Living in a HCOL and making a middle class salary is a struggle

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Bob Sacamano
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Living in a HCOL and making a middle class salary is a struggle

Post by Bob Sacamano » Tue Jan 07, 2020 4:18 pm

wife and i live in a very expensive suburb of NYC (Westchester for those familiar). at 33-years old we make "decent" but not excellent salaries (her ~$100K and me ~$115K). all in we're at ~$230K gross.

we're starting a family and starting to look at homes in the area. even in the less prestigious towns, $600K gets you a fixer upper in a decent school district. anything under $500K, forget about it. not even worth it. and the taxes? yikes. 2%-4% of home value seems to be average.

moving is the logical first thought but that is quickly done away with as my wife is a tenured teacher in a good school district and her entire support system is here.

this is as much a vent as a place to discuss. have any other folks made it in a HCOLA on a middle class salary? could use some positive, but realistic insight from you folks. thanks!

batpot
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Re: Living in a HCOL and making a middle class salary is a struggle

Post by batpot » Tue Jan 07, 2020 4:27 pm

How much of a "fixer upper" are you talking? It's within your budget.
Also, have you looked at costs of day care?

And I hate to break it to you, but $230k is far from middle class.
Median household income in the US is around $60k.

sailaway
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Re: Living in a HCOL and making a middle class salary is a struggle

Post by sailaway » Tue Jan 07, 2020 4:45 pm

Firstly, that is an upper middle class salary. You have the salary for the prices you are stating, even a bit more, if you save up a proper down payment.

Is buying the best thing financially in that area?

Are there townhomes available for purchase or rent?

Where are you living now? You are years away from school district concerns. Size isn't an issue for the first few months with a new baby, unless you are in a studio. Even then, you wouldn't be the first successful family to start that way.

fareastwarriors
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Re: Living in a HCOL and making a middle class salary is a struggle

Post by fareastwarriors » Tue Jan 07, 2020 4:45 pm

*edit*

delete
Last edited by fareastwarriors on Tue Jan 07, 2020 5:00 pm, edited 1 time in total.

tchoupitoulas
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Re: Living in a HCOL and making a middle class salary is a struggle

Post by tchoupitoulas » Tue Jan 07, 2020 4:47 pm

I grew up in Westchester. $230k may not count as "middle class" nationally but it's amazing how much you can make and still feel crunched trying to live what feels like a middle class lifestyle in New York. I'm not sure what part of Westchester you're in but I suspect that you have three basic options: 1) longer commute (across the tappan zee bridge or something), 2) less space (a condo rather than a detached single family home) or 3) worse schools (Yonkers or Mount Vernon). Maybe a 4th option is to go with the fixer upper and do a lot of the work yourselves, especially since you don't yet have kids.

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Re: Living in a HCOL and making a middle class salary is a struggle

Post by HEDGEFUNDIE » Tue Jan 07, 2020 4:49 pm

A $600k home bought at 20% down with mortgage rate of 3.5% and property tax of 2% will cost you $3k per month all-in.

That’s $36k per year.

You’re telling us you can’t afford that on $230k annual income?

scout1
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Re: Living in a HCOL and making a middle class salary is a struggle

Post by scout1 » Tue Jan 07, 2020 4:53 pm

HEDGEFUNDIE wrote:
Tue Jan 07, 2020 4:49 pm
A $600k home bought at 20% down with mortgage rate of 3.5% and property tax of 2% will cost you $3k per month all-in.

That’s $36k per year.

You’re telling us you can’t afford that on $230k annual income?
This.

The cost of a home is the interest paid, not the principal since you basically get that back.

rhoms33
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Re: Living in a HCOL and making a middle class salary is a struggle

Post by rhoms33 » Tue Jan 07, 2020 4:54 pm

I live close to you (Long Island), am the same age, and our income is slightly higher than yours. High taxes, expensive real estate, etc... but my wife and I and born and raised here, all family still here, very stable jobs here, etc... we aren't going anywhere.

We got lucky and bought a completely renovated house with low taxes(relatively speaking) in late 2011 for $510k, which was probably 4x our salaries at that point. Luckily our income has increased more than twofold since then, and we have a significant amount of equity in our home that's now probably worth closer to $750k.

Just had our first child in September, she just started daycare at $1300/mo. We'd like to move for more space and a different school district, but we'd be spending $1m-1.25m to get what we want. Problem like you say is taxes - you basically need to buy a fixer so it's assessed at a low sale price and do the reno yourself.

I know many people that comment probably wont, but I feel your struggle. IMO no different than it being impossible to time the stock market, its also impossible to time the real estate market. If you see something you like and you have the 20% to put down, I'd make a move sooner rather than later... what seems unaffordable today is likely to be even more unaffordable in 5 or 10 years.

