A few months back, I was listening to a lot of financial independence podcasts and then hopping on Twitter to “subtweet” about things I’ve heard. (“Subtweeting” is when you talk about someone on Twitter without tagging them, usually to throw some shade at something they’ve said or done.) Perhaps not the most mature thing, but I was incredulous at some of the tone-deaf things I was hearing:
Another recent gem I meant to subtweet about: a podcast about "how not to be poor" and the advice was "buy a house with at least 20% down."
Yup, that's it. You nailed it. That's how a person breaks out of the cycle of poverty.
— Stephonee | PoorerThanYou (@stephonee) March 13, 2018
The more I elbowed my way into the Financial Independence / Retire Early (FIRE) community, the more I noticed that I felt… poorer than everyone again. Now, I know that it’s far from everyone in the FIRE community doing this, it’s really just a few loud squeaky wheels that stick out in my mind. But while I know that I make decent money (more on that later), I was starting to feel like it wasn’t enough, like I was falling behind again. And I wasn’t the only one:
https://twitter.com/abbiesbauer/status/975061811941683200
yo yo yo, if you're writing a blog post that's like 'how i make it work on 15k a month!' maybe just nah
— Bravely- Sustainable Personal Finance (@bravelygo) March 17, 2018
Y'all, I am frugal. I am FRUgal. But let's tell the whole truth, mkay?
"Frugality let me do all these amazing things."
Sure. But so did your solidly middle-class income.
— Penny (@picksuppennies) March 9, 2018
The Personal Finance Community Is Growing, But In What Direction?
It was starting to feel to me, and I suspect to others, like the online personal finance community was growing away from me. I knew that wasn’t really true, that there were still plenty of people writing (and podcasting and vlogging) great content for people with more modest incomes. In fact, though it may feel to me like 10 years ago there were more people writing at my level, I’d wager that with the explosive growth of our niche, there are way more people blogging for middle incomes now than ever before.
I know that great personal finance content for middle incomes is out there. I consume a lot of it, and I see people sharing even more that I can’t consume (because there’s more than any one person can read/listen to/watch!). But it can be hard to wade through the deluge of content and find things that are applicable to an average income. Especially when a lot of higher income folks have been becoming media darlings (the press loves a good headline like “How I Scrimped and Saved My Way To Retirement At 32” and often skips the “while making 4x the national median income” part).
This is not to say that higher income earners are bad (goodness no, get that money!), or that they should shut up and not give personal finance advice to anyone. We need more voices of all stripes, higher income folk included. Tanja of Our Next Life (a high income earner herself) wrote up a Blogging Manifesto, urging all of us in this space to be transparent and acknowledge if you have a high income. Because again, it’s not that a high income is bad or means you can’t write about money for the rest of us—it’s just that we all need to be clear and realistic about what personal finance looks like on a middle income.
And so, I got an idea in my head. It took me several months to pull it together (I have a full-time job, this blog, a toddler, no child care, and I am allergic to caffeine and have to sleep, after all!), but I had two things I wanted to accomplish:
- To make it incredibly easy for people with middle incomes to find the great personal finance content for them that I know is out there.
- To incentivize content creators (bloggers, podcasters, YouTubers, etc.) to keep middle incomes in mind and to work hard on making more of that great content for them.
Seven months later, the Money Middletons are here.
But What Is a “Middle Income?”
This is perhaps the #1 question and I’ll be honest… I’m still working on a good answer here. It’s… complicated. It shouldn’t be, but it is. I explained a lot of my thoughts during my appearance on the His and Her FI podcast about The Middletons.
If we try to use the official definitions of the “middle class” we quickly run into issues, like the fact that the Brookings Institute found 12 different ways to define the middle class. But if we want to keep it simple, the Pew Research Center (and kinda sorta officially/unofficially the US Census) uses a definition of “2/3rds – 2x the national median income for your household size.” They also have this handy dandy calculator that takes your metropolitan area into account (perfect for those of us who cry foul because we live in high cost of living areas, myself included):
Some higher income folks may need the reality check of a calculator to tell them whether or not they really have a middle income. (Hint: the $180k from my original tweet doesn’t pass as “middle” even where I live, in the highest median income county in America.) But most of us know. We don’t need the calculator to tell us. The feeling of personal finance information being aimed above our heads is what tells us where we stand.
What we need is information tailored to our level. A community of other Middletons. So, I went ahead and built one.
Launching a New Community for Middle Incomes
Today, I was up until 4am putting the final touches on MoneyMiddletons.com, scheduling the email alert and social media posts, and making sure that the very first pieces of content we featured were ready to shine.
