Accepting different levels of wealth among friends & family

It seems like the older I get, the more I am uncomfortable with and just do not know how to handle wealth disparities between my family and our friends. We are not struggling, but we are not wealthy by Bay Area standards. I'm a SAHM and my husband makes 100k a year, we have three kids. I don't feel deprived, but we do worry about where our big expenses will come from (preschool, vacations to see extended family, healthcare, etc.), as we are still paying off student loan debt. Over the last few years I've had a harder and harder time spending time with more wealthy friends, and subsequently a harder time not feeling resentful. Friends insist they could never be a SAHM without nanny help, or complaining about how inconvenient it is to live through an expensive home remodel. Most upsetting is that my preschool aged daughter is now starting to pick up on why so-an-so has so many more toys/shoes/whatever.

I guess I'm asking, how do others deal with this? Somehow we have ended up with a high percentage of friends who have trust funds or enormous financial help from their families. Do your friends just change over the years? I want to think it shouldn't matter, but I can't help but feel resentful and frustrated. can't hang with the joneses

We have our kids in private schools and thankfully receive financial aid, otherwise we couldn't afford it. We are exposed to a wide variety of wealth from families like ours, to very successful, hardworking people, to trust fund families whose wealthy grandparents pay the tuition and buy their children expensive cars. Some of these people are my friends and I love them. I do sometimes notice the disparity between their kid's experiences and ours and sometimes wonder if my kids are missing out (skiing all winter, grand summer vacations, and expensive birthday parties), but I don't lose any sleep over it.

Having my have my own business in which most of my clientele are CEO's, surgeons, attorneys, etc.. I have become very accustomed to working with families with money, and this is what I have learned: at the end of the day people are people. They may not share our financial struggles, but they might have different struggles (e.g husband is working so much he's rarely home, they might be living in an unhappy marriage or going through a nasty divorce. But hopefully they are blissfully happy and friends should be happy for their friend's success.

Over the years, I've discovered that many of these people, some who are my closest friends, are truly delightful human beings: educated, funny, generous, and they love to enjoy life. I would encourage you to try focusing on the individual person more than what they have, and to spend more time with the truly genuine people in this group of friends that you have. anon

maybe your friends changed, but i think the issue is you. you seem to lack the gratitude for what you have and not being happy with all you have. why does it matter that your friend gets to remodel? do you want to deal with the hassle of remodeling while taking care of 3 kids? as for your preschooler, you can tell her that 'we only buy what we need' instead of focusing on the lack of money. it's a good lesson in life. there's no need for a dozen pairs of shoes. or another toy which will keep your kid occupied for a few days, then sit around. and honestly, even if i had a 9-figure bank account, i wouldn't buy my kids more shoes anyway. i never want my kids to get trapped into consumerism.

it seems like you already know how to live within your means - keep it up! don't let others distract you. my closest friends are very rich, like 1% rich. but i'm happy for their success. sure, it'd be nice to be able to travel, buy a minivan, etc,... but it's a blessing to be able to live on one income around here with 3 financially-ruinous-but-wonderful children. yes, the staggering expenses like college and healthcare are legitimately worrisome, but trying to keep up with the joneses is a worthless effort. perhaps there's a deeper reason for why you feel jealousy towards your wealthier friends, so maybe some introspection can help you determine why you feel this inadequacy. you have so much goodness in your life - i hope you'll realize that in the near-future. good luck. grateful SAHM of 3

In terms of your other questions, especially to your child, because I've talked to friends about that same concern...When my kid asks if we are rich, then I say, ''Yes, absolutely. We have everything we need and more. We are the richest people on the planet compared to 99% of the world's population. We have enough food to eat, enough for computers, new shoes, and a yearly vacation. Do some people have more? Yes, they do. But you have more than many, many others. You have a family that loves you.''

The trick of course, with that little speech is that you have to mean it. You have to really stop feeling envious about the wealth of others and start being grateful for all the things you have. Time to Grow Up

Most of our friends have significantly more than us. Most of them are very modest about it. I sometimes daydream that there are people like us out there and hope to find more of them. So, the bottom line is - is that you are not alone. I understand you and am one of you. Try to think of what is good in your life versus what you do not have. Good luck. Karen

IMHO, you do need to make some new friends. By all means keep your old ones, just limit your contact with them to the ones that don't make you uncomfortable or who you truly enjoy.

We're in the middle. We do better than a lot of our long-time friends (frankly, we're more ambitious and just think bigger) and do a lot worse than some of our tech friends who are now SVPs and General Counsels at big companies. We do dinners at one of our houses with the former and dinners in restaurants with the latter. We take the occasional trip with both -- camping or skiing locally with the former, Italy with the latter. And some we have drifted apart from because we couldn't bridge the gap. Free time is limited for all of us so surround yourself with people you feel good spending time with. This is a tough one.

Growing up, I lived in a world of privilege. Then, marriage, kids, loss of husband (doesn't matter how: loss of high-paid partner equals one much-much-smaller income), and we were sincerely broke, not well-off like you are now.

We asked for nothing from others. My wealthy family didn't like my politics (they're right-of-center Republicans, I'm a left-of-center Democrat), so, we didn't ask my wealthy family to help and they didn't offer. We made-do. For example, we were proud to made our bicycles from used parts, tuned our bicycles well, and, often, though needing paint, our bicycles rode better than the expensive ones our friends rode. Often our better-off friends came to our neat, orderly, clean, crowded home for bicycle-repair advice. In grad school, I worked nights while my kids slept, raced home, got kids to school on time, studied, picked kids up from school, made dinner (often shared with friends), and when the kids were in bed, slept for a few hours and went to work. We focused on getting done what had to be done, kept within our very limited budget, cleaned our home at the end of each month hoping to find a few dollars that might be left in a coat pocket, and ''kept our eyes on our prize.''

Friends who could respect that we did the best we could with the money we had continued to be friends; others we had known for years and had thought to be friends were uncomfortable with our financially-limited lifestyle and drifted away. My kids grew to be resourceful, inventive, (mostly) self-disciplined, pretty-successful, and parents of their own wonderful kids.

Now, years later, I've made a small fortune (emphasis on ''small'' here, because my ''fortune'' only seems to be a ''fortune'' in comparison to where I've been), own a nice home, and I can afford to help by supporting schools and music lessons for my grandchildren while my children struggle financially as young marrieds with kids. Now, I hope my kids and I will be able to teach similar lessons of self-respect to grandchildren, not false-pride based on having money and owning things.

Teach your kids PRIDE of being inventive, PRIDE of being resourceful, and PRIDE of being hard-working. Look forward to the fact that, most likely, when you're a granny you can help in a way you didn't get help, but don't help too much. Don't teach your kids that money makes people better. Proud granny

First - when your daughter notices so-and-so has 'more' of something else - talk about how different families make different choices. 'Our family likes to have lots of organic vegetables instead of lots of shoes (or a garden,or charitable donations, or college degrees, or whatever). Our family spends vacations getting to see California and our family, instead of other countries.'' Then - really believe it! Think about your choices and how they positively reflect your values (you are a SAHM instead of having two salaries, why? You invested in college loans, why? Etc)

Also - when your friends comment on their minor anguishes (eg living thru remodel) - remember we all experience pain despite our financial situations. And joy too! That is the human condition & we can empathize. And go back to #1 above to work on the jealousy of wanting that remodel.

