Author Topic: Conversations with the Wealthy but Working neighbors  (Read 40418 times)

ROF Expat

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Re: Conversations with the Wealthy but Working neighbors
« Reply #50 on: November 12, 2017, 03:37:33 PM »

Right now, my working definition is: 

Having the assets to support a median lifestyle for yourself, to give your children a good opportunity to do better, and to continually improve your standard of living over time. 




I do not understand the bit about continually improving your standard of living. Are you saying that someone who is content with their lot cannot be considered rich? Someone who has a 5000sqft house needs to plan on upgrading? If you already have a maid, a gardener and nanny, you have to at least up your vacations?

ixtap,

I think the improving standard of living is an important concept for several reasons.  First, because our standard of living and our standards for wealth aren't static.  Also, because the asset level I talk about doesn't necessarily imply a particularly lavish lifestyle.  I'm calling "rich" the ability to maintain a lifestyle with a median income of $55K without working.  The 50% savings rate mostly means being able to live that median lifestyle while anticipating a continually improving financial situation and certainly without worrying about a downturn in the market.  At a 4% withdrawal rate, we're talking about $110K per year. 

A person who can permanently support a 5,000 square foot house, maids, gardeners, and nannies is almost certainly spending a lot more than the 55K or even the 110K I'm talking about.  And having the money doesn't have to mean spending it.  I referred to "having the assets"  to continually improve standard of living over time.  To my mind, that means having choices.  Having that 50% savings rate cushion might also mean living that median lifestyle, but having the ability to give substantially to charity.  Another way of looking at it would be to say that being rich means being able to save money, not having to use everything. 

I take your point about the ability to be content and not continually want more.  I think that is ultimately one of the keys to happiness. 
   

Joeko

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Re: Conversations with the Wealthy but Working neighbors
« Reply #51 on: November 12, 2017, 05:17:24 PM »
Seneca:  “What difference does it make how much there is laid away in a man's safe or in his barns, how many head of stock he grazes or how much capital he puts out at interest, if he is always after what is another's and only counts what he has yet to get, never what he has already. You ask what is the proper limit to a person's wealth? First, having what is essential, and second, having what is enough.”

inline five

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Re: Conversations with the Wealthy but Working neighbors
« Reply #52 on: November 12, 2017, 05:21:12 PM »

Inline Five, aka $8600/month poster, maybe it is worth looking at your expenses and really think about what is important to you.  I realize you live in a HCOL, but can it be possible that some of the items you attribute value to don't really provide you any real joy.  If that is the case you may find yourself much richer than you think. Just to let you know I too am a fool with an oversized house who attributed too much value to things I did not understand.  Once we have this fixer upper properly fixed up we are out of here.

We have taken a look at it but I'm not sure what else we can cut out that would have a small effect on our lives. We spend ~$3500/month including our $1000 mortgage. I wouldn't say we are in a HCOL area but I've never lived anywhere one could buy a house in a reasonable area for under $100k.

We will be moving shortly and our house payment will go up but I will say that I would much rather spend more on a house in a better areas the country (not a bigger one) than have new cars. I'm fine driving my older car but do want to live in a nicer warmer area.

I think it's tough for us to feel well off because we just don't live our lives that way. People at work are buying second homes, boats and airplanes and here I am living in my first home.

Honestly I really don't want any of that I would much rather have financial security but sometimes it can get a little old. I don't lack anything in my life except I would like to live in a warmer part of the country. I hate the cold. It will happen hopefully by next year.

GreenEggs

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Re: Conversations with the Wealthy but Working neighbors
« Reply #53 on: November 12, 2017, 05:31:17 PM »
I live in a hcol golf course/ waterfront neighborhood.  My family's been here since before the golf course & mansions, and it's been entertaining & educational to see how they live and learn about how some of them think. 

A few of them I'm friendly enough to chat a little about financial things, mainly real estate since house sales & prices are a common interest to all of us.  Also, since my dad bought some investment properties on the street years ago, while there were still reasonably affordable.  Property taxes are also high in our county, so that's often part of the conversation. 

A couple of my neighbors seem to be about at the age to consider retiring and appear to have plenty wealth, but I've mentioned retiring and they say "I'm just not sure how much we'll need to maintain our lifestyle."  I remind them that each year they continue working is "one less year" that they'll need to worry about "living"!  I understand it's wonderful to be the boss & making the big bucks, but wouldn't you rather stay at home and enjoy living? 

They seem to be caught up in a mental trap.  They've busted their butts getting to the top of the hill, and just don't know how to cash out and enjoy it all.  I do see them with their fancy stuff, and maybe they're addicted to consuming. 

One of them said he has 70 employees & was recently offered $10M for his company, and if he sold it he could still rent out the building for $40K per month.  He said he wasn't sure that was a good enough offer for the business.  I asked him "regardless of if the price is right, would that be enough for you cover any debts and have a comfortable retirement?"  He wasn't sure!  Next week he was considering buying a smaller competitor up the highway.  Jeeze!  He talks about wanting to simplify & downsize, and retire & relax, but he's just addicted to working.  I see a lot of that around here.  I feel sorry for these guys.  They've "won the game", but they just can't let go. 

Same guy told me "I used to be so quick at making decisions, but now I can't seem to make up my mind about things.".   I think it's because part of him wants to "stop" and part of him wants to "go". 

I'd hate to see it take a heart attack to help him decide it's time to stop...

Paul der Krake

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Re: Conversations with the Wealthy but Working neighbors
« Reply #54 on: November 12, 2017, 05:49:22 PM »
Inline five: I think you have a very different idea of what constitutes HCOL than most. People would kill to live on $230,000 with only a $1,000 mortgage.

inline five

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Re: Conversations with the Wealthy but Working neighbors
« Reply #55 on: November 12, 2017, 07:39:26 PM »
Inline five: I think you have a very different idea of what constitutes HCOL than most. People would kill to live on $230,000 with only a $1,000 mortgage.
EnjoyIt was the one who called it a HCOL area, not me.

FireLane

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Re: Conversations with the Wealthy but Working neighbors
« Reply #56 on: November 12, 2017, 08:35:04 PM »
My wife and I have a household income of around $230k. After taxes, deductions etc we only see at best $8600/month.

While that sounds like a lot of money it really isn't anywhere near being "wealthy" or "rich". We are most solidly middle class and our home is valued around $200k, my car is 22 years old hers is 7. No kids no debt etc.

My income is similar to yours. Sorry to inform you: we're both rich.

Inequality is fractal. No matter how much money you make, you can always convince yourself you're not "rich" when you see people making way more than you ever will. Compared to almost everyone I know in real life, I'm doing very well, and even I regularly ask myself how anyone can afford to buy a house given the real-estate prices in New York City.

Nevertheless, the fact remains that $200K a year is stratospherically high compared to the vast majority of human beings. We're in the 1% globally, and in or very near the 1% in America, the richest country in the world. I don't think there's anything inherently wrong or shameful about that, but you should acknowledge your privileged status and own up to it.