Needless to say, a part of my launch plan was to have this very blog post done by this morning as well, and obviously that didn’t happen. But I’m not even sad about it, because writing this a bit later gave me a chance to see everyone else’s reaction to the site launch before I sat down to write this. And a wizard is never late, we arrive precisely when we mean to, Frodo!
People Talking About The Middletons Launch
Congratulations and best of luck! Been looking forward to this
— Liz @ Chief Mom Officer (@LizOfficer) October 22, 2018
I'm so excited about @MoneyMiddletons! @TreadLightly_RE did an amazing intro & explanation of her family's Middleton finances & goals (even though she isn't the site curator) https://t.co/sD3mEIBkN8
— Champagne & Capital Gains (@champgains) October 22, 2018
We ran out of space in the tweet, but @stephonee , we want to make sure you know how much we appreciate the efforts you and others are investing in making personal finance information more accessible, and financial independence achievable, for the average person!
— The Money Mix (@MoneyMixUS) October 22, 2018
Emilie at Wise Mind Money has become one of my main “partners in crime” for The Middletons, and she used the launch to start a new series on her own blog and talk about what it feels like to be a Middleton.
Reaching for FI’s Erin lives near me and shares my pain of being a Middleton in this ridiculous high cost of living area. But she also shares my tendency to blank when people ask for resources for low or middle incomes, and so she’s really happy to have The Middletons to point to now! (Me too, Erin. Me too.)
Financial Pilgrim wants to know how you define the middle class? And how do you connect with the middle class, whether you’re a part of it or not? (Duh, spoiler: the answer is The Middletons website and community, but you knew that.)
Sarah at Smile & Conquer asks “Where My Middletons At?” and puts out the call for us to unite in the Middletons community. Yaaaaassss sister!
Tread Lightly, Retire Early’s post was mentioned in one of the tweets I called out above, but it bears repeating because she hit the nail right on the head about what it’s like being a money Middleton in the high income financial independence community.
Steph the Blogger shares how she started out as a Middleton. And though her income has grown, she still feels like she’s back where she started, and hopes she can find a way forward in her own financial life with content from The Middletons.
Stephonee, this is great! Thank you for sharing that Pew calculator which shows me squarely in the Middle for my area (which I inherently knew as a single occupant household working in local government).
I owe you a post about what being a Money Middleton looks like for me, and I hope to have something(s) featured here someday!
Hurray Josh! I’ll definitely be eyeing your blog for an upcoming Middletons post… and for stuff to feature on The Middletons! 😀
And you are welcome for that calculator – so helpful, isn’t it?
Whomp whomp. I thought we were in the middle for our area (and a few other parts in FL as well) but turns out we were part of the upper tier with my husband’s new(ish) job. We were part of the middle before
What happens if you crossed over the middle threshold? Do we still count? 🙂
Hahaha, a good problem to have! And even from the early days of thinking about doing the Middletons project, I’ve always said “I’m not the Middletons police. I’m not here to kick anyone out if they earn $1 more than the threshold.” I think that it’s great that you’ve risen up out of Middletons status, and we definitely still want you around to share your thoughts and ideas with Middletons! I think it’s just important for higher income earners to remember what it was like to be a Middleton (if they ever were Middletons, as you were before your husband’s new job), and to keep in mind what Middletons are dealing with. 🙂
Hi Steph – don’t sweat the haters. Haters guna hate but we’ll still be plodding along, slowly growing our wealth!
I don’t sweat the haters… I just build a whole new website and community instead! 😀
Okay, thank you for linking to that calculator, it is fabulous! Will be using that in my work life as well 😉
You know I love a good calculator!
WAIT you don’t have childcare? HOW the heck did I miss that?? Congrats on getting this off the ground so quickly! I wish I could have been as involved as I wanted to be but the day job still hasn’t let up. Nevertheless, I look forward to helping out!
Yup! It’s probably not super obvious from my online activities, though. Husband and I have been working opposite shifts, switching off each day. We also only have 1 car, so it’s been… interesting. 😉 We did start kiddo in a pre-pre-preschool for 6 hours a week this year, though. That isn’t a whole lot of working time, but it definitely helps with scheduling doctors appointments for the adults or running errands (though usually, we just work during that time).
And I will get you involved with The Middletons as much as you want when you’re able! 😀
Im right at the cusp. With my income alone we are middle income, but if I add in my bfs wages we are upper. He works in the low wage service industry though and is currently unemployed, so it’s difficult to decide where we fit in.