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Re: Living in a HCOL and making a middle class salary is a struggle

Post by surfstar » Tue Jan 07, 2020 4:59 pm

Yes. Easily doable.
Last edited by surfstar on Tue Jan 07, 2020 5:28 pm, edited 2 times in total.

chevca
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Re: Living in a HCOL and making a middle class salary is a struggle

Post by chevca » Tue Jan 07, 2020 5:00 pm

So, $230k/year is middle class salary for a married couple nowadays? Wow....

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White Coat Investor
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Re: Living in a HCOL and making a middle class salary is a struggle

Post by White Coat Investor » Tue Jan 07, 2020 5:00 pm

Bob Sacamano wrote:
Tue Jan 07, 2020 4:18 pm
wife and i live in a very expensive suburb of NYC (Westchester for those familiar). at 33-years old we make "decent" but not excellent salaries (her ~$100K and me ~$115K). all in we're at ~$230K gross.

we're starting a family and starting to look at homes in the area. even in the less prestigious towns, $600K gets you a fixer upper in a decent school district. anything under $500K, forget about it. not even worth it. and the taxes? yikes. 2%-4% of home value seems to be average.

moving is the logical first thought but that is quickly done away with as my wife is a tenured teacher in a good school district and her entire support system is here.

this is as much a vent as a place to discuss. have any other folks made it in a HCOLA on a middle class salary? could use some positive, but realistic insight from you folks. thanks!
Ha ha. Funny that you think $230K is middle class. First thing I'd do is gain a little insight into your actual financial situation. Everyone likes to think they're middle class. Guess what? You're not. Neither am I. But it's best to start with admitting that. $230K puts you at the 97th percentile, so you're in the top 3%. If you think the middle class comprises the middle 95% of the country, I think you have a very weird definition of middle class. Where do you draw the line for upper class? Pew draws it at $180-200K or so, but I think that's too high frankly. I'd say top 20% is upper class, and that starts at just $82K. You guys together outearn lots of docs in New York by the way.

But that's all neither here nor there. The fact remains that even with an upper class income, you can feel very pinched, especially in a high cost of living area. The secret is to surround yourself with people making half as much money. Then you'll always feel rich. I assure you there are plenty of people in your town that make half as money as you. Live like them and feel rich.
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Re: Living in a HCOL and making a middle class salary is a struggle

Post by Dottie57 » Tue Jan 07, 2020 5:08 pm

chevca wrote:
Tue Jan 07, 2020 5:00 pm
So, $230k/year is middle class salary for a married couple nowadays? Wow....
It is hard not to laugh.

Op, I apologize. What is your net take home pay?
Last edited by Dottie57 on Tue Jan 07, 2020 5:12 pm, edited 1 time in total.

TheLaughingCow
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Re: Living in a HCOL and making a middle class salary is a struggle

Post by TheLaughingCow » Tue Jan 07, 2020 5:11 pm

Only on bogleheads would the phrases "230k" and "middle class" share a sentence.

smitcat
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Re: Living in a HCOL and making a middle class salary is a struggle

Post by smitcat » Tue Jan 07, 2020 5:12 pm

My SIL lived in White Plains in a 2bd/2bth Townhome that they sold about a year back for just under $400K.
I know there are other options near there as our daughter was looking to commute there as well about 2 yrs back.
Perhaps one of these 10 neighborhoods would be part of the solution?...

http://www.westchestermagazine.com/10-o ... stchester/

ThatGuy
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Re: Living in a HCOL and making a middle class salary is a struggle

Post by ThatGuy » Tue Jan 07, 2020 5:13 pm

White Coat Investor wrote:
Tue Jan 07, 2020 5:00 pm
Ha ha. Funny that you think $230K is middle class. First thing I'd do is gain a little insight into your actual financial situation. Everyone likes to think they're middle class. Guess what? You're not
Westchester county has a median household income of $92,758, and a per capita income of $54,572. This is in comparison to the US as a whole which is $60,293 and $32,621. Even if we say middle class is up to 2x the median, the OP is way out of the middle class.

OP, if you want some real sticker shock, compare your median house value of $528,300 in Westchester with the median in San Francisco at $1,009,500 and a median household income of $104,552.

