Self-Assessment: Poor, Middle- or Upper-Class?

Most American’s are poor by these standards, which is not necessarily bad.

I recently wrote an essay on the American class system in Catholic World Report and would like to further clarify how I understand these class distinctions:

“Today, socioeconomic class is defined not only by income or wealth but also by education, occupation, and social identity... Many Americans feel entitled to “identify” with the upper middle class through their spending habits—purchasing luxury goods, embracing trends, and maintaining lifestyles beyond their means. Despite this aspirational consumption, most Americans lack the productive assets or high income necessary to sustain such lifestyles, often relying on debt to sustain their spending habits. This disconnection between actual economic status and perceived class identity highlights the cultural power of the American Dream and the societal pressure to appear upwardly mobile while, in fact, this delusional consumer debt spending is fueling a return to greater economic disparity among the classes.”

I could write several essays on the spiritual poverty of American society. St Teresa of Calcutta did an excellent job summarizing this kind of poverty when she said, “We think sometimes that poverty is only being hungry, naked, and homeless. The poverty of being unwanted, unloved, and uncared for is the greatest poverty.”

St John Chrysostom was even more blunt when he wrote, “You consider the poor to be wretched, but I consider those who live in sin to be far more wretched," but I want to look at this problem from the standpoint of material class structure in relation to material, household responsibilities.

In joy and charity, Catholic households have an intrinsic duty to provide certain necessities for themselves and their children: housing, food, clothing, access to the sacraments, and catechetical instruction. Where I see families and individuals get into financial trouble, however, is when they confuse things that are beneficial with things that are necessary. It might be beneficial for me to own a nicer house in a nicer neighborhood and send my children to the best Catholic school in town, but these things are not necessary. We always need to figure out a way to live within our means, even if that requires us to downsize.

There is nothing wrong with being a poor family, as long as the husband is doing his best to provide and increase his skill and income and the wife is frugal with the family resources. Blessed are the poor in spirit, for theirs is the kingdom of heaven. The ‘poor in spirit’ understand that everything belongs to God and trust in Him as their ultimate Provider. Where people get into trouble is when they are unwilling to admit they are poor because they identify with a lifestyle that is beyond their means. Your parents might be middle-class, but you might be poor. There is nothing wrong with that.

We all start out poor and helpless when we are born. Part of preparing for marriage as a young man or woman is financial. Young men need to prove their ability to provide for a family on one salary, for example, before they are ready to get married. Likewise, women desiring marriage do well not to incur heavy college loans or other debt burdens in their single years. Marriage is financially demanding, but not overly so for those who practice the virtues of temperance, frugality, modesty, meekness, and humility.

My Definition of Poor, Middle- and Upper-Class

I have a simple way of determine if my family is poor, middle- or upper-class. In 20^th century America, people experienced social mobility in a way that generally corresponded to the three major seasons of life: student, parent, and elder. Most students are poor, most parents start out poor and work their way into the middle-class, and “retirees”, by my definition, are upper-class.

The distinctions below are an objective measurement that say nothing about how content you are in life. I want to emphasize that one can be content or miserable at all three levels. One can be holy or sinful at all three levels. Having said that, let me explain how I would define these three classes today:

We are Poor if we have any kind of consumer debt including credit card debt, a car loan, or student loan (we will leave mortgages out of the discussion for now).

We are Upper-Class if we own enough productive assets to generate all the income we need to live a Christian way of life that befits our vocation and state in life.

We are Middle-Class if we are free of all consumer debt but are not upper-class.

A few distinctions are necessary: first, a distinction between consumer debt and business debt. Business debt is related to productivity. As long as the net gain is positive or expected to be positive in a reasonable amount of time, there is nothing irresponsible about business debt, all things being equal. I don’t see a moral impediment to owning mortgages on rental properties, for example, as long as they are cash-flow positive or expected to be, in the long-run.

I am also not saying that it is morally illicit to have consumer debt IF the debt is needed for necessities, and you have a reasonable plan to pay it off in a reasonable amount of time (ASAP). That is a big if. My opening point was that, if you are in debt because you “identify” with being middle-class, but you are in fact poor, you are not living in reality. You may need to eat humble pie and find a way to slash your expenses. For most people that means downsizing their house and vehicle expectations, but it could be as simple as cutting out snack foods, restaurants, designer clothing, entertainment media, and private education. Homeschooling, for example, is usually the best alternative to public school for those who are poor.

Consumer debt is also on a scale. The worst kind of debt is credit card debt that you can’t pay off the same month you spent it, then auto loans, then student loans, then a home mortgage. Student loans are better or worse depending on whether your a household provider or not and whether you gained a skill through the education that enables you to make significantly more money than if you had not gone to school. Going into debt for a liberal arts college education, for example, is probably not a good idea unless you intend to earn your living as an academic. Most people can acquire a liberal arts education suitable enough to homeschool one’s own children by the age of 16, if they are diligent. A student loan amount should be reasonably proportionate to the earning power of your acquired knowledge.

I will do a separate post on mortgages because housing is its own thing, but let me mention that if you are a family with a big debt load, you should seriously consider downsizing your housing situation, as painful as that sounds. You should be able to pay for all your housing expenses including rent/mortgage, taxes, insurance, utilities and maintenance with less than 25%-30% of your primary paycheck or income source (i.e. excluding your wife’s second income).

A mortgage is not a big deal, as long as the house is modest, you make a large down payment, your total housing expenses will be less than if you were renting, and you plan on paying the mortgage off as quickly as possible. I recommend living with parents or family members until you can buy a small unit or house with cash.

Related essay: Is Consumer Debt Really That Bad?