And I am not *such* a nice person . So I have also noticed how many of my acquaintances with fancier houses or vacations -- also have a lot of debt. So when I'm really jealous, I imagine how much debt the other person has and their inner pain every time they have to pay their bills ... Saver not spender

Some would be resentful of you too I suppose and others not. I think one just needs to develop a philosophical approach, like yes so and so has a remodeled kitchen but I get to stay home with the kids. Who knows, maybe that person with the remodel home had it harder than you in another aspect of her life. My husband and I are relatively well off now, but we both grew up in modest unstable homes and worked our asses off, some friends I knew in college whose parents gave them a lot more support have less than us now but others have more.

If it bothers you that much, than yes find people more similar to you in things that bother you. For instance if all your friends want to eat at restaurants you can't afford or go on vacations that you can't then make plans with the ones who eat and vacation where you want to, but remember others may feel resentful of you too with 100k earning husband and being able to be a sahm - which seems modest to you but a luxury to many.

I think it may just be easier to remember what you do have and not worry about others - or look and see that there are aspects of their life that aren't so great even with that money because remember that money doesn't buy a happier marriage or nicer politer kids - in fact maybe the opposite. anon

Secondly, there's always a chance that the folks that do this are just insensitive and honestly might also not realize that you're not wealthy. Try to get a better feel for their motives...if you feel that they're sincerely just not aware, then perhaps you could say something like ''gee, must be nice''...or ''I certainly wouldn't know about that'' so they know that it bothers you. Real friends would try to be more sympathetic to your feelings.

Thirdly, it's very important to not allow your own feelings about this to be seen by your kids. Your kids must not be influenced by other people's economic status (or at least realize what kind of personalities that they should avoid as they get older). Don't teach them envy because you don't want their self esteem to suffer or be tied to how much money one makes. If your child says ''so and so got this toy or they get to go here'' then don't make an issue out of your own financial circumstances. Downplay the material stuff and then redirect about good personal qualities that her friend has.

On a side note, I have extended family that is very much middle class/working class and they treat MY family as if we're wealthy/privileged! They have they're own jealousies and often treat us different since we own our own home in the expensive Bay Area! It's strange to be on the other side of things when I feel pretty average financially. lisa

Think about when you are old and looking back on your life... what is really important-- having a nanny to help you be a stay at home mom?! Or knowing that you cared for your children every day and made them the focus of your world...

If you are feeling jealous and valuing more toys yourself of course your daughter will pick up on that, and have the same attitude. Go spend some time volunteering in a hospital with kids with cancer, or in a soup kitchen. Some people have all the money in the world, and they still don't seem happy... why would more money make you happy?! can't take it with you

i would say to let by-gones be by-gones in this and not worry about moving away from such unsatisfying relationships, even when they involve family (not all families stay together forever or are even close--very few in fact, in my 69 year experience).

there are many ways to reach out for new relationships w/ folks whose life-styles are more similar to yours; but even absent those (and there are no small amounts of struggle, even then), there is nothing wrong w/ having your time be more self/immediate family-centered, if that's how it shakes down. there is no social mandate to ''be connected'' to any specific degree.

especially if it involves keeping up w/ those nasty (or at least culturally different) joneses (i feel lucky that i realized long ago that that was one thing i knew i didn't want to do). doug

If your friends are good people whom you enjoy being around, and you mainly feel jealous/insecure because you have less, you should work through that stuff yourself. Stop comparing yourself to them, appreciate what you have, and realize that it's all relative. They are immersed in their culture of great wealth, and they are cutting according to their cloth.

If they are actually bragging all the time or making insensitive comments to you, then you could call them on that and remind them that you don't have the same resources they do. You could let them know that such comments make you feel bad/self-conscious/jealous/resentful, etc. They will probably be embarrassed and quickly change their behavior.

If you find that you don't really relate to them because their experience is so foreign to you, or you don't really share their values, or you think they are actually kind of obnoxious, then maybe you should look for some new friends in any social class.

I would also like to say that I come from very humble beginnings and from immigrant parents who worked to their bones to provide for me and my two brothers. My mother even had to go on welfare for awhile after my father passed leaving her to raise us all on her own. I can't help but roll my eyes at a post where in the first few sentences it is revealed that your family income is six digits. As a fellow SAHM in the East Bay, our family income is WELL below yours and we are surviving... with my son going to a coop preschool in an affluent community here in the East Bay, so believe you me, I KNOW the feeling of being around other families that are much MUCH more well off than I am.

My three year old son recently asked me, ''Mommy, why are some mommies and daddies able to buy their kids a lot of toys and you and daddy can't buy me a lot of toys?'' Here is what I told him, ''Sweetheart, there are two things your mommy and daddy believe in: One, no matter how much money anyone has it is more important to cherish and appreciate things more like the time we spend together, the fun we have, the stories we tell, and the things we already have, and when we are able to buy something new we are able to appreciate it a whole lot more! And two, some families, like ours, live on a very tight budget and have to prioritize the things we spend our money on. And I know how important toys are to you, but out of things like food, the roof over our head and toys, which do you think are the MOST important things we need to LIVE?''

He was able to answer that the food and our home were the most important... and even though he is three, I never shy away from such an adult conversation with him, b/c even at this age he is already able to recognize what is more important than material things, and even though he'll still whine about wanting more toys, I know that one day when he really understands, he'll appreciate that we are teaching him what matters most in life.

Meanwhile, I do not let others who may have more material things bother me too much, and on days when it does bother me I remind myself of what I tell my son. I try not to believe in the haves and have-nots, b/c while I have met people who live in amazing houses and have a ton of stuff, they are empty in a lot of other ways that I am not. Jennifer

It's the modern dilemma isn't it...that most people reading this have lives that are stable enough to not worry about how they'll manage food and shelter but yet many are stressed, yearning for something else. I can't imagine that the people who scolded you for not just counting your blessings (which surely you do) don't also sometimes long for more, get jealous...just a bit.

I at the moment, living outside of the bay area and I think that the extreme wealth, and the expense of living in Bay Area create a stress that isn't as palpable where I live now.

The reason the topic interested me is because I come at it from the other end. I am a SAHM with three kids and a husband who makes a good living. Very good by any standard.... I love to travel and we take good vacations, I don't worry about money day to day. Although I still worry about retirement, college... I still don't' do everything I want to do because of money. And yes when friends do a fabulous remodel and take a fabulous vacation I sometimes get lost in being covetous..... Even if I have just come back from a few days at the beach! I have to reflect that I am so so lucky, that jealousy is toxic and what's most important, love and good health aren't guaranteed at any income so best to just appreciate that which I have. And I do and that quick jab of jealousy passes. So in the end it's just being mindful really.

I am also do try to be very aware about how much I do and have compared to many friends and I try to find the balance between sharing with them...my excitement over something (a Christmas plan, a birthday idea, an upcoming vacation) or my frustration about say, needing a car repair. But I do very much modulate myself.... and I NEVER say things like.... Oh gosh the decorator put the wrong fabric on my new chair and now I have to re-do it.... or I don't know how I am going to pack for the Ski trip and go to that nice dinner and make muffins for the teachers....

