Money Moves with G: The Middle-Class Money Trap

Key Takeaways

• A six-figure income can still leave you feeling broke: income is not the same as wealth
• "Your bills look like success": the car, the house and the vacations can hide an empty bank account
• If your employer offers a 401(k) match and you can afford it, Grafton's view is to contribute at least enough to get the full match
• Lenders look at your whole financial picture, not just your income
• Do not be ashamed to see a financial advisor, and find one who fits you
• You do not have to upgrade your life every time your pay goes up

Summary

Grafton Sizemore took on a trap he sees all the time in Hardin County: people who earn good money and still feel broke. A bonus turns into an expensive vacation, a raise turns into a bigger payment, and the bills start to look like success while the bank account says otherwise.

His message was encouraging, not scolding. You can build wealth in the middle class. It comes down to budgeting, taking the free money when it is offered, and not upgrading everything every time your income goes up.

Full Article

Grafton started with his housekeeping. In his own words on air: "I'm a team loan officer here at Motto Mortgage, NMLS 2068414." He added, "I'm not a financial planner, not an investment advisor, not a CPA," and, "This is all education. It's not quotes. When I even talk about rates and things, it's not a rate quote."

Then he got into this week's topic. "It is talking about basically when it comes to the middle class and the middle class money trap," he said, and he thinks that describes a large share of this area. It is the old "keeping up with the Joneses" problem our parents warned us about.

Six figures and still broke

"Something I wanted to get into this week is this idea that you can make a hundred, 150 or even 200K a year and you could still feel broke," Grafton said. "Because it all has to do with money management."

His example: you get a bonus, so you take the expensive vacation, or you buy everything on your wish list at once instead of spreading it out. He owned it. "I've been guilty of it," he said. Young Grafton bought what he wanted when he wanted it, and that did not change until he was in a relationship.

Your bills look like success

"It's your bills look like success," Grafton said. A nice car, a nice house, new furniture and great vacations to post on Instagram. "It looks like you've made it, but you look at your bank account and it doesn't look like you've made it."

The people he meets who are truly wealthy, he said, often do not have all of those things. They live in the house they paid off 20 years ago, or drive a car they bought new 10 years ago that now has 150,000 miles on it. "Listen, here in Hardin County, Elizabethtown, Kentucky, some of the wealthiest people wear some cowboy boots and jeans," he said. "Wealth is very different than what it looks like online."

Take the free money

You can be in the middle class and build wealth, Grafton said, as long as you make a budget and put some money away. One specific point: if your company offers a 401(k) match and you can financially do it, he said you should at bare minimum put in enough to get the full match. "It's free money. Take that money, build that wealth."

What a lender sees

Grafton brought it back to his own lane. Without talking about specific scenarios, he said lenders sometimes see people who make a lot of money and still cannot qualify, because their finances are not in order. On the flip side, someone making $40,000 a year with no debt and a great credit score can look great on paper. It may not be a million-dollar home, he said, but it can be something very feasible for that family.

"Your income isn't the same as your wealth," he said. "Income does not mean wealth."

Get help without shame

If budgeting is a struggle, Grafton said, "Do not be ashamed to go talk to a financial advisor because you're in a rough situation." Some advisors have minimums, but others will grind with you until you get where you want to be. You do not have to go to the big name in town who works with million-dollar investors. "You find somebody who fits your need, your wants, and those people are out there."

You don't have to upgrade everything

"The goal isn't to keep making more money so that you can afford more payments," Grafton said. Making more does not mean you need the nicer car, the nicer house, or, with Bourbon Local coming up, the most expensive bourbon.

He had a few practical ways to spend less on the things you want anyway. He is a credit card points guy and uses points for rooms and flights. Timing matters: in college, he and his friends booked a spring break trip on Black Friday because it was cheaper. Nate added that he and Courtney have booked trips on Black Friday more than once, especially cruises, though Disney and Universal do their own thing. The hosts agreed the whole Black Friday to Cyber Monday stretch, and the twice-a-year Prime Days, are worth planning around if you can wait.

The Money Move

Grafton was clear that this is not just a middle-class problem. You can be upper class and still be in a terrible financial situation. But for the people who make up most of our area, his message was simple: "Don't feel like you're down. Just be a little bit more disciplined and that wealth will come."

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