Am I Middle Class?

The Middle class has 3 subcategories. They are Lower Middle Class, Middle Class, and Upper Middle Class.

In January 2022 Fortune magazine showed the middle class on a national scale.

Click here: Fortune Article - who is the middle-class —and how they survived during the first year of the pandemic

In order to have a better understanding of what is considered middle class, look at the table below: There are 3 subcategories of the middle class based on income for a family of three. It is used for general purposes, not to categorize people.

Middle Class Table

For example, if a married couple had one child and both spouses earned $50,000 a year combined, their income would be $100,000 per year. This would make them middle class.

You can use the Pew research calculator to determine if you are middle class. Categories can change from state to state depending on the cost of living and family size.

Some experts disagree about the classes and there is no definitive answer. Numerous factors determine class, not just income. One’s education, geographical location (city, state, neighborhood), family financial philosophy and habits, and social circles.

Because classes are too difficult to define with too many factors to consider, I am using my own parameters for the purpose of how to prosper based on basic living situations rather than income.

Working Poor and Lower Middle Class

The working poor and the middle-class work hard and long hours in order to meet their living expenses.

If they own a vehicle for transportation, it is probably old and unreliable. Qualifying for a car loan is highly unlikely.

The lower middle class have a harder time qualifying for loans. If they get a loan, it is probably a payday loan. These are loans used against their paychecks.  They use these loans to pay for obligations that they don't have enough money for. Payday loans prey on those that do not earn enough money. They can charge 300% and are predatory.

Very few have or use a budget. A budget can cause stress or anxiety when they realize they aren't earning enough to meet their needs.

When I was struggling, I didn’t want to look at my bills or know what was going on because it was too depressing.

They are more often paying fines and penalties for overdue bills or a broken headlight.

Save The Middle Class Parade

Multilevel Companies, Corporations, Entrepreneurship

MLM’s sell dreams of becoming multi-millionaires by only recruiting a few people. A typical pitch would be “this is your own business, how many businesses can you buy for… (some dollar amount they give you)?”

The cost might be affordable, but no successful business owner buys more products than they can use or sell. Many MLM's require monthly purchases that you can't use or sell fast enough. Eventually the cost will outweigh the profits.

Those that hate the MLM industry say they are ALL pyramid schemes, and that only the people at the top are making money.

The same could be said about Chief Executive Officers (CEO's) or other "C" executives within a corporation. An MLM is a corporation with the same percentage of people making it to the top.

MLM’s have no guaranteed pay or guaranteed benefits. On the other hand, if you are a company employee, you get a guaranteed income with benefits.

A weak argument for those that hate MLM's is that there are expenses that aren’t found in real businesses or jobs.

Those that hate MLM's are not familiar with the costs associated with the insurance industry. You have to pay for your own training, the cost of the test to get licensed, renewal fees for your license every few years, your appointment fees and your Errors and Omissions insurance that is required. The same could be said about real estate agents.

For most people MLM’s should be avoided. Especially if it will interfere with your ability to pay for your needs. Focus on training or education that will build skills, so you can earn a higher wage at a better job.

When an MLM Makes Sense

I have been involved in a MLM since 2001, LegalShield. As an insurance agent it makes sense to offer my clients added protection. It compliments my business.

For a small, monthly premium LegalShield can prevent a moving traffic violation fine and keep it off your record. It also offers “Will” preparation, trial defense services, letters, phone calls on your behalf and emergency services 24/7. In addition, you can get identity theft protection. You can go to my LegalShield website, if you want to learn more.

If you dream of being an entrepreneur and owning a business, know that it takes several years to build a business. It can take you anywhere from 4 – 10 years if you work it full-time. If it's part-time double that. The time it takes to succeed depends on how many hours you work in your business.  Most businesses fail. This includes building an MLM.

Middle Class

The middle class have a job and can meet their expenses without help from the government. They may have money in the bank and might be able to afford a vacation.

I read a story about a husband and wife in their fifties, who were school bus drivers; they lived frugally for years saving most of their money so that they could retire early.

The couple met with a financial advisor who was skeptical about their ability to retire early. This was based on the fact that they were school bus drivers and didn't earn a lot of money.