I think much would be solved by a little awareness at all levels. Practicing gratitude consciously. anon

How much money is enough?

I am in a job that is very stressful and exhausting. It's a Silicon Valley tech job and I feel utterly burnt out after six years at this non-stop, always-on job and parenting two kids at the same time. The problem? It pays $300K a year. I am the main breadwinner in our house with my partner's job paying 1/3rd that amount. My question is, how much money is enough in the Bay Area? We have been, for the six years I've been at this job, saving massive amounts for retirement and kids' college, while also paying for private school in SF. We have stockpiled everything we could, knowing this job would kill me at some point and I'd have to leave it. I am at that point; I am so burnt out that I don't know if I have it in me to keep working in Silicon Valley at all. But I am terrified to quit this job, because we are afraid for our future as we have only been saving for retirement in earnest for the past six years and don't even own property. One way out of our predicament would be to leave the Bay Area, and we are very strongly considering that. But, before we move, we are wondering if it is possible to live in a top school district or pay for private school making much, much less. Can it be done? Is there such a place? (We've looked at Piedmont, Palo Alto, and other districts near to my job, but they all seem very unaffordable.) time-starved

In your case, if you are earning a lot of money in a stressful job you hate, is there any reason it wouldn't be possible for you to earn something close to that (say 70%) in a job with better working conditions? I am just thinking it should not have to be an "all or nothing choice" - either big bucks or no salary at all. If you have skills that someone is willing to pay a lot for, they must be translatable to SOME other job. I would at least try. Good luck.

There is a calculator there that will show you where you rank in wealth among the world's people. In your case, you are in the top .001% in terms of wealth. So do you make enough money? It's good that you asked that question. I hope you can find a truly satisfying answer. one of the world's wealthy

As a lifelong member of the working class I have a different perspective. My spouse makes 60K a year working 2 jobs and in the best of times I make 25K working 2 jobs (most yrs closer to 15K.) We live w/o the goodies you mentioned (the sum total of our savings is $4000 and that's the most we've ever had), my kids will have to make their way thru college the way I did, scholarships, loans and scrambling, etc, etc. Quite frankly it can really suck to have to stress about money as much as we do.

But having said that our family is not nearly as stressed as you describe. Maybe its a difference in expectations or willingness to feel satisfied. When money worries get overwhelming I don't check my bank account (that will only enflame them!); I open my fridge door and see that it's full. If hunger isn't an issue then I remember all's good and I've got more than most people on the planet. I love the Bay Area, the network of friends we have, etc, etc. We have a lovely life, not because we have ''enough money,'' but because we're able to let what we have be enough. anon

By my math, you and your partner make $400,000 together. That's a lot by most people's standards, and the vast majority of us get by on much less (and many people will post to tell you so).

The question of how much money is enough, however, depends on a number of things.

1) How much money you actually spend. It sounds like you have been saving a lot. But it isn't clear whether you've been saving $50K/spending $350 K or saving $300 K/ spending $100 K. That is going to make a big difference in how easy or hard this will be.

2) How much your current spending can be reduced. You could send your kids to public school, but would you? You say you don't own a house and that is good in terms of having the flexibility to cut costs-- the current housing market is making it extremely hard for many people to sell their homes.

3) What kind of lifestyle you want to have. This is related to #2. Public school, small house, no yard, not-so-great neighborhood, limited dining out, used car (or no car)--you can cut your spending a lot. But what are you willing to do? I live in Oakland and send my child to public school, and we are very happy.

You don't give enough information in your post for anyone on BPN to answer your question. How many kids? How much savings? What are your can't-cut-this financial obligations? How old are you? How old are your kids? What is your current budget? My point is, there is a lot of information to answer your question and we (BPN readers) don't have it.

I recommend that you hire a FEE-ONLY financial planner (the national association of personal financial advisors has a useful listing of members http://www.napfa.org/; also Brian Pon at Financial Connections Group http://www.financialconnections.com/financial-advisory- team.html is very a very sensible planner). A financial planner can help you figure out a current and possible future budgets, assess your current savings (retirement/college/other), help you decide whether you can/should buy a house, and help you figure out a plan.

In the meantime, find out if it is feasible to cut your work schedule. Maybe you could stay at your current job and work 3 days a week for $180K--if you can work out a budget that makes that work. Carrie

Montera middle school is survivable. High School is problematic but Tech isn't so bad. Housing is less than Piedmont. Then there is Berkeley with great public schools and Albany as well. Berkeley High is awesome!! Lots of choices well within your means. I suggest leaving the job based on your post. Don't let it kill you. Had a friend in a similar spot and he finally just quit and was unemployed for 6 months and then a much less stress job popped up and all is well. Best Wishes anon

We both have Ph. D.s and work in academia or non-profits, were salaries are generally low. We were able to own a house in lower Rockridge and could have probably sent our kids to Peralta (we have since moved). To own a house, we have always bought properties with in-law apartments that we have used to pay our mortgage and make ends meet. We do contribute for retirement and we don't have any debts other than our home mortgage. We just opened a savings account for our children but do not have a college account, we both come from middle families were we had to stay close to home to go to college, go to good public schools (e.g., Cal) and get grants and/or work part time--and we expect our children to do the same or they might be able to get scholarships for Ivy League universities...

And, having said that, we also have friends who make it with much less than we make and have a happy live in the Bay Area: they just rent, live in small apartments, send the kids to public school and get involved in it, etc. Making ends meet

I suggest you read Dave Ramsey's book ''The Total Money Makeover'' for some advice on how to manage your money. That will help you greatly when you go from making 400k a year to 100k.

The reality is, and you probably know this, you are going to have to make sacrifices. You are going to have to choose between a nice house, a good/private school, onice cars, neighborhood, and lifestyle.

My husband and I saved $100,000 over 4 years making between $73k and 150k. Granted, this was before we had a kid. She is still not school age so we don't have that to consider, however, with our 100k we purchased a very modest 2 bedroom, 1 bath home in Maxwell Park in Oakland. Our mortgage is $2200/month. To us, this is a FORTUNE because we rented for years at $1500/month. We don't go out to eat except the occasional lunch or dinner once a month or so. We buy premade food from Trader Joes and I take my lunch with me to work. We drive older cars that we have paid off and don't plan to buy any more until we can pay cash for them. If you do these things, you could easily still afford a private school on 100k. And you don't need to live in an expensive neighborhood if you pay for private school.

I'm guessing with a job that pays $300k many of your coworkers, peers, and friends have a lifestyle that you feel you need to have too. But your kids will be FINE if they attend a public school. You will be FINE if you don't buy property. You will be FINE if you don't eat at nice restaurants frequently or drive expensive cars. If you are going to be home with the kids anyway, you can help give them a good education to supplement what they learn at a public school which will help them excel just as well as if they were in a private school.

If you prefer public school, you can easily rent in a nice neighborhood and avoid the property issue. I have a friend that rents a 3 bedroom, 2 bath duplex in Cupertino for around $2300/month. It's a great school system and a reasonable rental rate.

My husband and I pay our mortgage and live fine on 100k/year. I work and he stays home with my daughter. And we still manage to save $500+ a month, give 10% of our income to our church, pay all the bills, and get plenty of extras here and there (nice clothes, going out once in a while). We could afford to do more, but we don't. Neither of us is burned out. It is doable. We plan to send her to a public school and supplement her education on our own. We plan for her to get loans or scholarships for college. good luck!