All numbers from the US Census Bureau.
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Re: Living in a HCOL and making a middle class salary is a struggle

Post by gougou » Tue Jan 07, 2020 5:18 pm

Buying around 4x income is what you have to do. With $230K gross you can afford $1M house especially if you have very stable employment. Monthly PITI is around $5000 with today's low interest rate.

jibantik
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Re: Living in a HCOL and making a middle class salary is a struggle

Post by jibantik » Tue Jan 07, 2020 5:22 pm

LOL 230k is middle class :mrgreen:

Guess all those people holding signs on the side of the highway exits must be making low six figures :mrgreen:

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Watty
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Re: Living in a HCOL and making a middle class salary is a struggle

Post by Watty » Tue Jan 07, 2020 5:26 pm

Bob Sacamano wrote:
Tue Jan 07, 2020 4:18 pm
moving is the logical first thought but that is quickly done away with as my wife is a tenured teacher in a good school district and her entire support system is here.
Family is one thing but what is "her entire support system"?

The tenure is something you can likely put a dollar value on and factor it into any decision to stay or move.

It would be good to check out some other parts of the country and look at houses when you are on vacations to see if you can find some part of the country that you might get excited about and want to move to. That way you would be moving towards something, not just moving away from the northeast.

You might also think of what the opportunity cost is of staying in a high cost of living area. It could make a difference in the number of kids that you decide to have or needing to work ten years longer.
Bob Sacamano wrote:
Tue Jan 07, 2020 4:18 pm
we're starting a family and starting to look at homes in the area.
I would suggest putting buying a house on the back burner until you have healthy babies at home.

If you end up needing expensive fertility treatments or adoption costs that could change your finances. If you have difficulties in having kids then having a big family home with empty bedrooms could be depressing.

If you have a kid with even minor and temporary health issues then day care may not be a desirable or even possible option so you may need to go down to one income for a while.
ThatGuy wrote:
Tue Jan 07, 2020 5:13 pm
White Coat Investor wrote:
Tue Jan 07, 2020 5:00 pm
Ha ha. Funny that you think $230K is middle class. First thing I'd do is gain a little insight into your actual financial situation. Everyone likes to think they're middle class. Guess what? You're not
Westchester county has a median household income of $92,758, and a per capita income of $54,572. This is in comparison to the US as a whole which is $60,293 and $32,621. Even if we say middle class is up to 2x the median, the OP is way out of the middle class.

OP, if you want some real sticker shock, compare your median house value of $528,300 in Westchester with the median in San Francisco at $1,009,500 and a median household income of $104,552.

All numbers from the US Census Bureau.
This is another good source of information. The median single family home price nationwide last quarter was only $280K

https://www.nar.realtor/research-and-st ... ordability

and here is a PDF of the details.

https://www.nar.realtor/sites/default/f ... -11-07.pdf
Last edited by Watty on Tue Jan 07, 2020 5:28 pm, edited 1 time in total.

prd1982
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Re: Living in a HCOL and making a middle class salary is a struggle

Post by prd1982 » Tue Jan 07, 2020 5:26 pm

Cut Bob some slack. Sure, he is in the lower-rich class. But he has a lot more in common with the middle class than the ultra wealthy. It keeps spending in check to think you need to watch your money.

I think most of us feel like we are middle class, even if we know the stats say we are not.

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Re: Living in a HCOL and making a middle class salary is a struggle

Post by willthrill81 » Tue Jan 07, 2020 5:29 pm

White Coat Investor wrote:
Tue Jan 07, 2020 5:00 pm
I assure you there are plenty of people in your town that make half as money as you. Live like them and feel rich.
+1

The OP could spend double the median U.S. household income and still probably reach financial independence in fewer than 20 years.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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Re: Living in a HCOL and making a middle class salary is a struggle

Post by Carefreeap » Tue Jan 07, 2020 5:31 pm

ThatGuy wrote:
Tue Jan 07, 2020 5:13 pm
White Coat Investor wrote:
Tue Jan 07, 2020 5:00 pm
Ha ha. Funny that you think $230K is middle class. First thing I'd do is gain a little insight into your actual financial situation. Everyone likes to think they're middle class. Guess what? You're not
Westchester county has a median household income of $92,758, and a per capita income of $54,572. This is in comparison to the US as a whole which is $60,293 and $32,621. Even if we say middle class is up to 2x the median, the OP is way out of the middle class.

OP, if you want some real sticker shock, compare your median house value of $528,300 in Westchester with the median in San Francisco at $1,009,500 and a median household income of $104,552.

All numbers from the US Census Bureau.
Yeah, our "middle class" neighborhood (technically a small incorporated town) outside of San Francisco has fixers for about $800k. When we bought our dump in 1990 it cost $245k and my husband made $50K. Don't forget that interest rates back then were about 12% not the sub 4% they are now. If you multiply prices by 3X it's close to the same price in today's $$$.

It was a struggle as it is for most people when it comes to buying their first house. Even when we fixed the place up we bought knock-off Formica countertops, not granite.