Undecided

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Re: Conversations with the Wealthy but Working neighbors
« Reply #57 on: November 12, 2017, 08:43:06 PM »
My wife and I have a household income of around $230k. After taxes, deductions etc we only see at best $8600/month.

While that sounds like a lot of money it really isn't anywhere near being "wealthy" or "rich". We are most solidly middle class and our home is valued around $200k, my car is 22 years old hers is 7. No kids no debt etc.

My income is similar to yours. Sorry to inform you: we're both rich.

Inequality is fractal. No matter how much money you make, you can always convince yourself you're not "rich" when you see people making way more than you ever will. Compared to almost everyone I know in real life, I'm doing very well, and even I regularly ask myself how anyone can afford to buy a house given the real-estate prices in New York City.

Nevertheless, the fact remains that $200K a year is stratospherically high compared to the vast majority of human beings. We're in the 1% globally, and in or very near the 1% in America, the richest country in the world. I don't think there's anything inherently wrong or shameful about that, but you should acknowledge your privileged status and own up to it.

I think this disregards the point others have made about income vs. wealth. You have relatively high income, to be sure, and it’s fine to recognise and own up to that (although I’m. It sure when and why anyone needs to “own up to” their income other than to the tax authorities). If you live reasonably, then after a full career making that kind of salary, you may be rich. But the income alone doesn’t do it. If a person’s first job out of school pays $180k, but that’s also the amount of his or her student loan debt, it’s not like showing up to the first day of work means he or she is suddenly rich.

Cpa Cat

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Re: Conversations with the Wealthy but Working neighbors
« Reply #58 on: November 12, 2017, 09:37:37 PM »
Well if they receive that income passively without working yes they are well off. For the working slobs, not so much. That paycheck stops when you stop.

What gave you the impression that self-employed means passive? In my example, they work for themselves. I'm sure they work very hard for their $250,000. And they're in the top 1% of earners in the state. But they, like you, think they are not rich.

But I have another client who's a hairdresser making $30,000 per year. She pays all her taxes and maxes out her IRA and has nice apartment and a dog and nice clothes and has fun with her friends.

It's about waste. People who are in the top 1% of earners and are still broke are broke because they waste their money, not because they're poor.

Granted, I agree they aren't wealthy. They have 0 wealth. They have negative net worth. But that doesn't mean they aren't spending $200,000 per year (assuming they actually pay their taxes). The hairdresser is wealthier than they are. But she's not rich.

I used to be deluded like some folks here. I thought $250,000 was "middle class." I referred to myself as middle class on that income. I called myself middle class while outspending 95% of the population and still building wealth. But that was an error. I was full of BS.

My wife and I have a household income of around $230k. After taxes, deductions etc we only see at best $8600/month.

While that sounds like a lot of money it really isn't anywhere near being "wealthy" or "rich". We are most solidly middle class and our home is valued around $200k, my car is 22 years old hers is 7. No kids no debt etc.

I think it's kind of gross to look at $8600 (after taxes, health insurance, retirement savings, ESOP) and say "Oh, I'm not rich at all. Totally middle class." You need some perspective on how normal people live. If you live in a house that cheap, have no debt, drive old cars, and have no kids, then you must be building wealth at a huge rate (50% after tax savings rate, if I read your other post right).

Middle class people live like you do, but without the luxury of $8600/mo after taxes. So in that sense, you "look" middle class. But you do not have a middle class income. Normal middle class people don't save $4000 per month (not counting retirement savings).

And that's great. Embrace it. But don't imagine you're a struggling middle class hero, experiencing an average, middle class financial life.

I actually had another client who made $500,000/yr tell me he was middle class. Oh sure, he had negative net worth. Owed the government a huge amount, had cleaned out his retirement savings on some ridiculousness or another, was house poor, had terrible credit, and a whole host of other financial problems. But really... when does it get stupid to call yourself "not rich." Do you really figure that guy is on par with all the other working slobs?

Knapptyme

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Re: Conversations with the Wealthy but Working neighbors
« Reply #59 on: November 12, 2017, 09:51:34 PM »
My wife and I are "rich" by most standards. We are so loaded, I quit my job to be a SAHD. We're headed on a family vacation (paid for by CC rewards for normal spending) over Thanksgiving Break. She's still a teacher.

This past Saturday, since we are so wealthy, and it was mildly cold in our house because the heater doesn't kick on until it's 65o F inside, I had a fire going for her when she woke. Then we sat around for most of the day enjoying a peaceful, relaxing day. We went for a bike ride, read books, played with the kids, cooked and ate good food.

Filthy f*cking rich on roughly 55k gross annual salary.

We visit and have family in the Bay Area and can sympathize with HCOL struggles, but why all the complainypants about rich, wealthy, middle-class, or whatever? Huge student loans don't force oneself into current poor choices on inflated incomes. I would surmise that half of the wasted money is on conspicuous consumption a la economical car driven 25,000 miles annually. Or bargains on unnecessary upgrades or toys (my brother bought a nice, used, speed boat this past summer, which then required a dock, a lift, a trailer, and a place to store it for the winter, not to mention the gas, maintenance, and winterization each year). My wife and I discussed in private how his wife basically sentenced him to five more years of work on top of the ten he needed to achieve FIRE so she can maintain their lifestyle inflation. (He never wanted a speed boat.) He pulls in at least double, if not triple, what we do.

My SIL would likely classify her family (with my brother and nephews) as middle class. They are not even the family in the Bay Area or some other HCOLA.

nereo

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Re: Conversations with the Wealthy but Working neighbors
« Reply #60 on: November 13, 2017, 06:10:59 AM »
I've been reading this thread and have found it chalk-full of wisdom nuggets about our perceptions of wealth and what it means to be "rich".

@ inline five; please, please consider for a minute that this very blog was aimed squarely at families like yours: household that earn substantially more than the median $54k/year, yet they still do not consider themselves wealthy.  A full case-study may be incredibly enlightening (though ego-bruising), particularly since you've said "...we have taken a look at it but I'm not sure what else we can cut out that would have a small effect on our lives."  On the surface and with limited information you seem to be crushing it, saving a whopping $4k/month.
I also get how its hard to feel wealthy when those around me are spending so conspicuously.  I've lived in SF and DC and watched - sometimes with envy - as friends and associates purchased their 7-series BMWs and flew up to Whistler-Blackcomb for a ski-weekend (staying of course on-resort). Their spending seemed to be in another world compared to me, yet they talked about it as if this is what "normal" people did. But its also a disservice to the hundreds-of-millions of actual middle class Americans form whom the idea of a second home or a personal aeroplane is about as achievable as you or I paying for a weekend in space. Further, those added expenses don't make their owners significantly more happy.

What you see around you with coworkers buying their vacation home and luxury cars doesn't tell the whole story.  Most are carrying substantial debt or leveraging their future - see CPA Cat's stories for a few examples. My father was a well-paid physician (now retired) a little over a decade ago they had to restructure their 40-doctor private practice to reduce debt to be stable long-term.  It shocked me how many of those physicians (all earning >$100k/year) could not afford even a 10% one year pay cut, despite the outward appearance of living like a successful upper-middle class citizen.

