Conversations with the Wealthy but Working neighbors

[HawkeyeNFO]

I live in a pretty nice neighborhood, where average houses go for well over $1M, and typically both the husband and wife are working, usually one (often both) of them is a doctor or attorney or a DC lobbyist.  I retired from the Navy about a month ago at 44, and am in no rush to find a civilian job.

I was out walking the dog yesterday, and one of my neighbors was home, and commented how lucky I was to not need to go to work, and how he couldn't do it because he to keep working to pay all his bills.  The reason I saw him in the first place is because he was outside talking to his lawn service guys when I walked by.  As we started talking, he showed me all the great things another contractor did with some drainage pipes installed in his lawn, and we talked about all the work a different contractor did in gutting his upstairs and re-doing his kitchen.  I pointed out that he needed to work not by mentioning any of these things, but by half-joking about his 2 recently-purchased Audis in the driveway. 

Just thought it was interesting, because we take care of our own lawn instead of using a service, and our cars are from 2003 and 2008, both made in America.  Neighbor is a super nice guy, and has a nice home and nice cars, but I sure love every day being a Saturday.

[nereo]

There was an interesting article I read today regarding the impact of proposed tax code changes.  It focused ont eh "upper-middle class", and the author interviewed several families and an accountant from an affluent neighborhood in Georgia.  Among the more eye-opening statements:

“I don’t feel wealthy, I don’t have a bunch of money stashed away anywhere.” - person who has a family income of $180,000/yr

“Some of them are living paycheck to paycheck. You would imagine that people are fairly well-to-do even with $200,000. But they don’t consider themselves to be rich.” - T. Jenkin, financial advisor

people earning up to $250,000 in this region “don’t consider themselves to be high-earners.”

It's not an income problem, it's a wealth problem.

[EnjoyIt]

There was an interesting article I read today regarding the impact of proposed tax code changes.  It focused ont eh "upper-middle class", and the author interviewed several families and an accountant from an affluent neighborhood in Georgia.  Among the more eye-opening statements:

“I don’t feel wealthy, I don’t have a bunch of money stashed away anywhere.” - person who has a family income of $180,000/yr

“Some of them are living paycheck to paycheck. You would imagine that people are fairly well-to-do even with $200,000. But they don’t consider themselves to be rich.” - T. Jenkin, financial advisor

people earning up to $250,000 in this region “don’t consider themselves to be high-earners.”

It's not an income problem, it's a wealth problem.

I think it is more of a
"It is not an income problem, it is a spending problem"

If a family making $200k+ a year can't build some substantial wealth and feel rich, they are just spending way too much on things they think they value but more then likely is useless in the grand scheme of life and happiness.  BTW, I work with these people.

[matchewed]

It's all relative unfortunately. These people (and in many ways we are just another version of "these people") see the immediate world around them and think this is normal. Of course, they are living it, and they are normal, therefore it must be normal...

One of my personal goals is to always keep this in mind. It's the whole practicing gratitude thing. I do not live a "normal" life. I live an extraordinarily privileged life with oodles of luxury. My GF and I are stupidly wealthy and high income. It almost doesn't matter how much money we make (almost... it definitely won't in four years or so).

[marty998]

“Some of them are living paycheck to paycheck. You would imagine that people are fairly well-to-do even with $200,000. But they don’t consider themselves to be rich.” - T. Jenkin, financial advisor

This is not unique to America. Everyone here earning $180k is "not rich", because they have mortgages, childcare, private school fees, 2 big cars etc etc.

It's almost as if people have no choice but to spend everything and be broke!

[Freedomin5]

In addition, I think the other part of the problem is that people don't realize that they don't actually take home $200,000 per year. In Canada, on that income, the tax rate (before deductions and all that) is around 50%. Even if you hire a tax accountant and get deductions, you're looking at a 30% tax rate. So you only actually take home $100,000 to $140,000 which is still a lot of money, but affords a different lifestyle than someone with $200,000 to spend.. However, if people have the mindset that $200,000 is a lot and spend like they actually take home $200,000, then I can see how they can quickly feel like they are not rich.

[MrsPete]

I have a term for this:  The working rich.

[inline five]

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.

[remizidae]

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.

So what definition of "wealthy" or "rich" are you using, if making several times the average American household income is not enough to make you "rich"? I make less than you, but I'm willing to bite the bullet and say, yes, we are rich. I can't buy everything I want, I can't retire yet, I still have student loans and definitely no private plane. But we are objectively much better off than the average household.