I recently read a book that is somewhat helpful...''If I am so smart, where did all my money go?'' For us, saving is not a problem (this book assumes you spend more than you make, which is not our challenge, luckily), but nonetheless, it was helpful to look at categories of expenses and average %'s and such...also for calculating future expenses (for us and for you...what will be the total cost of private school? what is the projected cost of college, really?) Maybe this will help you think it through?

Moving to another part of the bay area with better schools might or might not be a better option for you. For us it is not since we are lucky to have a low mortgage balance and property taxes...moving would dramatically raise both of those....higher than the cost of private school for us anyway.

A friend in the financial industry tells me that we can retire when we can live off 3% of our liquid resources...which means $30k per year for each $1M you have in the bank...which is a LONG way off (if ever) for us. Would need nearly $2M just to cover private school. Insane.

So back to the question at hand...how much is enough? I think that doing the calculations in the book mentioned above would really help you get closer to that answer as it is individual to your expenses and future plans. Different answer of course between how much is enough salary to live on vs. how much savings are enough to retire. Anon

Now listen, I am sure that you will find MANY who will rhapsodize about $ not buying happiness, etc. But the reality of life is that you need some, esp. if you want to own a house, pay for your retirement and your children's college. You have quite an opportunity here.

Now, I'm not saying that you are NOT burnt out, but do you need a leave of absence (for a month or two) or do you need a whole new career? it's amazing what a break can do to recharge you.

To answer your questions: if the 2 of you make $400K together, you CAN afford Piedmont. As for private schools: here in East Bay, you can find schools where you child can speak spanish, french, german, chinese, and even sign. Where else can you find this?!?

Hey, if you want to move, do so (more room for the rest of us!), but you need to think this out. best of luck

But what I feel you are really asking is, how to keep the same amount of money and all it's perks but stay at home.

You want to be taken care of. You don't want to be the breadwinner.

Sorry, that's not a nice response but it's really at the heart of what you are asking. You really want your spouse to make your salary, let him deal with the stress and then you can stay home but still keep the lifestyle.

You have options, get another job, get a richer spouse, more to a less affluent area, win the lottery, learn to be happy with less, keep the job and learn to deal with the stress, etc.

Figure out what you really want. There are many answers, you just have to choose. You Choose

We feel very lucky to have an annual income of a little more than $75K, and know lots of families who live on less than that -- and we feel like we live well. We have two healthy and happy kids who absolutely LOVE their education in the Berkeley public schools, a home that we love in a neighborhood with trees and gardens and other nice folks, and jobs that we care about and enjoy. We help out family in other parts, have two used cars that we don't have to use too often (we can generally walk to work), and enjoy vacations when we need them. We also have health care and always enough to eat. And we wouldn't want a fancier house or a private school education even if we could afford it.

So yes, it's entirely possible to do it on less. Just decide what's really important to you, pay for that, and let the rest go. As far as I've seen, the race to the top doesn't really make most people happy -- and once you have enough money for the real essentials, whatever you need for the rest of your happiness generally can't be bought.

It helps if you surround yourself with friends who feel the same way, because community is a great factor in balancing out those rough spots that sometimes come from living on less. set priorities and enjoy!

First of all, if one makes 400k, one is paying 50% of that in taxes. So, really, the starting pointing would be 200k in terms of available income. If the original poster were I, she would be shoveling out 3 tuitions (one college, one high school, and one middle school) to the tune of over 100k. So, let's say that leaves 90k for what? A mortgage/rental (which is going to be more expensive in the better school districts), health insurance (our Blue X PPO is running us 18,000k/yearly), my spouse's student loans (albeit at low interest but no longer deductible--a whole 'nother thread), food, clothing, shelter, car payments, and supporting a mother-in-law who was unimaginably prodigal with her windfall, but what are we going to do, let her live on the street??

So, before the poster asks (your expenses matter and inform what 400k really means) and before everybody gets into their ''rage'' mode, understand that you don't know the first thing about the expenses that beset this poster.

Really, she/he was asking for help in assessing something about which she/he was concerned or anxious.

Misericordia, BPNers, e.g. compassion. Anon

How do you thrive financially in the Bay Area?

I am looking for practical advice about how people manage to ''get ahead'' financially in the Bay Area. I look around and I wonder how people do it, because I see SAHMs, people owning $1M houses etc. and I am really curious how people thrive financially and plan for their financial futures in the Bay Area. Are lots of families really making $400k-500k a year to be able to afford to live in great school districts, buy homes and cars, go on holiday, AND save significant amounts for retirement and college? I see tons of people seeming to live better than we do in SF, Berkeley, Piedmont, Burlingame etc. And yet we are a two-income family making good corporate salaries and we feel we cannot afford a house in a good school district and still manage to save adequately for the future. We do manage to save 25% of our income for retirement and $20k a year for college, but we wouldn't be able to save like this if we had a big mortgage - and we'd have a pretty big one for a house in a good school district, even be after putting down the large down payment we've saved over 20 years of scrimping. So I guess I'd just like to know how do you do it?! Did everyone buy houses when they were really cheap? How much do you need to make to get ahead financially in the Bay Area, because we feel like we're still treading water at 40. -Need financial advice

Let's look at the numbers for a bit: assuming, conservatively that you and your husband earn $150,000 together. After tax, let's say that you take home $100,000. That would mean that you are actually saving (with 25% for savings and $20,000 for college savings) 45% of your take home. That would leave you with $4,583 per month to pay mortgage, property taxes, insurance, clothing, food, etc. No wonder you feel the pinch. Many financial advisers would suggest saving for your own retirement first and allowing your children to do what we did when going through college - borrow, get financial aid, etc. There is no shame in that. That would free up another $1,667 per month in disposable income. But really it comes down to priorities and values which are highly personal and how you want to live. I wouldn't suggest saving nothing but if you don't enjoy a little of what you earn, what happens if you get hit by a bus tomorrow? A little perspective is all. Thriving in the Bay Area

By contrast, my sister in Nevada bought a house in the last year with no family money, and just on her income from U. Nevada as an admin. assistant. She bought a short sale that was affordable, and she had first-time buyer loans for the downpayment from the City of Reno, the state of Nevada, HUD, plus last year's rebate. The loans do not have to be paid back if she stays in the house for 15 yrs. Other cities have similar programs. Her monthly payment is manageable.

I have also learned that people have their priorities and spend money on what's important to them. So while it may not be obvious where someone is cutting corners, I tend to think that most people do.