People need to watch less TV and focus on what's truly important.
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willthrill81
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Re: Living in a HCOL and making a middle class salary is a struggle

Post by willthrill81 » Tue Jan 07, 2020 5:34 pm

ThatGuy wrote:
Tue Jan 07, 2020 5:13 pm
OP, if you want some real sticker shock, compare your median house value of $528,300 in Westchester with the median in San Francisco at $1,009,500 and a median household income of $104,552.
If the median is $528k, then that almost certainly means that there will be some nice homes still available for $300k-$350k. The OP could save a big chunk of household income, maybe as much as 50%, and still easily afford a home in that range.

We've bought three homes, and we never spent more than just over double our household income on any of them, which was the standard for 'easily affordable' put forward by Thomas Stanley in The Millionaire Mind. It worked out very well for us, and we should be mortgage-free in about two months and putting 50% of our gross household income into tax-advantaged accounts of various kinds.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

rich126
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Re: Living in a HCOL and making a middle class salary is a struggle

Post by rich126 » Tue Jan 07, 2020 5:39 pm

Personally I think housing in most of the country is horribly overpriced.

And $230K is pretty good income but it depends on what you are spending, saving, etc.

As a single person I make a good salary (maybe low compared to some people on these boards) and I often wonder what my neighbors make since I see them in a similarly priced home driving BMW/Porsche/etc. with multiple kids. I have no kids, no ex-wives and drive my Hyundai, which I hope to keep 10 years. A few may make more but I'm guessing most aren't saving for retirement and/or are what my uncle figured out decades ago "house poor". He made good money and his coworkers did as well but he always heard them complaining and living paycheck to paycheck. He figured out their issue was houses, they had to have the expensive home that maxed out their loan approval and then couldn't afford to lose a paycheck. He never bought a home, instead inherit his parents' home later in life (nothing high end about it).

Now one good thing about living in a HCOL area is that if you decide to move later or retire to a cheaper COL area you can afford a very nice home or can put some of the profits from the house sale into your retirement.

I think my first house (a townhome) cost around $90 and my income was probably around $30K. It wasn't in a good neighborhood and I sure didn't make any money when I sold it. At $230K you should be able to afford a $600K home but I would only do it if I thought it was in a good area, my job was stable, and I wasn't planning to move for at least 7+ years.

ohai
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Re: Living in a HCOL and making a middle class salary is a struggle

Post by ohai » Tue Jan 07, 2020 5:48 pm

Teachers in Westchester get $100k salaries with tenure?

Anyway, what is your net worth? I'd expect that you would have saved most if not all of the house cost by now. If not, where is the money going?

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Re: Living in a HCOL and making a middle class salary is a struggle

Post by willthrill81 » Tue Jan 07, 2020 5:49 pm

rich126 wrote:
Tue Jan 07, 2020 5:39 pm
Personally I think housing in most of the country is horribly overpriced.
While I very much agree with you that most people spend too much on housing in the U.S., the issue is actually not usually due to housing being overpriced. Rather, the problem is that people are buying houses that are too large. The median number of square feet of living space in new single-family homes per the median U.S. household size in terms of number of people has doubled over the last ~50 years. Housing costs per square foot have basically just kept pace with inflation over that period, but the fact that home sizes relative to the number of people occupying them have increased dramatically means that the amount spent on housing has increased dramatically as well.

Image
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

rich126
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Re: Living in a HCOL and making a middle class salary is a struggle

Post by rich126 » Tue Jan 07, 2020 5:55 pm

willthrill81 wrote:
Tue Jan 07, 2020 5:49 pm
rich126 wrote:
Tue Jan 07, 2020 5:39 pm
Personally I think housing in most of the country is horribly overpriced.
While I very much agree with you that most people spend too much on housing in the U.S., the issue is actually not usually due to housing being overpriced. Rather, the problem is that people are buying houses that are too large. The median number of square feet of living space in new single-family homes per the median U.S. household size in terms of number of people has doubled over the last ~50 years. Housing costs per square foot have basically just kept pace with inflation over that period, but the fact that home sizes relative to the number of people occupying them have increased dramatically means that the amount spent on housing has increased dramatically as well.

Image
True. I often hear people say "I need a 4 bedroom, 3 car garage, etc." The reality is that is what they want, either for personal reasons or they feel a need to keep up with the "Joneses".

I grew up in a 3 bed 1.5 bath, 1 car garage house with no central A/C. We did fine. Not sure I would want no A/C now but otherwise it was no problem. Also the larger the house the more expensive everything else is: electricity, heating/cooling, replacing the roof, taxes, etc.