The Washington Post had an interesting article on this. You can plug in your income and location and it will tell you whether you qualify as "middle class" (defined as 30th to 80th percentile). At $160k, I am "middle class" in my suburb, but I would be "upper class" in the city nearby.

https://www.washingtonpost.com/news/wonk/wp/2017/10/25/is-100000-middle-class-in-america/?utm_term=.3383f9012341

[marty998]

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.

"Only" $8,600 a month.

Not having a go at you specifically but so is it we only define wealthy or rich by pointing to someone with a helicopter? If you are in the top 5-10% in your country in terms of income and/or wealth I'd say you are comparatively rich.

[GU]

To be fair, a lot of high earning professionals also have massive student loan balances.  I'm an attorney in a high COL city.  I make over $200k, but my student loan balance is over $300k (ah, the miracle of compounding interest!). I don't feel rich, and objectively, I'm not rich under any reasonable standard.

But I certainly agree that many people spend way too much money on unnecessary things that prevents them from being FI.

[Abe]

I define rich as being able to spend without worrying about a budget since our spending is always below our income. My wife and I make around $300k but live in one of the most expensive housing markets in the country ($4k rent for a 2 bedroom house). We still feel rich since our savings keep going up even though our lives are upper middle class. It's interesting how different people perceive similar situations differently.

[ysette9]

Ah, thé old “what is rich?” question popping up again. I think it is hard to pin down because we have this nebulous feeling about what rich should look like, and that includes lavish consumption and a lack of worry about money. We don’t worry about making our bills because we making very good household income. On the other hand we live in a HCOL area so our lifestyle looks anything but rich. Small house in a minority-majority neighborhood, used cars, etc. However we are definitely better off than most Americans, even those in other areas with the 3500 ft^2 houses and luxury cars. Humans are very good at comparing themselves to others as well as wanting to feel like they fit in with the herd. I suspect that is part of the resistance to the “rich” label. I’ll say that yes, objectively we are rich as compared to others, but it doesn’t feel that way, so I understand the instinct to push back and say “but.....!”

[Abe]

I'm not sure how living in a majority non-white neighborhood makes you look not "rich", please explain. I live in a neighborhood with similar demographics in southern CA and everyone here is either a doctor, tech professional or lawyer.

[Paul der Krake]

Living in a highly desirable neighborhood or area isn't a pre-existing condition – it's spending, and it can be controlled.

$200k is a boatload of money whether you live in San Francisco or Memphis. The people quoted in the WaPo article, who said they need the deductions to make the numbers work, should be ashamed of their profligate financial situations.

[rpr]

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'm just curious about this. Do your deductions include contributions to retirement? Otherwise 127K in taxes on a 230K income seems a bit excessive.

[Lmoot]

The more I think about it, the more I don't consider a gross household income of say, $150,000, to be "rich". Of course it's all relative, and I'm comparing it to myself. I earn around the $50k mark. $50k may seem like a lot to some of the college kids and post-grads I work with, but many people make more than that, and it's really not a lot of money. If I met someone with my income *BAM*...we'd instantaneously become a 6-figure household.

I say rich is relative anyhow. Even the example someone gave early about taking home $8600/ month; my instinct was to say "yowser!" that's a alot. But when I sit and think about it, if you average the take home between two people, that's $4300 per person. I take home about $3500/month, so that's only $800 per person more than what I earn on my own (I work a typical cog job, processing medical bills from home, and work part time for a non-profit, earning $8.50/hr, and a small rental property. Granted, it probably doesn't include pre-tax savings if they gross over $200k. But it just put things into perspective for me.

[runbikerun]

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.

230k puts you in about the 95th percentile for household income. If being rich has any relationship whatsoever to income, then you are rich.

There's a more detailed debate to be had about income versus net worth, but on an income comparison you're rich by any reasonable measure.

[Imma]

Heck, I'm low-middle class, and feel well off compared to most folks I know. I put the majority of my paycheck in the bank, while people I know that make two or three times what I do are sitting in their fancy houses living paycheck to paycheck.

That's how I feel as well. My s/o and I were both raised "white thrash" and most people we know are poor. We don't have a high income at all, but we own our home, have a low mortgage, a very small student loan, we put money away at the beginning of the month for retirement, spend what we feel is necessary and then still have money left over at the end of the month. We feel extremely wealthy with a gross income of about $40.000.

I can see how you don't feel rich on a low 6 figure income if you're sensitive to peer pressure and live in a neighbourhood where everyone has a high 6 figure income and are spending that as well, but in that case the best option is to sell up and move somewhere cheaper. Not only will you have more disposable income left over, you don't feel the pressure to buy a brand new car every other year if no one else in the street does.

