Author Topic: The "everybody seems wealthy" illusion — is it really just all fueled by debt?  (Read 117001 times)

JLee

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Agreed! Just today I paid a bill to a friendly little IT lady who helped us setting up a new software at work. Two days, 6 + 4 hours, she charged us a tad below 2 average monthly posttax saψaries. Splendid way of earning money! Lots of people with the gusto to jump to self-employment earn a lot of money, surprisingly quickly. Then again, they do shoulder a lot of risk.
Yes! This is on my long-term career plan...we happily pay IT contractors $10k a week, and nobody even blinks!

PaulMaxime

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One thing to add to this discussion is that we are not all in the same stage of life.

Many of my co-workers are 20 somethings just starting out while I'm a 52 year old guy who's been working and saving for 30 years. Of course I have a nicer house than the person who's just out of college. If I didn't there would be something wrong.



mm1970

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I've come to the conclusion that most of Facebook (and indeed a lot of social life) is an illusion since what is seen is not taken in context. People post their best moments or socially present their best selves, and unless you know them very well, cannot compare your life with theirs.

a CW of mine appeared to have a fantastic life, and it was all an illusion - she suddenly decided to move out of country... long story short, she owed the CRA a bunch of money, then people showed up at our workplace looking to serve a subpeona...
I've been helping out with that lately.

Three rounds of stomach flu since Thanksgiving...canceled our vacation, canceled all of our holiday get-togethers...making my FB friends feel awesome.

Chris22

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Going on Facebook to judge other people might skew your perspective.  People love posting expensive dinners and fancy vacations.   If they're struggling financially or living a modest lifestyle, that's probably not going to be reflected in their posts.

Last night for dinner, I cooked two filets (seared indoors on my new $16 Target cast iron skillet!) and boiled a couple lobster tails and had a bottle of red wine for dinner.

Lunch was a ham sandwich.

I skipped breakfast.


Guess which meal went on Facebook?  :)

I think most of us mentioning meals aren't talking about home cooked meals, even the fancy ones. I'm talking about the weekly pictures of expensive restaurant meals.

Oh, I know, it was just an illustration of the principle.  Personally, I might "check in" at a restaurant, but to pull out a camera and take a picture of the food is exceptionally tacky.

soccerluvof4

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One thing to add to this discussion is that we are not all in the same stage of life.

Many of my co-workers are 20 somethings just starting out while I'm a 52 year old guy who's been working and saving for 30 years. Of course I have a nicer house than the person who's just out of college. If I didn't there would be something wrong.



I agree with the first part of your statement BUT not that because your 52 if you dont have a nicer house there is something wrong.

GreenSheep

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I guess I should start saying what's really on my mind on Facebook and to people in general. I just feel like no one wants to hear about my excitement regarding my frugal wins (a flight bought with airline miles, a grocery store checkout snafu in my favor, etc.). Most people are spendypants who don't see the point in considering such things and find it silly to care about them. I don't brag about the flashy parts of my life (mostly because there aren't any!). And so the cycle continues.

I'm a red panda

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I guess I should start saying what's really on my mind on Facebook and to people in general. I just feel like no one wants to hear about my excitement regarding my frugal wins (a flight bought with airline miles, a grocery store checkout snafu in my favor, etc.). Most people are spendypants who don't see the point in considering such things and find it silly to care about them. I don't brag about the flashy parts of my life (mostly because there aren't any!). And so the cycle continues.

I've noticed people seem to brag about exceptionally expensive and exceptionally cheap.  My FB friends are not frugal, but they love to post about an amazing deal they found.  I'd post about travel hacking if it is something that interests you.  Why tailor YOUR facebook to other people. It's YOUR page.

matchewed

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Or maybe don't try to derive value in your life by what banner you hang in your virtual representation of the life you're presenting to the world?

Then there is no cycle to continue.

zephyr911

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One thing to add to this discussion is that we are not all in the same stage of life.

Many of my co-workers are 20 somethings just starting out while I'm a 52 year old guy who's been working and saving for 30 years. Of course I have a nicer house than the person who's just out of college. If I didn't there would be something wrong.
Good point, that. In a conversation with my cousin (~10yrs younger) who just started investing in the last year, our $1k+/wk investment pace came up and he almost sounded disheartened because he was pretty excited about hitting $1k/mo. Had to reassure him this is the product of years of streamlining and he's well ahead of his peers - I'm genuinely proud.

GreenSheep

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Or maybe don't try to derive value in your life by what banner you hang in your virtual representation of the life you're presenting to the world?

Then there is no cycle to continue.

Believe me, you're preaching to the choir here. I'd actually like to get off Facebook entirely, but I'm not sure how else to keep in touch with those people I still care about but don't see/speak to on a regular basis. Hell, I'd like to remove the Facebook-like interactions from my offline life as well, but it's nearly impossible to remove useless chatter and small talk from life entirely.

As for the real world, it's just not much fun (or polite) to start or continue a conversation on a topic no one else cares about. It's not about representing myself in a certain way. I'm just not one of those rude people who insist on continuing to beat a topic to death when it's clear that no one else is interested. If everyone else is talking about some big purchase or the latest tv show, I smile and nod for as long as necessary before I can make a discreet exit.

