one-bedroom apartment on the Upper East Side in NYC about 25 years ago. She owed just $11,000 on the place when we bought a house in NJ and moved in together. She made extraordinary moolah on the sale.
It was hard to let an ever-appreciating property go, but it allowed her to retire at 50yo and make some smart investments. She had a working class job and was so lucky her mom managed to put some savings aside.
[quote=“wonky, post:25, topic:807336”]
To give more detail than in the OP, to explain why it’s something I’m thinking about:
“That surcharge starts at $85,000 for a person who files their taxes as “single.” Every time I see this, I think that threshold seems really low to call someone higher income, but it only catches about 6% of people with Medicare.”[UNQUOTE=wonky;20744009]
A single person relying on Medicare at $85,000 can certainly afford the charge. It’s a Ponzi scheme like S.S. not, a 'lock-box- with money invested by you.
It’s not really a “Ponzi scheme” in any meaninful definition of the word. Social Security and Medicare are self-funded programs that have worked for 83 years (50 years for Medicare). You put in a mandadory percentage of your earnings until you are 65, after which time you receive payments. Ponzi schemes are short-term frauds where you are only able to obtain the fantastic returns the fraudster promises from the investments of later dupes.
Social Security, maybe, but not Medicare. The single biggest source of funding for Medicare is general revenues. Part A is mostly self-funded, but not parts B & D.