this!
Many parents have thier peak earning years just as their kids hit college. If you keep to your frugal pervious budget despite raises, extra cash goes to the college fund.
With one child finished with college and living on his own and another in college (all set for tuition), I feel like our monthly spending has really decreased, but I can’t figure out why. I didn’t think we spent that much to feed them to begin with, but perhaps we did (two boys). They are not really into expensive clothing. I didn’t think the music lessons were extravagent, and during high school, we paid a sports fee, but it wasn’t that high. I guess it all added up, though.
Making slightly above 200K in CA. 1/3 we pay in taxes, 1/3 we pay for that fancy school our student attends, and 1/3 covers our living expense including contributions to 401K, etc. Our house is paid off, so just those huge property taxes we pay here in California. We eat out only on weekends, drive 10+ year old cars and spend vacation on our local lakes.
@SouthernHope – they say money can’t buy happiness … well, I’d like to find out for myself!
If they drive, what about car and car insurance related costs?
Because spending to support high school kids tends to be distributed among various categories of household budget, it may not be noticeable, or easily visible in aggregate, the way college tuition, room, and board can be. But some commuter-based schools do recognize that such costs are non-zero, so their student budget for commuters includes significant “room and board” costs. For example, http://www.csueastbay.edu/prospective/cost-and-financial-aid/cost-of-attendance/ estimates $7,674 (= $4,968 + $1,314 + $1,392) for a costs of a commuter student living with parents that could reasonably be seen as a continuation of costs that existed while s/he was in high school.
If our income increased we would need to do a lot a work on our house. We need new siding, new framing around our windows (and possibly new windows), a new HVAC system (furnace will have to be replaced when it dies and the repair person thinks it is anytime now), a new deck, and a new driveway. These are needs, not wants, and we will not be able to put it off many more years. Along with our retirement and college savings, we have been putting a little extra away each year to cover these repairs/replacements but as soon as we get a decent amount saved, something needs repaired (it was our roof last year -$11K). Our home is 31 years old (we have lived here for 17) and we have the original HVAC, siding, driveway, windows,doors, framing, deck, etc…also the original kitchen (appliances have been updated) and bathrooms, but they are still functional so they are not even on the radar to upgrade yet. We are trying to save a home equity loan option for college costs if needed so we don’t want a lot of debt going into this process. With an increase in income we would certainly put the money into the upkeep of our home.
As our income increased, our expenses did as well but mainly because we had additional family members to take care of (daycare expenses, instruments, sports, books, camps, prom, larger car for transporting kids). These are all part of the upper middle class trap and I don’t pretend to be struggling but it is also not easy to carve out a lot of extra money to pay for college. I am thankful that we have saved a little bit for so many years. It added up and my dd had many great choices of schools in her budget.
Our oldest heads to college in the fall and then we have 10 years of tuition ahead of us, with some years kids doubled up so two tuitions at once. I can understand how people make $200K and are struggling to save extra money for college. We are frugal and do without to save for retirement, college, and rainy day account, but our home looks pretty poor compared to all of our neighbors. I know they have all spent many, many tens of thousands on home upkeep.
@roethlisburger I never said New York City. If you’re making $2,000,000 a year (bringing in $1.2 million NET) living in San Francisco, Greenwich, Potomac, Calabasas, that million or two million can make you feel middle class. As you make more money you, of course, live in progressively better places. It’s hard to understand if you’re not in that position. I’m no millionaire, but I’ve never felt like my family is in the top 5% of income earners in the country despite us statistically being there. It’s all relative. Sure you’re comfortable, but if you feel like you’re in the middle relative to your neighbors, that’s really all that matters in my view. Despite the numbers, “middle class” is very subjective.
If you gross $2 million a year, you’re not remotely middle class, even in San Francisco. If you live in San Francisco and think you’re middle class on a gross income of $2 million a year, you’re delusional.
https://www.nytimes.com/2016/09/25/business/your-local-1-percenters-may-not-be-as-rich-as-you-think.html
@roethlisburger I just said $1.2 NET, but regardless, it’s all relative. Just because on paper, you are “middle class” doesn’t mean it feels that way. I was just giving an example. I wasn’t saying on paper $2 million dollars is middle class. Obviously is not. BUT depending on where you live, a high salary may not feel that high. $40,000 a year must feel like a dream in Sneedville, TN. In Chevy Chase, that feels like poverty. It’s all relative. It’s hard to put yourself in those shoes but as you make more money, the cost of living goes up and your day to day expenses go up.
