That we are even having this discussion, which would look completely bizarre in many other parts of the country, stems directly from Greater Boston's perpetually inflated real estate prices.
As one knowledgeable market observer commented to me the other day, the real estate bubble never burst in the Boston area, it just lost a little air.
And as sales pick up again and prices start moving up, all those bubble year prices may wind up looking like a bargain a few years down the line.
That brings me now back to the claim by Astrom, a local lawyer, that he is still middle class, even as he pulls down more than $300,000 a year. Here is what I recently blogged about Astrom.
While he technically could have afforded to buy a half million dollar house, Astrom, an immigrant from Belarus who worked his way up the legal ladder, instead chose a $250,000 suburban condo, which took a $50,000 down payment to get into.
His wife is a full-time student - he shells out $2,800 a month on day care costs.
Astrom's claim of middle class status sparked fury on the comment board of this blog, drawing jabs that were downright mean in some cases.
But more telling were the comments of others who also pull down what would seem to be very decent paychecks, either solo or as part of professional couple, landing them in the $200,000 and up income bracket.
What sounds like a princely sum vanishes when you consider some basic ratios. You need to be earning, as a couple or individually, $100,000 to afford a $300,000 house. If the two of you pull down a combined $200,000, that could get you up to $600,000 - it sounds like a lot, but not within the 128 beltway.
But that's without taking into account the cost of childcare, which if both parents work full time, can easily amount to a second mortgage payment around here, not to mention student debt.
Here are some relatively high earners, who, like Astrom, say they are in the same middle class boat as everyone else.
01/23/2013 04:54 PM
I agree with astrom on this one. My fiance an I make about 225K combined, don't have any kids, and don't feel wealthy at all because the potential for financial disaster is around ever corner. You never know when you' ll be fired, catch a DUI after drinking a couple glasses of wine at dinner, come down with a serious illness, etc... We could easily go from having plenty of cash reserves in the bank to borrowing money from family in a few months of unemployment and a run of bad luck. I imagine having kids just makes it worse with braces and college tuition and all that.
I think it really just comes down to how confident you are that you won't go broke anytime soon. If I was rich, I don't think I would works 55+ hours/week because I wouldn't have to worry about my financial future. I'd be rich, and as someone mentioned earlier, I could let my money do the work for me. I just don't think I would stress if I had a couple million in the bank and knew that my investments could carry me no matter what happened. Isn't that what being rich is?
Instead I have this feeling that the Sword of Damocles is right above me at all times. It's almost like I've made enough money to buy two investment properties and live comfortably, but now I have this magnified risk in my life in which I need to have plenty of money on hand in case of disaster. I can't eat out constantly, don't drive a fancy car, or take month long vacations because money is a very real issue.
01/25/2013 10:38 AM
I can't agree more with astrom on his experience. Me and my wife have been making $200k for the past 10 years. There has been no significant income increase due to job change and lack of raise/bonus etc.
Before we had kids, we're living in a 2bedroom rental. We felt like middle class. We went out to eat routinely. Book getaway vacation when there is a good deal. Every week end, we looked for things to do and ways to spend while still managed to saving some money.
After we had kids, we brought a house with a $500k mortgage, we paid $2500 for child care (these are low end prices). And instantly,we're living like third world poverty. No more vacation/getaway/entertainment. Eating out is fast food at the mall or occasional Olive Garden. No more savings. Every month is pay check to paycheck. As a matter of fact, the first 2-3 years we actually had to dig into our savings.
The evils are the housing, child care, and to some degree, health care. And with the higher tax rate, there is not much incentive for us to make more because a higher paying job require more time commitment and less time for family.
We're already working as busy as we could. Anything worse than this, we might as well pack up and leave for Texas and start home schooling our kids. We may not have the required teaching experience, but we definitely graduated from better colleges than most of the teachers and child care providers we have met.
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