Jenny1974

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Re: Conversations with the Wealthy but Working neighbors
« Reply #61 on: November 13, 2017, 07:01:32 AM »
We will make over $300K this year in a LCOL area and I don't feel rich.  Not matter how much I make, I will never stop scrutinizing our spending or living without a budget.  I'm just not wired that way.  Of course, my inclination to not feel rich may have to do with the fact that we certainly don't spend $300K a year.  We probably live off maybe a 1/3 of that . . . probably less . .  and the rest goes straight to the investments.

Camarillo Brillo

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Re: Conversations with the Wealthy but Working neighbors
« Reply #62 on: November 13, 2017, 07:22:41 AM »
Interesting thread.  I make $800K+ a year and save/defer over $500K of that.  We have deliberately chose to live in a very low cost area in a higher-middle class neighborhood.  My wife and I each drive 2009 cars with over 100K miles on them and our boys never attended private schools.  From all appearances, we're average for our area, and few would consider us rich or wealthy. 

And you know what, there are times where it really pisses me off : - ) 

Acquaintances flaunt their spending trying to show everyone how wealthy they are, when I can tell that they're barely treading water.  I would like to slap them alongside the head and say "hey you dipshit, if you quite spending your $$ and started saving it instead, you could retire like I will next year with nearly $10M banked." 

The funny thing is that my older son started college this year and he occasionally points out how wealthy his new friends are because they have vacation homes or muscle cars.  I think he gets it, though, because he's a huge saver and is on track to have $50K accumulated by the time he graduates.  He's already at $30K.

scantee

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Re: Conversations with the Wealthy but Working neighbors
« Reply #63 on: November 13, 2017, 07:39:27 AM »
We will make over $300K this year in a LCOL area and I don't feel rich. Not matter how much I make, I will never stop scrutinizing our spending or living without a budget.  I'm just not wired that way.  Of course, my inclination to not feel rich may have to do with the fact that we certainly don't spend $300K a year.  We probably live off maybe a 1/3 of that . . . probably less . .  and the rest goes straight to the investments.

Wealth isn't a feeling. It really doesn't matter if you feel rich, you are rich by almost any conceivable standard.

Jenny1974

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Re: Conversations with the Wealthy but Working neighbors
« Reply #64 on: November 13, 2017, 07:51:35 AM »
We will make over $300K this year in a LCOL area and I don't feel rich. Not matter how much I make, I will never stop scrutinizing our spending or living without a budget.  I'm just not wired that way.  Of course, my inclination to not feel rich may have to do with the fact that we certainly don't spend $300K a year.  We probably live off maybe a 1/3 of that . . . probably less . .  and the rest goes straight to the investments.

Wealth isn't a feeling. It really doesn't matter if you feel rich, you are rich by almost any conceivable standard.

True statement.  I'm not sure why it makes me very uncomfortable to call myself "rich".  I'm not sure I'll ever be at a place where I'm comfortable with that label . . .for whatever reason.

ixtap

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Re: Conversations with the Wealthy but Working neighbors
« Reply #65 on: November 13, 2017, 08:10:07 AM »
Once upon on a time we used the phrase "independently wealthy" to refer to the fabulously rich who did whatever they wanted and never worried about running out. Somehow, a large number of people now seem to think that is the only kind of rich there is.

starguru

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Re: Conversations with the Wealthy but Working neighbors
« Reply #66 on: November 13, 2017, 08:54:20 AM »
Quote
True statement.  I'm not sure why it makes me very uncomfortable to call myself "rich".  I'm not sure I'll ever be at a place where I'm comfortable with that label . . .for whatever reason.

I can think of a few reasons:

1.  (Liberal) political discourse tends imply that the rich are "bad".  They either didn't work for it, or don't want to share it, or had every advantage in becoming it, or got lucky, which is unfair to those who are not it, and they should be ashamed of themselves.  You don't want to think of yourself like that (and nor should you). 

2.  There are shades of rich.  300k is a huge income that should provide anyone who makes it ample opportunity to both enjoy life materialistically and save money.  But 300k is not so much money that if that earners buys all the things society tells them they should buy (big house, luxury cars, fancy foods, jewelry, vacation homes,  country clubs, etc...) they will have a lot left over.  Also, 300k is a lot less than people who are "more rich".  It's nothing to the Mitt Romney or Bill Gates or Warren Buffet types.  There is a fundamental difference between a high earner and someone with actual wealth who can live off that wealth indefinitely, never having to worry about money.  For most 300k/yr earners, the lifestyle shuts down if the income spigot is turned off.  For "more rich" people that is less the case.  How can someone be "rich" if it could all go away if something happens to the income? 



solon

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Re: Conversations with the Wealthy but Working neighbors
« Reply #67 on: November 13, 2017, 08:58:46 AM »
This weekend I plugged our numbers into the calculator on the Washington Post website, mentioned upthread. We came out above middle class. I called the family in and showed it to them and explained that "this is what rich feels like." And "we are obscenely wealthy". They informed me we are not obscenely wealthy. Maybe we're doing better than some, but there are a lot of people doing much better than us too. Well, I tried.

starguru

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Re: Conversations with the Wealthy but Working neighbors
« Reply #68 on: November 13, 2017, 09:04:15 AM »
We will make over $300K this year in a LCOL area and I don't feel rich. Not matter how much I make, I will never stop scrutinizing our spending or living without a budget.  I'm just not wired that way.  Of course, my inclination to not feel rich may have to do with the fact that we certainly don't spend $300K a year.  We probably live off maybe a 1/3 of that . . . probably less . .  and the rest goes straight to the investments.

Wealth isn't a feeling. It really doesn't matter if you feel rich, you are rich by almost any conceivable standard.

I don't think that is true.  The word "rich" does not come with a clear, agreed upon, definition in financial terms.  It's subjective until people agree on what it means, so it might as well be a feeling.  To most people it means "anyone who has more than me". 

Moreover, 300k in income is not enough, by itself, to be "rich", whatever that means.  A doctor that recently graduated with 500k in debt, who shows up for work is not rich on his/her first day just because his/her income crossed some arbitrary threshold. 

YttriumNitrate

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Re: Conversations with the Wealthy but Working neighbors
« Reply #69 on: November 13, 2017, 09:06:04 AM »
This whole discussion reminds me of MMM's post on hedonic adaptation, and how it results in just about everyone thinking they are middle class.

http://www.mrmoneymustache.com/2011/10/22/what-is-hedonic-adaptation-and-how-can-it-turn-you-into-a-sukka/

It's no surprise that a person living in a $3 million dollar Palo Alto house will think of themselves as middle class. They have adapted to an environment of high wealth, and there are people with much much more than them in their environment, so clearly they are not the ones who are wealthy.

