The New York Times had an article this week on how financial CEOs couldn't possibly afford their lifestyles on $500,000 — the proposed cap on their pay. It's a fun piece ticking off the cost of private schools, nannies, co-op maintenance fees, personal trainers, and gowns for charity gigs. And the article forgot other big ticket items like summer camp and tutoring. It fits in well with all the stories about John Thain's ridiculous office remodeling. It's fun to laugh at those dumb, rich people who are whimpering about poverty.
Of course, it's hard to maintain even a middle life style in Manhattan for under $200,000. To have access to good public schools, you have to have the right zip code. Daycare is triple the cost of suburban daycare. Rent for an apartment with laundry and a washing machine is more than most people's mortgage.
Yes, it's hard to summon up sympathy for the urban, middle class. Just move to the suburbs, people.
But a lot of us are going to have to live on less this year. Without Steve's bonus, we're going to be more frugal this year. It won't be a huge change for us, because we didn't use his bonus money to buy things. Rather, we've been repaying school loans, building up some semblance of a retirement plan, and putting a new roof on the house. The loans are now under control and the roof doesn't leak anymore, so that won't be an issue this year. Still, we're holding back on some purchases that we wouldn't have worried about before. I'm looking for a new armchair on Craig's List rather than Crate and Barrel.
If things get worse though, we will have to cut back on things that would really hurt — gym membership, Jonah's summer camp, date night dinners. If we lost out on that stuff, we would feel poor. Because poverty isn't a number; it's making sacrifices on things that feel normal.
What would make you feel poor?
(Just to clarify here. Feeling poor is very different from being objectively poor with no running water or food. This is just middle class chatter here. Nobody is looking for sympathy for not being to afford gym membership.)
Apt. 11d 
Having to give-up Whole Foods and/or Montessori.
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I’d feel poor if I had less than we had when we were growing up. But, that wasn’t very much (didn’t include gym memberships, summer camps, or date nights, or whole foods or montessori).
Of course, we have all those things now, and haven’t had to give them up, so I have no idea how I’d actually feel.
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The biggest thing we’ve cut back on is travel. Since every family member except my parents lives a plane-flight away, this means we haven’t seen our extended families at all. One set of grandparents hasn’t been visited for almost a year (they won’t fly). There are entire sets of aunts/uncles/cousins that we haven’t seen since 2007. It’s painful.
I have also pretty much stopped buying clothes for myself. I’m sure everyone at the office is very sick of my gray sweater, but they’ll live!
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I would feel poorer (rather than poor) if I had to give up cell phones, fast internet, Netflix, commercial housecleaning, buying books, Starbucks, keeping the house toasty during the winter, and yearly West Coast travel to all the grandmas, aunties, uncles, and cousins. If our kids were smaller, disposable diapers would be on the list.
It wouldn’t surprise me at all if there were salary cuts this year (slava bogu for tenure), and my husband’s small software royalty income has been trending down for some time. They just raised tuition rates at C’s school (full-time teachers had been getting 27k a year). That’s the bad news. The good news is that while we’ve been slowly saving for our house, prices have been slipping, and every month we wait and save brings us closer to an affordable house in a good neighborhood.
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I love my apartment and my cleaning person. If I had to move or let the cleaning person go (at $90.00 per month, it isn’t a huge expense), that would make me feel poor.
Hubby’s last paycheck is either June or July 1 — and he’ll be in law school starting in September. Lucky for me, I have an opportunity to teach more and thus earn more…otherwise we’d be in some trouble.
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In many ways, I already feel poor because, as bj mention above, I’m living a lifestyle below the one I grew up with. It’s interesting, though, because I made the choice to quit my job right before the downturn, so I think I feel differently about my relative wealth since I’m not the victim of an unexpected loss of a bonus, cut in salary, or job loss. We strategically planned cuts. We were able to reduce daycare down to two days a week, cutting those costs in half. And we may eliminate that next year. We have had to pull a bit from savings, mostly as a result of extra expenses–travel being the most costly. We may have to do the same for taxes–not income, but school and property. We didn’t have to do that in the past. I’m making income, but it is still all going to savings. This way, we get used to living on one salary and we save money for those unexpected expenses.
