What it Costs to Live Well in the South

"What it Costs to Live Well in the South" does a commendable job of analyzing what it takes to be upper-middle class in today's South.

Forbes was "not looking at an opulent lifestyle--no private helicopters, megayachts or castles in France--but, instead, at what many Americans would consider the upper middle class American dream: private schools for the kids, a large house in an upscale neighborhood, a weekend retreat, a pricey night out once a week and a couple of very nice cars." Text at the bottom of the linked article further explains Forbes' methodology.

Results Summarized
The slideshow available in the article shows detail for 12 cities in the South, including Houston, Atlanta, Charlotte, and Charleston.

"For the most part, the pattern in the South is comparable with that in the Northeast: The most expensive cities are larger and have more industry, immigration and growth. Miami and Atlanta topped the list, with Houston following close behind. The least expensive places to live well were Oklahoma City, Jackson, Miss., and Little Rock, Ark.--states that tend to be near the bottom when it comes to median household incomes, according to the U.S. Census Bureau.

What jumped out at us, however, was how pricey these cities still were for our fictional family. To be sure, while there is no city in the South that is as expensive as New York or Boston, anyone who has spent time in Miami lately--and gotten an eyeful of the local real estate prices--would not be surprised to learn that it ranks, by our estimates, as one of the most expensive cities in the South. Taking into consideration a range of factors, we determined that a family of four would need to earn about $310,000 (net of taxes) to maintain an affluent lifestyle--about the same as what it would take in Washington, D.C."

To be fair to the article...they explain their methodology at the end of it and the parameters that they use. They had to *standardize* something..and it doesn't seem as though what they chose was too far from what is true to live "well".

They took all of these components of a lifestyle - cars, vacations, private schools, vacation homes, etc - and calculated the costs of them and then added it all (+ 1% savings rate) to come up with "what it takes" to do all of these things (which are considered living well).

When I look at what they ended up with, these folks seem to be more "living well" than "rich". Additionally, someone who does live like this doesn't *think* that they are rich - driving a BMW 3 series is different than driving a 7 Series. They had median homes in their neighborhoods, not the most expensive. They don't have an apt in Manhattan, etc. It's all relative.

The article weren't saying/suggesting/offering that an "average person" lived this way. The income number was effectively the summation of all of the costs deemed necessary to "live well".


Some of their parameters:

* Family of four with one child in a private college and one in eighth grade and attending a private school.

* Fictional clan has two houses--one in a nice neighborhood and one in the country or at the beach. (More on how they chose the houses in article)

* Assumed the family made a 20% down payment on the home and took out a 30-year, fixed-rate mortgage. We did not factor down payments into our budgets, since they are one-time expenses. We used an interest rate of 5.61%, which the Mortgage Bankers Association says was the average rate for such loans at the beginning of June. Added in homeowners' insurance costs.

* We also wanted our imaginary family to have a weekend retreat. So we chose a likely location for a country or beach house (the Gulf Coast, Asheville, N.C.).

* Our family has two very upscale cars; a sporty BMW 325i sedan and a capacious Lexus RX 330 with front-wheel drive, both 2005 models.

* Since the Fictionals like to eat at nice restaurants, we figured out how much it would cost them to have dinner each week (including an appetizer, main course, dessert, a bottle of nice--though not amazing--wine and a tip) at an expensive local place. We then multiplied that figure by 52 to get the annual spending total.

* This high-income family also likes to travel. We had them take three vacations each year,

* Utility and health care numbers, which are spending estimates for households in our specified ZIP codes.

* We figured our family would send its children to private colleges, which could be anywhere in the country.

* Our "Other" number, which includes spending on clothes, cosmetics, pets and the like, is from the American Express Platinum Luxury Survey,

* Our family saves very little (1%) of its income. This may not be the most fiscally prudent way to behave, but it is the norm in this country. In fact, we were even a little generous, as according to the Department of Commerce, American households save less than 1% of their income these days.

* Finally, there were taxes.