The Balanced Spreadsheet-Financial News, Budget Advice, Debt help, Financial Tips, and other advice

March 28, 2010

Gauge on your middle class status

Filed under: News Review, Real Example — Tags: , , — thebalancedspreadsheet @ 9:57 am

Yahoo Finance with the help of US World News had an article titled “How to gauge your Middle Class Status” It compiled a whole bunch of data and determined what the average American household earns and what they spent it on. A few things that jumped out to me:

Median Income-The Median middle class income in America is $81,000 as of 2008 with the income range between $51,000 and $123,000.

Home-The average home value is $231,000 with $17,600 a year in mortgage payments and other costs. The average mortgage payments are not that high considering an $81,000 income. After taking out taxes, that is about 25% of your take home pay.

Cars-$12,400 a year is dropped on cars with the average new car price around $45,000. YIKES! I have discussed how much a new car really costs you before and having a depreciating asset that is over half of your salary is not a way to be building wealth.

Vacation vs. Retirement-The average spent on vacations is $3,000 versus $2,600 saving for retirement assuming the 3.2 percent average savings rate. So we spend more on vacations then we do our future! Something does not seem right there.

Household Net Worth-The Average net worth is $84,000 which is down about 30% since 2007. That just tells me that most of the net worth we have as Americans was mostly tied into our home value. Yes, the stock market has fallen but it has recovered quite nicely in the past 12 months.

I recommend reading the whole article as it is interesting to see how you compare to the average American household. It was nice to see that my family has a higher savings rate and less car expense then most people though. This is a big reason why our net worth is higher than average as well and it continues to rise. Another interesting figure was that we are working more than ever before but when surveyed it was found the one thing we wanted 5.5 more times then wealth? Free time (68% vs. 12%)! Could it be that our consumption driven society based on working a lot to get more money to buy “stuff” (cars and vacations) to impress our friends is not the way to go?


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