Personally, my family is fortunate to have 2 good incomes (no SAHM), a good school district, and low mortgage (we bought 10 years ago and had saved for years to be able to put a lot of money down). Yet I still shop for clothes on sale at Old Navy and Marshall's, drive a car with more than 100,000 miles, stock up when items are on sale at the grocery, and don't eat out or hire babysitters often. We save what we can each month, but it's never as much as I'd like. We do fine, but in the end, it's all a matter of priorities. . . Watch every dollar

I enjoyed living in the Bay but knew we could never stay there because we don't have #1 or #2 going on and didn't wnat to do #3 or #4. I think a big part of the growing inequality in America is going to be reflected geographically. Joel Kotkin is an excellent demographer who is one of the few voices in urban planning pointing out that, as much as we like to idealize the urban planning model of places like SF and New York, those cities are not affordable to the vast majority of Americans, many of whom move to what he calls ''aspirational'' cities (e.g., Houston) where it's still possible to be middle class without getting significant financial support from the last (our parents') generation. Sorry to be cynical; it honestly sounds like you're doing pretty darned well financially. But the Bay Area is unworkable for many people without major sacrifices. VW

That said I think most of the people I know are not very good with their money. I see friends considering private school that do not have the financial resources to do it - we make a lot more money than most of them and I know we couldn't afford it if we want to save for retirement - I think lots of people in the bay area forgo saving for the future to support the cost of living in the bay area. My last comment is to question your definition of ''good school district''. I personally think test scores are mostly an indication of the socio-economic make up of the students. As long as your kids are not in a bad school - they'll probably do well in most schools. frugal

I think it's all about choices. It sounds like you made a very sensible choice to save a lot of $ for retirement, college & for a downpayment. Good for you. Other people in your financial category, like my spouse & me, made a different choice. I own a lovely house in a nice area, that is REALLY expensive. I have a crazy big mortgage and my property taxes are $1500/month (what you save for college). Prop 13 is RUTHLESS on young couples with children. It's bankrupted our state and makes the entry to homeownership nearly impossible (hopefully at some point California taxpayers will repeal it, so everyone pays their fair share!). That aside, the other thing that drove housing prices up was the dot com boom, and subsequent sucess of Google, Facebook, etc., which unfortunately, my family did not benefit from!

As a result, we do NOT have $$ to put into savings that you do, and our college fund is paltry. The only $ we are saving is in our house. Ideal? No, obviously not. But you have to decide if you want to stay or go, and if you want to stay, how important it is to own a home, etc. Again, choices. Good luck, I look forward to the other comments on this one

The other thing to consider is that a lot of people that you see with $1M homes and expensive vacations are NOT living within their means. They can't afford their lifestyle either. not rich, not poor

Here's what I think it breaks down to: 1 - There are some who were lucky and bought early.
2 - I think there are many who have been living beyond their means. Then there are the people who bought homes they could just barely afford and are now struggling.
3 - And there seem to be just enough people who do have the $400+ salaries and can afford that extra to soak up all the available housing stock.

So that's the commiseration. On ideas:

- My husband and I (about same age as you) are renting right now - the ground level of someone elses very large house. It's a bit embarassing sometimes, not having a place to entertain, but I hold fast to living within means. We decided to only have 1 child, to reduce the college req. (but also a better fit for my temperment - probably more the driver).

- we're helping to start a charter school (Yu Ming Mandarin immersion) so that we're more flexible on house location.

- help ''create'' more good school districts. There's so much demand and yet there are these ''off-limits'' zones. Our peers aren't there so we're not there and therefore they don't improve. This takes a village and of course there's only so much time after 2 full time jobs.

- the others are political long shots.
* Change/eliminate Prop13: would get more people to potentially downsize from their homes. As a side note, it's silly that the state uses sales tax as opposed to property tax to fund operations. (property tax is deductible at the federal level while sales tax is not) It ends up being a transfer to teh Feds & other states
* reduce state payroll tax

We'll see what the new governor comes up with... same shoes

Given that I have an incomplete picture of your financial situation, and assuming you make over 200k, this is my advice: Take the down payment you've saved plus any untaxshelted retirement / college money and buy yourself a modest house while the interest rates are low and the bidding wars are manageable. thriving

My theory is that many other people don't save enough (for retirement, college, or anything else) and that they are probably living too close to the edge. I was very concerned, when we bought our house, about what would happen if one of us lost our job. That was 2004, and of course the recent recession put many families into exactly that position.

We bought a $400,000 duplex in a not-great school zone in Oakland. We used Oakland Unified School District's ''Options'' process to get our daughted into a good, but not super-coveted (i.e. hills), school. Even so, our ability to save for retirement and college has taken a hit. In addition to the mortgage, there are taxes, insurance, and maintenance. I used to save 25% of my income; it is now at 15% (after taking even more of a hit and then working back up). Our college savings are really inadequate.

There are occassional flurries of controversy on this listserve when someone asks something along the lines of ''How do you make ends meet on $100,000 per year?'' and all the people who are getting along on less get all het up about, I don't know, how it is that people can't get by on $100,000 a year. In some sense, it seems absurd, but I really think we live in an area where housing can eat up almost arbitrary amounts of money. I would love to live in Rockridge or Elmwood. Make more money, move to a better neighborhood, but have the same amount of money to pay for all your other stuff (or less), but your life is more financially precarious because of your mortgage obligation.

Bottom line: My advice is not to let your reach exceed your grasp in where you want to live. The Bay Area is snobby about schools, but there are many more good schools that make the exclusive lists. Choose a smaller home or one with income potential (duplex or cottage). And do the math before you commit, on meeting all your obligations (retirement, college, mortgage, taxes, insurance, maintenance). Carrie

I'm never quite sure how we do it, since I don't even think we have a very high income for the bay area. My husband's base salary is $140k. There have been two years when he made around $350k but there were also several years when he only made $110k and we still maintained our same living standard. In the last two months I have gone back to work which has added another $75k to our income.

I guess we wouldn't be able to live like this if we had to enter the housing market right now. We bought our first house in Rockridge ten years ago for $500k (which a the time was a lot!) and then we sold it 5 years later for $950k and then bought our present house in Lafayette for only $750k even though it was bigger and had better schools. So our mortgage payment is ''only'' $2800/month

But even so, I look around at the real estate ads, and there are multiple houses now in excellent locations that are listed for under $600k, so I don't know how people say they can't buy into a good school district.

So anyway. There it is from someone in the bay area who actually feels like she is ''making it'' even though I dont' think our incomes are extraordinarily high (many, many people I know are making more like $350k-$700k per year). Loving Live in the Bay Area

Seems like a lot of people bought homes early, have parents who have helped out or jobs that pay really well. The financial advice we were given was to save for a down payment first, then buy a house and then to start putting as much away for retirement as we could. There are loans/scholarships for kids but none for retirement. In the same financial boat

Many of the responders to the post suggested one of the ways people can afford to have a house in the Bay Area is by inheriting money, inheriting a house, or receiving a sizeable amount of money from the parents. I can't help but to feel insulted by the comment. While some people may have afforded their house this way, personally, we (husband and wife) have WORKED HARD since graduating from college (and worked during college) and have not received one penny from either sets of parents for our houses.

Here are specifics on how we did it and are doing it:

-We work for large non-profits (20 years and 15 years) and have stable employment (knock on wood). While the pay is not comparable to private companies, at least our company is fairly reliable and there has been continuous employment. Yes, we are lucky. Combined, our income might be about $200K before taxes.

-While one buys a house for a certain sum, in general, salaries increase over time, so you actually grow into your mortgage and it becomes easier to afford the mortgage.

-In some cases, if one can swing it, having a 15 year home mortgage makes sense. In the end you pay less money, but it might take a bit of struggling at first. But, once you start seeing on your mortgage statement the amount of principle you are paying off, you might be encouraged!