My point was that it's nice to know there are other people who would prefer to discuss more meaningful topics, but it's frustrating to be in the minority, and a rather quiet minority at that.

elaine amj

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This is the hard part for me. I was born in the GDR to a bourgeois family, meaning we were impoverished and everything had been taken from my family a generation or two above me. So I grew up surrounded by some sort of undignified bitterness that runs in my veins. I had to start from scratch, and when my mother died shortly before I went to university, there wasn't much to inherit - about what I had saved myself in one year of work. I'm doing well enough now, but I strive really hard with accepting how other people's birth luck and choices create an uneven playing field, and have done so forever. I see people around me changing careers like underwear, because that's an easy way to climb in salaries, and I struggle with the disloyalty they display and the unfinished projects they leave behind. It's stupid, yet I can't help it! I see friends my age buy cabins worth more than our house, and I can't help but think about the vast challenge they load upon themselves financially ("We eat cheap bread now") and timewise (all property tends to fall apart in rainy, windy, icy Norway). There's a distance left to not caring and just enjoying life. Got to say I am surprised at the massive, constant relief that having paid off the house is though.

What really helped me was to accept that life was never set up to be fair. Bad things happen to good people all the time. What matters is how you deal with it.

But yes, I do sometimes get a teeny bit green seeing people do stuff I wish I could do. But then I start counting my own blessings and my life is so overflowing with abundant blessings that I am just overwhelmingly thankful to be where I am.

ender

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Wealth perception is all about the comparison between standard of life and your expectation for standard of life.

If that expectation includes a fulltime dedicated nanny costing $60k/year, a $1M+ house, and a HCOL area then $400k may not make you feel wealthy, because you are "only" at your expectation for what life should be.

John74

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A "wealthy lifestyle" does not have to be fueled by debt to be unsustainable. The more you spend now, you less you save, and the more likely the house of cards will collapse at some point. With a big income (and there are plenty of people making good money), you can pull off the illusion of wealth for a while without getting yourself into debt, but without actual accumulated wealth it will all come tumbling down around you if you are asked to turn in your badge. The more of your income you spend now, the harder the fall (and that won't make it on Facebook).
« Last Edit: January 12, 2016, 10:25:13 AM by John74 »

Chris22

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A "wealthy lifestyle" does not have to be fueled by debt to be unsustainable. The more you spend now, you less you save, and the more likely the house of cards will collapse at some point. With a big income (and there are plenty of people making good money), you can pull off the illusion of wealth for a while without getting yourself into debt, but without actual accumulated wealth it will all come tumbling down around you if you are asked to turn in your badge. The more of your income you spend now, the harder the fall (and that won't make it on Facebook).

Depends.  If your lifestyle is new fancy material items every year, you're right, but if one spends time acquiring fancy things (house, car, etc) and pays them off and keeps them, it's not nearly as expensive to continue to own them as it is to acquire them.  And hell, if you buy an expensive house in a desirable area and pay it off and live in it for years, it's entirely likely that you can sell that fancy house and retire somewhere less $$, or to a condo or something, and fund your retirement.

John74

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A "wealthy lifestyle" does not have to be fueled by debt to be unsustainable. The more you spend now, you less you save, and the more likely the house of cards will collapse at some point. With a big income (and there are plenty of people making good money), you can pull off the illusion of wealth for a while without getting yourself into debt, but without actual accumulated wealth it will all come tumbling down around you if you are asked to turn in your badge. The more of your income you spend now, the harder the fall (and that won't make it on Facebook).

Depends.  If your lifestyle is new fancy material items every year, you're right, but if one spends time acquiring fancy things (house, car, etc) and pays them off and keeps them, it's not nearly as expensive to continue to own them as it is to acquire them.  And hell, if you buy an expensive house in a desirable area and pay it off and live in it for years, it's entirely likely that you can sell that fancy house and retire somewhere less $$, or to a condo or something, and fund your retirement.

But if you sell the house in the desirable area and retire in a condo somewhere else, you lose the wealthy lifestyle. And acquiring fancy things and pay them off still cost a lot in upkeep usually.
« Last Edit: January 12, 2016, 12:09:22 PM by John74 »

Chris22

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A "wealthy lifestyle" does not have to be fueled by debt to be unsustainable. The more you spend now, you less you save, and the more likely the house of cards will collapse at some point. With a big income (and there are plenty of people making good money), you can pull off the illusion of wealth for a while without getting yourself into debt, but without actual accumulated wealth it will all come tumbling down around you if you are asked to turn in your badge. The more of your income you spend now, the harder the fall (and that won't make it on Facebook).

Depends.  If your lifestyle is new fancy material items every year, you're right, but if one spends time acquiring fancy things (house, car, etc) and pays them off and keeps them, it's not nearly as expensive to continue to own them as it is to acquire them.  And hell, if you buy an expensive house in a desirable area and pay it off and live in it for years, it's entirely likely that you can sell that fancy house and retire somewhere less $$, or to a condo or something, and fund your retirement.

But if you sell the house in the desirable area and retire in a condo so where else, you lose the wealthy lifestyle.

