I’m not sure I understand the math in this article. At current interest rates, a $550000 is closer to a 3.5k mortgage, not 5k.
At 250k a year, they’re making roughly 20k per month. If they’re willing to pay 30% of their income to a mortgage, that’s 6k. Even post-tax, that’s still more than 3.5k.
I agree that the cost of housing is ridiculous. This sounds more like they have exceptionally bad credit or they’re looking at homes that are way above their budget.
So it sounds like they had a house in a reasonable area…
Her old boss called her up in 2021 offering double what she got paid last time…
And they never thought to check why she was being offered twice her salary to do the same job?
It’s likely because everyone moved away due to housing prices if they weren’t insanely wealthy. Shouldn’t have sold the home they owned before they even googled the price of homes where they were moving.
Also makes me think it’s likely they have exceptionally bad credit like you said. They got two kids, and apparently do zero planning for huge life decisions and complain when shit doesn’t work out. Other families raise kids on legit 1/10th of the money this family has…
I find that professions means kinda Jack shit in the modern age.
Financial specialists I know are drowning in gambling debt and crypto they can’t sell but “debt is good”
Therapists I know are the epitome of perpetual children mindset and complain that people are being rude to them all the time if asked to do anything.
Project managers I know just forward emails and ask me to help keep them on track.
Maybe it’s all burnout but I think people went for the job titles and positions they could get through connections not what they are good at and people have just been pretending and faking their way through our crumbling facade of an existence for the past couple decades.
I am currently forced to be PM and it fucking sucks! I want to do engineering again, solve problems others can’t solve, blablabla and not this pile of shit.
As someone who will have to dedicate 60-70% of their income to own a small, run down home, i really dont have a lot of sympathy for them. 30% of your income to housing is considered affordable, however that metric has likely been impossible for most people to reach over the past decade, most people can’t even rent for 30% of their income these days.
Im not supporting high housing and rent costs, i just think compared to average American right now, this couple shouldn’t really be considered “struggling” or “poor”
As someone living in Germany, what pissed me off most was when they mentioned that they never imagined raising their kids in an apartment. Like an apartment is beneath them. It is 2024. Don’t we all know that heating single family homes and the sheer extra space they require is absolutely disproportionate? Everyone wants a cheap huge single family house in the middle of the city and no cars and no climate change. Like, yeah, that won’t happen.
Can we please start normalizing living in apartments? We just moved to a much cheaper city and hope to buy a 3-4 room apartment here one day. This will still cost us about 600k and we make less than 50k combined. But even if we had the money to pay over 1.5 mil for a house here, I wouldn’t want to live in a house, unless I’d have like 6 kids.
As your kids age into teens and young adults, the apartment offers more freedoms than suburbia as they wont require a car to go anywhere. In many US suburbs, kids are chained to their parents as a taxi service until they need to buy their own car. Which is why so many american suburbs have 4+ car sized driveways, because every human in the house must buy a car and gas and insurance etc.
Why would you need 4 bedrooms for a family of 4? I’m not 100% sure how rooms are counted there but wouldn’t 3 bedrooms and one living room be sufficient?
going to confirm. The easiest units to find are 2 bedroom, 3 bedroom are rare but not impossible to find and overpriced (you will pay almost double. To the point your wondering if you can get away with getting a 2 bedroom and a neighboring 1 bedroom because it might be the same). one bedroom and efficiency which they like to pawn off as studios (studios should have the space of a one bedroom without the wall) are common but bang for the buck 2 bedroom will get you the best price per square foot especially in relation to association dues.
In my city, it is almost impossible to find a 3 BR apartment, let alone one without exorbitant condo fees. At that point, a 3 or 4 BR house is not much more and you own the land as well.
The problem is developers can make more building studios, 1, and 2 BRs, but anything beyond 2 BR the marginal return is lower. So if you have two kids, you’re probably going to want at least 3 BRs, which is so prohibitively expensive due to a supply shortage, the best option is to buy a house.