[Cranky]

“Wealth” is what you’ve got in the bank. “Rich” is how you feel compared to your neighbors.

So if everyone in your neighborhood has the massive house and a couple of new expensive cars and lawn service and big debt, yeah, I think you won’t feel “rich”.

Whereas I actually do feel rich, because I am very well off compared to my neighbors in my particular neighborhood.

[Finallyunderstand]

All too common of a theme.  I have a friend who was wanting his wife to not have to work part time anymore and they were talking about how to cut costs so she could do it.  They focused so much on little things here and there.  I simply said, “why don’t you sell her $60k suv and your $40k truck”.  I knew that would more than make up for her part time income since there were payments on both.  He half listened and got a slightly cheaper truck and then used the extra money to pay off hers.  Still an abundance of money tied up in vehicles but only one smaller payment.

People too often confuse needs and wants and once you have something “high end” you don’t want people to see you going backwards. 

My wife had the same issue initially when we were looking at cheaper vehicles while making over $200k/yr.  She said she didn’t want people to think we were struggling.  I asked her if she wants to look rich or be rich.  We chose to be rich.  Our house costs less than 1year of income and is paid off.  We drive used vehicles.  Rarely eat out.  Eat all leftovers, etc.  amazing how fast the stache grows.  And to people who say that $200k income isn’t rich, you’re wrong.  We are rich and know it and I’m grateful every day for what we are able to do and how we feel by not comparing and competing with random strangers who drive Audi’s, BMW’s and live in $500k+ homes.

[Trifle]

My wife had the same issue initially when we were looking at cheaper vehicles while making over $200k/yr.  She said she didn’t want people to think we were struggling.  I asked her if she wants to look rich or be rich.  We chose to be rich. 

Amen.  When I hear someone comment on someone's expensive house or car, and say "They must have money,"  I think to myself, no -- they had money.   

Because of our choices to save over the years, we are now one of those under-the-radar wealthy families.  We live in a modest area and drive modest older cars.  I'm sure our neighbors would never guess we are sitting on fat investment accounts and nearing early retirement.   Plus, we feel like we have crazy luxury, and are living our lives from a place of gratitude.  I am guessing that is something that the high spenders might never feel.  And it goes without saying -- they might never be free of the need to work either.  We all make our choices, and for us it was a no-brainer -- we wanted that freedom.       

[TomTX]

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.

"Only" $8,600 a month.

Not having a go at you specifically but so is it we only define wealthy or rich by pointing to someone with a helicopter? If you are in the top 5-10% in your country in terms of income and/or wealth I'd say you are comparatively rich.

It's an enormous firehose of cash. And I am pretty certain the $8600/month is after a bunch is diverted to 401k, etc.

My takehome is less than half of that, even if I go down to zero 401k-type contribution.

[nereo]

Median US household income ~ $54,000.
Note the US has among the highest median income of any country. 
Globally it's closer to $10k/year.

...food for thought.

[COEE]

I asked her if she wants to look rich or be rich.

This is great!  I don't think it will work for me though.  I recently had a friend call and ask if we wanted to buy his 10 year old Lexus - I had jokingly said once that I'd buy it if I could.  It really is a great car, but he's wanting $1500 too much for it, and I'm not willing to go that high.  We eventually passed, but now my wife thinks she should have a 10 year old gas sucking Lexus, BMW, or Audi in the driveway.  I wish I had never opened this can of worms by entertaining the idea when my friend called.  At least she's still open to having an a 10 year old version since the body styles haven't changed much.

At our combined income (Somewhere in the $150k range, depending on bonuses), retirement is a forgone conclusion.  It's just a situation where we have to go to work and we'll be able to retire in a 10-15 year timeframe.  We are not hardcore mustachians, obviously.

As far as if we're rich or not - Yep, we're rich.  We can buy just about anything we want.  (Minus a jet airplane or luxury yacht, stuff like that)

[ixtap]

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.

So you aren't rich because you haven't chosen to spend lavishly? Even though your take home pay is well into the range that most Americans would start debating between middle class and upper middle class for that gross salary?

[Undecided]

I think it’s reasonably likely that the neighbour in the original post was just being politely self-deprecating. Perhaps, mindful that Veterans Day was coming, he was putting a positive spin on what he perceived as the OP’s struggle to find a civilian job.