Not necessarily.  Sell a big house in the NYC metro area and buy yourself a nice condo in FL for 20%?  Possible all day long.

Quote
And acquiring fancy things and pay them off still cost a lot in upkeep.

Again, not necessarily.  At least not necessarily more than buying new stuff.

John74

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Big house in NYC metro= Wealthy lifestyle.
Condo in Florida: accessible to most people, nothing to brag about IMO. Didn't they give condos away in Florida a few years ago after the housing bust? And then Florida is not exactly NYC.

To me this is a big step down and illustrates exactly my point. Few people can afford to keep the big NYC house forever. It takes coin, more than people with expensive lifestyle can usually afford to accumulate.




WGH

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It was probably mentioned but I haven't read all the posts but I think a lot of the vacations, cars, McMansions are coming at the expense of no savings especially retirement savings. Think of all those articles about how the majority of the population has no emergency or retirement savings.

I work in finance and we have a pretty nice retirement plan that offers an after tax match. You put in 4% they match that 2% so you put in $100 you get $50. Can't beat that return. But get this. Despite the fact that this is a finance company where almost everyone has a business degree more than half of the staff does not participate in this as it's non-mandatory! Let that sink in a bunch of business educated, finance and accounting folks who live in a LCOL area and make good money are giving up a guaranteed 50% return!

Why? Because they would rather spend that 4% on the vacations and the nice cars.

dude

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Friend of mine took ten, TEN, trips last year. Places like Hawaii, San Fran. A week, a long weekend, ten days. Now she will "scale back" for 2016  . . . By buying a new $30k SUV!
Thing is, two good 6 figure incomes, no kids, a great but "modest" house (under a million) means this is EASY. My only question is why they still work. But hey like the spending. It's fun. They also have decent savings.
Upper middle class Canadians--world's most comfortable people.

Yep, this^.  Vacations last year for me include a week in Japan to snowboard, a week in Cozumel, MX to dive, a week in New Hampshire to climb, 2 weeks in Maui to surf, dive, and hike (and we were in Roatan, Honduras last week to dive).  DW and I are DINKS with combined income right at the top 5% of households.  We save a shitload (@$95k/year, not including employer contributions to pension), so we can easily afford it.  But a weeklong vacation costs us on average @ $2,500, airfare, lodging, etc. included.  We generally choose destinations that are reasonably priced, stay in modest accommodations, and eat pretty cheaply. We still work because (a) I need three more years to collect my (unreduced, immediate) pension, and (b) she likes her job and still needs to save more.

elaine amj

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For my family, if we are willing to work until conventional retirement age, we really don't need to save much more than the recommended 10% or so. I'm estimating that if we both work until normal age, we will get a conservative $40-$50k a year from our "forced" pensions. That's enough for a simple retirement with some luxuries.

So if I don't save at the 50% rate we are doing now, we'd have an extra $30-$40k in our pockets to spend every year. That can buy a lot of house, cars, stuff, and vacations!

Mind-blowing.

Of course, we'd never be able to "afford" to retire on $40-$50k if we're used to spending $80k/year.

libertarian4321

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How do they do it?  Meet the Jones', er, the Johnson's, they're in debt up to their eyeballs:

https://www.youtube.com/watch?v=LG-Z-kYSC4s

I know tons of people who make good incomes and appear to be living well, but have tons of debt, and if they were hit with a big emergency expense would probably have to hold a garage sale to cover the emergency.

When I briefly forayed into the world of investment advising years ago, I had a boss who drove a nice Mercedes (he was living the dream- nice house, fancy clothes, club membership, just like the guy in the video above). 

The AC went out in early August.  In South Texas (average daily temp probably about 100 degrees).

He drove around all month sweltering in his car, because he had to wait until the end of the month (pay day) to be able to afford the repairs.

This clown was going advising people on money and wealth management. 

Utterly freakin' ridiculous. 

But unfortunately, "fake it til you make it" seems to be far more common than "LBYM and build wealth slowly" in America.



The Fake Cheap

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From my days working in a bank, I can tell you that many of these people are funding these lifestyles with debt.  Not all of course, but the majority for sure.  In fact it was very rare for me to encounter someone in their 20's, 30's or even 40's with any sort of existing savings or savings plan.  Even the "big shot" lawyers and other highly paid occupations would often have maxed LOCs and HELOC's etc. 

Chris22

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From my days working in a bank, I can tell you that many of these people are funding these lifestyles with debt.  Not all of course, but the majority for sure.  In fact it was very rare for me to encounter someone in their 20's, 30's or even 40's with any sort of existing savings or savings plan.  Even the "big shot" lawyers and other highly paid occupations would often have maxed LOCs and HELOC's etc.

How do you know though?  For even my modest holdings I deal with 5-6+ different banks.  Couple checking and small savings account in one, 529, credit card, and IRAs in another, 401ks for wife and I in different banks, credit union with more cash, two mortgages (residence + rental) in two other banks, and then mutual fund holdings.  I always wonder what my main bank thinks of me with relatively small checking and savings balances, and no visibility to where the bulk of my savings is.  And I am a little different than most in that I do a lot of leveraging, so I have a fair amount of low interest debt that I make minimum payments on so I can invest more.  If you don't have the whole picture, you can make lots of incorrect assumptions. 