I think that’s the point? That even this couple who looks successful at a first glance still can’t meet the bar where a mortgage is financially responsible for them. America is struggling.
They could manage a mortgage at their income, they probably just aren’t satisified with what they can afford or have other lifestyle decisions eating too much of the budget.
The 30% rule is generally about gross pay. Their gross income is about 20k a month.
Regardless though the 11k a month take home doesn’t make much sense. That would mean they’re paying closer to 100k in taxes plus another 20k on other deductions, which even on the west coast is absurd.
Not too weird if you consider pre-tax contributions for retirement and health insurance.
Regardless, this is some clickbait bullshit. I ran some numbers too like other commenters, and you have to have some real shit credit even with an 11% down payment to get the monthly payment cited in the article. Even so, with an 11% down payment you shouldn’t be buying a house anyway due to the PMI and higher interest that comes with it.
There’s a whole mess of poor financial decisions that led to the clickbait headline.
Also, lots of people will jump to say that a $250k household income is middle class and I’ve seen a few in this thread, but I personally don’t know how anyone could arrive at that conclusion. Median household income in the US is more like $105k. A household income of $155k is enough to put you in the top 20%. $200k will put you in the top 12%. $250k gets you to the top 8%. When 92% of people are able to make do with less, it really just seems like people such as the ones in the article don’t understand what it is to live within their means and don’t understand how much better off they are than most everyone else.
Middle class is a very arbitrary term. But if you expect it to be defined by something close to median income as the starting point, then that’s setting the bar very low. The lifestyle of a household making gross 250k and 100k isn’t drastically different. The big differences would be that the higher income household will have a little more options for children, daycare, education, retirement, or a couple more vacations per year. The lower income family would be doing any of those tasks at the expense of another. And even the 250k household will not effectively be able to check all the boxes off. One is going to be much more comfortable, but they will likely be working comparable hours to do it. Nothing about that screams rich. Instead of saying that people making that much aren’t middle class, we should steer the focus to how low the median income is.
Assuming your numbers are correct, if going from 155k to 250k moves you from top 20% to top 8%, that really just shows off how income is heavily skewed towards that top 0.001% more than anything since the slope beyond 1% is nearly a straight line up. I’ve more than doubled my income over the last 10 years and am making over $150k now, but I live the same life I have 10 years ago with a little more breathing room and realization I can actually retire. To me, it’s less about what I gained making more money. It’s about how little I had when I started around $40k. I have friends who make about half of my salary but arguably have a more lavish lifestyle and own nicer things. They sacrifice retirement for that choice. I still sacrifice living in a home at my income because I’m choosing saving for retirement over raising a family. My coworkers who make more than me have families and a house and their math doesn’t have a comfortable retirement on the table. It’s just that expensive.
All this middle class labelling serves is to drive this artificial resentment towards people of similar financial working class against relatively small margins. The couple in the article listed out very simple goals for what their housing costs should be and have struggles to stay in that budget. It speaks volumes to the housing issue we have today but also the expectations for what housing is. It’s going to be difficult to visualize a world where everyone can get that picturesque house with property and a coupe cars without some serious growth in development. But the only way to do that is through making terrible choices in city planning.
Housing should be affordable, but the idea that every family can own a big house just feels like a carrot on a stick that isn’t attainable within today’s parameters.
Thank you for doing the math on this. I ran the numbers through an amortization schedule and was scratching my head when they said they couldn’t afford a $550,000 mortgage because it was $5k a month. For being a financial analyst, she’s not very good at basic finance.
I’m not sure I understand the math in this article. At current interest rates, a $550000 is closer to a 3.5k mortgage, not 5k.
At 250k a year, they’re making roughly 20k per month. If they’re willing to pay 30% of their income to a mortgage, that’s 6k. Even post-tax, that’s still more than 3.5k.
I agree that the cost of housing is ridiculous. This sounds more like they have exceptionally bad credit or they’re looking at homes that are way above their budget.
