I think the media saturation on wealthy, lifestyles has led to a sort of envy escalation as we’ve gone from a weekly dose of “Lifestyles of the Rich and Famous” or “Cribs” to a constant feed on social media. One of my relatives will never own a home because, despite being single and childless, he needs a 3000 sq-ft house with pool, hot tub, and 3-4 bathrooms and, darn it, the banks won’t approve him for a house he can’t afford.
More of a sea-change in the American Dream is not the idea of working until your successful, but easy money/windfall fantasies.
We’re on the other end of the Oredigger reasoning. My wife and I raised three children in 1600 sq. ft. We considered that lavish, because we started out in a 2-bedroom, 1-bath, 600 sq. ft. starter home in an iffy neighborhood.
Our American Dream was to work in careeers we loved, and not have to work so hard that we couldn’t enjoy what we had.
If I was rich, I hope I wouldn’t be too ostentatious with it and still live a humble life, albeit several levels upgraded above my current meagre existence.
But, though I wouldn’t shun it if obscene wealth ever happened, I have only ever wanted a simple quiet life, with basic financial security. Not needing to worry about my simple needs being met is all I have ever asked for.
FCM, you’re a bit further out in DC exurbia than I am, but we’re both in DC exurbia. And let’s face it, $300K around here IS a starter home, on the scale of newly built homes.
My WAG is that a GS-9 can afford a 30-year mortgage on a $300K home, and this area is chock full of GS-9’s and up, and persons in the private sector who are making at least that much. So there’s a solid market for homes in that range.
To build on what others have said in this thread, suppose you’re a developer, and you’ve just bought a chunk of land that you can put 200 single-family homes on. What’s the incentive to build cheap homes? You’ve got the cost of the land, and the cost of the roads and infrastructure, and those costs are there if you build cheap or expensive. You want to maximize your profit, so you build the priciest homes you can sell. If you can sell seven-figure homes, you’ll do it.
Out where you are, there’s no way to sell a whole development of seven-figure homes, but you can sell $300K and $400K homes like hotcakes, I’ll bet. So that’s what they build, and that’s what they sell. There’s little incentive for them to do otherwise. People who need to start off with cheaper homes will buy older, smaller homes; they’re your real ‘starter homes’ around here.
Somehow celebrity culture plus some mix of cynicism about the fading of the “good jobs for life” model has convinced people that they’re either going to make it big in a windfall-like way or they’re going to be struggling.
Couple that with non-stop advertising for every good thing in life and pretty soon we have all the sheeple not walking, not jogging, but dashing as fast as they can on the treadmill of earn-and-spend until they blow up their health, their budget, or retire penniless with lots of rapidly depreciating toys and monthly payments. Good for the shareholders. Not so good for the sheeple.
I live in South Florida. A local chain of middle class furniture stores advertises heavily on local TV. Complete bedroom sets for $1499, dining room sets for $899, etc. Not for poor folks, but not for richy-riches either.
The ads show a late 20s couple, or at most mid 30s, with that furniture set up in a waterfront mansion that easily sells for $5M.
Hint honey: people who buy $5M second houses don’t buy $899 dining room sets. And darn few of them are 20-something, pro athletes & TV celebrities excepted. But that’s sure the message.
Many people want what they see others have, or what they see on TV. A lot of people would rather have a kitchen with granite counter tops than an acre of land. Some people just want to be comfortable, like you it seems, and me. I own a 3 story townhouse in Southern Maryland and it’s fine for me. If I didn’t need bedrooms for my kids, I’d sell it and move into a studio condo somewhere if I could.
Also, I like Brooks Brothers shirts, they are extremely comfortable
This has always puzzled me. If your goal is showing off status, why not downgrade your spending and live in a lower income strata. Then you’ll be the richest person in your neighborhood, and can preen and show off with better stuff. Why on earth would you try to compete in the strata above your income? This makes no sense and will probably end in disaster.
My MIL always says it’s best to have the least expensive house in a nice neighborhood than the priciest house in a cheap neighborhood. That makes sense to me.
The hedonic treadmill is real. Before Covid the country was getting richer every year and people need something to spend their money on and show their status. Every year the houses get bigger.It has always been like that. My grandparents home was tiny, 5 small rooms. When I went back and looked at the house I grew up in, I was shocked how small it was. Now my family thinks of my house as small.
Happiness is not getting what you want but wanting what you have.
As someone who recently moved from a 1300 square foot house to a 3200 one, there are a lot of things I like about having more space.
Our family of four was fine in the small house. It certainly wasn’t a great hardship to live there. But it was a minor challenge in some ways. We’d have to choose between the kids having their own rooms and having a guest room. We cant have more than 2 people over for a meal unless we eat outside because there’s nowhere to put a table that seats more than 6 people.