Of course I don’t know, but I generally respect that any reasonably intelligent adult is making (or moving toward) the best choices he or she can, considering individual preferences and circumstances. Perceived envy of early-retirement seems to be envy of the status of not-working, but not sufficient to make the accompanying sacrifices.

[CogentCap]

I'm not sure how living in a majority non-white neighborhood makes you look not "rich", please explain. I live in a neighborhood with similar demographics in southern CA and everyone here is either a doctor, tech professional or lawyer.

Where do you live?  I want to live somewhere like that!

[ixtap]

“Some of them are living paycheck to paycheck. You would imagine that people are fairly well-to-do even with $200,000. But they don’t consider themselves to be rich.” - T. Jenkin, financial advisor

This is not unique to America. Everyone here earning $180k is "not rich", because they have mortgages, childcare, private school fees, 2 big cars etc etc.

It's almost as if people have no choice but to spend everything and be broke!

Last I checked, one of our family members had 4 cars for two adults: each had a commuting car and a play car.

[Linea_Norway]

I don't automatically think that someone driving an expensive car is rich. i have learned that friends of mine with two good incomes took up a car loan to finance a fancy Volvo. If even they need to do that, I think there might be more people driving a loaned car. They might want to look rich, but aren't.

[Ocinfo]

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.


Sent from my iPhone using Tapatalk

[Cpa Cat]

I have this conversation routinely with my rich clients. $200,000 in income puts them in the top 1% of households in our state. And yet they whine that they can't afford to pay their taxes.

It's hard to convince them that they can't afford to pay their taxes because they spent all their money on things they don't need.

I had a client just last week recount how they spend $20,000 on daycare, and $15,000 on health insurance/medical, and $30,000 on housing. What can I do but ask them, "Ok, well, you made $250,000 - what happened to the other $185,000?"

[EnjoyIt]

My wife had the same issue initially when we were looking at cheaper vehicles while making over $200k/yr.  She said she didn’t want people to think we were struggling.  I asked her if she wants to look rich or be rich.  We chose to be rich. 

Amen.  When I hear someone comment on someone's expensive house or car, and say "They must have money,"  I think to myself, no -- they had money.   

Because of our choices to save over the years, we are now one of those under-the-radar wealthy families.  We live in a modest area and drive modest older cars.  I'm sure our neighbors would never guess we are sitting on fat investment accounts and nearing early retirement.   Plus, we feel like we have crazy luxury, and are living our lives from a place of gratitude.  I am guessing that is something that the high spenders might never feel.  And it goes without saying -- they might never be free of the need to work either.  We all make our choices, and for us it was a no-brainer -- we wanted that freedom.     

I always say "you can't judge how much money someone has by how much they spend"

[brooklynmoney]

To me, rich means you don’t have to work. Different than high income.

[ROF Expat]

Having a high income, engaging in conspicuous consumption, and "being rich" are not the same thing. 

To my mind, "rich" is much more about assets than income.  A retired guy living a modest life with a million dollars in assets is "richer" than a high income earner with a lot of consumer debt living in a fancy house with a mortgage that's underwater and driving a leased luxury car who is only a job loss away from bankruptcy. 

The OP has made me think about how I define "rich."  My first thought is that for a lot of people it means "substantially more than I have right now."  I understand how an earlier poster doesn't feel "rich" with a $230K income, but that probably looks pretty darn rich to a single parent struggling to raise a kid on say, $30K a year. 

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. 


Working from a median household income of around $55k, I'm going to throw out a figure of $2.75 million in investable assets and say that is my definition of "rich" in America today.  With $2.75 million invested, you could have a "median" income on a 2% SWR, allowing you to live that "median" lifestyle, have the income growth associated with a 50% savings rate, and pass a substantial inheritance to family or charity. 

JMHO, and I welcome disagreement. 

 

[ixtap]

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?

[Linea_Norway]

Being rich is in my objective not having to worry about money and your ability to pay bills and at the same time making large savings.

According to that definition I have been rich for a decade or so. We were living in an el cheapo house with a beautiful view most of the time, situated in an LCOL area.

[Milizard]

Rich = being able to spend $xxx,xxx each year without going into debt or decreasing your net worth.   I'm not sure what x should be at this point, and perhaps it should be net of basic area housing costs, but it covers idiots who can't save a dime on $100's of thousands in income, as well as people with a healthy stash started, but low income.

[jlcnuke]

The most common definition of "rich" if you ask people to define it boils down to "someone making more money than me". I'm making $50k/year, that guy making $75k/year is rich. I'm making $150k/year, that guy making $200k/year is rich. I'm making $500k/year, that guy making $750k/year is rich.

