The Conference Board’s definition is, I believe, designed for consistency regardless of what people buy or even how much they buy:

““Households with discretionary income, as defined by the study, are those whose spendable income exceeds that held by households with similar demographic features.”

Yes, that’s a bit circular, but notice also that it refers to “spendable income,” not whether it’s actually spent.

I’ve heard that two-year reserves argument on rare occasion, but it is a way-outlier. I can tell you with great assurance that no more than a teeny tiny percentage of Americans has ever been in a two-years of reserves situation (this would NOT, and should not, include targeted funds like 401(k) or education funds).

I have had one guy walk out of a class I gave when I wouldn’t buy into that definition. But that’s one guy out of thousands and thousands of others over a 15-year period. My take is that 3-6 months in reserves is fine, and that you can even justify less if you have unused and very inexpensive credit lines with very low rates.

I don’t disagree that there’s an overextension problem out there. The big question is how widespread it is.

So true. America is about re-making yourself, always has been…but this shows how people have forgotten. Most midle class, even upper class, are living in a finacial dream world. The definition of “middle class”, traditionally, has been defined as those people who can afford to live, without income, with no change in lifestyle, for two years. How many “middle class” Americans you think can do that? I know I can’t! Yet I have a brick house with an acre of land, in a country setting. (I don’t say “own”, ’cause I don’t own it yet! No one seems to grasp that these days)

So, I would say, appearing to be middle class, is one thing, but actually being middle class is quite another. Alot of people with 2500 sq. ft. mansions are a paycheck away from penury, and worse. Bunch of fools, as always.

We need more information on this study.

The anecdotals are interesting. Get enough of them and you start figuring they can’t be ignored. Though #13 makes some pretty good observations.

#13, good points. What of course happens now is that expectations get raised, and George Will’s observation many years ago comes into play: “Americans quickly come to think of pleasures as entitlements.” No society on earth has ever turned perceived luxury into perceived “necessity” so quickly.

I’m a late-20s DINK living with my wife. My generational observations are the following: What is commonly considered to be good middle-class living is becoming extremely cheap. A Wal-Mart grocery bill could be as low as $35 per person per week for a household–and that’s staying the same with inflation. Clothing can be purchased very cheap or expensive, depending on your tastes or priorities. Certain media entertainments, which once would costs a household $1000s in appliances purchases are a given with a $80/mo cable bill, $10/mo netflix bill, a $500 computer bought 5 years ago and a TV/VCR/DVD that could be less than $100. Car prices haven’t risen much with inflation, and used cars are more plentiful and last longer.

In fact, the only a few factors seem to separate upper-middle class from “working class”: Whether a family owns their home, and in what part of town they live, and possibly, the quality of their vehicle. Class in America is becoming more about how you live and behave socially than how much money you make.

I am beginning to distrust the numbers because they are not reflecting MY reality….

Hey, I remember in the 1970s, my mother would cut dress patterns with these big paper templates to make clothes for my sister. Who the hell does that anymore??

Last week, I think, one of the Ron Paul ‘bots was hyper-ventilating about how much more flour cost today (adjusted for inflation) was than a century ago. (He had been challenged to name things that were more expensive today than 100 years ago, inflation adjusted.) He didn’t bother to mention how much more flour an hour’s wage today could buy compared to an hour’s wage 100 years ago.

Many, many people have a vested interest in having the economy be seen as being as bad as possible.

But if they haven’t figured out that supply-side tax cuts increase receipts to the Treasury, we can at least hope that they won’t make this connection either. Besides, they pretend to only go after the top 1%-5%.