I do think housing is over priced in areas I'm familiar with but maybe I'm just getting old :)

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Re: Living in a HCOL and making a middle class salary is a struggle

Post by playtothebeat » Tue Jan 07, 2020 6:10 pm

You are what i call a HENRY - High Earner Not Rich Yet.

Unless you have substantial student loans or other debt/obligations you can not eliminate (for instance, medical expenses or something similar), you can certainly afford a $600k or higher house.

I understand what you're saying, but I'm not sure you're painting a complete picture.

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Re: Living in a HCOL and making a middle class salary is a struggle

Post by 1130Super » Tue Jan 07, 2020 6:11 pm

batpot wrote:
Tue Jan 07, 2020 4:27 pm
How much of a "fixer upper" are you talking? It's within your budget.
Also, have you looked at costs of day care?

And I hate to break it to you, but $230k is far from middle class.
Median household income in the US is around $60k.
Yes but in NYC 230k is upper MIDDLE CLASS
Last edited by 1130Super on Tue Jan 07, 2020 10:05 pm, edited 1 time in total.

rich126
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Re: Living in a HCOL and making a middle class salary is a struggle

Post by rich126 » Tue Jan 07, 2020 6:14 pm

I happened to stumble upon the House Price Index at the FRED site (for Arizona - https://fred.stlouisfed.org/series/AZSTHPI). This gives you a rough idea of the increase (and drops) of housing over the last few decades. Obviously within a state certain areas rise/fall at a substantially different rate than other areas.

For example, AZ peaked at an index value of 426 in 2006Q4 and bottomed out at 230 in 2011Q4 (thankfully I didn't sell and instead rented it out). Now at 2019Q3 it is at 436. In MD it went from 535 to 400. And now at 496. Using those states since I lived in both.

None of this takes into account house size.

And I got off topic so I'll let this rest.

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Re: Living in a HCOL and making a middle class salary is a struggle

Post by Rob5TCP » Tue Jan 07, 2020 6:18 pm

Middle Class for Westchester is 55k on the low end and 165k on the high end.
230k is not that far from middle class. Regional differences are huge.

https://money.cnn.com/interactive/econo ... index.html

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Re: Living in a HCOL and making a middle class salary is a struggle

Post by willthrill81 » Tue Jan 07, 2020 6:23 pm

1130Super wrote:
Tue Jan 07, 2020 6:11 pm
batpot wrote:
Tue Jan 07, 2020 4:27 pm
How much of a "fixer upper" are you talking? It's within your budget.
Also, have you looked at costs of day care?

And I hate to break it to you, but $230k is far from middle class.
Median household income in the US is around $60k.
Yes but in NYC 230k is middle class.
According to the Census Bureau, that's almost triple the median household income for Manhattan. That doesn't sound like middle class to me.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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Re: Living in a HCOL and making a middle class salary is a struggle

Post by 1130Super » Tue Jan 07, 2020 6:29 pm

gougou wrote:
Tue Jan 07, 2020 5:18 pm
Buying around 4x income is what you have to do. With $230K gross you can afford $1M house especially if you have very stable employment. Monthly PITI is around $5000 with today's low interest rate.
That’s just a general rule of thumb, in high tax states a $1mill home could mean over $3000 in monthly property taxes.
25% - 28% of 230k is like $4800- $5300 PITI which is a home worth $600k-650k if he has 20% down
Last edited by 1130Super on Tue Jan 07, 2020 6:43 pm, edited 1 time in total.

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Re: Living in a HCOL and making a middle class salary is a struggle

Post by surfstar » Tue Jan 07, 2020 6:37 pm

Not everyone needs to own a home, by the way.

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Re: Living in a HCOL and making a middle class salary is a struggle

Post by stoptothink » Tue Jan 07, 2020 6:40 pm

ohai wrote:
Tue Jan 07, 2020 5:48 pm
Teachers in Westchester get $100k salaries with tenure?
That's another major factor in why moving isn't a viable option: that teacher salary is cut in half in most of the rest of the country.

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Re: Living in a HCOL and making a middle class salary is a struggle

Post by physixfan » Tue Jan 07, 2020 6:48 pm

chevca wrote:
Tue Jan 07, 2020 5:00 pm
So, $230k/year is middle class salary for a married couple nowadays? Wow....
It's funny that a lot of my friends make a $200k+ or even $300k+ salary, and all of them think they are middle class people... Maybe in SF bay area, Seattle, and NYC etc., people with this kind of salary usually still feel struggling with housing price etc., just like the real middle class elsewhere...

