Now I Know Where I Stand Financially. Wow.

by Darwin on September 20, 2012

One of my old favorite economics blogs Political Calculations has a neat tool that allows you to plug in your personal and family income and it spits out where you stand in relation to your fellow Americans.

I put in my numbers for both my routine W-2 income and then the total family income by adding in what I make blogging in total (since my wife is home with the kids now, so no 2nd W-2 income). Since some people that know us personally read the blog, I’m not going to divulge my exact income (which could be easily derived by giving you my % on the continuum) since that’s obnoxious. But I will say I am really surprised at where I stand. I’ll just say I don’t feel like we’re at the top, but that’s where the percentages are putting us. We are SOLIDLY middle class and we live in a slightly high cost of living area, but certainly not NYC or California coast.

I guess when I consider our spending, like a couple vacations a year, the pool we put in and the real estate investment I made last year, the ability to invest in and co-found an outsourcing company, if we were making $30K less a year, we could still live in the same house and have roughly the same lifestyle, but we don’t feel wealthy by any means. Our kids go to public school, we drive Hondas 4 and 6 years old, we don’t have expensive hobbies and we’re not exactly killin’ it with savings. Granted, I’m plowing whatever extra money I can into my Self-Directed IRA and the kids’ 529 college plans, but admittedly, many months, nothing goes in. There always seems to be a major monthly expense like a home repair, a car repair, annual pre-school payment for the little one or some other $500-$1000 expense that pops up. It’s life!

It makes me appreciate a few things:

  1. We have it really good. I don’t make $300K per year like a lot of my college buddies that went to work on Wall Street, but I still bring in enough to give us a decent lifestyle and at least statistically, in the upper end of the American earning spectrum. Higher than I would have thought.
  2. Blogging Income makes a huge difference. Even though my W-2 salary is decent, and I think having extra side income inflates our spending habits a bit, if that income went away today, we might be barely getting ahead each month (after 401(k) investments, college savings, etc.). But having the extra income on the side has provided substantial flexibility for extra vacations, paying a sitter to go out to dinner without really thinking about it, taking that trip to Disney every couple years, or any other number of things that we pretty much take for granted that we might not otherwise.  It is the difference between having very little excess free cash flow and decent free cash flow after expenses and planned savings each month.
  3. My Job is REALLY important (financially to us, not like I’m a real big deal at work). I just heard about more layoffs in my company. It’s in another area and our area is quite busy right now. Aside from that, I’m a strong performer and relatively young. But it reinforces that I really need to hang on to this job and keep kickin butt there too so I’m always viewed as an asset rather than a potential labor unit to reduce. There’s nothing to prevent me from leaving but I hate to leave when things are going well here and I like the job only to find I hate my future job. But if you get laid off, you’re unemployable at your old level – that’s how hiring managers view the unemployed right or wrong. Thankfully, I have a lot of leads on high paying jobs and what’s hot via TheLadders (it’s aweome, and FREE if you don’t already use the site). When I model our finances out to retirement, as long as I maintain my full time job and even get raises that just match inflation, we’re in good shape. But if I were laid off and had to move or take a job with considerably lower income to stay in town, our plans would change dramatically.

I guess in summary, seeing the actual data in front of me reinforced that I AM living the American dream. I probably have it better than I should since so few Americans claim to live the dream these days and I haven’t done anything that many of them haven’t.

After Seeing Where You Stand, What Are Your Thoughts?

{ 9 comments… read them below or add one }

W at Off-Road Finance September 20, 2012 at 8:55 am

Very interesting calculator. I was surprised among other things to see there are now more income earning women in the US than men. I knew about where my income stood because I worked it out for an article earlier this year. I’m at 96.3% in terms of personal income and as a family we’re at 91.9%.

Interesting that if I were a woman I’d be at 99.2% for personal income. There just aren’t that many women with six figure incomes apparently despite there being more earning income.


JT September 20, 2012 at 10:26 am

Shocking, isn’t it? I don’t make a tremendous amount of money, but I was higher than I expected to be.

This calculator seems to get something right when comparing data: ignoring age. For the most part, the problem area for income is with people 18-25, maybe 30 on the high end. I know quite a few very intelligent people graduating from very good universities with degrees that should be marketable who are finding it hard to get a job. It’s tough out there. A degree isn’t what it used to be; a degree + significant experience gets you what a degree used to get you. Employment data is backing this up – unemployment trends lower with age, which is correlated to experience.


Darwin September 20, 2012 at 10:36 pm

I would love to see the data for my age! I bet that data exists actually since DOB/SS# tied to tax returns.


Joe @ Retire By 40 September 20, 2012 at 11:36 am

The calculator is not working very well for Chrome. I’ll try with Firefox later. I know we were in the upper range before I left my job. We’re probably right in the middle now that I’m not working full time anymore. I’ve been following your blog for a couple of years now and I think you are doing a great job for your family.


Bucksprout September 20, 2012 at 3:00 pm

This is interesting. I have always been interested in knowing where I rank and where other people rank relative to their financial status.


krantcents September 20, 2012 at 7:14 pm

My future looks very bright and the present is pretty good too. I work only 22.5 hours a week and paid fairly well. In less than 5 years I retire again and have multiple income streams and no debt. No complaints!


Darwin September 20, 2012 at 10:14 pm

That’s awesome! You have a working spouse as well or pull that off all on your own?


101 Centavos September 22, 2012 at 8:36 pm

Interesting… I’m in the top range for personal income, but since we’re a single-income household, lower for families.


Wayne @ Young Family Finance September 24, 2012 at 12:05 am

While it doesn’t take into account debt like student loans, this is a nice tool for appreciating one’s income. I’m under 50%, but not impoverished. Even though it feels like I am, sometimes, when the payments go out!


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