-We started small with a condo ($120K). Then sold it and bought a small house ($320K). Then worked our way up to a larger house ($535K). A lot of this is LUCK with regards to the economy. We bought at the right time. We are happy with our house and don't need a $1M house to be happy. continued below....

-We purchased in an area not exactly convenient to our jobs, but the houses are cheaper and you get more for your money. The neighborhood is nice and safe. While the commute is a burden, that's just the trade off we were willing to take. We still bought in a good public school district.

-We make home improvements ourselves. While the houses we purchased were not fixer uppers, we still had to do some renovations like replace the wallpaper, tile the floors, replace the sprinkler system, replace the faucet fixtures, sew curtains, and install the shower door. We also maintain the garden ourselves. We did this over a period of years and learned as we went. Yeah, it takes a lot of TIME and struggle, but this saves tons money. That's the trade off. But, we are PROUD to say we've done so many home improvements ourselves, on our very own. Both of us did them together. It's a wonderful accomplishment.

-We started having children at an older age, so we had already built a small nest egg. Grandma watches the kids during the time I am part-time at work.

-We bought/drove Honda Civics and had them for about 10-12 years. They were still going strong when we sold them. They were not fancy cars and not expensive, yet reliable. We sold them to have the latest security features (air bags) in our new car.

-We look for deals. For example, our next larger car was purchased used but again, a reliable brand. Our cars are not fancy. Our vacations are planned with last-minute deals.

-We stay at cheaper hotels/motels. Yeah, it's not the Bellagio, but the more affordable Monte Carlo hotel, Tuscany hotel (not even on the strip), or Best Western for us. Once in a while we might splurge, but not often. We'd rather save the money for the excursion itself. And for cruises, while the tours might be expensive and well planned, we look at the tour brochures the cruises offer, then do the tour on our own or find another organized tour group at the destination. You can save tons this way.

-We don't buy knick knacks. Those add up and take up space. They make it more difficult to move later, too. We do buy things that we need and might splurge once in a while on something we really want that will make us happy.

-We don't subscribe to cable or satellite TV. Honestly, we just don't have the time to watch television. We use the TV antenna, rent movies/stream from Netflix, or use Hulu.com to watch TV shows. So many TV episodes are online now so we're able to still watch our favorite shows.

All this together makes it so we are able to save each month to our tax deferred plans and afford our house. I hope this gives you some ideas. Best wishes to you. Anon

I think a lot of people lease their fancy cars, live WAAAY past their means and have a 40 year mortgage and carry a lot of consumer debt. Don't buy into the hype, it's as real as Hollywood. Maybe find a place to live that offers your kids a good public education. Might have to scale back a little on their college fund but the trade off will be worth it because as soon as they fly the coop you can move into a cheaper neighborhood and send them a little cash every month for school, that's our plan. cheapskate mom

1. At 10% down, we used some savings, some money paid from an accident caused by another party, and a sweet one-time gift of $5,000 from my parents overseas.

2. We always maintained superb credit (830 points), only spending what we can pay in full by the end of the month, making sure we don't have too many credit cards - just one for back-up in case the other one gets compromised.

3. No subscriptions, no cable TV - we don't actually want it. Netflix is great and our converter box gives us 5 channels. We talk, we don't have time for TV.

4. I love thriftshopping. What a waste of money it is to pay regular prices for clothes! I own about 6 cashmere sweaters in different colors that I bought over the years for about $5.99 each (in exc. condition, of course). Recently, I purchased 6 unique tops for dancing (Bebe, Express etc) plus a pair of brown half boots and paid $22 total at a thriftstore where everything was 30% off. My teenage daughter got herself a bunch of cool seatshirts for $1.50 each. Regular stores limit you by current fashion styles and colors and price.

5. Keep your family small! Don't go by emotion but what you are worth in income and do your math. Kids need daycare, food & clothes, braces, etc. Budget your family size within your means and based on relatives around you. We don't have any relatives in this area.

6. We love to travel and to see the most for the least we go camping and invested in comfortable camping equipment over time. For winterbreak, it's a motel. Travel is about exploring during the day, not where I am while I sleep.

7. A couple of refinances brought us extra cash for the purchase of 3 year old truck and the replacement of windows. I happily drive a 1991 Honda in great shape, which I paid off after 5 years (before we had a child). I also lowered mortgage rate and interest.

8. Select an employer with great benefits. I'm still with mine for more than 20 years. Eat healthy (I only buy organic) and stay healthy. I feel well off! Anonymous

Money Envy

I never thought I'd feel this way, but here I am. My husband's business is ending, and we're in thousands of dollars of debt. I have a decent job but it just scrapes our family by. We have a small son who wears hand me downs, and lives in a house of love but little else. Our furniture is wobbly, we've got a roof that leaks, and absolutely no money for vacations, new clothes, movies, dinners out, or extras.

I'm tired of having to make excuses when I can't go to movies or out to dinner with friends. I was never a big shopper, but it'd be nice to buy new jeans. And the hardest part for me, as a mom, is hearing about other kids' vacations, piano lessons, classes, etc. when I can barely buy gas to get to work.

I know money doesn't buy love, yet it feels like our financial boat is sinking. I guess I'm looking for some suggestions to deal with my own envy of parents whose disposable income might comprise my entire month's salary. I'm jealous, and I'm not happy about that. How do you deal? Melancholy, but not mad.

For me, when I worry about the $11,751 in debt I am, I try to remember that 1 1/2 years ago I was $60,000 in debt. When I feel unkempt in my ill-fitting jeans, and it sinks in that I don't have the money to go out and buy new ones, I try to distract myself with how adorable my child looks in her self-constructed ensembles. They are quite daring and splashy (hand-me-downs). My husband tells me every day how beautiful I am. This helps. Though I have not had a haircut since last Mother's Day, and we live in a rental house that I hate, I have my kids. I remember having money in the bank and a clean condo with a great view in San Francisco once. My shabby life with kids now is incredibly better. Changing my Perspective

We often shop second hand for our daughter. We do not eat out or go to the movies except when we get a gift certificate as a gift. I wear clothes that are several years old and we drive cars from the 80s and early 90s.

Here's also what we do. We get annual passes for the zoo and Lawrence Hall of Science. We also get scholarships for summer camps (apply early and often). We visit the public library often. We go to events at the Oakland Museum when it's free (once per month) and the San Francisco Museums (once per month free or very low cost) and we ride the bus and BART. I want to let you know that you can have really great, smart kids. You can have happy kids and you can be okay with less. And, it's really easy to compare yourself and come up short if you look at material wealth.

Recently, I overheard a parent who is a high level professional who said she would love to go back to being a cashier. She loved the job and was happy when talking to the customers that came in - she cashiered in high school and college. But she now had too many obligations.

There is envy on both sides of the fence. AND, I really understand how you feel. Occasional Envy mixed with mostly Graditude

Some of what I've done to combat this is to work with my husband to make plans and set goals to improve our financial situation. This helps, because, though change doesn't happen overnight, and we've had setbacks, at least i feel like we're *doing something.*

But, we're not at a place where we are even able to pay our bills on time yet, let alone have any disposable income to speak of, so there are times where I still feel sad and wish we had more money.

