Is Your Social Class Keeping You Poor?

by Money Reasons

You’re from the wrong side of the tracks, and you know it. You know your place, and it seems impossible to escape from your working class (or lower) background. Resistance if futile, so why even try?

Every where you look it’s the same old, same old!!! Tommy is unemployed and drinking a lot more than he use to, Tammy is an unhappy welfare mom with 4 kids, one of which is having problems with drugs, and another with the law… It’s just reality that you will never have money, prestige or happiness in your life.

Not to be too condescending, but you are wrong! The answer to the question “Is Your Social Class keeping you poor?” is an empathetic but absolute NO! Why can I save this so assuredly? Because I’m living proof that you can rise to a higher social class or two, and grow your wealth in the process. So I can actually draw on my own life experience with respect to this, since I’m pretty much an expert since I already walked the walk.

I’m not going to write a book here, so I’ll summarize my thought on this to get to the meat of what someone may do to improve both your social class and grow wealth.

The first thing you need to do is believe that you can grow up to be rich (or in my case, at least better off) someday. For me personally, that state of believing happened after reading the book called “The Millionaire Next Door” (by Thomas Stanley). I wrote about this in Wealth Tip 8 – Believe Your Way to Wealth. You’ll hear some people say that it doesn’t matter, but I’m here to say it did for me (although I’m not a millionaire yet…)! This was the starting point for me in my wealth building process, and I consider it one of my first and arguably most important wealth building tools..

To be honest, there are plenty of books with a similar message… Like the following:

Think and Grow Rich, by Napolean Hill
The Richest Man in Babylon, by George Samuel Clason
The Wealthy Barber, by David Chilton
and there are plenty of other such book…

I think I was fortunate in reading “The Millionaire Next Door” first and although some believe it dry in presentation, the content that was presented while a bit scientific and statistically verbose was the perfect content for my type of mind.

Okay, belief is only part of the equation, the next part is placating your culture while still needing to live in that same culture. I found myself ignoring the most negative elements in my culture and that help, but I can only imagine that this could be very hard for others. You might want to believe, but also keep it on the down low and keep it to yourself for the most part. No reason to make yourself a target in your social setting.
It’s even easier today, if you decide to go the “slow” route to wealth. Practically all of the books above that I listed preach similar things. The most important being saving at least 10% of your income and invest that money in investments. As I said it’s easier in that most financial advisers will tell you to invest in a basket of index mutual funds (or ETFs). Then just year in and year out put that money in your wealth strategy (called your investment portfolio). I won’t go into specifics, but that’s basically the typical path, and it has worked for me so far (did I mention that I’m not a millionaire yet? lol). Okay, your mindset is now set to achieve wealth… It’s still kind of odd, and to be honest at first I didn’t totally believe it wouldn’t be possible me, but I still put in the effort. I used an excel spreadsheet for my personal finances, and that made it easier to track and plan.

Coming from the social class setting that I did, I was more focused on the income/wage potential and getting hiring aspects of a major in college than I was in following my heart. So in college, I decided to get a BS in Computer Science and to work in technology with a minor in business. This path has provided me the money stream and knowledge that helped growing wealth. This is just one path though, and although it helped, it’s not a critical element.

As for behaving class appropriate, well, even today, I’m still learning proper class etiquette, but you could probably just google it and jump start that part after you started to form some wealth. I’ll leave that for you to develop…

Well, there you have it, trust me, you can beat your the social class you were born into, and rise to a higher social class if you want to.

What social class am I in? Well, I like to consider myself a social class chameleon, and when there are just a few people I can get along in any small social group, except the top 5%. I do work around folks that are in the top 5%, and while I respect them, I always feel a bit out of place around them. I once went to lunch with a friend that was in that top 5% group, and was a little surprised when he told a waitress that I as smarter than I looked. I laughed at his complimenting insult, After thinking about it passively for years, I think he actually meant it. I’m not upset about it though, and I still get a chuckle on it. I haven’t seen that guys since he travels overseas a lot and move to a pretty richy area…

When push comes to shove, I think when all the layers are pealed back though, we are all still in the class that we were born into. This is why multi-millionaires say they are middle class… It’s because they are a product of their birth class. And in thought and reality, we all are.

Thanks for reading,

Don

P.S. One warning! I find that I have to continually learn to keep your social class progress developing in an upwards fashion. And by learning, I mean both knowledge and your environment… It’s not easy, but worth it… I hope.

What It Means To Be Lower Upper Middle Class

by Money Reasons

Yeah, I know, it a funny title “Lower Upper Middle Class“, but it’s the closest representation to a socioeconomic class that I could come up with to represent my current state.

So what does it mean to be “Lower Upper Middle Class”?

I like to think of it as being at a party where there are two connected but different rooms. Room 1 is where my middle-class friends are talking, and I’m mostly in this room. Room 2 is where some of my Upper Middle-Class friends and even family members are talking about topics I want to hear. While I want to join the conversations with my friends in Room 2, my friends in room 1 and room 2 don’t get along. So I’m standing in the doorway of rooms 1 and 2 acknowledging some of my friends in room 2 and desperately trying to listen to what they are saying while hanging out talking to my friends in Room 1 at the same time.

I guess in some ways, I don’t belong to either room. You see, I’m still in a metamorphose phase where I’m trying to grow my money to a level that I can participate in more Upper Middle-Class Activities without decreasing my net worth, while at the same time trying to resist spending money and time on some of the things that my middle-class friends are spending money on. I’m pretty much in the proverbial “Catch-22” stage in my financial life right now.

Okay, now that I explained the feeling of “Lower Upper Middle Class“, what are the other points of interest that I perceive about my current stage?

