How would you classify $250,000/yr family income? (Orange, Costa Mesa: appliances, luxury)

[JohnG72]

Originally Posted by k374

Given the fact that a couple making $250k/yr has worked considerably harder than the average person to attain that income level it's only reasonable to expect a standard of house above average. Now, this type of house will cost at least $650,000. If a couple wanted to be conservative and put 20% down, that's $130,000 plus closing, about $140,000 in total.

With all of other's life expenses considered how long do you think this couple would need to save the $140,000? What about furnishing the new house? Now you can see how $250k/yr is hardly well off...

a well off couple would be able to VERY EASILY purchase an above average house with 20% down and furnish it.

People who say $250k/yr family income is rich in an area where houses cost $650-700k just do not understand basic math!

Yeah it looks that way until you consider that this $250K hypothetical family could live in the best communities in Huntington Beach extremely comfortably by renting a 2500-3000 sq ft home at $5K a month($60K a year, less than 25% of gross pay...very very affordable).

The problem with your model is that you are going off housing prices that are way out of allignment with affordability.

This hypothetical family could easily rent a home that would sell for 1.2-1.3 million in a gated community with outstanding schools. Hardly a situation where they are not rich/wealthy/high income.

[Socalpal]

Originally Posted by k374

Given the fact that a couple making $250k/yr has worked considerably harder than the average person to attain that income level it's only reasonable to expect a standard of house above average.

If the couple works for any Orange County public agency they probably make over $250k per year combined, most city/county/state workers that I know do not work "harder' than the average person.

[bicoastal10]

A lot of you guys are crazy if you think $250k classifies as rich or wealthy. In my book, it's net worth that matters, not income, but since we're talking about income, I'd say rich/wealthy STARTS at a gross income of at least $750k/year or a net worth of at least $5 million (especially in SoCal). A lot of you forget that a gross income of $250k is really a net income of about $180k. If you're a single person, sure, that's a lot of money, but if you have a family/kids, that's not much. Think about all the expenses a family of, say, 4 may have: mortgage on a $700-800k house, homeowners insurance, property taxes, utilities, lawn care, car payments, cell phone payments, life insurance premiums, food/groceries, daycare for any little ones, private school tuition (people making $250k usually want their kids in private school), piano lessons for the kids, one or two family vacations per year, etc.

Don't get me wrong; $250k is good money. However, I'd never classify someone making $250k as rich or wealthy; especially if they have to work full-time to make that $250k as opposed to someone making $250k solely from investments/interest. Instead I'd classify them as very comfortable and upper middle class.

[k374]

good points bicoastal...another few facts to consider is that the higher a person's income the less stable it is and the longer it takes to find a replacement job if one is laid off. Also people who make that kind of money usually work longer hours and may have above average student loan debts. Working longer hours means perhaps having a full time maid to do the housework and taking care of the kids.

This whole $250k/yr thing looks like a whole lot more than it actually is.

[JohnG72]

Originally Posted by bicoastal10

A lot of you guys are crazy if you think $250k classifies as rich or wealthy. In my book, it's net worth that matters, not income, but since we're talking about income, I'd say rich/wealthy STARTS at a gross income of at least $750k/year or a net worth of at least $5 million (especially in SoCal). A lot of you forget that a gross income of $250k is really a net income of about $180k. If you're a single person, sure, that's a lot of money, but if you have a family/kids, that's not much. Think about all the expenses a family of, say, 4 may have: mortgage on a $700-800k house, homeowners insurance, property taxes, utilities, lawn care, car payments, cell phone payments, life insurance premiums, food/groceries, daycare for any little ones, private school tuition (people making $250k usually want their kids in private school), piano lessons for the kids, one or two family vacations per year, etc.

Don't get me wrong; $250k is good money. However, I'd never classify someone making $250k as rich or wealthy; especially if they have to work full-time to make that $250k as opposed to someone making $250k solely from investments/interest. Instead I'd classify them as very comfortable and upper middle class.