KCM5

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From my days working in a bank, I can tell you that many of these people are funding these lifestyles with debt.  Not all of course, but the majority for sure.  In fact it was very rare for me to encounter someone in their 20's, 30's or even 40's with any sort of existing savings or savings plan.  Even the "big shot" lawyers and other highly paid occupations would often have maxed LOCs and HELOC's etc.

How do you know though?  For even my modest holdings I deal with 5-6+ different banks.  Couple checking and small savings account in one, 529, credit card, and IRAs in another, 401ks for wife and I in different banks, credit union with more cash, two mortgages (residence + rental) in two other banks, and then mutual fund holdings.  I always wonder what my main bank thinks of me with relatively small checking and savings balances, and no visibility to where the bulk of my savings is.  And I am a little different than most in that I do a lot of leveraging, so I have a fair amount of low interest debt that I make minimum payments on so I can invest more.  If you don't have the whole picture, you can make lots of incorrect assumptions. 

Yeah, I wonder this, too. I don't even have a savings account at my main bank. And I keep the checking account balance below $3k. Yet we save 50% of our income. It's just with Vanguard, work 457, defined benefit pension, etc. AND I have a car loan (0%), mortgage (30 year at just over 3%), student loans (on 10 year plan at 2%), credit cards (paid off monthly so no interest). We're even looking at opening and using a HELOC for a home addition. People at the home bank could easily glance at that and think we're leveraged to the hilt - because we kind of are.

LiveLean

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I made a conscious effort to avoid social media in 2015 and, as a result, I don't notice it nearly as much. It's the pics-or-it-didn't-happen mentality. I am floored by how many folks in the Gen X generation (parents like myself) are subsidized by their parents or even trust funders. I can't imagine, at 46, having a parent give me money, vacations, down payments, etc. That ended when they paid my last college bill in 1991 (though I paid for a chunk of college, too). Back then, having a car payment or a student loan was unusual. Now it's commonplace.

Another thing fueling it is the wedding industry. It's amazing how many young women I know who will travel to the ends of the Earth to attend 6-8 weddings a year of college and high school friends. So when they establish that pattern of travel, that's a tough habit to break.


Chris22

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I made a conscious effort to avoid social media in 2015 and, as a result, I don't notice it nearly as much. It's the pics-or-it-didn't-happen mentality. I am floored by how many folks in the Gen X generation (parents like myself) are subsidized by their parents or even trust funders. I can't imagine, at 46, having a parent give me money, vacations, down payments, etc.

My parents took my wife, daughter and I, as well as my sister and her husband, on a very expensive vacation a couple years ago (to Alaska), and are planning another one next year (to Hawaii).  Last one was for dad's 60th, this one for mom's.  They've already told us that they don't plan on leaving us much money (though there will be a paid-for $500k+ house to split), they want to be alive to see us enjoy what they give/leave.  Taking us on vacation with them is one way they do that.  They have plenty of money, and that's how they want to spend it.  I'd never ask them for it, but if it makes them happy to give, I won't fight them.

jinga nation

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Re: The "everybody seems wealthy" illusion
« Reply #176 on: January 13, 2016, 02:22:13 PM »
I often have this struggle where it seems as if everybody around me is wealthy. Friends, strangers, whoever. It happens in all sorts of ways — from the houses I ride my bike past on my way to the grocery store, to online friends always taking off on extended trips or living in pricey areas of the country.

Is it all just amassing of debt for immediate gratification? <snip>

Is it really just all fueled by debt?
I haven't read the entire thread, but to answer the OP:
  • Conspicuous consumption is in the mainstream and it is by-and-large fueled by debt. Look at data. Record highs of auto loans, credit card loans, education loans.
  • I passed by my alma mater recently during finals week and saw a ton of nice cars. So either rich parents or paid for using loans. Nice cars were rare to see when I was a student from 1998-2004. Wasn't like this in 2004 when I graduated with my Master's degree. I've lived in the same area since 1998, and my uncle has since 1985. We notice similar trends. (Maybe we're getting old and angry.)
  • Social media, in my non-scientific opinion, drives people to show off their fancy new purchases, and spurs others to do so to. Luxury vehicle purchases (German, Japanese) are the norm where I live. A used car dealer (lives in my modest neighborhood) tells me low and lower middle income customers want the shiny 3 year old imported car for $199/month on a 6/7/8 year loan. No budget for maintenance and insurance though!
  • Friends who work in mortgage banking say applications of HELOCs are increasing to leverage equity from their house to take 'advantage' of low rates.
  • Being wealthy and seems wealthy are worlds apart. The bubble will burst. The house of cards will fall. Unless the government interferes, natural selection will sort out the winners from the losers, people and businesses alike. Be a contrarian, save and invest in low-cost mutual funds, rental real estate, etc.

NESailor

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From my days working in a bank, I can tell you that many of these people are funding these lifestyles with debt.  Not all of course, but the majority for sure.  In fact it was very rare for me to encounter someone in their 20's, 30's or even 40's with any sort of existing savings or savings plan.  Even the "big shot" lawyers and other highly paid occupations would often have maxed LOCs and HELOC's etc.