At this point, I’d feel poor if we couldn’t cover the basics–pay the utilities, buy groceries or clothes. While we might have to cut back on dinners out or activities for the kids, those feel like gravy right now.
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Having been pretty poor as a child (didn’t eat every day, etc.), it would take losing a lot to feel poor.
Feeling poorer just means that when you forgo something you want or are accustomed to buying or doing, you perceive that the reason is outside your control rather than a decision you’ve made to further your goals.
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I’d feel poor if:
I couldn’t afford to go to the doctor.
I couldn’t afford to eat varied food.
I couldn’t live in a warm, tight house.
(My wife and I have both, as children, done all 3.)
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Perhaps we mean “deprived” rather than “poor”? that is, things that cost money that we really don’t want to give up? Loosing all the things people are talking about would certainly change my life, but it wouldn’t make me feel poor. Well, except for Sam & Kai; I would feel poor if I or my children didn’t have enough to eat, a safe place to live, access to health care, and access to education.
I have another question, that riffs off the NY times article, and wether 500K is an undue hardship. If your family was making 2M a year, for 10 years, how much would you spend?
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How about qualifying for Earned Income Credit on your taxes?
Oh wait, we do.
We’ve suffered a huge loss of income in the last two years. Poor is a state of mind.
Worrying about the leaky roof, two cars with over 100k, and my husband went from a six figure income to a call center.
But still, I have a roof, even if it leaks, I have a car, even if one window is held in by duct tape, and we have jobs that will keep us in food even if we are living far below what anyone would call middle class.
The only thing I feel weird about is how other people love to now judge me or classify me based on what I can or can’t afford.
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One thing I really dislike about the current downturn is how so many people are suddenly lifelong tightwads. How many people have I heard bragging about how frugal they are, and always have been? (“I don’t count on my bonus until it’s actually in my pocket.” Puh-lease.)
These people seem to forget that I’ve known them for more than two years, that I remember them when they were talking about the “innovative” financing for their fabulous new home or their latest exotic vacation. a.k.a that I know they’re lying!!! It makes me crazy.
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Yeah, I can’t get behind this. Right now I feel rich. Before I was normal. I’m rich because I can have my milk delivered once a week. Normal is going to the store and buying it. I guess poor would be having to serve cereal with water.
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Yeah, you’re right, Wendy. There is a real difference between feeling poor and being objectively poor. Nobody should feel sorry for CEOs for feeling poor. Or for a middle class family for not being able to go the fancy gym. Really. But we’re just talking here.
Sorry about the car/roof/job, Lisa. Things are really bad right now and all employed people should be very grateful. My husband’s company laid off another 1,800 people this week. And really sorry that you’ve been attitude from people. We have one car w/100,000 miles. Someone dented our bumper last week and I don’t think we’re going to bother to get it pushed out, because the thing is such a wreck anyway.
The trick in life is to figure out how to feel rich, even though you may have just as much as everyone else. I wonder if the one good thing about a childhood in poverty is that you always feel rich later in life. Steve and I always have our years of cockroach-filled apartments in the city to remind us of how lucky we are today.
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“I have another question, that riffs off the NY times article, and wether 500K is an undue hardship. If your family was making 2M a year, for 10 years, how much would you spend?”
1. taxes (not sure how much, but it would be a lot)
2. at least $200k a year charity (between charity and taxes, we are probably down to $1 million a year)
3. $250k for a really nice house right now, plus maybe $7k a year for property tax
4. $1k for a treadmill (gym is close, but I hate walking back in the dark)
5. retirement savings ($2 million?)
6. kids’ college savings ($200k?)