So it sounds like they had a house in a reasonable area…
Her old boss called her up in 2021 offering double what she got paid last time…
And they never thought to check why she was being offered twice her salary to do the same job?
It’s likely because everyone moved away due to housing prices if they weren’t insanely wealthy. Shouldn’t have sold the home they owned before they even googled the price of homes where they were moving.
Also makes me think it’s likely they have exceptionally bad credit like you said. They got two kids, and apparently do zero planning for huge life decisions and complain when shit doesn’t work out. Other families raise kids on legit 1/10th of the money this family has…
And she’s a financial specialist?
They could spend 70% of their income on their housing and still have more leftover than I make in a year.
It’s not about them, or you, or me. It’s about us, the disappearing middle class.
you do support a spouse and two kids with that yeah?
I find that professions means kinda Jack shit in the modern age.
Financial specialists I know are drowning in gambling debt and crypto they can’t sell but “debt is good”
Therapists I know are the epitome of perpetual children mindset and complain that people are being rude to them all the time if asked to do anything.
Project managers I know just forward emails and ask me to help keep them on track.
Maybe it’s all burnout but I think people went for the job titles and positions they could get through connections not what they are good at and people have just been pretending and faking their way through our crumbling facade of an existence for the past couple decades.
Hey they didn’t get that fancy PMP cert to do work.
/s, not /s. Project Managers are a force multiplier, some are just a negative force multiplier.
I am currently forced to be PM and it fucking sucks! I want to do engineering again, solve problems others can’t solve, blablabla and not this pile of shit.
As someone who will have to dedicate 60-70% of their income to own a small, run down home, i really dont have a lot of sympathy for them. 30% of your income to housing is considered affordable, however that metric has likely been impossible for most people to reach over the past decade, most people can’t even rent for 30% of their income these days.
Im not supporting high housing and rent costs, i just think compared to average American right now, this couple shouldn’t really be considered “struggling” or “poor”
As someone living in Germany, what pissed me off most was when they mentioned that they never imagined raising their kids in an apartment. Like an apartment is beneath them. It is 2024. Don’t we all know that heating single family homes and the sheer extra space they require is absolutely disproportionate? Everyone wants a cheap huge single family house in the middle of the city and no cars and no climate change. Like, yeah, that won’t happen. Can we please start normalizing living in apartments? We just moved to a much cheaper city and hope to buy a 3-4 room apartment here one day. This will still cost us about 600k and we make less than 50k combined. But even if we had the money to pay over 1.5 mil for a house here, I wouldn’t want to live in a house, unless I’d have like 6 kids.
As your kids age into teens and young adults, the apartment offers more freedoms than suburbia as they wont require a car to go anywhere. In many US suburbs, kids are chained to their parents as a taxi service until they need to buy their own car. Which is why so many american suburbs have 4+ car sized driveways, because every human in the house must buy a car and gas and insurance etc.
Don’t worry, there are plenty of suburban apartments to get the worst of both worlds these days
America is secretly a nation of mech pilots but the mech has more rights than the person in it.
You know how hard it is to find a 4 bed apartment in the us? Most houses aren’t 4 bed!
Why would you need 4 bedrooms for a family of 4? I’m not 100% sure how rooms are counted there but wouldn’t 3 bedrooms and one living room be sufficient?
Den or office? I mean really not a huge needed thing and I would happily just take a nook in a corner but some people need it?
Got to go old school and just put the office computer in the living room so everyone can enjoy the sounds of dial up
going to confirm. The easiest units to find are 2 bedroom, 3 bedroom are rare but not impossible to find and overpriced (you will pay almost double. To the point your wondering if you can get away with getting a 2 bedroom and a neighboring 1 bedroom because it might be the same). one bedroom and efficiency which they like to pawn off as studios (studios should have the space of a one bedroom without the wall) are common but bang for the buck 2 bedroom will get you the best price per square foot especially in relation to association dues.
In my city, it is almost impossible to find a 3 BR apartment, let alone one without exorbitant condo fees. At that point, a 3 or 4 BR house is not much more and you own the land as well.