On the other end of the spectrum, in a rich country it's easy to forget that someone making and spending $32,000 a year is in the top 1% of earners.
http://www.investopedia.com/articles/personal-finance/050615/are-you-top-one-percent-world.asp

Undecided

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Re: Conversations with the Wealthy but Working neighbors
« Reply #70 on: November 13, 2017, 09:25:53 AM »
Once upon on a time we used the phrase "independently wealthy" to refer to the fabulously rich who did whatever they wanted and never worried about running out. Somehow, a large number of people now seem to think that is the only kind of rich there is.

I think of “rich” as a top-tier subset of “independently wealthy,” actually. That’s the problem with using terms for meanings beyond the specificity of their definitions. If you mean “we” to mean U.S. society generally, while I don’t know when “ once upon a time” was, your described usage doesn’t mirror my own feeling (and while I’m only in my early 40s, I was raised by my grandparents, so I think my understanding of terms is relatively well informed by how they were used by at least some working-class northesterners from “the greatest generation”).
« Last Edit: November 13, 2017, 09:28:22 AM by Undecided »

Dances With Fire

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Re: Conversations with the Wealthy but Working neighbors
« Reply #71 on: November 13, 2017, 09:41:42 AM »
My wife and I have a household income of around $230k. After taxes, deductions etc we only see at best $8600/month.

While that sounds like a lot of money it really isn't anywhere near being "wealthy" or "rich".
We are most solidly middle class and our home is valued around $200k, my car is 22 years old hers is 7. No kids no debt etc.

I truly am a little shocked at the replies being posted here, especially on this forum that focuses a lot on frugal living, saving, and LBYM...(Though I probably shouldn't be "shocked" at all.) Many on this board take home half of this amount and STILL feel FI or even fully FIRE, compared to their neighbors, co-workers, etc.

Sure, YMMV, but seriously...Don't "feel" "wealthy" or "rich??" I was unemployed and on the verge of HOMLESSNESS in my youth...Today, we are "Rich" and "wealthy" beyond our wildest dreams... Just my 2 Cents, If you want to see "just getting by" or POOR, I can show you countless families in our area...Wealthy? Damn straight I feel lucky, blessed, thankful, and yes, wealthy...

DumpTruck

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Re: Conversations with the Wealthy but Working neighbors
« Reply #72 on: November 13, 2017, 09:59:12 AM »
I already feel guilty for making low 6 figures.

It's far more money than I need.

How do you guys justify paying the government that much money? I guess for those that support the consumerist government agenda of endless ever expanding GDP trading shared resources for vast wealth of a few at the expense of our beautiful environment it's not a worry.

Metta

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Re: Conversations with the Wealthy but Working neighbors
« Reply #73 on: November 13, 2017, 10:05:00 AM »
We will make over $300K this year in a LCOL area and I don't feel rich.  Not matter how much I make, I will never stop scrutinizing our spending or living without a budget.  I'm just not wired that way.  Of course, my inclination to not feel rich may have to do with the fact that we certainly don't spend $300K a year.  We probably live off maybe a 1/3 of that . . . probably less . .  and the rest goes straight to the investments.

I find this fascinating. I also scrutinize our budget and our investments, but doing so makes me feel rich. It reinforces that I am no longer drowning in debt and have no debt whatsoever. Not having to pay anyone back is enough to make me feel rich. But then when I go to my net worth statement, I am overcome with how wealthy we are. When I get depressed, playing with our budget and net worth statement is what I do to make myself happy again.

It wasn't always this way. I used to cry every week when we had our budget discussion. It seemed hopeless. I wanted to kill myself. Since avoiding the budget discussion and killing myself were both off the table, I chose to make budget days also dessert days so that I could deaden the pain with some chocolate. It was a fattening couple of years as we got out of debt.

Last year (the last year before I FIREd) we made together about $125,000 which is a heap of money. But I felt rich when we had a combined income of $65,000 and had paid off all the debts except the house. Now that we have mondo huge investments and can still afford to put away 1/3 of our income while bringing in about half of our previous income and I am free to do whatever I want with my time, that's just amazing!

I feel so lucky and so blessed by the good fortune to be born where and when I was, to have the health to work hard, to have a sensible partner who helped me get out of debt and put away money. I am rich and I feel it. It's just odd that I feel so wealthy with less income than you do.

ReadySetMillionaire

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Re: Conversations with the Wealthy but Working neighbors
« Reply #74 on: November 13, 2017, 10:33:40 AM »
Count me as another poster who is fascinated by people on this forum with 2x or 3x my family's income and not feeling rich. My wife and I make about $110k jointly and we feel unbelievably wealthy.

Just this year, that income allowed us to pay for our wedding, pay a down payment for a new car, pay the out-of-pocket expenses for my knee surgery, pay for our honeymoon, pay to be in a couple weddings, pay off her remaining balance on her car loan ($3,600), pay the remainder of her private student loans ($4,400); all while living in a very comfortable 1,100 square foot home with a finished basement, pay for SlingTV and internet, pay about $100-200 month going out for dinner or drinks, etc.; AND all while saving about $30k for retirement.

Next year on a similar income we are hoping to save about $50,000 ($36,000 to 401ks, plus employer matches, plus $6,750 to HSA, plus IRA contributions)...which is almost what the median household in America earns.

Maybe this is because my brother and his genuinely only earn slightly above the median household income, so that gives me some perspective, but I just don't get how you could make six figures, follow a frugal lifestyle, and not feel pretty damn good about your income situation.
« Last Edit: November 13, 2017, 11:04:21 AM by ReadySetMillionaire »

NeonPegasus

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Re: Conversations with the Wealthy but Working neighbors
« Reply #75 on: November 13, 2017, 10:46:27 AM »
My daughters (10, 7 and 4) have asked if we are rich.

I first say, no, "we" are not rich. You guys are poor, though you are wealthier than your peers (they save half their allowance and are making a nice stash).

Then I say, your dad and I are rich. We earn more than 95% of other Americans. We are wealthier than 99% of the people in the world. There is no measure by which we can say we are not rich, no matter how we subjectively perceive ourselves. We are incredibly lucky and while we have worked hard, the accident of our births (location, race, families) has more to do with our success than we'd like to admit.

I don't want my daughters to think that the lifestyle they live is anything but amazing. They have never had a need that I haven't been able to fill. They have never had to wait to get a new pair of shoes or ever worried about eating, having clean water or power. If I don't buy them an ipad, it's because I don't believe in buying one for them, not because we can't afford it. Hopefully, by teaching them how exceptional their lives are, they will be more sympathetic to those who do not have the same advantages.

nereo

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Re: Conversations with the Wealthy but Working neighbors
« Reply #76 on: November 13, 2017, 10:50:36 AM »

How do you guys justify paying the government that much money? I guess for those that support the consumerist government agenda of endless ever expanding GDP trading shared resources for vast wealth of a few at the expense of our beautiful environment it's not a worry.
what.... exactly are you suggesting here?  Tax fraud? Intentionally earning less so the government gets less revenue?  I have no idea where this is supposed to lead.

ixtap

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Re: Conversations with the Wealthy but Working neighbors
« Reply #77 on: November 13, 2017, 10:51:37 AM »

How do you guys justify paying the government that much money? I guess for those that support the consumerist government agenda of endless ever expanding GDP trading shared resources for vast wealth of a few at the expense of our beautiful environment it's not a worry.
what.... exactly are you suggesting here?  Tax fraud? Intentionally earning less so the government gets less revenue?  I have no idea where this is supposed to lead.