IMO, talking about "income" when defining "rich" is pretty meaningless because the buying power of any given income can vary widely. A person making $20k/year is, relatively, massively wealthy in some places while making $100k/year in other places may not provide as comfortable a lifestyle.

[inline five]

I have this conversation routinely with my rich clients. $200,000 in income puts them in the top 1% of households in our state. And yet they whine that they can't afford to pay their taxes.

It's hard to convince them that they can't afford to pay their taxes because they spent all their money on things they don't need.

I had a client just last week recount how they spend $20,000 on daycare, and $15,000 on health insurance/medical, and $30,000 on housing. What can I do but ask them, "Ok, well, you made $250,000 - what happened to the other $185,000?"

See that's a BS question because $230k isn't anywhere near that amount.

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, the rich can live their comfortable lives without working again and receive their income via passive income. Are we better off than we were a couple years ago? Sure.

[nereo]

I have this conversation routinely with my rich clients.
...
I had a client just last week recount how they spend $20,000 on daycare, and $15,000 on health insurance/medical, and $30,000 on housing. What can I do but ask them, "Ok, well, you made $250,000 - what happened to the other $185,000?"

Wow, my sister is your client??  small world...

Rich = being able to spend $xxx,xxx each year without going into debt or decreasing your net worth.   

I'm a bit shocked at how many people on this particular forum base their definition of "rich" on what people can spend per year.
we're decidedly below the median household income yet we consider ourselves rich because we have everything we need and still have a nice, fat, growing cushion in our investment accounts.  Hard to imagine spending more would measurably increase our happiness (while having more time to do the things we want probably will...)

[Cpa Cat]

I have this conversation routinely with my rich clients. $200,000 in income puts them in the top 1% of households in our state. And yet they whine that they can't afford to pay their taxes.

It's hard to convince them that they can't afford to pay their taxes because they spent all their money on things they don't need.

I had a client just last week recount how they spend $20,000 on daycare, and $15,000 on health insurance/medical, and $30,000 on housing. What can I do but ask them, "Ok, well, you made $250,000 - what happened to the other $185,000?"

See that's a BS question because $230k isn't anywhere near that amount.

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, the rich can live their comfortable lives without working again. Are we better off than we were a couple years ago? Sure.

Well, they are self employed with an S-Corp. Since I ran their tax calculation on Friday, I happen to know they're looking at about $60k combined State and Federal Income Tax, of which they have paid only $20k - hence the reason for our tax meeting. There is no ESOP. They aren't spending anything on retirement savings.

But let's play pretend. They were at $185,000 after daycare, house, insurance, medical. They're at $125,000 after they pay their tax bill.  They're at 89k after they open a 401k and each contribute $18k for a total of $36k. Of course, then their taxes go down, but forget that. I'm still left with about $90,000 of spending money.

Still not rich?

That's bullshit.

[inline five]

Well, they are self employed with an S-Corp. Since I ran their tax calculation on Friday, I happen to know they're looking at about $60k combined State and Federal Income Tax, of which they have paid only $20k - hence the reason for our tax meeting. There is no ESOP. They aren't spending anything on retirement savings.

But let's play pretend. They were at $185,000 after daycare, house, insurance, medical. They're at $125,000 after they pay their tax bill.  They're at 89k after they open a 401k and each contribute $18k for a total of $36k. Of course, then their taxes go down, but forget that. I'm still left with about $90,000 of spending money.

Still not rich?

That's bullshit.

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.

[Milizard]

I have this conversation routinely with my rich clients.
...
I had a client just last week recount how they spend $20,000 on daycare, and $15,000 on health insurance/medical, and $30,000 on housing. What can I do but ask them, "Ok, well, you made $250,000 - what happened to the other $185,000?"

Wow, my sister is your client??  small world...

Rich = being able to spend $xxx,xxx each year without going into debt or decreasing your net worth.   

I'm a bit shocked at how many people on this particular forum base their definition of "rich" on what people can spend per year.
we're decidedly below the median household income yet we consider ourselves rich because we have everything we need and still have a nice, fat, growing cushion in our investment accounts.  Hard to imagine spending more would measurably increase our happiness (while having more time to do the things we want probably will...)

Having the option to spend isn't the same thing as spending it. It means that you have a choice to do so or not. 

[EnjoyIt]

For most people rich is making more money than you are currently making

Reality: Rich is having enough resources to support the lifestyle that you want without worrying about running out of money.