Vacations: I can afford to go on better and more vacations, including vacations overseas, but I don’t. I want to establish a more secure financial footing before I take that leap. For me, I mustn’t spend money, which in effect will decrease my wealth. This is where a dividend strategy comes into play. Read how I’m doing such a strategy for my lunches at work via my article about the Dividend Lunch Experiment. So for the time being, all my vacations are local to the US.
Community Activities: We do community activities now, especially my wife where she volunteers and does charity work for the Schools and community in general. I hope to expand my role in this area too, but for now, I continually try to think of ways to better my financial picture.
Paying for College for the Kids: This is one of the many drains I have on my paycheck. I want to fully fund my kid’s college costs. This will give them a huge head start in life. Both of my kids are doing great in school, and I’m hoping they get scholarships of some sort.
House Hunting: Currently I’m mortgage-free, but I want to upgrade to a larger house. Since I’m deal-oriented and picky, I’ll be looking for a long time. I hope the rates stay low for a long time too. It’s funny, I can afford a more expensive house, but I choose not to. Perhaps if I had just a bit more money I would take the plunge and buy a dream home…
Eating Out: This is one area in which we splurge. We go out 2 or 3 times a week to a decent restaurant, but usually, it’s a chain restaurant like Olive Garden, Red Lobster, Chinese or Mexican restaurants too. But by a large margin, we go to Panera restaurant the most. Healthy food, but affordable for the most part. (Healthy, in that I usually get the Chicken Cobb Salad with Avocado, yum!).
Cashflow constrained: Although my house is paid off, I redirect the freed-up money to my 401k, Roth IRA, and ESPP options. All three are great, but my take-home pay doesn’t go very far. I’m especially proud that I participate in the ESPP plan at work because it’s a great money hack that makes me a few extra thousand in free money, and is a forced saving mechanism. How cool is that! Read this clever way that I’m using my ESPP to fund my Roth IRA.
Fashion: The entire house buys better clothes, except me. I don’t mind though, I need to polish my look by losing extra weight anyway.
Entertainment: We do go to the movies to see interesting-looking movies, but mostly we just wait until the movies come out on DVD. We do other things too, and this will continue to expand as I develop a strategy (more than likely dividends) to fund more adventures in entertainment.

Okay, I’ve just scratched the surface of what it’s like to be “Lower Upper Middle Class”, but it’s already past midnight, so I’m going to say good night!

Bests,

Don

Am I Really In The Working Class? Ruminating On The Middle And Other Social Classes

by Money Reasons

I Just Re-categorized Myself Out of the Middle Class!

I’ve come to this conclusion because after thinking I understand what middle class is, and what it takes to be a member of it, lately I’ve changed my mind because now I’m not so sure. Typically, my mind changes when I’m doing something mundane like mowing the lawn. I’m behind the mower and WHAM, I think “Hey, I’m not really middle class, instead I’m more within the working class, and here’s why…“. My mind is evil that way, continuously raining on my parade!

To backup my new reclassification, I reference Felix Dennis, who believes that I’m not even comfortable poor! Under his definition, you need 2 to 4 million to be within the range of comfortably poor, thus meaning that I’m “uncomfortably poor“. The more I think about it, the more his argument makes sense to me!

Why I May Not Belong To The Middle Class

History! Since we are a newer country than most, we have to look at Europe and England in particular for a more true definition of what being in the Middle Class means. According to them, the middle class of yesteryear were rich merchants but not in the nobility class. Some of the merchants of the middle Class were even richer than the aristocrats. You see, to them (England in particular) the middle class isn’t the same as middle wage earners. So in their society, the new rich are more in the middle class than the nobility that fell upon hard times. Since I’m not rich, perhaps I’m not in this group! I’m sure if I lived in England, I wouldn’t be considered Middle Class.
I must work for money or else my family goes hungry. Since I have to work, doesn’t that naturally put me in the “Working Class“?
I don’t have one million dollars in net worth yet! So if I were forced to live on all my assets invested in stocks or/and bonds, I would be below the poverty level for a family of four.
I don’t have any power in my community. In my town, when I talk, nobody listens or at least goes out of their way to do so. Now if I had money to support local community goals, then people would listen, or if I created special events that benefit my local community, then people would listen.

Perhaps I Am in the Middle Class?

I have a college education, and advanced training
My net worth is much higher than average for even the middle class category. This is from years of being frugal and investing.
I usually go on a nice vacation (at least one or two a year).
My kids are in sport and will probably go to college without paying anything or taking out a loan.
I’m in a continual state of learning.
I have power within my small social groups, where my ideas are listened to and sometimes acted out. This is true among my friends and work peers.
I look middle class…

Or Am I Upper Middle Class… (not)?

Nope, I’m not even close to being in the category! Actually, I use to fancy myself being on the line between middle and upper middle classes. However, if examined my salary, I’m close to making an Upper Middle Class salary (according to some measures anyway). As for education, I only have a bachelors degree, but as I mentioned before, I’m in a continual state of learning.

I’m a home owner and I’m totally debt free. My kids have some of the finer things (my son recently got a ipod touch and soon will get a cell phone). We go on nice trips for vacations and mini-vacations.

Even with all of the points above, I know that I fall short in this group, so I won’t waste anymore time thinking about it, perhaps in future. Check out my financial pyramid for the way I define my progress…

So in the end, I guess it’s how I look at what I do and what I am. One could argue that I’m a member of all of the social classes: Working Class, Middle Class and possible the Upper Middle Class (again this is stretching it).

For more great reading material on this subject, check out Roshawn’s brilliantly written article called “The Impossible Question: Just Who Is The Middle Class?” about why it’s so hard to determine who is in the middle class and not!

Thanks for ruminating with me!