When the advisor looked at their investments and assets, he was surprised. They owned their home and vehicles, had little to no debt and each had savings from their retirement accounts of around 500k each. There was no question they could retire.

Income does not define wealth, but rather how much is saved and spent.

Living Below your Means and Tracking your Expenses

Tracking is keeping a record of how much money is going where. A budget determines how much is spent and on what. I recommend tracking what you spend before you budget.

I use a spreadsheet to track my expenses. Use a system that is easiest for you. I take an average of my expenses, then I compare that with the average in my neighborhood. Gas and electricity were costing me the most. My electricity was twice as much as the average.

Here is why a budget wouldn’t have worked:

  • Changing my thermostat to lower my bills doesn't fix the problem of an inefficient system.
  • The central air conditioning unit was too small for the house, making the A/C run much harder and not cooling the house.
  • My A/C was almost 50 years old and not energy efficient.

After factoring in the unit size and the energy efficiency, it would cost less to invest in a new A/C and boiler. By replacing these items and adding solar, I cut these expenses by more than half and it paid for itself in 3 1/2 years.

Normally my bill for water, trash, and sewer is $350 per quarter, but we had unusual rain and the bill was $83 the next quarter.

To lower my water and utilities costs further, I had someone create a landscape design that doesn’t need to be watered, and provides shade without interfering with the solar.

It prevents the sun from heating the inside of the house in the summer and allows the sun to warm the house in the winter. Less need to the A/C. In the winter I rarely need the heat. Sometimes it gets up to 80 degrees inside. When this happens, I open the windows instead of using the A/C.

Do you have children cranking up the heat or air, or leaving lights on? Go over the increase in the bills and deduct it from their allowance. If you do not give your children an allowance, then have them work it off.

How To Determine If I am in Middle Class

When Financial Catastrophe Hits

Most financial advisors talk about an emergency fund of at least 3 months of living expenses. Three months of living expenses should be a starting point.

I have been through 8 recessions and I can tell you that most of them were more than 3 months. The average length of a recession is 17 months, with the pandemic of 2020 being the shortest in history of only 2 months.

Prepare for recessions by having a year's worth of living expenses, food and other necessities, plus an emergency fund as a cushion for anything that breaks down and needs to be replaced or fixed.

Having additional insurance that covers appliance repair or replacement is also part of preparedness especially if you have an older home.

Those in the middle-class are more likely to experience poverty during recessions. You can minimize the effects this by being prepared.

Having a year's supply of Food and Other Necessities.

Why is food storage and having other essentials important? During emergencies store shelves are empty. It’s hard to get what you need and when you do you are paying much more.

Go through the things you use often; make a list of things you would need to have on hand and make sure you have it.

Have a variety of frozen, canned and freeze dried. If you have freeze dried food, don't forget to store enough water, especially if you live in the desert.

Frozen food lasts anywhere from 3 months to 1 year depending on what you are storing and for anything shrink wrapped the shelf life is longer. Canned food lasts up to 5 years as long as the cans aren't dented. Freeze dried can last up to 30 years. Water is needed for these items to rehydrate them.

A common mistake for those that store essentials is never using it. You want to use and rotate as needed. Do not store foods you do not eat. If you do not eat them now, you won’t eat them later.

You can save a lot of money by buying in bulk. Buy when you see it on sale rather than when you need it or worse yet when everyone needs it at the same time, you may pay triple the cost.

Instituting these practices will save you from having to rely on government welfare or other assistance.

During the pandemic those on unemployment got additional funding from the government. I was one of those.

Upper Middle Class

The upper middle class and the rich are the people who shape the politics of our country and how we live. It is the upper middle class and the rich who influence how political candidates vote. They are the ones most likely to vote and be involved in politics.

Rich vs Wealthy

People use these words interchangeably thinking they mean the same thing, but they don’t. A rich person has a great paying job that pays great money. Being rich is about income.

Nicholas Cage or MC Hammer were rich not wealthy and when the money was gone, they were broke.

Some lottery winners could be categorized this way.

Wealthy is someone that has managed their money to work for them. You can be wealthy without being rich.