7. new laptop ($400)
8. new dining room furniture ($6k)
9. $100 extra per month for eating out
10. a more generous clothing budget ($1,000 a year more would go a long way)
11. $200 more a month for my husband’s blow money, and $200 more for me.
12. $10,000 a year more for travel
13. $X to cover current standard of living
Those are the first tier items, that would actually improve quality of life, rather than complicating it. As I count it, that leaves something like a $7 million surplus over the ten years. That sounds like a lot, but $13 million has been soaked up.
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The only thing that would really bring me down would be to not be saving or contributing to retirement. I really wouldn’t mind cutting most things to the bone so long as we can save. Although never being able to buy cute new clothes for the kids would probably sadden me, too.
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Laura, I know the original article is from the NYT, but it still bothers me when people conflate “NYC life” with “urban life”. There are plenty of other cities. I live in Baltimore, and we and most of the families we know make much less than $200 K, but we are this city’s middle class.
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I think it would take a lot for me to feel “poor.” Mostly because I like to be frugal anyway. It’s my happy baseline.
I’d feel poor if we had to take in a boarder to help pay the rent. I remember doing that when I was a kid and my mom needed extra money for the mortgage. Of course, back then, I didn’t feel like we were poor. I thought it was perfectly normal. But now, it would feel like we’d crossed back over a line.
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Megan McA says your Craigslist armchair will bring you bedbugs. Just saying…
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dave s.,
I’ve felt itchy all evening after reading that MM post.
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John Scalzi on being poor.
Not being able to medevac a kid back to Germany in case of a serious condition would make me feel poor. But if our income were falling that drastically, we would be out of Tbilisi anyway.
Going back to the amount of living space we had in Munich, ca. 1000 sq ft for five people, would make me feel poor. But our housing is subsidized by the organization that sent us here, so again, we’re insulated for a while.
$2M a year for 10 years? Thinking about that shows pretty quickly why a stimulus works better if it targets people lower down on the income scale. I can think of three or four big-ticket things right out of the gate, but the marginal dollar slides pretty quickly into categories like save for this or that, invest in this or that. And especially when the financial system is out of whack, that’s just not going to help out generally.
My big-ticket items would be a house in Germany (probably Berlin area) and a house in the States (probably DC area). Then, an order of magnitude smaller, would be a family car in each country and paying off my grad school loans. After that? Savings for kids’ education, savings for retirement.
Two caveats. One is that there would probably be a lot of ancillary expenses associated with whatever kind of job pays $2M annually. And second, that my modest expectations are in themselves class markers of someone who would never expect to be in a $2M-per-year situation.
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I’d feel deprived if, say, we had to cut off our cable TV and high-speed internet. Over this past year we’ve cut back on a number of discretionary items from our budget. That didn’t make us feel poor but it has made us feel more secure, financially, as we’ve concentrated on building up our savings.
I’d feel poor if we could no longer afford our house. If we came to that point, I wouldn’t be able to afford an apartment, even, as our mortgage payments are below market rents in this town. And the waiting list for subsidized housing is scarily long.
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Laura, you’ll have to ask Julie about her successes with her recent thumbing her nose at the gym. But don’t ask Mike about it.
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I am living a lifestyle less than I grew up with as well. I’d be lying if I said it didn’t bother me a teensy tiny bit that we can’t afford a house in the area that we live in, prices are still artificially inflated here bec. of the demand of this area. We live in a 2 bedroom apartment in the suburbs not the city! My parents have a 4 bedroom, 3 bath home, massive yard fit with pool, hammock and fancy landscaping and they got it for only 40k back in the 60’s. I tell myself that things are different and it’s not fair to compare my husband to my dad bec. it’s a different economy today then it was back then.
If I had to pick one thing that would make me feel poor if we couldn’t afford it, it would be if we had to get financial aid to pay for our children to go to their private schools. We are able to thank G-d still afford the full tuition price, 15k for two kids to go this year, not including the dinner and building fund of course! That tuition is part of the reason we can’t afford to save effectively for a house unfortunately.
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