I believe it was more of a drop out suggestion.

DumpTruck

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Re: Conversations with the Wealthy but Working neighbors
« Reply #78 on: November 13, 2017, 11:00:45 AM »

How do you guys justify paying the government that much money? I guess for those that support the consumerist government agenda of endless ever expanding GDP trading shared resources for vast wealth of a few at the expense of our beautiful environment it's not a worry.
what.... exactly are you suggesting here?  Tax fraud? Intentionally earning less so the government gets less revenue?  I have no idea where this is supposed to lead.

Exactly your latter point, earning as little as possible, once your bases are covered. If my company offered me a raise right now I would refuse it. In fact my former boss offered me double why i currently make (but would have to move to Texas, gross) and I refused it. My intent is to cover my minimal bases and then reduce my income as much as possible. I'm pretty close.

Metta

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Re: Conversations with the Wealthy but Working neighbors
« Reply #79 on: November 13, 2017, 11:00:58 AM »

Maybe this is because my brother and his wife are genuinely poor, so that gives me some perspective, but I just don't get how you could make six figures, follow a frugal lifestyle, and not feel pretty damn good about your income situation.

I wonder if that it what it is with me as well. My sister is truly poor, as well. Perhaps people who don't know poor people and their struggles in a close intimate way are led to delusions about their own level of wealth.

talltexan

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Re: Conversations with the Wealthy but Working neighbors
« Reply #80 on: November 13, 2017, 11:01:59 AM »
Amen to peer pressure. Spending a lot of time on here makes me feel like I need to save more.

nereo

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Re: Conversations with the Wealthy but Working neighbors
« Reply #81 on: November 13, 2017, 11:19:05 AM »

How do you guys justify paying the government that much money? I guess for those that support the consumerist government agenda of endless ever expanding GDP trading shared resources for vast wealth of a few at the expense of our beautiful environment it's not a worry.
what.... exactly are you suggesting here?  Tax fraud? Intentionally earning less so the government gets less revenue?  I have no idea where this is supposed to lead.

Exactly your latter point, earning as little as possible, once your bases are covered. If my company offered me a raise right now I would refuse it. In fact my former boss offered me double why i currently make (but would have to move to Texas, gross) and I refused it. My intent is to cover my minimal bases and then reduce my income as much as possible. I'm pretty close.
I'll choose to earn less if it comes with more flexibility or time, and in fact part of our FI strategy is to go to part-time contracts as we 'glide' into full FIRE over a decade plus.
BUT - it would be pretty hard for me to refuse more money for the same amount of effort.  While I'm not enamored with what our federal government currently spends our money on, I'm not convinced that less tax revenue would change that. If anything it seems that the military will be funded regardless and the programs I'd most like to see funded are/will on the chopping block whenever revenue is an issue. ::shrug::

Undecided

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Re: Conversations with the Wealthy but Working neighbors
« Reply #82 on: November 13, 2017, 11:30:34 AM »
Count me as another poster who is fascinated by people on this forum with 2x or 3x my family's income and not feeling rich. My wife and I make about $110k jointly and we feel unbelievably wealthy.

Just this year, that income allowed us to pay for our wedding, pay a down payment for a new car, pay the out-of-pocket expenses for my knee surgery, pay for our honeymoon, pay to be in a couple weddings, pay off her remaining balance on her car loan ($3,600), pay the remainder of her private student loans ($4,400); all while living in a very comfortable 1,100 square foot home with a finished basement, pay for SlingTV and internet, pay about $100-200 month going out for dinner or drinks, etc.; AND all while saving about $30k for retirement.

Next year on a similar income we are hoping to save about $50,000 ($36,000 to 401ks, plus employer matches, plus $6,750 to HSA, plus IRA contributions)...which is almost what the median household in America earns.

Maybe this is because my brother and his genuinely only earn slightly above the median household income, so that gives me some perspective, but I just don't get how you could make six figures, follow a frugal lifestyle, and not feel pretty damn good about your income situation.

The way I see it (and obviously there are a lot of views on these questions), you're describing being "affluent." You are paying for a nice lifestyle from ongoing earned income, whereas the "rich" or "wealthy" have assets that themselves support some nice lifestyle. Having a high income is fortunate, but to call it "being rich," disregards an opportunity to make valid distinctions between different states of being (for whatever uses these terms are really being employed for---which in many cases is probably nothing more than for expressions of jealousy or fostering class warfare).

Context is everything, of course, and when the term "rich" is used within a first-world society, I think it is generally used as a relative demarcation within that type of society---the notion of getting people to consider themselves in the context of the world at large, while a very valid perspective and an important reminder, is just not the same context in which the term is used for what I perceive to be its typical purposes.

DS

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Re: Conversations with the Wealthy but Working neighbors
« Reply #83 on: November 13, 2017, 12:03:08 PM »
An important and overlooked aspect of MMM's message is having a rich inner relationship with the self, which is more powerful than the richness income will provide (insert peace fingers) and available after a certain level of basic needs are met. When you have this relationship with the self, you will look around and say you are rich no matter what anyone around you is earning, doing, etc. :)

inline five

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Re: Conversations with the Wealthy but Working neighbors
« Reply #84 on: November 13, 2017, 12:05:50 PM »
If you must work for your money, you're not rich.

If other people work and you get paid, you're rich (assuming a middle of the road lifestyle or above).

inline five

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Re: Conversations with the Wealthy but Working neighbors
« Reply #85 on: November 13, 2017, 12:09:46 PM »
An important and overlooked aspect of MMM's message is having a rich inner relationship with the self, which is more powerful than the richness income will provide (insert peace fingers) and available after a certain level of basic needs are met. When you have this relationship with the self, you will look around and say you are rich no matter what anyone around you is earning, doing, etc. :)

More feel good BS.

You can have inner peace and live in a van, are you rich? Hey if it makes you feel better to tell yourself you are go for it.

I came out of college in 2003 making about $12,000 a year. I know what it's like to not have a bunch of money and constantly worry about that next pay check. It's a big motivator for me now. I try to only buy things that make me money not cost me money.

DS

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Re: Conversations with the Wealthy but Working neighbors
« Reply #86 on: November 13, 2017, 12:18:16 PM »
More feel good BS.

You can have inner peace and live in a van, are you rich? Hey if it makes you feel better to tell yourself you are go for it.


If it makes you feel good to spread negativity into others' lives, don't go for it.

