The Poor Middle-Class

Rich at Queercents has a good post on what it takes to be middle class and makes a great case on why being middle class (at a $75k annual income) means barely getting by.

Sadly, I agree with the post. Ever since the 1960s, where a single earner in the family could provide for a family and send the kids to college, the average american's standard of living has been eroding at a steady pace. Of course the average house is 30% bigger than a 60s house but apart from the bump in creature comforts, there has been a drastic decrease in the amount of savings.

It now takes 2 incomes to maintain a decent lifestyle, and again, most people barely get by. There's the choice people have to make - do I want to save for my retirement this year, or go on vacation? And with the government lying about the rate of inflation, Social Security payments (or bank savings rates) haven't been keeping up. As a result, many seniors who thought the government would take care of them have an even more difficult choice - should we buy food or medicine?

In California, where the median house price is $550k (and dropping), being middle-class is even more difficult. I have friends, where both spouses work. One of their incomes goes totally towards house payments! So far I've turned down my wife's complaints about moving into a bigger house on the grounds that we can't afford it. I'd rather make the extra payments into areas where the house prices are appreciating and the rent covers most of the mortgage. Its better to have 5 appreciating assets you can afford than 1 depreciating "asset" that you can't. (isn't that really a liability?) Of course, the popular press will make stupid comments like "your house is your biggest asset" instead of saying, "if your house is your biggest asset, it just means you don't really have any assets and are probably broke". (that deserves a seperate rant of it own!)

Just goes to show that no one will take care of you. Its up to you to make your own financial future, to learn about finances and investing, to make the right and smart decisions, to live below your means, and to develop alternate means of income. And thats Kiyosaki's philosophy in a nutshell! Now you don't have to read the book ;-)