First Person: Planning My Middle Class Breakout

Yahoo Contributor Network

A growing number of Americans now say they are part of the lower class. If the middle class is shrinking, I want it to be because more of us are climbing up the socio-economic ladder. No matter what the numbers say, I'm still planning my middle class breakout.

According to a recent piece by Yahoo Finance, the middle class is shrinking. Some question whether the middle class has fully participated in the economic recovery. With mixed definitions of what it means to be middle class in America, it's no wonder some people question their socio-economic status. I always assumed I would ascend from the middle class to at least an upper middle-class lifestyle. After the housing crisis, I am living in a lower middle-class lifestyle even though my household income falls within the upper middle-class range. If experts want to know what's really eating the middle class, they don't need to look beyond the housing bubble, student loan crisis and distrust of the stock market.

Turning our home into a rental

In order to break out of the middle class, my husband and I have to view our home as an investment. In another 5 years, we plan to have our mortgage paid off. Instead of selling our home to buy a home in an upper-class neighborhood, we plan to turn it into a rental. According to, we could get $1,300 for rent at this time. In another 5 years, the going rate for rentals may be higher. We won't rely on the rental income to pay for our new mortgage, but we will save it for our future retirement. We aren't going to worry about the fact that the resale value of our home is so low. Our home's value is in its rental potential.

Avoiding college loan debt

We know it will be difficult for our children to maintain a middle-class lifestyle if they are struggling to pay off student loan debt for decades. Instead of co-signing on student loans, we dipped into our retirement savings in our 40s to help them pay for college. Even though it may seem like a bad move, we will have more discretionary income in the future without student loan debt haunting us into retirement.

Investing on auto-pilot

A lot of middle-class people stopped trusting the stock market during the Great Recession. Although I distrust the stock market, I allow money to be automatically deducted from my paycheck and invested within a 401(k). I'm most excited about the fact that I can contribute to a Roth 401(k), which means I won't have to pay taxes on the income when I'm retired. As long as I don't have to think about my investments, I'm more at peace with my personal finances. I'm optimistic my circumstances will improve in the next two decades.

Our grandparents didn't work as hard as they did so that their descendents would descend into financial darkness. I don't like living in a lower middle-class neighborhood, but I'm willing to make that temporary sacrifice until I can afford to move up to that deluxe apartment in the sky.

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More from this contributor:

Living on the Edge of Financial Disaster

I'm Glad I Talked to a Bill Collector

Hitting my Midlife Income Plateau


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