I said once a certain level of needs are met. I've lived on next to nothing as well. In 2014 I hiked the entire Appalachian Trail with only the belongings on my back and 0 net worth. Richer than sitting under the fluorescent lights surrounded by people buying into illusions will ever be.

nereo

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Re: Conversations with the Wealthy but Working neighbors
« Reply #87 on: November 13, 2017, 12:19:12 PM »
An important and overlooked aspect of MMM's message is having a rich inner relationship with the self, which is more powerful than the richness income will provide (insert peace fingers) and available after a certain level of basic needs are met. When you have this relationship with the self, you will look around and say you are rich no matter what anyone around you is earning, doing, etc. :)

That's a good reminder DS.  Once basic needs are met we can search out the next expensive trinket or do things which enrich our lives and the lives of others. The 'greatest generation' felt lucky to be solidly middle class on what amounts to about $28,000/year (real-adjusted). We do not need 5x or 10x that to be equally happy.  Food is cheap, shelter has kept pace with inflation and basic travel is far less than it has ever been.

EnjoyIt

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Re: Conversations with the Wealthy but Working neighbors
« Reply #88 on: November 13, 2017, 12:28:50 PM »
I've been reading this thread and have found it chalk-full of wisdom nuggets about our perceptions of wealth and what it means to be "rich".

@ inline five; please, please consider for a minute that this very blog was aimed squarely at families like yours: household that earn substantially more than the median $54k/year, yet they still do not consider themselves wealthy.  A full case-study may be incredibly enlightening (though ego-bruising), particularly since you've said "...we have taken a look at it but I'm not sure what else we can cut out that would have a small effect on our lives."  On the surface and with limited information you seem to be crushing it, saving a whopping $4k/month.
I also get how its hard to feel wealthy when those around me are spending so conspicuously.  I've lived in SF and DC and watched - sometimes with envy - as friends and associates purchased their 7-series BMWs and flew up to Whistler-Blackcomb for a ski-weekend (staying of course on-resort). Their spending seemed to be in another world compared to me, yet they talked about it as if this is what "normal" people did. But its also a disservice to the hundreds-of-millions of actual middle class Americans form whom the idea of a second home or a personal aeroplane is about as achievable as you or I paying for a weekend in space. Further, those added expenses don't make their owners significantly more happy.

What you see around you with coworkers buying their vacation home and luxury cars doesn't tell the whole story.  Most are carrying substantial debt or leveraging their future - see CPA Cat's stories for a few examples. My father was a well-paid physician (now retired) a little over a decade ago they had to restructure their 40-doctor private practice to reduce debt to be stable long-term.  It shocked me how many of those physicians (all earning >$100k/year) could not afford even a 10% one year pay cut, despite the outward appearance of living like a successful upper-middle class citizen.

Nereo, I think you hit the nail on the head.  I see so many physicians around me who waste their earnings away.  It is a shame because I think if most docs were not living paycheck to paycheck they could rally together and fight for their rights as opposed to just accept what the government and insurance forces unto them.  Imagine if half the docs in this country were willing to forgo a few months of wages to negotiate a better deal for themselves. I would forgo 3 months wages instantly just to get rid of patient satisfaction surveys which studies show actually harms patients.

Inline five, I too will double down on you posting a case study and let the others have a wack at your budget.  You would be surprised how much you can learn just by putting everything in writing. A few years ago I was going to post a question non bogleheads and ready to lay out all of our finances.  I stayed up probably later than I should one night and put everything together.  By the end of the process I learned so much about myself, our spending, our future projections that I didn't even end up posting anything.  My family is so much better off because of it. Give it a try.


DumpTruck

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Re: Conversations with the Wealthy but Working neighbors
« Reply #89 on: November 13, 2017, 12:29:54 PM »
An important and overlooked aspect of MMM's message is having a rich inner relationship with the self, which is more powerful than the richness income will provide (insert peace fingers) and available after a certain level of basic needs are met. When you have this relationship with the self, you will look around and say you are rich no matter what anyone around you is earning, doing, etc. :)

More feel good BS.

You can have inner peace and live in a van, are you rich? Hey if it makes you feel better to tell yourself you are go for it.

I came out of college in 2003 making about $12,000 a year. I know what it's like to not have a bunch of money and constantly worry about that next pay check. It's a big motivator for me now. I try to only buy things that make me money not cost me money.

hehee, i'm laughing as I read this, planning on leaving my cushy 6 figure office job and sell all my belongings to live in a van full time. I used to also be concerned about money but my level of worry about it was directly proportional to the amount of things that I wanted.

NoraLenderbee

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Re: Conversations with the Wealthy but Working neighbors
« Reply #90 on: November 13, 2017, 12:33:55 PM »

More feel good BS.

You can have inner peace and live in a van, are you rich? Hey if it makes you feel better to tell yourself you are go for it.


I wasn't going to say anything, but now you've earned it.
Quote
After federal, state, local, and 401k you're down to roughly $120-$130k. Minus insurance, ESOP etc. and you lose even more.

Our insurance/medical costs are under $2k/yr for the two of us and housing net is around $6k (of which about $12k is mortgage minus $6k pay down so net of $6k). My wife does an ESOP with the 10% deduction post tax.

Are we rich? Absolutely no way,

Your post-tax, post-401k income is almost equal to my gross salary. Let's take that only 120K number and subtract a generous 20K for insurance and ESPP. Your medical and housing are 8 K per year. You presumably have no car loans. What the hell are you doing with the other $92,000 per year? Why do you act like it's so tough for you?

Facepunch for attitude.

ReadySetMillionaire

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Re: Conversations with the Wealthy but Working neighbors
« Reply #91 on: November 13, 2017, 12:38:32 PM »
The way I see it (and obviously there are a lot of views on these questions), you're describing being "affluent." You are paying for a nice lifestyle from ongoing earned income, whereas the "rich" or "wealthy" have assets that themselves support some nice lifestyle. Having a high income is fortunate, but to call it "being rich," disregards an opportunity to make valid distinctions between different states of being (for whatever uses these terms are really being employed for---which in many cases is probably nothing more than for expressions of jealousy or fostering class warfare).

Context is everything, of course, and when the term "rich" is used within a first-world society, I think it is generally used as a relative demarcation within that type of society---the notion of getting people to consider themselves in the context of the world at large, while a very valid perspective and an important reminder, is just not the same context in which the term is used for what I perceive to be its typical purposes.


More feel good BS.

You can have inner peace and live in a van, are you rich? Hey if it makes you feel better to tell yourself you are go for it.

I came out of college in 2003 making about $12,000 a year. I know what it's like to not have a bunch of money and constantly worry about that next pay check. It's a big motivator for me now. I try to only buy things that make me money not cost me money.

I think both of these posts are generally pessimistic and lack perspective if you think, for instance, that I'm not rich compared to the general population. You've really isolated yourself in some first class suburbs if you think my situation (generally described above) doesn't make me rich.