For some people being Rich is driving fine cars, dinning at the finest restaurants, and staying at the fanciest resorts.  For others rich is much simpler.  I would venture to say that most mustachians are either rich or will be very soon.  The above poster who can't feel rich on $8600/month is likely misunderstanding value.  I think we value certain things too much. Cars is a great example which we laugh at on this forum.  But when we look at the premiums we pay for negligible differences in cars we realize it does not purchase that much more happiness.  For example getting a sports package on a car may give you a louder exhaust note and maybe tighter suspension for $X.  The reality is that most people once off the lot and drive the car for a few days may never again notice the difference but at the time they valued that option at $x.  An even bigger example are homes.  People value the tiniest insignificant things in a home when once you live in the upscale/improvement you eventually get used to it and it purchases almost no additional happiness.  I know someone who recently got a significant raise which in effect doubled their income.  Instead of stashing most of it away they moved and doubled the value of their home.  The reason was because they thought their kids would be happier in a larger home.  Personally I think being financially independent and being around the kids would make them happier as compared toan extra 1000sqft of living space, but what do I know. 

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.

[shuffler]

$230k isn't anywhere near that amount.
After federal, state, local, and 401k you're down to roughly $120-$130k. Minus insurance, ESOP etc. and you lose even more.

401k and ESOP are savings, not spending.  They contribute to "richness", not deduct from it.
Insurance is spending.  Same spending that everyone else with lower salaries also has to work into their budget.

[Blindsquirrel]

    Yeah, it actually is not all that rare or hard to imagine. 250k gross self employed 20% savings rate couple with no kids. -48k in 401k deductions for a couple at 50 years old. you are at 202k-$36.5k for both halves of ss/medicare=165.5k-45.5k for state, local and federal taxes=120k then  blow 2k PITA a month on a house and 1k a month for health insurance and you still have 7k a month or so to pay for everything else. If you are in a HCOL and trade the 2k/mo PITA house for a 5k a month PITA crib you are down to 4k a month to fund everything else. 4k a month to spend while saving 4k a month in the 401k is pretty nice living but you are probably not going to be dating super models or driving the Ferrari you envisioned you would have with 250k gross income. If you throw some kids and large student loans into that equation even less likely for the bikini barge life style.
 
https://www.trulia.com/blog/what-a-5k-monthly-mortgage-buys-in-6-u-s-cities/

[rpr]

It is somewhat clear that in contrast to being wealthy, being "rich" is a lot more state of mind. Some people can feel rich with absolutely nothing, while others can never ever get that feeling of "richness" despite however much they have.  Wealth is probably a more objective measure.  Richness is about lifestyle, while wealth is more about assets. Both are correlated somewhat but not correlated perfectly.

@ EnjoyIt -- I liked your post above. It is very illuminating when you look at your spending and figure out what really brings value (or "joy").

[rpr]

    Yeah, it actually is not all that rare or hard to imagine. 250k gross self employed 20% savings rate couple with no kids. -48k in 401k deductions for a couple at 50 years old. you are at 202k-$36.5k for both halves of ss/medicare=165.5k-45.5k for state, local and federal taxes=120k then  blow 2k PITA a month on a house and 1k a month for health insurance and you still have 7k a month or so to pay for everything else. If you are in a HCOL and trade the 2k/mo PITA house for a 5k a month PITA crib you are down to 4k a month to fund everything else. 4k a month to spend while saving 4k a month in the 401k is pretty nice living but you are probably not going to be dating super models or driving the Ferrari you envisioned you would have with 250k gross income. If you throw some kids and large student loans into that equation even less likely for the bikini barge life style.
 
https://www.trulia.com/blog/what-a-5k-monthly-mortgage-buys-in-6-u-s-cities/

@ Blindsquirrel -- the 48K contributions to the 401k are not == "spending". In the math above, the person's disposable income as it is traditionally defined works out to be 250K - 36.5K - 45K ~170K/year or ~14K/month.

[Blindsquirrel]

   Yeah, 48 k in savings a year in 401k probably puts you in the top 10% of savings/year in the USA and is not spending. Was more thinking of it from a cash flow perspective than a pure income/spending perspective. I could see that folks in that situation are saving a good amount but they still do not have the best cash flow compared to their giant income.  There are probably some folks that are not all that far from my non exact/ head calculated number. If you toss the gasoline of 18% credit card debt and leased cars like many families do on that situation they are going not be able to retire until very late if at all.  Playing defense (controlling spending) is way more important than playing offense (income) once you are in the higher income categories.