When I start to feel really blue, I work to re-direct my attitude and practice gratitude for what I DO have, which, as Anna Quindlen puts it, is ''an embarrassment of riches'' compared to what the vast majority of people in this world have. Really. We have a roof over our heads, my daughter is surrounded by love, has clothes and shoes and plenty of toys. I have clothes a running car and food to eat. I live in a beautiful part of the world where there are many wonderful things to do for FREE (some of my favorite things to do cost nothing!).

Also, my daughter gets to live with her grandma and grandpa right upstairs. I get lots of support from them when I need it, and my daughter knows she has a lot of people who love her.

Most importantly of all: I do not have to watch my child die of starvation, or disease, or grow up in a war-zone-- living with the fear that she might not get to grow up at all, and, even she does, she will likely be damaged and terrorized.

Reminding oneself of that last part can really help to put things in perspective, I find that's true for me, anyway. Anon.

I sometimes start to get depressed when I see others spending without a second thought when I have to count every dollar. But a few thoughts keep me from going down that bitter road very far. First, I don't resent rich people I know. they are usually very hard working and have made some sacrifices for their lifestyle. And because of them financial aid is available to us poorer folks.

Second, I've lived poor in third world countries. I realize our family has wealth beyond measure compared to most people in the world! I don't have to walk miles to fetch water and firewood. I don't have to sell my children as domestic servants. I don't have to prostitute to stay alive. I have a house with heat, water, furniture, appliances and 2 cars. We have extras like computers, cameras, and cell phones. I know that money anxiety is terrible, but one's absolute amount of money doesn't have much to do with one's happiness. Your RELATIVE wealth determines how satisfied you are. If everyone around you has about your same level of wealth or poverty you are a lot happier, regardless of how much that amount is. It's comparing unfavorably to others in your community that brings resentment. If you expand your concept of what is your community to the whole world, you will realize just how amazingly priviledged you are.

Third, I know dissatisfied rich people and happy poor poeple.

Fourth, I take comfort in that my enforced decreased consumption is leaving a smaller footprint on this world - America consumes about 25% of the world's resources with our lifestyle. And finally, bitterness is not good for the heart. I hope your finances improve, along with your outlook. Relatively poor, relatively rich

I don't have any real advice, except that I listen to myself when I'm in that state, and try to be compassionate. I know that when I've traveled in the past to other parts of the world, I felt I had much too much stuff. So it's really a state of mind based on what seems normal. It's transient. Love is great. It's good to have shelter, albeit leaky. And it sucks that ''everyone'' has all this stuff that we can't. Ah. It is what it is. AND I know folks who find a lot of free stuff to do around here, which is possible if you look. You could join a babysitting coop to offset the cost of going out.... Lots of luck and happiness. anon

Families we know at school assume that we can afford to send our child to the enrichment classes that their children go to, but the fact is that we just can't. We don't go on vacations and rarely eat out. There is virtually no disposable income, and I feel guilty about almost everything I buy.

Here is how I try to deal with it- I just give the impression that living the simple life is a conscious, virtuous choice. We don't have cable because we don't want our son to be exposed to commercials! We are trying to reduce our carbon footprint! We are not interested in consumer culture! All of these things are true for us, it's just that they are not always voluntary.

As for dealing with jealousy, I wish I had a good answer for that. Sometimes I feel jealousy too, especially when I visit homes that look like pages from a design magazine, or I see my son's school friends getting into a nice new car. I make an effort not to seem impressed. I just try to look at it this way- there are always people who have more than you and there are always people who have less. The families you feel jealous of also have someone to be jealous of I'm sure! It's human nature. You Are Not Alone!

It feels like your problem is not really permanent, so donC",b"t look for permanent solutions now. Your husbandC",b"s business is ending sure he will find something else eventually. And there will be time for vacation, piano lesson, and ski trips. Meanwhile try to get creative: for example my sister teaches piano lessons to a couple of kids in exchange of Mandarin lessons from these kids mom. YMCA offers a lot of classes and scholarships, so are a bunch of other programs. There are a lot of Berkeley students on Craiglist who will teach piano, tennis etc for not very much.

And yes you need, really need to keep some disposal income for yourself, just go ahead and buy these new jeans. Whether its gloom and doom all around, we are still women and need to feel like ones. Lola

What is "middle income" in the Bay area?

Does anyone know how to get an idea of what constitutes different income levels for the Bay Area (Berkeley, in particular)? We're trying to set up a budget, but it seems that our combined incomes don't cover the basics that they should. If I knew what was considered standard, or ''middle,'' or even ''middle-upper,'' etc., I'd have some context for what we're trying to do. We'll eventually look for a financial planner, but I need to do do some initial research first.

Is everyone making a ton more money than us?

Am I being totally ridiculous? I used to think my husband made a decent amount of money (about $80K, which I don't normally blab, but feel this is pretty anonymous). We (husband, baby, me) are well fed, clothed, and sheltered (tiny place, but cozy). Recently, I've been questioning whether or not he actually is doing well, in terms of salary. Friends and relatives (our age, late 20s) are buying $500K houses, nice cars, vacations. Houses in our not so nice neighbor are now selling for over $400K (we bought our house for half that a couple of years ago). How are people doing it? Is everyone just making a ton more money than us?? Please advise- am I being silly? Or do we need a reality check?? Perplexed- Where are you getting all this money??

I empathize with your comment about ''how do they do it?'' We are constantly running into fellow Berkeleyans who seem far more committed to their principles than we are - they would never work for a soulless corporation as I do, they would never send their kids to daycare, they would never send their kids to public school when private schools are so much better, etc! We, too, wonder how they do it. But most often, when we get to know these people a little better, we realize that they have lots of money from other sources, primarily well-off parents, which neither of us have. So we take it all with a grain of salt.

It IS financially difficult for a middle-class couple to make it in the bay area, and especially to achieve the dream of homeownership. You could do it, probably, but you'd have to make those sacrifices - a long commute, living in a neighborhood you find less than ideal, & possibly working outside the home - that some of our silver spoon friends would never understand. As with the rest of life, it's ''this or that, but not both.'' squeezed

As to how they are doing it, well, it's impossible to know about other people's individual circumstances but consider that given today low's interest rates and the fact that mortagage interest is deductible, today it costs about the same to buy a house than to rent (for example, that $450K house may mean a $1700 monthly payment after taxes). The same can be said about nice cars - given today's low interest rates and extended payment periods, the monthly payments can be affordable to many. Also remember that people often overspend and go in debt for things like vacations. anon

I think folks are constantly trying to 'keep up with the Joneses' & perhaps are feeling the crunch, too but don't want to show it.

PS- $80K is a very respectable salary! six figure salary & still struggling!

And lastly, I have a friend whose husband has family money and that is how they do all the vacations/home/etc. that you probably see around you. I would guess that at least some people that you are seeing have savings or money that is not related to their jobs and is contributing to an enviable lifestyle. It's hard to compare to that. I know the temptation is very real though. I know how you feel sometimes.

