What is Middle Class?

What are we told about the middle class?
Charles Smith has gathered a few facts. Generally, we think about income from $45,000 to $125,000, but we fail to include expenses, the roller coaster of inflation and debt and costly services such as insurance.

What if we looked more deeply? Charles is proposing taking a new look at our definition of middle-class:

  1. No more than 30% of net income is spent on housing, either to own or rent.
  2. 6-8% of net income is saved–not including retirement IRAs or 401K plans.
  3. No more than 15% of net income is spent on medical and dental expenses, including insurance.
  4. The household can afford to pay tuition, fees and books for two household members living at home and attending a 4-year state university/college.
  5. Food (including meals away from home) costs no more than 15% of net income.
  6. The household can pay cash for a recent-vintage reliable used vehicle, and can support the one reliable vehicle and a “beater” old vehicle for secondary use; the household carries no auto loans.
  7. The household pays off all credit card purchases monthly and carries no consumer credit balance.
  8. The household can afford to take a domestic vacation once a year without incurring debt or tapping the 6-8% of income set aside for savings.
  9. If the family owns a residence, the equity stands at a minimum of 50% of market value.
  10. The household maintains at least 6 months’ living expenses in readily accessible savings.

By these standards, how many households in the U.S. are truly “middle-class”? Not very many.

Charles asks, “Do you think this is a fantasy world? This was the world in the U.S.A. from 1955 – 1975.”