How do you know though?  For even my modest holdings I deal with 5-6+ different banks.  Couple checking and small savings account in one, 529, credit card, and IRAs in another, 401ks for wife and I in different banks, credit union with more cash, two mortgages (residence + rental) in two other banks, and then mutual fund holdings.  I always wonder what my main bank thinks of me with relatively small checking and savings balances, and no visibility to where the bulk of my savings is.  And I am a little different than most in that I do a lot of leveraging, so I have a fair amount of low interest debt that I make minimum payments on so I can invest more.  If you don't have the whole picture, you can make lots of incorrect assumptions.

Correct...but if you work at a bank and someone comes in to apply for a loan or CC or whatever, you get the person's whole picture real quick.  Income, assets, debts.  Boom, there you have it.  Perhaps that's what they were referring to?

JLee

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From my days working in a bank, I can tell you that many of these people are funding these lifestyles with debt.  Not all of course, but the majority for sure.  In fact it was very rare for me to encounter someone in their 20's, 30's or even 40's with any sort of existing savings or savings plan.  Even the "big shot" lawyers and other highly paid occupations would often have maxed LOCs and HELOC's etc.

How do you know though?  For even my modest holdings I deal with 5-6+ different banks.  Couple checking and small savings account in one, 529, credit card, and IRAs in another, 401ks for wife and I in different banks, credit union with more cash, two mortgages (residence + rental) in two other banks, and then mutual fund holdings.  I always wonder what my main bank thinks of me with relatively small checking and savings balances, and no visibility to where the bulk of my savings is.  And I am a little different than most in that I do a lot of leveraging, so I have a fair amount of low interest debt that I make minimum payments on so I can invest more.  If you don't have the whole picture, you can make lots of incorrect assumptions.

Correct...but if you work at a bank and someone comes in to apply for a loan or CC or whatever, you get the person's whole picture real quick.  Income, assets, debts.  Boom, there you have it.  Perhaps that's what they were referring to?

I don't recall ever having to list investment/retirement account holdings for a loan or CC.

BTDretire

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We argued about this for pages on another thread and seemed to come to the idea that X/yr salary is high income, X in liquid assets is rich/wealthy.

I said in that thread my idea of rich is $1m in liquid assets, wealthy would be beyond that quite a bit.


 Yes, $1M seems like you are rich, but it only generates $40,000 a year, $13,000 less than
the median household income. And as a mustachian, you don't want to spend any principal.
Most people would call you rich, but your certainly not living as well as most spendypants people.
 Quite a juxtaposition, but I know which I'd rather be.

CheapScholar

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The Facebook posts that crack me up most are the happy hours.  People go out to restaurants and bars constantly and pay God knows what for drinks and bad appetizers.  I also have many friends who go out to lunch nearly every day, although they don't Facebook it.  I don't think they ever take the time to do the simple math of how much they are spending.  For example, my brother in law works in Chicago and spends $10 a day easy on lunch.  I'd be willing to bet that he pays more each day in sales tax than I do for my entire lunch, typically leftovers, pb&j, or the free food constantly for the taking in my work break room.

tobitonic

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I'm sure someone could say the same about us.  We spend a lot in certain areas and in others we don't.  Our income is close to 400k and we purchased a 750k home in a hot neighborhood.  Our plan is to pay it off before early retirement.  We only have one car and I ride my bike to work.

We save around 100k plus each year when including 401k matching, defined pension contribution, emergency savings, stock grants etc.   but we also go on some fancy vacations and I have some luxury clothing items.  Life is short.  While I want to ensure we can retire early I also want to enjoy my relative youth and time with my husband.  I try to balance things.  We also stand to inherit a pretty penny and I try to not count on this.

That's because you are wealthy - it's not an illusion. :P

Funny because I don't consider us wealthy but I suppose to many we are.

Imagine a $350,000/yr pay cut, then you'd be where most people are. :P

Hah, well put.

DollarBill

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The "everybody seems wealthy" illusion — is it really just all fueled by debt?
« Reply #182 on: January 13, 2016, 07:28:43 PM »
I sure am glad for the FB posts to keep this economy rolling ;-)

Fastfwd

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For example, my brother in law works in Chicago and spends $10 a day easy on lunch.

I have been thinking about that lately. I bring lunched to work everyday and it's the trouble of preparing it, transporting another bag on the bus and then lining up for the microwaves. It costs me probably around 5$ to bring my lunch. 20 days of work per month and the difference between 5$ lunch and 10$ prepared meal is just 100$ per month. Not a big item in my budget and a lot of convenience for the decade or so of work I still have to do before retirement. Maybe I am being too frugal.

mrteacher

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For example, my brother in law works in Chicago and spends $10 a day easy on lunch.

I have been thinking about that lately. I bring lunched to work everyday and it's the trouble of preparing it, transporting another bag on the bus and then lining up for the microwaves. It costs me probably around 5$ to bring my lunch. 20 days of work per month and the difference between 5$ lunch and 10$ prepared meal is just 100$ per month. Not a big item in my budget and a lot of convenience for the decade or so of work I still have to do before retirement. Maybe I am being too frugal.