You are so young and doing so good....Look at other ppl, ppl who are intelligent hardworking, with good education, but things just didnt go right for them.....and are struggling...they are happy if they are able to put food on the table for thier kids. Forget about houses and cars............ I think instead of wondering why and how ppl are getting cars and vacations....Reach out to the communty, try to have compasion for ppl who are making effort and need a little boost from the fortunate ones. Be a friend to someone, Thier are a lo more things you can do rather than wonder how come...they have this and that ...and i dont.........This is greed.keep away from it.....Take care and enjoy your blessings sherry

You own a house (and therefore have to pay taxes, insurance, etc.) so things probably feel a little tight.

I just read ''The Two-Income Trap: Why Middle Class Mothers and Fathers are Going Broke'' and it really paints a stark picture of how the government considers us to be ''affluent'' but really, every penny goes to keeping the family afloat.

As to why people can afford to spend $500,000 on a house, lenders have lowered their standards. There are more no money down loans, more 80/10 loans. It used to be the rule was you should spend no more than 2-3 times your annual salary on a house. Now people spend 3 to 5 times their annual salary.

I wonder where people are getting their money, too. I think a lot of people are up to their eyeballs in debt, car loans, home equity loans, credit card debt. Some people are probably good with money, and some people just earn a lot.

I try not to compare our family with others, but its hard. We really would like a newer, bigger car (I drive a '89 Jeep and my husband drives a '98 Honda Accord) and a three bedroom house. (We have a boy and a girl and a two-bedroom house). But for us, its more important not to be in debt, have a low mortgage and to have a cash cushion.

BTW, if you want to borrow my copy of the book, email me and I will leave it out for you. pgm

I'm sure there are people out there who are earning every cent they spend, but a lot of people living the good life in the Bay Area are doing it with a little (or a lot) of help! Tax the rich!

We are a family of six (2 adults, 9yoB, 7yoB, 4yoG, 2yoG) and if I remember correctly, we made $28K last year. I know it was under $30K.

I buy all the kids clothes at Thriftown, wait, I buy EVERYTHING at Thriftown! :) Books, kitchen stuff, clothes, bedding (not blankets - we usually use sleeping bags instead of blankets), shoes, organizing stuff, dressers, bookcases, art (well, one piece i fell in love with) and do most of my clothes buying when they have their 1/2 off all clothing days. I have memorized (pretty much) the prices of all the food staples I buy and shop at Williams Natural Grocery, Trader Joes, Berkeley Bowl, Raleys, Safeway (mostly just for WIC stuff) and Costco to get the best buys. If your memory isn't that reliable (mine ONLY works for food prices :)), get a book and track the prices of all the staples you get until you *know* where they are the cheapest.

I never (well, hardly ever :)) buy processed food. I try to make my own bread, we buy little paper goods (only toliet paper which is used to supplement the cloth wipes we normally use). I make our own soap (this is REALLY simple - just melt and pour, but cheaper and cleaner than anything I've found). I water down all our liquid soaps (detergent also) and find great results watering down 1/3 soap to 2/3 water. I recycle all plastic bags and don't need to buy any as I simply use the ones I get at BB or in packaging. We have free dialup and just got cable TV (but get the $25/month one and I'm not sure if we'll keep it. Basic cable is only about $14/mo). We have 2 cars and do the maintenance ourselves - but they are easy - 1985 VW Vans.

We were incredibly lucky to buy our house before the boom (we actually bought in a buyer's market - can you believe such a thing? :)) and have recently refinanced to take $200/mo off our payments.

We have high deductibles on our cars and the house. We rarely use the heat in the winter and have no A/C. We hang our clothes to dry. We do not make toll or long distance calls - our phone bill is about $8 a month.

We do not go out for movies (I think we went to a theatre in 1996, but that would be the last time :)) and very rarely go out for dinner.

I buy all dairy, high fat, meat, selected fruits and veggies organic. We have oatmeal a lot for breakfast.

IMO, and being able to own our home makes a HUGE difference, you can live really cheaply here in the bay area - as long as you're already in a home. The biggest thing that has helped me is to ask myself before I purchase something if it is a need or a want. If it is a need, we save up for it.

Oh, and the biggest saver is probably homeschooling. Nah, the biggest saver is having bought our home in 1995. We were so incredibly lucky. I hope some of this might have helped.

Oh, I make my own tinctures (herbal remedies) and never go to the doctor, but then again, we have MediCal, so that's not too much of a help... Kathy

I think the best way to look at it is to imagine that ''Bay Area dollars'' are a foreign currency. Say the exchange rate is about 2 Bay Area dollars to one ''Other U.S. dollar''. So, if you're earning $80K here, your standard of living will probably be about the same as someone earning $40K in, say, the Midwest.

There are advantages and disadvantages to being paid in ''Bay Area dollars''. For one thing, salaries are higher here, so if you do happen to have any money left over after paying the bills ;-) , you can probably afford more luxury items like vacations or other items which are sold on a nationwide basis. Of course, there are also disadvantages, like being taxed as though you were ''upper middle class'' when you're really ''lower middle class.'' ;-/

Every now and then I think of moving... but then I ask myself, where in the world could I find another place that has such good weather, great neighbors and friends, great politics and an atmosphere of tolerance? Where could I find a better place to raise my children? So we don't have a big house with a big yard or an SUV... who cares? My children are learning to be good people. They're learning tolerance and appreciating diversity. And, they're learning the value of a dollar (Bay Area or other) and the importance of hard work. loves this ''country''

I think people who live in this area, own a house, go on nice vacations, etc. must have some sort of savings or family money they can fall back on. Or, they didn't start their adult lives with debt (school loans, car, credit card) that they're trying to pay off at the same time. Learning all the time

I buy clothes at thrift stores, consignment shops, outlets, and during the July/January sales ONLY (and that way I can indulge my shopaholic tendencies). Our cars are 13 and 7 years old (and are moderately priced). We are staunch supporters of Berkeley public schools. We only use credit cards for some vacation expenses(and agree how much to spend and by when the credit card will be paid off). We buy large appliances, etc. when stores are offering ''free interest'' and pay them off within the ''free'' time frame. We have a monthly budget and include savings as a ''bill'' to be paid up front - we also put aside every month for irregular expenses such as summer day camp, property tax, etc. Only THEN, do we have expendable cash for eating out, etc.

Some of our friends drive expensive SUV's, only buy at Nordstrom's and laugh at our ''cheapness''. But, we believe living ''below our means'' will prepare us to weather layoffs, illnesses, college tuition, and hopefully retirement. It has also been the ONLY way we have been able to deal with aging parent issues.

Being ''average'' in the Bay Area means making trade offs about what is important to you - if you are a SAHM, that is a choice that you and your husband made. To blame your husband for not making more, isn't fair in my opinion. I'm sure that he's stressed out being the sole bread winner as it is. After all, $80,000 in a GOOD salary that most would envy, its certainly a professional salary (more than TWO starting teacher salaries!) - unfortunately in the Bay Area $80,00 for a family of 4 is lower middle class. If that's not the level you are prepared to live within - you and your husband may have to consider relocating OR rethinking how important being a SAHM is to your family. Karen H.

Things we DON'T have or buy:
- fancy cars
- expensive vacations
- we have no debt other than our mortgage
- we've also decided we can't do private school
- we also get no outside help and when we got married we had absolutely no debt and about $60K combined in savings. I don't know how we do it -- like I said, I don't think our income is that high for this area, but I feel we live really well. Though when I look at what kind of house we could buy in another part of the country I do dream of moving... Anon