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Re: Living in a HCOL and making a middle class salary is a struggle

Post by livesoft » Tue Jan 07, 2020 6:48 pm

In the 1980's I lived on Long Island near an area where homes were zoned on 5 acres per home. We never could afford a home in NY and always rented. My inflation-adjusted salary was less than $100K and you have two of those. Our daughter was born there and spent the first couple of years of her life in an apartment. Our apartment rent was more than our monthly mortgage when we finally bought a house after moving out of NY. We only had one car, too.

So I just see that you are pretty normal and really have nothing to vent about. Indeed, I think you all should be able to save and invest about $115K (higher gross salary of the two of you) every year. Been there. Done that. And our daughter was in daycare, too.
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Re: Living in a HCOL and making a middle class salary is a struggle

Post by 1130Super » Tue Jan 07, 2020 6:57 pm

physixfan wrote:
Tue Jan 07, 2020 6:48 pm
chevca wrote:
Tue Jan 07, 2020 5:00 pm
So, $230k/year is middle class salary for a married couple nowadays? Wow....
It's funny that a lot of my friends make a $200k+ or even $300k+ salary, and all of them think they are middle class people... Maybe in SF bay area, Seattle, and NYC etc., people with this kind of salary usually still feel struggling with housing price etc., just like the real middle class elsewhere...
3bed 2bath 1500 sq foot houses rent for 10k a month in San Fran
Crappy Studio in bad Neighborhood $3500-$4000

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Re: Living in a HCOL and making a middle class salary is a struggle

Post by dmcmahon » Tue Jan 07, 2020 7:02 pm

Everything is relative. I live in an HCOL area where, and I’m not making this up, at least one local town discussed low-income housing for anyone making less than $250k. So yeah, I am sympathetic to the OP. Though I would say that on total comp you are probably doing better than you think, if you include the pension and health benefits your wife is likely to get when you’re retirement age.

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Re: Living in a HCOL and making a middle class salary is a struggle

Post by BV3273 » Tue Jan 07, 2020 7:04 pm

Bob Sacamano wrote:
Tue Jan 07, 2020 4:18 pm
wife and i live in a very expensive suburb of NYC (Westchester for those familiar). at 33-years old we make "decent" but not excellent salaries (her ~$100K and me ~$115K). all in we're at ~$230K gross.

we're starting a family and starting to look at homes in the area. even in the less prestigious towns, $600K gets you a fixer upper in a decent school district. anything under $500K, forget about it. not even worth it. and the taxes? yikes. 2%-4% of home value seems to be average.

moving is the logical first thought but that is quickly done away with as my wife is a tenured teacher in a good school district and her entire support system is here.

this is as much a vent as a place to discuss. have any other folks made it in a HCOLA on a middle class salary? could use some positive, but realistic insight from you folks. thanks!

I’m 34 next month and I live in southern Westchester. My combined income is similar to yours with two kids. I feel your pain lol.

I find most of the posts quite comical to be honest. On paper it may seem like we make a lot of money, but the reality is that our area is extremely costly to live in.

Real estate is completely overpriced and basically unattainable. I purchased my house in 2012 and have watched the housing market rise out of control. Dumpster fires are going for 600k+ and if your not paying sticker price don’t even waste your time putting in a bid. Taxes are going up, up, and away for areas with good schools you’re looking at 15k+ per year on the low side.

I paid 449k for a small cape in a nice quiet neighborhood close to Bronxville. Taxes are around 9k per year, which as far as I’m concerned is a steal. Private school is going to be a must and after running the numbers it’s a bargain versus moving anywhere else in the area. Similar to you my wife is a teacher as well and she has a ton of family in the area so moving an hour up the line is not an option for me.

My plan is simple: Make due with what I have, minimize debt, plan for the worst and hope for the best.

I’d like to move to a big house with an open concept and spacious living areas, but I’m not going to be house rich like some of my friends. It just doesn’t make sense.

If this site has taught me anything it’s about creating a secure future and ensure good quality of life. This is done by LBYMing and investing the rest. That’s my plan.

PM me let’s grab a cup of coffee and commiserate.

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Re: Living in a HCOL and making a middle class salary is a struggle

Post by WS1 » Tue Jan 07, 2020 7:40 pm

Sympathetic as I’m in the same boat.

I don’t think median income is helpful as the OP is not competing against the 62 year old couple with a paid off home. OP is competing against other families looking for seats in decent school districts and saving for college at today’s prices.

I can’t dig through census data on my phone, but I’d bet the median income for a Westchester County household in their late 30s is very close to the OPs.

edit—the constant chorus of “max out all tax advantaged space or you’ll die” has definitely messed with my head.

edit #2 - child care instead of college
Last edited by WS1 on Tue Jan 07, 2020 7:52 pm, edited 1 time in total.