Sure, but it's also a health thing. Even eating out at a 'healthy' restaurant/sandwich shop is not going to compare to a from-home meal - assuming, of course, that you are cooking/preparing healthy meals.

The line for the microwave can get long where I work, too, so many days I'll bring a beast of a salad: lettuce, tons of chopped veggies, nuts, hard boiled egg, beans, etc.

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Sure, but it's also a health thing. Even eating out at a 'healthy' restaurant/sandwich shop is not going to compare to a from-home meal - assuming, of course, that you are cooking/preparing healthy meals.

Very true. As in many things moderation is the answer. Maybe I should let myself eat prepared meals 1 or 2 days per week.

Giro

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I agree with a few of the other posts.  The spending may not be all on credit, but it's at the expense of SOMETHING else.  If we didn't have the goal of early retirement, we would have an extra $8k a month.  That is a lot of change to spend. 

But, I like watching my investments grow so that I'm not a slave to this 9-5.  It's more important to me than a big house or lavish vacations. 

At the beginning of this  year, I wrote down a list of everything that is important to me.  One of those things was less time "doing things".  I have about 6 weeks of vacation each year and last year I ended up with 3 weeks in December that I had to use or I would lose it (no pay out, no nothing).  I stayed home.  It was wonderful.  I loved it.  I want to take more time staying home from work.  If I had to choose between one week in the Bahamas or four weeks at home doing nothing....I would stay home. 




rubybeth

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Haven't read the whole thread, but I've often thought the same thing (people living on leveraged money/debt), especially as DH and I still live in the same apartment we rented when we got married over 7 years ago, and still haven't saved up for a down payment on a house. But we've paid for other things without debt, so I try to keep track of what we have accomplished vs. what we haven't. We may not have a picket fence to show for it, but that's okay.

I used to be more more surprised when friends/family reveal what kind of financial picture they have (mortgages, student loans, etc.). I'm not as surprised after hearing so many of these stories. DH and I really are the outliers, and we're okay with that. We're both anxious people, and having debt didn't set well with either of us.

A lot of our friends probably make decent incomes, but they've made other choices that result in debt, or their situations were different to begin with. DH and I were very lucky to get our undergraduate degrees without student loans, under very different circumstances. But we had that advantage/privilege, and we fully appreciate that fact.

rockstache

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Re: The "everybody seems wealthy" illusion
« Reply #188 on: January 14, 2016, 08:31:40 AM »
For example, my brother in law works in Chicago and spends $10 a day easy on lunch.

I have been thinking about that lately. I bring lunched to work everyday and it's the trouble of preparing it, transporting another bag on the bus and then lining up for the microwaves. It costs me probably around 5$ to bring my lunch. 20 days of work per month and the difference between 5$ lunch and 10$ prepared meal is just 100$ per month. Not a big item in my budget and a lot of convenience for the decade or so of work I still have to do before retirement. Maybe I am being too frugal.

$5 seems like a pretty expensive homemade lunch. I estimate mine is around $1-2. But I eat the same thing just about every day and I know that probably isn't for everyone.

Chris22

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Re: The "everybody seems wealthy" illusion
« Reply #189 on: January 14, 2016, 08:50:38 AM »
For example, my brother in law works in Chicago and spends $10 a day easy on lunch.

I have been thinking about that lately. I bring lunched to work everyday and it's the trouble of preparing it, transporting another bag on the bus and then lining up for the microwaves. It costs me probably around 5$ to bring my lunch. 20 days of work per month and the difference between 5$ lunch and 10$ prepared meal is just 100$ per month. Not a big item in my budget and a lot of convenience for the decade or so of work I still have to do before retirement. Maybe I am being too frugal.

$5 seems like a pretty expensive homemade lunch. I estimate mine is around $1-2. But I eat the same thing just about every day and I know that probably isn't for everyone.

Round numbers, I eat lunchmeat, bread, fruit, bag of chips for lunch 4 days a week (x 2 people = 8 lunches).

Estimates:
Lunchmeat (1lb) $8
Bread $3
Fruit $6
Chips $3
$20/8 = $2.50

Throw a drink from a vending machine on there, you're at $4, bring it from home, it's maybe $3 (or water is free).

Ramblin' Ma'am

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I agree with a few of the other posts.  The spending may not be all on credit, but it's at the expense of SOMETHING else.  If we didn't have the goal of early retirement, we would have an extra $8k a month.  That is a lot of change to spend. 

I always think of this when I read sob stories in the NY Times or other outlets about people who were making six figures and then were laid off. "Mary Jones had a $150K a year job but was laid off in her 40s. Within a few months, her house had been foreclosed on and she had no savings left." Where does all the money go?

rockstache

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Re: The "everybody seems wealthy" illusion
« Reply #191 on: January 14, 2016, 09:33:56 AM »
For example, my brother in law works in Chicago and spends $10 a day easy on lunch.