Totally understand that. There’s definitely a “seasons of life” thing when using income as the baseline. I also think the calculator should take age into account, but that’s really tough in two-income-earner households (whose age do you use?). But I once heard someone on a podcast (here I go again…) going on and on about a person needing to “get to a median income of $50,000” before they could start working toward financial independence. But, he was talking about a newly-graduated college grad. The median for that age group is basically half the amount he was saying.
Anyway, that is to say, it’s complicated! I think you best fit wherever fits you best… if that makes sense. I would consider you Middletons, but more important is what you consider yourselves and what helps you.
we have a 2 person household, 5 years apart in age. we only got married 14 years ago in our late 30’s. we were poor separately in our 20’s. then we were middle separately in our 30’s. our 40’s we combined forces and even with my blue collar job we really made hay on saving/investing. then mrs. me lost her gravy job and back to the middle the past couple of years. the takeaway for me is that a late start won’t kill your chances but when times are good you gotta put the hammer down.
working opposite shifts is not ideal. we did it for about 10 years. it really takes a couple of independent and not-too-needy people to make that work. nice calculator.
Whew that calculator is a (terrifying, for me) thing of beauty! Thanks for taking on this project too and sorry I’ve been MIA on it for months!
Congratulations!! The site looks fabulous and you are filling a void that needed to be filled.
Congrats on launching this Stephanie! This is much-needed. So much of the advice in the FI space assumes you are making a ton, and that if you aren’t, you just need to do more. As you pointed out yourself, there’s nothing wrong with making a lot, and there are plenty of high-income earners who DO have perspective on their own situation. The voices who don’t really tend to stick out though.
Yes yes yes! You get it, Andrew. But of course, I knew that from our previous conversations. 🙂 Thanks for the comment and the kind words.
I saw the buzz about the Middletons on Twitter – great idea and congrats! Early in my career, I didn’t enjoy a huge salary either. But, I did ask myself how am I going to be financially free one day? The answer for me was education – financial education. I spent a lot of time in the library reading about real estate and ended up buying a house in my late 20s. The books I read said you didn’t need a ton of money to buy a house. Other people are doing it, so can you they said. They were right.
Life changed shortly after buying the house (3-months later). I was offered a higher paying job in another state. I turned the property into a rental; one of the best investments I ever made. I too was relatively “poor” when I bought it. Armed with knowledge about real estate, I bought a HUD home where I moved. It required very little money down; read about HUD homes in another library book. I later sold that house, but that was a mistake. It is worth a ton more now. Live and learn.
I’m an advocate for “education” no matter what your income is right now. Once educated about basic finance, you’ll increase your income because you know how and you’ll realize it isn’t all that hard. It does take persistence and patience.
Again, thanks for posting – awesome info and love the calculator. It says I’m in the Upper Income quadrant now (as I should be after 30 some years of working, learning, and saving).
That calculator was really helpful! My husband was working a traditional full-time job earlier this year. But now he’s freelance and earning a smaller variable income. According to the calculator we’re now middle income but right on the cusp of high income. This is probably why it’s been hard for me to self-identify to a particular group.
Enjoyed meeting you this past weekend!
I love a good calculator, I’m so glad it was helpful to you! And it was great to meet you, as well! 🙂
Ugh, I feel this so hard, as someone who has never made more than $39,000 (that was my banner earning year) but is pretty deep into the MMM community. According to the calculator, I’m lower income on the cusp of middle income (it tips at $27K in my area), but I’m self-employed with high COGS so it’s a little hard to calculate.
I obviously benefit from my high-income partner and feel weird about it generally when giving personal finance advice- we don’t share financial resources and legally have no tie to one another, but their work pays for our internet bill (which would be $35 a month without) and they pay slightly higher rent than I do. I also would NOT be able to pull off my savings rate (around 30% this year) on this income if it weren’t for obamacare, which subsidizes my self-employed health insurance to the tune of $222 a month, and co-pay assistance, which covers my $7,000 per year out of pocket maximum for my $3000 per month medication.
This. is. awesome. I can’t wait to see what you put together.
You have some good points. Thanks for taking the time to do this.
I would like to comment about the Abbie Bauer comment you have in the article that says,
“If PF bloggers could stop preaching about investing in property, that would be great..WE GET IT, but we middle folks can’t even afford to buy a house to live in!”
Depending on your market, that’s really bad advice.
Average new car price in this country is about $33,000. Yet you can get a perfectly fine new car for about $15,000, less than half the price! That’s an $18,000 price difference! That’s a lot of money. Add in some interest and you’re up to $20,000 in savings. A couple with two cars could save $40,000 just by making a affordable car choices.
So, about 5 or 6 years after those car choices were made, that family could have $40,000 in their savings. I’ll ignore the possibility of investing that money (and thus increasing it) and just assume it made enough to keep up with inflation.