The big house, on the other hand, is really bigger than we were looking for, but it’s in the neighborhood that we wanted and is actually less money than some smaller houses in the same neighborhood, partly because it doesn’t have much of a usable yard and partly because the finish on the inside isn’t as nice (which is fine with us, we can slowly fix and upgrade things as we want to).
To some extent, our grandparents’ homes were smaller because they were poorer than we are (not in every case, but generally). Everyone’s homes were smaller. Things were more expensive then. Sure, people show off by buying big houses, but it’s actually nice to have more space, too.
Our big house is in a lower cost of living area (not really a low one, but lower than where we were), so to some extent we’re following pullin’s advice. But we didn’t move to preen and show off. We still bought one of the least expensive homes in our new neighborhood. We moved because we wanted more space, because we wanted to live in this general area, we wanted lower costs, and we chose this neighborhood instead of cheaper ones where we could have really strutted our stuff and outcompeted the Joneses because of the schools.
I think you’ll also find that at almost any level of income, people at that level of income will consider themselves to be “making a living” and not “making a fortune”.
People in the top 1% of income in the US will describe themselves as “upper middle-class”. There are many and complicated reasons for why this is.
One interesting way to think about this phenomenon is that the median household income in the US puts one in the top 1% of income earning households worldwide, yet median-income Americans do not think of themselves as rich. Why don’t more median-income earners move to Thailand or Belize or El Salvador and live like kings? Again, there are a lot of reasons, but many of them map pretty closely onto the reasons that people who make $200k a year in the some expensive coastal city don’t move to rural Idaho or Tennessee.
From my perspective just over the river from Manhattan $300k IS the more affordable housing!
Don’t get me wrong. I enjoy the trappings of a two six-figure income household. Home on the Hudson River a 10 minute ferry ride from Midtown. Brooks Brothers suits. Expensive watches. Being able to go out to dinner, travel, or buy nice things without having to worry about money that much. Even just having extra money for unforeseen emergencies is nice.
And really, other than an expensive home and some minor indulgences, we don’t really spend a lot of money on non-essentials.
That said, after 40+ years of Gordon Gekko, dot-coms, hedge funds, Hollywood superstars, superstar athletes, sub-prime mortgages, dot-coms v2.0 (now called “tech unicorns”) and Donald Trump, I think there is something deep in the American psyche where you are some sort of “loser” if you aren’t making $500k a year or a millionaire before age 30. On some level, it’s just accepted that it’s ok for a few people to own 99% of the wealth in the country, even at the expense of our infrastructure and health.
The reason that so many high earners still consider themselves part of the “middle class” is that they are. Classes aren’t statistical quintiles. The are more like a socioeconomic hierarchy structure. Really not that dissimilar from a medieval feudal system IMHO. In my mind, “wealthy” people are given the right to revenue-producing assets such as majority stake in a large corporation (or a large tract of land). I’ve even heard theories that equate senior executive positions at such companies the equivalent of a feudal monarch granting titles (SVP, EVP, CxO) as a form of political currency, as these roles often have to real purpose other than to push paper and look “important”.
Under such a system, those in the 1%-5% are more like a retinue of knights and minor lords. Granted a livelihood at the grace of their lord (Executive Manager) for proving their fealty in battle (through impressive year over year sales, billable hours, etc). “Middle class” because they aren’t peasants and serfs (ordinary work a day folk) eking out a living. But certainly not wealthy enough to determine their own financial destiny.
It’s not a perfect analogy, but I think it kind of fits.
I’m not sure the OP is asking the right question though. What’s the tradeoff from making a fortune vs just making a living? All things being equal, sure, I’d like to make more money.
I think really the question would most people rather make x consistently at a job they enjoyed, vs y*x at a job they hated where they might get let go at any time but couldn’t leave because of the “golden handcuffs” effect.
Also see “Parable of the Fisherman and the Banker” (sometimes the fisherman is specifically “Mexican” but I’m not sure if that isn’t considered “woke” now.)
I dunno. I’ve never felt this way or have known anyone to my knowledge who has. Deeply ingrained in the American psyche seems hyperbolic to me. Even a 1700 sq ft. home, which someone above described as modest, seems large to me.
I dunno. I’ve never felt this way or have known anyone to my knowledge who has. Deeply ingrained in the American psyche seems hyperbolic to me. Even a 1700 sq ft. home, which someone above described as modest, seems large to me. I mean, my wife and I live in a 1400 sq ft. house on 1/2 acre that’s valued at probably $160/$170K in a rural area, and I think it’s large and in a pretty nice secluded neighborhood.
They do move to Idaho, in droves, and I wish they’d stop. They’ve destroyed the housing market in Boise pretty thoroughly - you have to be making California money to afford a Boise home. Which puts a real damper on my desire to get into a nice four-bedroom one-theaterworthy-room house - not for status, but because my 2-bedroom apartment is crammed to the gills.
