<p>Article in Monday's Wall St. Journal detailing the troubles many formerly upper middle class families are encountering:</p>
<p>Kids</a> Feel Pinch of Parents' Unemployment - WSJ.com</p>
<p>I’m having a little problem. Why can’t upper middle class families save some money? A family with an income of $550,000 can only save $250,000? And this guy worked for GE Capital? </p>
<p>What is this need to buy so much house?</p>
<p>And the cost of college is getting more ridiculous every year.</p>
<p>Good article - always a good reminder!</p>
<p>Too often people assume what is real today will be even better tomorrow and do not plan for the unexpected or ever expect it to happen. Granted FA should help out in extreme cases where circumstances change but better to plan for security then assume nothing will ever change.</p>
<p>While it was 5 years ago, before my D got to college age my husband was diagnosed with a disease that changed our future in many ways, his earning potential and ability to work a major part of that. We did what we needed to do, including moving in with family to get back on our feet, etc. We are back in our own home but very very cautious of every penny, as we need to be, so much of my advice is stemming from that perspective. But also debt is just not advisable for anyone,to get a degree you cannot get otherwise is one thing, but to get a degree from a more wanted school for more money, not advisable. Of course that argument would assume you selected your list of schools based on fit for you and that even your safeties (financial and otherwise) would be good options.</p>
<p>I do wonder at what rate tuitions can rise without something having to change. I expect at current increase rates that significant changes will have to occur in future years as I just don’t see how the current rates and expected increases can be sustainable!</p>
<p>I personally want to know why the WSJ and OP referred to someone who made 550k/year as upper-middle class.</p>
<p>The Market downer of 2000 was my fault when I got too greedy.
The Market downer of 2001-2003 was bin Laden’s fault.
The Economy collapse of 2007-2010 was the ignorance of those who were to protect us.</p>
<p>I give the $550K guy a little bit of credit; he says “I know, I know … cry me a river” at the end of the article. And he’s right – he isn’t going to get any sympathy from anybody. Frankly, I think it is a shame that Johns Hopkins ending up giving his kids financial aid. </p>
<p>Two other points struck me.</p>
<p>I would guess he is into his 50’s – why would you take on a new house with a large mortgage at that age? </p>
<p>Wouldn’t you feel an obligation to have the funds set aside for, say, an in-state public for each of your kids before you started spending $50K a year for the older ones?</p>
<p>I know the answer is what shillyshally said above - people think the good times will never end. </p>
<p>I wonder if they have any money in their retirement accounts? 800K of home equity and 250K in a college fund is not much to show for a 550K annual income.</p>
<p>“I would guess he is into his 50’s – why would you take on a new house with a large mortgage at that age?”</p>
<p>Trophy wife?</p>
<p>Shillyshally-
You are 36 yrs old and have a college-aged daughter? Really?</p>
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</p>
<p>That’s because the “class” of a person and their annual income are unrelated.</p>
<p>Class refers to the status of people in relation to others. Lower class generally perform services (laundry, open doors, drive) for upper class people. Upper class people hire lower class people to perform services. Middle class don’t hire people to do things for them, but also don’t serve upper class people. </p>
<p>By that definition, someone who makes very little but hires people to do laundry, etc actually can fall into a upper class role, at least for a little while.</p>
<p>The better term is “middle income” and 550k a year easily falls into upper income.</p>
<p>NewHope33: LOL, but it doesn’t look like it based on the accompanying picture :). His wife appears to be an attractive, middle-aged woman.</p>
<p>delamer - Sorry, my mistake … I thought that was a picture of his Mother-in-Law!</p>
<p>NewHope33: Still laughing out loud!!</p>
<p>They only mention the amount saved for college - the 250K, not their total savings.</p>
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<p>I didn’t read the article…but WHY did his kid get need based aid if his income is $550,000? Do tell…what did I miss.</p>
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<p>my mom’s 38 and I’m heading to college this year</p>
<p><em>Mr. Johnson made up to $550,000 a year, including bonuses, before losing his job in March 2009.</em>The Johnsons had stashed $250,000 away for college.</p>
<p><em>If that money isn’t tapped sooner for household expenses, it might buy two years of schooling for each of his children, Mr. Johnson calculates.</em> Further expenses such as first homes and weddings are out of the question. “They’re going to have to elope,” he says.*</p>
<p>In the summer of 2007, the Johnsons paid $1.5 million for their Fairfield home and took out a mortgage of $852,000. Mr. Johnson figures it could realistically sell for $800,000 today. Given the numbers, the family is trying to avoid moving and recently refinanced their house at a lower interest rate.</p>
<p><em>“It’s emasculating,”</em>Mr. Johnson says. “I’m supposed to be providing for them, but I can’t.”</p>
<p>Dad of 3…</p>
<p>The above doesn’t look good.</p>
<p>thumper1 -</p>
<p>The dad lost his job recently with 2 kids at JHU; his income had been as high as $550K. He also lost all the equity in his house (on paper, at least).</p>
<p>It seems to me a misuse of the FA system that someone with that financial circumstance is getting aid. This is a guy who made in a year what the average family makes in 10 years.</p>
<p>We are all so brilliant today, looking back at what others should have done yesterday. Very few of us forecast what was going to happen. This gentleman isn’t looking for sympathy, but the reality is that he probably thought he had a very secure high-paying job-as did many others. Saving 250K for college is amazing, putting a down payment of 650K is amazing. I think we saved about 1/50th of that for college. Having that high of a mortgage with that sort of income is quite reasonable. And when you’re making 550K/year–quite a bit goes to taxes, and it is possible that he hadn’t made a high salary for long. He sounds like he has been far more responsible than the vast majority of people in this downturn, at least he still pays his mortgage.</p>
<p>A classic case of people living beyond their means…</p>