Now, what could you do with that money?
I bought my first rental property, a 3 bedroom, 1 bath house for $38,400. Another $7,000 later we had a rent-ready house to our high standards. It rents for $765 a month and makes me about $4800 a year after paying property management, repairs, taxes, insurance, and set asides for future repairs.
A year without 2 car payments would go most of the way towards covering the $6,600 savings gap.
For us, it was a “disaster”. A hail storm totaled both our cars. After we bought the hail-dented cars back from the insurance company for pennies on the dollar, we pocketed $10,000. Everyone else we know who got caught in that storm lost hundreds of dollars because they paid to fix the cosmetic damage.
Now, instead of buying fancier cars, let’s continue using those two cars for a total of 10 years. The savings on car payments, plus the rent coming in, and we’ve got enough to buy another house.
Our first home gave us a $30,000 jump in net worth because the after repair value (ARV) was that much higher than the purchase and renovation cost. After about 2 years of renting it out, I could finance it and pull a chunk of money out of it to purchase another home.
Our second home was $37,000 and we put $13,000 into it. It rents for $870 a month.
Our third home was $33,000 and needed $10,000 in work.
Of course, if we chose to live in a similarly priced home we would have even greater savings.
Is this “specific” strategy workable in all locations? Of course not.
But there are a host of ways to make money in real estate. Some will work in your area, some won’t. Some will work with very limited money, others will require more money.
Did you know you can legally sell a house you don’t own (without being a realtor), make money doing it, and have the homeowner and buyer thank you for doing it?
Did you know it’s possible to buy homes for 30%-50% of retail value?
I’ll just put it bluntly — buying a home the retail way is very, very different from how real estate investors may do it. Even if you never invest in real estate you may find that lessons you learn about buying at a wholesale price may save you a bundle. We got our new home to live in at a 30% savings on the appraised value because we used some of the real estate investing things we had learned.
So, before discounting the possibility of regular middle class folks doing this, take the time to learn how to do it. You might be surprised.
For example, I know of one young lady just starting out in her career who was paid so little that she couldn’t afford an apartment of her own. She had to have a roommate for a 2 bedroom apartment. When her roommate was travelling on business, she would rent out her roommate’s room on Airbnb. When her roommate was in town, she rented out her own room and slept on a friend’s couch. After awhile she had made enough to afford to rent another apartment all by herself. But she didn’t move into it, she rented it out on Airbnb! She just kept repeating the process. When mortgage rates got low she used her new, higher income to qualify for mortgages so she could buy units instead of rent them. Would that strategy work everywhere? No. But it would work a number of places and you only need to be in them or move there. Or learn more strategies and use one that will work for your circumstances.
Who’s buying fancy new cars? I bought my current car (the ONLY car my husband and I have) 6 years ago, used (it’s a 2004) for about $11,000. I had $2500 to put down on it (including the cash from selling my previous car, which I drove into the ground before getting this car), and financed the rest at 1.99%. And yet, 6 years later, I do not have this magical $40,000 you speak of.
Sorry if I’m stuck on just the first point of your long comment, but this is a real sore spot for me on this blog. Since 2007, people have been coming into these comments and telling me to just “buy a smaller car” or otherwise make better car choices in order afford to not have to put groceries on credit cards or to buy a home or whatever else XYZ thing people think I could afford by… doing what I’m already doing.
As far as real estate investing goes, I actually dedicate quite a bit of my time to learning about it. I listen to real estate investing podcasts (Afford Anything religiously, I’ve listened to Bigger Pockets in the past), and I’m reading one of the Bigger Pockets books right now. Studying different real estate investing strategies over the past 2 years, I’ve learned one thing above all else: I haven’t found any style of real estate investing that is right for me. I have almost zero spare time to investigate deals, my husband is extremely debt-averse (not interested in taking on a mortgage for even a primary residence), and our savings is tied up in tax-advantaged accounts. Additionally, living with other people is extremely dangerous for us (my husband has severe food allergies, sharing a kitchen with others is a huge life risk), and on top of that we have a 2-year-old toddler (which most people don’t want to live with) and husband also has pet allergies (which most people don’t want to live without!). But if you know of any real estate strategies that require no time, no debt, no cash, and not living with anyone else… I’m all ears! (I’m just kidding, don’t try to sell me a snake oil bridge. I know there’s no such thing as any investment that requires no time, no debt, and no cash.)
I know this is all very personal to me and my specific situation… but you did leave this comment on my blog, so… there you go.
Thanks for the reply.
I addressed a comment from someone else that you quoted. That comment said that middle income folks couldn’t invest in real estate and that they couldn’t even afford to buy their own houses, much less investment property.