The problem is developers can make more building studios, 1, and 2 BRs, but anything beyond 2 BR the marginal return is lower. So if you have two kids, you’re probably going to want at least 3 BRs, which is so prohibitively expensive due to a supply shortage, the best option is to buy a house.
I think that’s the point? That even this couple who looks successful at a first glance still can’t meet the bar where a mortgage is financially responsible for them. America is struggling.
They could manage a mortgage at their income, they probably just aren’t satisified with what they can afford or have other lifestyle decisions eating too much of the budget.
Where i live, a decent 1500SF is easily $1M+. Renovated? Probably $1.2M.
20k a month? you think they pay 10k a year in taxes at 250k???
The 30% rule is generally about gross pay. Their gross income is about 20k a month.
Regardless though the 11k a month take home doesn’t make much sense. That would mean they’re paying closer to 100k in taxes plus another 20k on other deductions, which even on the west coast is absurd.
Not too weird if you consider pre-tax contributions for retirement and health insurance.
Regardless, this is some clickbait bullshit. I ran some numbers too like other commenters, and you have to have some real shit credit even with an 11% down payment to get the monthly payment cited in the article. Even so, with an 11% down payment you shouldn’t be buying a house anyway due to the PMI and higher interest that comes with it.
There’s a whole mess of poor financial decisions that led to the clickbait headline.
Also, lots of people will jump to say that a $250k household income is middle class and I’ve seen a few in this thread, but I personally don’t know how anyone could arrive at that conclusion. Median household income in the US is more like $105k. A household income of $155k is enough to put you in the top 20%. $200k will put you in the top 12%. $250k gets you to the top 8%. When 92% of people are able to make do with less, it really just seems like people such as the ones in the article don’t understand what it is to live within their means and don’t understand how much better off they are than most everyone else.
Middle class is a very arbitrary term. But if you expect it to be defined by something close to median income as the starting point, then that’s setting the bar very low. The lifestyle of a household making gross 250k and 100k isn’t drastically different. The big differences would be that the higher income household will have a little more options for children, daycare, education, retirement, or a couple more vacations per year. The lower income family would be doing any of those tasks at the expense of another. And even the 250k household will not effectively be able to check all the boxes off. One is going to be much more comfortable, but they will likely be working comparable hours to do it. Nothing about that screams rich. Instead of saying that people making that much aren’t middle class, we should steer the focus to how low the median income is.
Assuming your numbers are correct, if going from 155k to 250k moves you from top 20% to top 8%, that really just shows off how income is heavily skewed towards that top 0.001% more than anything since the slope beyond 1% is nearly a straight line up. I’ve more than doubled my income over the last 10 years and am making over $150k now, but I live the same life I have 10 years ago with a little more breathing room and realization I can actually retire. To me, it’s less about what I gained making more money. It’s about how little I had when I started around $40k. I have friends who make about half of my salary but arguably have a more lavish lifestyle and own nicer things. They sacrifice retirement for that choice. I still sacrifice living in a home at my income because I’m choosing saving for retirement over raising a family. My coworkers who make more than me have families and a house and their math doesn’t have a comfortable retirement on the table. It’s just that expensive.
All this middle class labelling serves is to drive this artificial resentment towards people of similar financial working class against relatively small margins. The couple in the article listed out very simple goals for what their housing costs should be and have struggles to stay in that budget. It speaks volumes to the housing issue we have today but also the expectations for what housing is. It’s going to be difficult to visualize a world where everyone can get that picturesque house with property and a coupe cars without some serious growth in development. But the only way to do that is through making terrible choices in city planning.
Housing should be affordable, but the idea that every family can own a big house just feels like a carrot on a stick that isn’t attainable within today’s parameters.
Thank you for doing the math on this. I ran the numbers through an amortization schedule and was scratching my head when they said they couldn’t afford a $550,000 mortgage because it was $5k a month. For being a financial analyst, she’s not very good at basic finance.