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Re: Living in a HCOL and making a middle class salary is a struggle

Post by livesoft » Tue Jan 07, 2020 7:51 pm

HEDGEFUNDIE wrote:
Tue Jan 07, 2020 4:49 pm
A $600k home bought at 20% down with mortgage rate of 3.5% and property tax of 2% will cost you $3k per month all-in.

That’s $36k per year.

You’re telling us you can’t afford that on $230k annual income?
If the above is true, then our inflation-adjusted apartment rent in the 1980s was about that. Folks today are lucky that interest rates are so much lower. Of course, we were looking at $600K homes in our neighborhood (not inflation adjusted!) back then, so way way out of our price capability.
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Re: Living in a HCOL and making a middle class salary is a struggle

Post by BV3273 » Tue Jan 07, 2020 7:54 pm

WS1 wrote:
Tue Jan 07, 2020 7:40 pm
Sympathetic as I’m in the same boat.

I don’t think median income is helpful as the OP is not competing against the 62 year old couple with a paid off home. OP is competing against other families looking for seats in decent school districts and saving for college at today’s prices.

I can’t dig through census data on my phone, but I’d bet the median income for a Westchester County household in their late 30s is very close to the OPs.

edit—the constant chorus of “max out all tax advantaged space or you’ll die” has definitely messed with my head.
You hit the nail on the head with your post. This was the first year I was able to max my 401k. Unfortunately the management at my company is messing with our commission plan (I’m in sales) so not sure what this year is going to bring, might have to start looking for a new job or one with a better quality of life for less money.

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Re: Living in a HCOL and making a middle class salary is a struggle

Post by SchruteB&B » Tue Jan 07, 2020 7:56 pm

prd1982 wrote:
Tue Jan 07, 2020 5:26 pm
Cut Bob some slack. Sure, he is in the lower-rich class. But he has a lot more in common with the middle class than the ultra wealthy. It keeps spending in check to think you need to watch your money.

I think most of us feel like we are middle class, even if we know the stats say we are not.
I do think Bob has far, far more in common with people making 75 or 100k than he does with the 1%. I tend to think that middle class also encompasses cultural ideas and values—like worrying about paying your mortgage—that applies to wider swaths of the population than a strict percentile stratification would suggest.

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Re: Living in a HCOL and making a middle class salary is a struggle

Post by HomeStretch » Tue Jan 07, 2020 8:06 pm

OP, much of the tri-state area has expensive housing and high state/local taxes. A house price of 3-4x household income is common in the area IMO. If you have a fixed mortgage rate, the mortgage payment will likely become a smaller portion of your future income.

While it’s tight to afford a house on two salaries, it’s even harder to afford same house and the cost of children especially if you become a one-income family. So be sure what your family/employment plans are before adding the cost burden of a house around the same too.

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Re: Living in a HCOL and making a middle class salary is a struggle

Post by Sam1 » Tue Jan 07, 2020 8:22 pm

willthrill81 wrote:
Tue Jan 07, 2020 5:34 pm
ThatGuy wrote:
Tue Jan 07, 2020 5:13 pm
OP, if you want some real sticker shock, compare your median house value of $528,300 in Westchester with the median in San Francisco at $1,009,500 and a median household income of $104,552.
If the median is $528k, then that almost certainly means that there will be some nice homes still available for $300k-$350k. The OP could save a big chunk of household income, maybe as much as 50%, and still easily afford a home in that range.

We've bought three homes, and we never spent more than just over double our household income on any of them, which was the standard for 'easily affordable' put forward by Thomas Stanley in The Millionaire Mind. It worked out very well for us, and we should be mortgage-free in about two months and putting 50% of our gross household income into tax-advantaged accounts of various kinds.
No way any decent homes in a NY suburb are going to be $300-350k. That’s laughable. $300-350k is a one bedroom condo. Probably a dumpy one with a hike to the train station.

You remind me of my dad who is completely out of touch with prices. Told me we should buy a house for $400k in the NY suburbs. This is like someone on this board telling you that you should buy a home for $60k.

You’re living in a lower COL area and there’s a lot you don’t understand. For example, did you know a train pass is typically around $400 a month? That many people still have to drive to the station (because it’s miles from their house?). Do you know how high property taxes are?

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Re: Living in a HCOL and making a middle class salary is a struggle

Post by HEDGEFUNDIE » Tue Jan 07, 2020 8:24 pm

SchruteB&B wrote:
Tue Jan 07, 2020 7:56 pm
prd1982 wrote:
Tue Jan 07, 2020 5:26 pm
Cut Bob some slack. Sure, he is in the lower-rich class. But he has a lot more in common with the middle class than the ultra wealthy. It keeps spending in check to think you need to watch your money.