Again, to use my brother and his wife as an example, their gross income is probably $70k. They have to rent a house because they can't afford to buy one. My brother's wife has massive student loans and spends every weekend doing softball pitching lessons to make ends meet. Their budget is so tight they have to call my mom for money for $250 visits to the vets for their dogs. They've even called me asking for $5 so they could buy pasta at the grocery store. Their budget is on a shoestring, and they are one accident away from everything falling apart.

Meanwhile, next year, my wife and I:

-Will make about $110k
-Will save about $45k for retirement
-Will have decent health insurance coverage (we get to pick between our two professional employers)
-Will have absolutely no problem making our mortgage payments
-Will have absolutely no problem if one of us would lose our jobs
-Will hopefully continue to have good health (side note: it's been found that less financial stress leads to smarter and better diets)
-Will live in an 1,100 square foot home with finished basement
-Will subscribe to Sling, HBOGO, and premium internet service
-Will take a ten-day vacation to Denver and then South Carolina (for a wedding)
-Will probably attend multiple expensive sporting events (Ohio State football, Indians, etc.)
-Will probably do a few home improvement projects (paint entire first floor, put backsplash in kitchen)
-Will drive nice, paid-off cars (2013 Toyota RAV-4, 2014 Honda CR-V)
-Will have no problem spending $500-1,000 on family member's birthday and Christmas gifts
-Will never, under any circumstance, have to call someone for money
-On and on and on and on I could go.

This is top 5% of the world type stuff. I honestly can hardly put into words how nice it is to do all of the above--and have money not even remotely be of any concern to me. Hell, the lack of stress (via living a frugal lifestyle) probably puts me in the top one percent. 

It's on you if you think not having yachts means I'm not rich.
« Last Edit: November 13, 2017, 12:44:50 PM by ReadySetMillionaire »

Undecided

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Re: Conversations with the Wealthy but Working neighbors
« Reply #92 on: November 13, 2017, 12:45:54 PM »

More feel good BS.

You can have inner peace and live in a van, are you rich? Hey if it makes you feel better to tell yourself you are go for it.


I wasn't going to say anything, but now you've earned it.
Quote
After federal, state, local, and 401k you're down to roughly $120-$130k. Minus insurance, ESOP etc. and you lose even more.

Our insurance/medical costs are under $2k/yr for the two of us and housing net is around $6k (of which about $12k is mortgage minus $6k pay down so net of $6k). My wife does an ESOP with the 10% deduction post tax.

Are we rich? Absolutely no way,

Your post-tax, post-401k income is almost equal to my gross salary. Let's take that only 120K number and subtract a generous 20K for insurance and ESPP. Your medical and housing are 8 K per year. You presumably have no car loans. What the hell are you doing with the other $92,000 per year? Why do you act like it's so tough for you?

Facepunch for attitude.

Is s/he acting like it's tough, or just saying "that's not 'rich'"? There's a vast gulf between the two.

starguru

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Re: Conversations with the Wealthy but Working neighbors
« Reply #93 on: November 13, 2017, 12:55:37 PM »
The way I see it (and obviously there are a lot of views on these questions), you're describing being "affluent." You are paying for a nice lifestyle from ongoing earned income, whereas the "rich" or "wealthy" have assets that themselves support some nice lifestyle. Having a high income is fortunate, but to call it "being rich," disregards an opportunity to make valid distinctions between different states of being (for whatever uses these terms are really being employed for---which in many cases is probably nothing more than for expressions of jealousy or fostering class warfare).

Context is everything, of course, and when the term "rich" is used within a first-world society, I think it is generally used as a relative demarcation within that type of society---the notion of getting people to consider themselves in the context of the world at large, while a very valid perspective and an important reminder, is just not the same context in which the term is used for what I perceive to be its typical purposes.


More feel good BS.

You can have inner peace and live in a van, are you rich? Hey if it makes you feel better to tell yourself you are go for it.

I came out of college in 2003 making about $12,000 a year. I know what it's like to not have a bunch of money and constantly worry about that next pay check. It's a big motivator for me now. I try to only buy things that make me money not cost me money.

I think both of these posts are generally pessimistic and lack perspective if you think, for instance, that I'm not rich compared to the general population. You've really isolated yourself in some first class suburbs if you think my situation (generally described above) doesn't make me rich.

Again, to use my brother and his wife as an example, their gross income is probably $70k. They have to rent a house because they can't afford to buy one. My brother's wife has massive student loans and spends every weekend doing softball pitching lessons to make ends meet. Their budget is so tight they have to call my mom for money for $250 visits to the vets for their dogs. They've even called me asking for $5 so they could buy pasta at the grocery store. Their budget is on a shoestring, and they are one accident away from everything falling apart.

Meanwhile, next year, my wife and I:

-Will make about $110k
-Will save about $45k for retirement
-Will have decent health insurance coverage (we get to pick between our two professional employers)
-Will have absolutely no problem making our mortgage payments
-Will have absolutely no problem if one of us would lose our jobs
-Will hopefully continue to have good health (side note: it's been found that less financial stress leads to smarter and better diets)
-Will live in an 1,100 square foot home with finished basement
-Will subscribe to Sling, HBOGO, and premium internet service
-Will take a ten-day vacation to Denver and then South Carolina (for a wedding)
-Will probably attend multiple expensive sporting events (Ohio State football, Indians, etc.)
-Will probably do a few home improvement projects (paint entire first floor, put backsplash in kitchen)
-Will drive nice, paid-off cars (2013 Toyota RAV-4, 2014 Honda CR-V)
-Will have no problem spending $500-1,000 on family member's birthday and Christmas gifts
-Will never, under any circumstance, have to call someone for money
-On and on and on and on I could go.

This is top 5% of the world type stuff. I honestly can hardly put into words how nice it is to do all of the above--and have money not even remotely be of any concern to me. Hell, the lack of stress (via living a frugal lifestyle) probably puts me in the top one percent. 

It's on you if you think not having yachts means I'm not rich.

The problem with this discussion is that you are implying that rich is a binary property.  You either are or are not.   In reality "rich" is a sliding scale. 

Undecided

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Re: Conversations with the Wealthy but Working neighbors
« Reply #94 on: November 13, 2017, 12:59:52 PM »

This is top 5% of the world type stuff. I honestly can hardly put into words how nice it is to do all of the above--and have money not even remotely be of any concern to me. Hell, the lack of stress (via living a frugal lifestyle) probably puts me in the top one percent. 

It's on you if you think not having yachts means I'm not rich.

No, you're mischaracterizing everything I wrote. I just think you are conflating lifestyle (which may be paid for with current earned income) and wealth. I said, absolutely, that you've described affluence, and are right to recognize your good fortune. But (with all the qualifiers I already delivered), that's just not what "rich" or "wealthy" means to me---it has absolutely nothing to do with lifestyle or income and everything to do with assets. I am in in no way saying that's not great, or that you need to have yacht money to be rich, just that "rich" is about assets, not income. When I Google 'rich,' I see "having a great deal of money or assets; wealthy." When I Google "wealthy," I see "having a great deal of money, resources, or assets; rich." Neither refers to income, or spending.