I have been thinking about that lately. I bring lunched to work everyday and it's the trouble of preparing it, transporting another bag on the bus and then lining up for the microwaves. It costs me probably around 5$ to bring my lunch. 20 days of work per month and the difference between 5$ lunch and 10$ prepared meal is just 100$ per month. Not a big item in my budget and a lot of convenience for the decade or so of work I still have to do before retirement. Maybe I am being too frugal.

$5 seems like a pretty expensive homemade lunch. I estimate mine is around $1-2. But I eat the same thing just about every day and I know that probably isn't for everyone.

Round numbers, I eat lunchmeat, bread, fruit, bag of chips for lunch 4 days a week (x 2 people = 8 lunches).

Estimates:
Lunchmeat (1lb) $8
Bread $3
Fruit $6
Chips $3
$20/8 = $2.50

Throw a drink from a vending machine on there, you're at $4, bring it from home, it's maybe $3 (or water is free).

Yeah that sounds more accurate. I only drink water at work, and I eat a PB&J and a hard boiled egg pretty much every day for lunch with an afternoon snack of fruit or veggies depending on what we bought that week/month.


Kitsune

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Re: The "everybody seems wealthy" illusion
« Reply #192 on: January 14, 2016, 12:58:51 PM »
For example, my brother in law works in Chicago and spends $10 a day easy on lunch.

I have been thinking about that lately. I bring lunched to work everyday and it's the trouble of preparing it, transporting another bag on the bus and then lining up for the microwaves. It costs me probably around 5$ to bring my lunch. 20 days of work per month and the difference between 5$ lunch and 10$ prepared meal is just 100$ per month. Not a big item in my budget and a lot of convenience for the decade or so of work I still have to do before retirement. Maybe I am being too frugal.

$5 seems like a pretty expensive homemade lunch. I estimate mine is around $1-2. But I eat the same thing just about every day and I know that probably isn't for everyone.

Round numbers, I eat lunchmeat, bread, fruit, bag of chips for lunch 4 days a week (x 2 people = 8 lunches).

Estimates:
Lunchmeat (1lb) $8
Bread $3
Fruit $6
Chips $3
$20/8 = $2.50

Throw a drink from a vending machine on there, you're at $4, bring it from home, it's maybe $3 (or water is free).

Yeah that sounds more accurate. I only drink water at work, and I eat a PB&J and a hard boiled egg pretty much every day for lunch with an afternoon snack of fruit or veggies depending on what we bought that week/month.

Lunch today (and tomorrow) was pasta with cherry tomatoes, tuna, capers, green onions, parmesan, and olives (aka: last night's leftovers, which fed 4 people + 2 toddlers). Brought with a bowl of blueberries in yogurt (frozen berries, homemade yogurt) and a cup of tea (brought the tea bag from home). Total cost for the pasta = 1.20$/portion. Cost for the berries and yogurt: about 50 cents. Tea bag: ... maybe 5 cents? So, ambitious accounting for my lunch has it at about 2$CAD. On average, ingredients-wise, we're looking at about that cost on the high end. (Sandwich will be made with leftover meat and homemade bread, or boiled eggs on lettuce from the garden, or... you get the picture. Tasty, healthy, not expensive).

Compared to an average of 10-12$CAD at the local food court... Assuming 4 weeks/month at savings of 8-10$/day, we're looking at 180$/month. Times 2, because I pack my husband's lunch as well. I can think of a LOT of things I'd rather do with 4,3K/year than go to the food court for lunch...
« Last Edit: January 14, 2016, 01:05:07 PM by Kitsune »

BlueHouse

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This is the hard part for me. I was born in the GDR to a bourgeois family, meaning we were impoverished and everything had been taken from my family a generation or two above me. So I grew up surrounded by some sort of undignified bitterness that runs in my veins. I had to start from scratch, and when my mother died shortly before I went to university, there wasn't much to inherit - about what I had saved myself in one year of work. I'm doing well enough now, but I strive really hard with accepting how other people's birth luck and choices create an uneven playing field, and have done so forever. I see people around me changing careers like underwear, because that's an easy way to climb in salaries, and I struggle with the disloyalty they display and the unfinished projects they leave behind. It's stupid, yet I can't help it! I see friends my age buy cabins worth more than our house, and I can't help but think about the vast challenge they load upon themselves financially ("We eat cheap bread now") and timewise (all property tends to fall apart in rainy, windy, icy Norway). There's a distance left to not caring and just enjoying life. Got to say I am surprised at the massive, constant relief that having paid off the house is though.
Would you feel better knowing that your small inheritance made me envious of you?  At least you got something (positive and didn't inherit someone else's debt).

Chris22

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At least you got something (positive and didn't inherit someone else's debt).

??  Except in very specific circumstances (prior arranged business deals, etc), it is impossible to inherit debt.  If an estate is in a negative worth position, you inherit nothing.

TheNick

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I agree with a few of the other posts.  The spending may not be all on credit, but it's at the expense of SOMETHING else.  If we didn't have the goal of early retirement, we would have an extra $8k a month.  That is a lot of change to spend. 

I always think of this when I read sob stories in the NY Times or other outlets about people who were making six figures and then were laid off. "Mary Jones had a $150K a year job but was laid off in her 40s. Within a few months, her house had been foreclosed on and she had no savings left." Where does all the money go?

