Tag Archives: lower upper middle class

2014 Year End Financial Results

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So how did I do this past year, especially with respect to net worth and my “Secret Wealth Goal“?

First the good news!  Near the end of 2014, my net worth finally crossed over into the PAW (Prodigious Accumulator of Wealth) status that is mentioned in the book the “The Millionaire Next Door“.  This is the first time this has happened to me, and I have to admit I was pretty ecstatic!

Second, the even better news!  For 2014, my “Net Worth to Accumulated Salary” Ratio (again from my Secret Wealth Goal mentioned above) is now 51.43% (vs 37.40% for the end of year 2012)…. Not too shabby.  For this net worth number calculation, I exclude the equity in my house!  If I include my house, the calculation would be much higher.  Ideally, I would like to have my “net worth to accumulated salary” ratio grow to over 100%!

Having my number climb over 100% would mean that my saving and investment gains would have outpaced the total value of my accumulated salaries… and that would be extremely awesome!

Hopefully in the next 5 years I get very, very close to that 100% ratio threshold (maybe 7 years, if I put in some slack for at least 1 recession within the next 7 years…)

it was nice being a PAW, even though it only lasted for about 60 to 90 days before my portfolio pulled back a little at the end of 2014 year.  Still it was very sweet while it lasted!  I’m not far from being a PAW again, hopefully this slump in the stock market will turn positive soon and I’ll be a PAW for a longer period in 2015.  Hard to say though, this bull market has already ran for quite a long time and is sadly is getting pretty old.

Even thought I had some great financial progress for the 2014 year, in my Wealth Pyramid, I still consider myself at the lowest threshold of the “Upper Middle Class” section.  In fact, I still consider myself in the “lower upper middle class” category!

If I could increase my net worth percentile compared to the percentile of everybody in the United States by just 5%, I would then consider myself solidly in the “Upper Middle Class” area.  But I’m not there and that extra 5% move is a long jump.

Financial Pyramid

Thanks “year 2014”, while not as great as year 2013, you were still a pretty decent year overall!

Good luck in 2015,

Don

My Personal Finance Pyramid Update – Lower (Upper Middle Class)

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My Personal Finance Pyramid

If you have read this blog in the past, you know that I created a visual chart to gauge my personal finance progress as I climb a wealth pyramid that I have created.  The pyramid (based off of Maslow’s Pyramid of Needs) seemed to be a great representation of such a wealth-pursuing journey.  In many ways, it helps me visualize the various levels and created milestones for me to watch for, since I love feedback!  So without further ado, here is my update on my progress climbing my “Personal Finance Pyramid“!

I have obtained the level of Lower “Upper Middle Class” status!  sort of…

Financial Pyramid

You are probably wondering why I wrote “sort of“.

Well, during the run of the stock market after “The Great Recession”, I managed to climb up to the lower green bar of the “Upper Middle Class” status area.  But now since the stock market has dipped again, I’ve fallen in the upper portion of the Asset Accumulation level again.  Close to “Upper Middle Class”, but not quite.

Upper Middle Class is actually a tricky category to be placed in since it’s more than just wealth and income.  In my part of the country, currently I fulfill those requirements… but the standard of living is lower where I live vs a larger city like New York.  As for eduction, I believe I fulfill those requirements, but barely.  No fancy ivy league schools in my past college life.

Another reasons I consider my family “lower upper middle class“ is because we live at a more frugal state than others in my city with comparable income.  But that said, many of my neighbors make a similar amount of income, so I’m not that far off.  My house is just a little over 2,000 sq feet though, so it’s smaller than the norm is these days.

Now for the Upper Middle Class lifestyle versus my current “middle class” lifestyle.

I have and do a lot of the same things as the upper middle class does, but instead of a Lexus I have a Toyota Camry.  And instead of taking vacations overseas, I still go on entire family vacations typically to the beach.  Oh, I could afford to take overseas vacations, but I would like to build up my dividend stream first to fund such activities.  Besides, I’m still growing my Wealth Snowball that was created in the Asset Accumulation level.  I guess lower “upper middle class” would mean that I have one foot in the Asset Accumulation level, and one foot in the Upper Middle Class level.

What financial numbers does it take to be considered the Upper Middle Class?

  • Household Income of over $100,000 (or for an individual to be at or above $95,000 in year 2012).  Update (2013): I’ve recently read that a good starting number is around $120,000.
  • Net Worth of around 500k+  (at least in 2012)

Anyway, that’s my assessment of my current state.  If the market keeps dipping though, there is a good chance that I’ll slip entirely back into the “Asset Accumulation” phase.

I hope the stock market has been more gentle with you than it has with me lately!

Bests,

Don