I also have some sympathy for inline five's reaction to DS. While we can indeed talk about being "rich" in myriad ways (friendships, love, joy), to talk about being "rich" without any modifier means to talk about money and assets, and pretending otherwise is either disingenuous or reflects a use of the term that requires some explanation.




inline five

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Re: Conversations with the Wealthy but Working neighbors
« Reply #95 on: November 13, 2017, 01:06:35 PM »

hehee, i'm laughing as I read this, planning on leaving my cushy 6 figure office job and sell all my belongings to live in a van full time. I used to also be concerned about money but my level of worry about it was directly proportional to the amount of things that I wanted.

That sounds nice until you break your leg, or require a dental procedure. I guess it doesn't really matter, the hospital has to fix you up anyway and you don't need to pay.

ReadySetMillionaire

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Re: Conversations with the Wealthy but Working neighbors
« Reply #96 on: November 13, 2017, 01:08:38 PM »

This is top 5% of the world type stuff. I honestly can hardly put into words how nice it is to do all of the above--and have money not even remotely be of any concern to me. Hell, the lack of stress (via living a frugal lifestyle) probably puts me in the top one percent. 

It's on you if you think not having yachts means I'm not rich.

No, you're mischaracterizing everything I wrote. I just think you are conflating lifestyle (which may be paid for with current earned income) and wealth. I said, absolutely, that you've described affluence, and are right to recognize your good fortune. But (with all the qualifiers I already delivered), that's just not what "rich" or "wealthy" means to me---it has absolutely nothing to do with lifestyle or income and everything to do with assets. I am in in no way saying that's not great, or that you need to have yacht money to be rich, just that "rich" is about assets, not income. When I Google 'rich,' I see "having a great deal of money or assets; wealthy." When I Google "wealthy," I see "having a great deal of money, resources, or assets; rich." Neither refers to income, or spending.

I also have some sympathy for inline five's reaction to DS. While we can indeed talk about being "rich" in myriad ways (friendships, love, joy), to talk about being "rich" without any modifier means to talk about money and assets, and pretending otherwise is either disingenuous or reflects a use of the term that requires some explanation.

We're two ships passing in the dark here, so it's not like we're going to resolve our disagreement. But to summarize as briefly as possible, if you don't think I have a "great deal of money, resources, or assets" as compared with the general (and world) population, I think you lack a bit of perspective.

inline five

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Re: Conversations with the Wealthy but Working neighbors
« Reply #97 on: November 13, 2017, 01:13:58 PM »

This is top 5% of the world type stuff. I honestly can hardly put into words how nice it is to do all of the above--and have money not even remotely be of any concern to me. Hell, the lack of stress (via living a frugal lifestyle) probably puts me in the top one percent. 

It's on you if you think not having yachts means I'm not rich.

No, you're mischaracterizing everything I wrote. I just think you are conflating lifestyle (which may be paid for with current earned income) and wealth. I said, absolutely, that you've described affluence, and are right to recognize your good fortune. But (with all the qualifiers I already delivered), that's just not what "rich" or "wealthy" means to me---it has absolutely nothing to do with lifestyle or income and everything to do with assets. I am in in no way saying that's not great, or that you need to have yacht money to be rich, just that "rich" is about assets, not income. When I Google 'rich,' I see "having a great deal of money or assets; wealthy." When I Google "wealthy," I see "having a great deal of money, resources, or assets; rich." Neither refers to income, or spending.

I also have some sympathy for inline five's reaction to DS. While we can indeed talk about being "rich" in myriad ways (friendships, love, joy), to talk about being "rich" without any modifier means to talk about money and assets, and pretending otherwise is either disingenuous or reflects a use of the term that requires some explanation.

We're two ships passing in the dark here, so it's not like we're going to resolve our disagreement. But to summarize as briefly as possible, if you don't think I have a "great deal of money, resources, or assets" as compared with the general (and world) population, I think you lack a bit of perspective.

It's ridulous to compare oneself to the worlds poplulation. What does $1m in Costa Rica get you? A lot more than the US.

Same thing goes for different areas of the US. While it may seem like $100k is a lot of income, if you live in San Francisco or San Jose it's hardly middle class. There a one bedroom apartment is ~$4k/month.

In Little Rock it's on the upper end of middle and allows the purchase of many income producing assets.

Everything must be taken in context and be relative.

mm1970

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Re: Conversations with the Wealthy but Working neighbors
« Reply #98 on: November 13, 2017, 01:24:44 PM »
This is pretty much my life. We live in an expensive area (~$1k per square foot) where most households are dual income doctor, lawyer, lobbyist, engineering/tech. The people that I work with all make over $100k and are also mostly in dual income households so it’s very easy to lose perspective. Many of us are on track to be FI young but many more will need to work well into their 50s to really have any wealth (still better than most have it).

My personal observation is that it is relatively easy to get a $250k household income given two college educated people in a HCOLA. This isn’t much different than in the old days of getting a union factory job and being able to comfortably provide for your family with relatively little stress. These people generally have an overall middle to upper middle class lifestyle and are much closer to average than they are to wealthy (especially during early years of paying off student loans). I walk through my neighborhood and can’t afford most of the houses for sale (I choose to live here so not a complaint, just an observation). If I go back to my hometown in the Midwest, I literally can’t find a home that I couldn’t afford. Median household income there is ~$35k versus my current zip code that exceeds $150k (86% have at least a bachelors degree and 60% have a masters or professional degree). I’m rich in one place and well off in the other.


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These are some pretty good points.  Someone up above made a comment that "$200k is a lot even in San Francisco", but...it's not really.  Yes, it puts you solidly into middle class, but...

Even if you don't have student loans - my crappy tiny old house (in CA, though not SF) mortgage + prop taxes + insurance are over $53,000 a year.  And I'm not in SF.  So, CA being a high-tax state, I can *easily* see $200k not going very far.  Student loans + $60k in housing costs + $50-60k in fed/ state/FICA taxes (and forget getting the mortgage interest deduction, y'all are paying the AMT!)

That said, watch your pennies, get rid of those student loans, get a few raises and you'll be doing a lot better.  Eventually.

inline five

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Re: Conversations with the Wealthy but Working neighbors
« Reply #99 on: November 13, 2017, 01:25:21 PM »

Your post-tax, post-401k income is almost equal to my gross salary. Let's take that only 120K number and subtract a generous 20K for insurance and ESPP. Your medical and housing are 8 K per year. You presumably have no car loans. What the hell are you doing with the other $92,000 per year? Why do you act like it's so tough for you?

Facepunch for attitude.

Where did I say my life was tough?

I used to ride a bike to my min wage job and sold my car to pay off my credit card debt after college. Even then my life wasn't that tough as I had everything I needed to live. Barely, but had it. Nothing to fall back on, but I made ends meet.

All I said was I wasn't rich and to think you are with just earned income is just ego inflation.