If you feel middle class making 2 mil a year (or even 1 mil or hell even a few hundred K), it really says to me that you’ve never even poked a toe out of your bubble.
I don’t really care how “subjective” middle class is. The median income in this country is 50k. (or 60k depending on how it’s measured)
Nope. 2M is not middle class anywhere. And if it feels like it, IMO, your parents have failed you by never taking you outside of your extremely privileged world. (“You” is not Calicash. It’s just a general “you.”)
H and my’s income has increased quite a bit over the years. So has our spending.
We pay cash when we buy a new car and the cars have most of the bells and whistles available. We travel more and stay in nicer places, we buy the best seats we can for concerts and theater, order whatever we want in a restaurant.
But we live in the same house we lived in for 28 years. And we have no debt.
We have saved a good amount for retirement and our kids have no student
Ioans.
So although we spend more, we are not living pay check to pay check by any means.
But if you are making more, why not enjoy it??
You can know that you’re extraordinarily privileged while still not feeling wealthy. It’s also a humility thing. There’s something uncomfortable and about saying or acknowledging you’re “rich.” More people are inclined to say they’re upper-middle or look at themselves as upper-middle.
Maybe I’m out of touch. That’s entirely possible too.
Oh, and before anyone says we could donate the money. We do that too. And the donation amounts have increased over the years.
If our income doubled, our spending would increase. We’d move to a better house - not necessarily bigger, but better quality construction than our current place, which is almost paid for. So our mortgage would double: we live in an expensive location, and will stay here for a long time for jobs, since I have ~20 yeas till retirement.
We would be more comfortable paying for private or OOS college for our second child, provided said child does not get into the in-state Public Ivy.
We love traveling, so would travel abroad every year and maybe spring for nice hotels now and again instead of VRBO. We would also go to symphony, ballet, theater etc. more often.
We are already saving a lot in addition to maxed out 401Ks, but of course we may be in a position to save more, as well as give more to charity.
So many great answers to which I can fully relate. The only thing I can think to add is the fact that people making that much money didn’t always make that much money. Us for example, we have a good income now, and thankfully can contribute to our sons schooling, and can afford full pay with the merit he earned at a few schools or the lower-priced state schools. However, because of many lean years from dependency on one income, with my husband building his business, we didn’t save enough for retirement or college. (Self-employment can come at a great cost in the early years.) So, now with our kids heading for college, we’ve got two kids to put through college, and a lot of catching up to do on our retirement savings. So, can we pay for college? Thankfully, yes. But do we have to be smart about how much we spend, yes, because I don’t want to be working at Taco Bell in my 70s.
According to the hedonic treadmill theory, spending more doesn’t always lead to a permanent increase in happiness. So often people might get a temporary boost in happiness after buying a nicer house and cars, but then their happiness level quickly returns to the status quo ante. On hotels is a Four Seasons or Ritz-Carlton really that different from a Marriott or Hilton?
Exactly. It ain’t all that to double your income, you’d be better off if it was made in investment income, a gift or getting lucky in the casino. After all the taxes and deductions, I only got about 46% of my last take home check, and I don’t even pay state taxes.
^That’s why it makes sense to save some $$ when you see an increase in earnings. As the saying goes, the rich get richer. Our tax system does favor unearned income.
Plus, with most of your basic needs met - insurance, food, housing, transportation, any extra money should allow for both increased savings and some improvement to quality of life through increased spending.
Not thrilled with how aid is given especially under privelaged, need based, under represented, and don’t even mention UNDOCUMENTED (I live in texas) and how kids get scholarships and aren’t citizens makes me very mad!
Others have already pointed out it would be near a doubling of income.
Actually, casino earnings are subject to federal income tax, and probably most state income taxes.