And that statement is not necessarily true. It’s certainly true for some folks with middle incomes. If their income isn’t stable, they have long periods of unemployment, they have medical problems that cost a lot in lost income or expensive treatments, etc., etc.
But a whole lot of middle income people are not in that situation. They have, and have had, and reasonably expect to have, a stable middle class income with reasonable health.
I’m not going to try to sell you anything. I just wasn’t willing to see a comment that discouraged regular folks from getting into real estate go unchallenged. The point you quoted said middle income folks couldn’t do it. The person who made that statement said something that simply is not true for all middle income individuals.
I’m talking about that specific point. I’ve just learned about your blog, I have only read this article. I know nothing about you other than what’s in this particular blog entry. I’m only talking about what regular folks can do, there’s nothing in my comments meant to apply to you and your specific situation.
I didn’t say that you personally were spending too much on cars. But the average new car price isn’t over twice what one can purchase a perfectly good new car for without a reason. That reason would be that LOTS of middle class folks are buying cars (and trucks) that cost much more than necessary. I was unable to find median new car prices, just average ones. I would have preferred median new car price because, well, heck, you know that. You’re smart and you know personal finance.
But other people ARE spending that kind of money on two family cars. And when they do, they are spending that extra $40,000. Choosing to save that money by buying a cheaper car (and saving the difference) instead is one way to get the extra money.
If your situation is such that you could not spend an extra $40,000 on two cars, then of course you won’t have $40,000 magically appear.
Some people eat out a lot each and every week. That adds up. An extra $4000 a year on restaurant food (which a lot of folks do) over 8 to 10 years would have purchased one of my rental properties and gotten it to rentable condition.
Other people buy too much house. Buying a smaller or less fashionable house, or even renting for awhile (depending on the area) might be enough to generate enough savings over time.
There are a host of ways to do real estate investments. If they don’t work for you, so be it. Silly me, I thought your blog was there to help other people with their personal finance journey. If the only advice you want to see in your comments must work for you in your specific circumstances, then you’ll be shortchanging your readers of a lot of ideas that might work perfectly for them.
Buying a duplex and renting out the other half is one way or folks who don’t want to rent out rooms in their home. Buying a house that has a mother in law suite (with a separate outside entrance and all interior entrances locked on your side) or an over garage rental unit is another option. f Buying a real fixer-upper that one fixes up while living in it for a couple years, then selling it for a profit and buying another fixer upper is a great way to build wealth. Do that a few times and you’ve got a free house to live in because the profits are tax free. Plus, if you’re moving every 2-3 years for a decade, you’re not motivated to buy a lot of stuff you’ll just have to move. Extra savings opportunities by avoiding spending!
Just because your family doesn’t want to buy a house with a mortgage doesn’t mean that no one else will. Same thing with renting out rooms in one’s house or apartment. Same thing with moving every few years to make a tax free profit on each house.
For those not interested in real estate, but wanting to start some kind of business on a limited budget, I strongly suggest https://www.popupbusinessschool.co.uk/ There is a lot of free information on how to set up a business for little to no money and no debt at all. They’ve done some podcasts and been interviewed by some personal finance bloggers too, so lots of ways to learn more. They are really good at teaching people the right way to think about starting a business.
One example they gave was a person who opened up a restaurant with a building, business license, equipment, food and staff with a 200 UK pound investment. The only money they put at risk was that 200 pounds they started with. No debt. No loans. Maximum 200 pound loss. How did they do it?
They knew of a diner (because they were a longtime customer) that was a mom and pop operation. The owners served breakfast and lunch, cleaned up, and went home. They made enough money on those two meals they didn’t need to stay open for dinner. He talked to the owners and asked if he could rent the facility in the evening for a couple of weeks for a 50% share of the profits. They agreed. With that one deal he now had a building, all the equipment he needed, a business license the restaurant was already operating under. And it cost him nothing up front. Brilliant!
Then he spent his 200 pounds distributing flyers in the neighborhood that advertised his new pop up restaurant for a 2 week only engagement.
Now comes the 2nd brilliant part of the guy’s plan. The flyer explained the menu and let people know they had to make a reservation, choose their meal and PAY IN ADVANCE. With that he knew exactly how much food to buy, how many staff he would need, and when he would need them.
If he hadn’t gotten enough takers he would have quit at this point and lost his 200 pound investment in advertising.
But he did get enough customers, so he opened his pop up restaurant. It was so successful that he got the owners to agree to another week. Then another. And another. After a couple of years he had enough saved up to buy his own restaurant facility.
Have a great day and best wishes on your blog. I’ll be reading more of your entries over the next month.