You confuse wants and needs.

Lots of wants that morph into needs = loads of debt. Private schools, cell phones, lawn care, car payments, daycare, private schools, piano lessons, family vacations are all wants, not needs.

As such, one could live a moderate lifestyle with a family of 4 on $250K, and rather quickly accumulate financial wealth. Its a matter of choices and $250K is not at all upper middle class, but upper class. I believe it puts one in the top 2% of wage earners or very close to that.

[k374]

Originally Posted by JohnG72

Its a matter of choices and $250K is not at all upper middle class, but upper class. I believe it puts one in the top 2% of wage earners or very close to that.

so by the same token you would think that $125k/yr for a single earner with no family is also "upper class"?

[JohnG72]

Originally Posted by k374

so by the same token you would think that $125k/yr for a single earner with no family is also "upper class"?

It's very close. The tax situation for the single earner with no ability to itemize makes it a no. This guy pays around $30-35K a year in state and federal taxes, amoungst other things.

If the $125K a year single earner can write off a significant amount, it would be a yes. Paying say $10K a year vs $30-35K a year makes a huge difference.

[Coldjensens]

Originally Posted by JohnG72

You confuse wants and needs.

Lots of wants that morph into needs = loads of debt. Private schools, cell phones, lawn care, car payments, daycare, private schools, piano lessons, family vacations are all wants, not needs.

As such, one could live a moderate lifestyle with a family of 4 on $250K, and rather quickly accumulate financial wealth. Its a matter of choices and $250K is not at all upper middle class, but upper class. I believe it puts one in the top 2% of wage earners or very close to that.

You are agreeing with us, possibly without intending to. The question is whether $250k is wealthy, rich, or jst getting by. You are agreeing with the majority of the responders that in Orange County, it is just getting by. You believe that if you forgo all trappings of wealth/comfort, then $250k allows you some savings which will eventually build wealth (if everything goes well), but not saying that 250K is wealthy, it just allows a family to get by and work to eventually become wealthy someday. That is not wealthy, that is just getting by.

Many of the items that you say are "wants" not "needs" depend on the situation. For many people a cell phone, internet, car payments, computer are necessary for the family to continue to make $250K per year. Many higher income earners must be able to work from home as well as the office. They need access to a phone and e-mail at all times. They also must have internet access while at meetings, hearings and the like. Further, they have to have a decent car. Many jobs include marketing which includes driving clients to dinners, sporting events etc. If they do not do that, they do not get new clients and their income will fall or disappear. They also "need" a dependable car. Often work takes them all over the state and all over the country at random times and to remote places. A Dr. cannot be late for surgury becuase his car broke down again. A lawyer cannot miss a court hearing becuase they drive a clunker, or becuase the bus was late. Thus, things that you think are "wants" are really "needs" because they are necessary to maintin a high income (or any income at all for that matter). It takes money to make money. Personally, if my work did not require it, I would not have a cell phone. I would also spend considerably less on transportation, clothing, dry cleaning, technology, education, and many other things. - And no, you do not get a write off for reimbursed business expenses until you hit a very large threshold and then many business expenses cannot be included (dry cleaning, suits, tuxedos, etc.). There is a lot more involved then just saying "I can get by wothout X or Y and therefore save money."

Further since such a family is typically working 10-14 hours a day lawn care, child care/activities, and house cleaning become needs, not wants. Sure the brain surgeon could mow his own lawn if he worked less, but then he would make less than $250K. In some instances private schools are needs, not wants. It depends on the location.

Thus, while you could eat nothing but hamburger helper, hitchhike to work and to meetings etc, wear dirty smelly cloths and skip work to mow the lawn yourself, you would nto contiunue to make $250K. It is not as simple as you seem to think.

[JohnG72]

Lol. Nonsense suits you well.

[Coldjensens]

Originally Posted by JohnG72

Lol. Nonsense suits you well.

Isn't it better to just say "Yes. I guess you are right.' Or say nothing at all?