Let's not forget the sob stories about "Mary Jones is 62 and earns 150k a year after a long and lucrative career and has 200k in retirement accounts and is worried she will never be able to afford to retire."  My how little some people must have save when they have a good paying job and after a 40 year career they don't even have 2x their salary in their stash.

tobitonic

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For example, my brother in law works in Chicago and spends $10 a day easy on lunch.

I have been thinking about that lately. I bring lunched to work everyday and it's the trouble of preparing it, transporting another bag on the bus and then lining up for the microwaves. It costs me probably around 5$ to bring my lunch. 20 days of work per month and the difference between 5$ lunch and 10$ prepared meal is just 100$ per month. Not a big item in my budget and a lot of convenience for the decade or so of work I still have to do before retirement. Maybe I am being too frugal.

Sure, but it's also a health thing. Even eating out at a 'healthy' restaurant/sandwich shop is not going to compare to a from-home meal - assuming, of course, that you are cooking/preparing healthy meals.

The line for the microwave can get long where I work, too, so many days I'll bring a beast of a salad: lettuce, tons of chopped veggies, nuts, hard boiled egg, beans, etc.

+1. My BIL once made a statement about how he didn't like going out to restaurants unless he thought they could make a better meal than his wife and he could.

At the time, I didn't think much of it...but after I really, really got into healthy eating, I agreed with him, although by "better," I mean "healthier."

When we cook, which is every night except for the occasional leftover from the previous night's cooking, it's whole wheat this, fresh vegetable that, only canola or olive oil, cage-free eggs, organic meats, ocean-caught fish, etc etc.

I know exactly what goes into every meal, and I know it's about as healthy as food gets without growing it ourselves, rather than simply sourced from the cheapest ingredients on the shelf.

I never thought I'd become a health nut, food-wise, but yeah...I can still eat out when it's a family occasion, no problem, but I definitely don't miss it the 95% of the year when we aren't eating out. It's been an interesting change.

Fishindude

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When we cook, which is every night except for the occasional leftover from the previous night's cooking, it's whole wheat this, fresh vegetable that, only canola or olive oil, cage-free eggs, organic meats, ocean-caught fish, etc etc.

I know exactly what goes into every meal, and I know it's about as healthy as food gets without growing it ourselves, rather than simply sourced from the cheapest ingredients on the shelf.


Good intentions, but if you aren't raising it yourself or don't have a close relationship with the producer, YOU DO NOT KNOW WHAT YOU ARE GETTING.

Here is an example.   A friend works for a large poultry producer, chickens raised in huge buildings, never see the light of day, eat whatever is given to them, etc.  When the "free range" craze took hold, their mega company recognized that they had to be in on it.  Apparently the association of poultry producers or something set the parameters on what constituted "free range" chickens.  This required their company to put wall openings into outdoor enclosures on some of their mega buildings so the chickens could come and go outdoors.   He says the chickens rarely ever go outdoors into these enclosures, and they are the same birds, eating the same stuff, etc.   They just charge the consumer a little more for "free range" chickens.

mrteacher

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For example, my brother in law works in Chicago and spends $10 a day easy on lunch.

I have been thinking about that lately. I bring lunched to work everyday and it's the trouble of preparing it, transporting another bag on the bus and then lining up for the microwaves. It costs me probably around 5$ to bring my lunch. 20 days of work per month and the difference between 5$ lunch and 10$ prepared meal is just 100$ per month. Not a big item in my budget and a lot of convenience for the decade or so of work I still have to do before retirement. Maybe I am being too frugal.

Sure, but it's also a health thing. Even eating out at a 'healthy' restaurant/sandwich shop is not going to compare to a from-home meal - assuming, of course, that you are cooking/preparing healthy meals.

The line for the microwave can get long where I work, too, so many days I'll bring a beast of a salad: lettuce, tons of chopped veggies, nuts, hard boiled egg, beans, etc.

+1. My BIL once made a statement about how he didn't like going out to restaurants unless he thought they could make a better meal than his wife and he could.

At the time, I didn't think much of it...but after I really, really got into healthy eating, I agreed with him, although by "better," I mean "healthier."

When we cook, which is every night except for the occasional leftover from the previous night's cooking, it's whole wheat this, fresh vegetable that, only canola or olive oil, cage-free eggs, organic meats, ocean-caught fish, etc etc.

I know exactly what goes into every meal, and I know it's about as healthy as food gets without growing it ourselves, rather than simply sourced from the cheapest ingredients on the shelf.

I never thought I'd become a health nut, food-wise, but yeah...I can still eat out when it's a family occasion, no problem, but I definitely don't miss it the 95% of the year when we aren't eating out. It's been an interesting change.

This is exactly how I feel.

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In my neighborhood I own one of the cheapest houses and according to stats Canada I am in the top 10% salary bracket. I think some of it is debt but mostly I think it is inherited money or foreign money. There are a lot of people in my area that came to Canada in the last few years and they have the biggest houses. Political stability attracts people from all over the world but mainly China and Middle east in my area.

 

Wow, a phone plan for fifteen bucks!