I think most of us feel like we are middle class, even if we know the stats say we are not.
I do think Bob has far, far more in common with people making 75 or 100k than he does with the 1%. I tend to think that middle class also encompasses cultural ideas and values—like worrying about paying your mortgage—that applies to wider swaths of the population than a strict percentile stratification would suggest.
Sure, Bob has a mortgage, just like the middle class.

But the difference between Bob and the actual middle class is that Bob can easily afford his mortgage while the middle class cannot.

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Re: Living in a HCOL and making a middle class salary is a struggle

Post by Sam1 » Tue Jan 07, 2020 8:28 pm

willthrill81 wrote:
Tue Jan 07, 2020 5:34 pm
ThatGuy wrote:
Tue Jan 07, 2020 5:13 pm
OP, if you want some real sticker shock, compare your median house value of $528,300 in Westchester with the median in San Francisco at $1,009,500 and a median household income of $104,552.
If the median is $528k, then that almost certainly means that there will be some nice homes still available for $300k-$350k. The OP could save a big chunk of household income, maybe as much as 50%, and still easily afford a home in that range.

We've bought three homes, and we never spent more than just over double our household income on any of them, which was the standard for 'easily affordable' put forward by Thomas Stanley in The Millionaire Mind. It worked out very well for us, and we should be mortgage-free in about two months and putting 50% of our gross household income into tax-advantaged accounts of various kinds.
I just looked and there aren’t any house under $350k in ALL of Westchester county. Really not one.

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Re: Living in a HCOL and making a middle class salary is a struggle

Post by willthrill81 » Tue Jan 07, 2020 8:29 pm

Sam1 wrote:
Tue Jan 07, 2020 8:22 pm
willthrill81 wrote:
Tue Jan 07, 2020 5:34 pm
ThatGuy wrote:
Tue Jan 07, 2020 5:13 pm
OP, if you want some real sticker shock, compare your median house value of $528,300 in Westchester with the median in San Francisco at $1,009,500 and a median household income of $104,552.
If the median is $528k, then that almost certainly means that there will be some nice homes still available for $300k-$350k. The OP could save a big chunk of household income, maybe as much as 50%, and still easily afford a home in that range.

We've bought three homes, and we never spent more than just over double our household income on any of them, which was the standard for 'easily affordable' put forward by Thomas Stanley in The Millionaire Mind. It worked out very well for us, and we should be mortgage-free in about two months and putting 50% of our gross household income into tax-advantaged accounts of various kinds.
No way any decent homes in a NY suburb are going to be $300-350k. That’s laughable. $300-350k is a one bedroom condo. Probably a dumpy one with a hike to the train station.

You remind me of my dad who is completely out of touch with prices. Told me we should buy a house for $400k in the NY suburbs. This is like someone on this board telling you that you should buy a home for $60k.

You’re living in a lower COL area and there’s a lot you don’t understand. For example, did you know a train pass is typically around $400 a month? That many people still have to drive to the station (because it’s miles from their house?). Do you know how high property taxes are?
You're right that I don't understand the price of homes in NY. But I do understand math, and if the median home price is $528k, then that means that 50% of the homes sold are under that price. Perhaps the 30th percentile is "dumpy." But if so, that means that 1/3 of the homes in that area are "dumpy."

And for the record, our area's COL is almost identical to that of the country now.
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Re: Living in a HCOL and making a middle class salary is a struggle

Post by IMO » Tue Jan 07, 2020 8:37 pm

HEDGEFUNDIE wrote:
Tue Jan 07, 2020 4:49 pm
A $600k home bought at 20% down with mortgage rate of 3.5% and property tax of 2% will cost you $3k per month all-in.

That’s $36k per year.

You’re telling us you can’t afford that on $230k annual income?
Agree.

What if the salary total was 1/2 at $115K and the house was half at $300K and Principle/Interest/Taxes was 1/2 at $18K per year. That would be tight but manageable. Then one all of a sudden got a $115K raise but housing costs/property taxes also got raised to $18K more per year. That would be definitively manageable with more breathing room.

This is where one has to do a detailed budget to see if one can still afford the maid and groundskeeper.

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Re: Living in a HCOL and making a middle class salary is a struggle

Post by ThatGuy » Tue Jan 07, 2020 8:43 pm

WS1 wrote:
Tue Jan 07, 2020 7:40 pm
I don’t think median income is helpful as the OP is not competing against the 62 year old couple with a paid off home. OP is competing against other families looking for seats in decent school districts and saving for college at today’s prices.
Middle class only includes dual earner families? News to me, I guess all of those old guys are a part of the grey class.
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