Why rich people don't feel rich

[Anonymous]

Here is an interesting post that compares income levels and tries to answer the question about why people with high incomes often don't feel wealthy:
http://economix.blogs.nytimes.com/2011/01/11/why-so-many-rich-people-dont-feel-very-rich/
I know this topic gets discussed here fairly often, so I thought others might be interested.

[Anonymous]

I think it's an apt observation. For me, part of the other reason I don't feel "rich" is the astronomical cost of living in this area driven by lots of well off people all competing to live and get services in the same small areas and trying to concentrate themselves as much as possible (in the suburbs at least) in order to avoid schools with larger concentrations of needy children.

I don't "feel" rich because people making far less in my home town (not in the boondocks but not here) live in way nicer homes w/ more space and better schools. I don't "feel" rich because what I view as essentials (e.g. child care I feel is quality, a home in a reasonably safe neighborhood, 2 cars for commuting in 2 opposite directions) consume large parts of my income and it's difficult (while saving - and not even maxing out saving recommendations either) to afford a home that's not falling down and both a reasonable commute and in a school zone that's not heavily concentrated w/ needy populations. But I bought shortly before the crash, so no need to restart this whole debate w/ people who bought in 2000 chiming in about how they feel loaded!

[Anonymous]

Its all relative. To me, someone who is "rich" has millions in assets. To someone else, I am rich. So that is why I don't feel rich. This doesn't mean that I do not feel thankful.

[Anonymous]

You are not rich unless you live entirely off unearned income.

[Anonymous]

What is money if you are sick and ill
What is money if you are surrounded by bratty children and a miserable spouse
What is money if you constantly worry about money?


The sleap of a labourer is sweet.

[Anonymous]

Anonymous wrote:You are not rich unless you live entirely off unearned income.

True...so true. If you have to work or raise your own kids, you're not in the club. I'm not in that club, nor would I want to be. It sounds boring.

[Anonymous]

I agree with almost everything both the 15:29 and 16:03 posters said.

It bugs me to hear "high income" equated with "rich." These are two separate things. There are people with high incomes who have high debt and no assets- a negative net worth. At the same time, there are people who make a low income, but are savers, and manage to accumulate assets (like U-Va professor Larry Sabato, who lived on mac n' cheese and donated $1M to U-Va, all from investment proceeds and his academic's salary.) It is easier to become "rich" if you have a high income. But the bottom line is, you must live on less money than you make and save/invest the rest.

The term is High Income Not Rich Yet ("HENRYs"). This is the complaint about the $250k tax wars. In this area, a family could make $250k, but has two parents working, kids in daycare, student loans for the education needed to get the high-paying job, and a house in Loudon that has depreciated in value and now is worth less than the mortgage. That is not "rich."

It is much easier to be "rich" in the lower-cost of living areas where a real mansion (not McMansion) can be bought on a low salary, that doesn't require paying much in taxes.

[Anonymous]

Whine, whine, whine. Cake. Eating it. Bleh.

[Anonymous]

The term is High Income Not Rich Yet ("HENRYs"). This is the complaint about the $250k tax wars. In this area, a family could make $250k, but has two parents working, kids in daycare, student loans for the education needed to get the high-paying job, and a house in Loudon that has depreciated in value and now is worth less than the mortgage. That is not "rich."

It is much easier to be "rich" in the lower-cost of living areas where a real mansion (not McMansion) can be bought on a low salary, that doesn't require paying much in taxes.

Exactly. I am very fortunate, but my financial reality in this area is not that of someone making the same salary in Iowa. And the tax code pretty much ignores that.

[Anonymous]

Anonymous wrote:I agree with almost everything both the 15:29 and 16:03 posters said.

It bugs me to hear "high income" equated with "rich." These are two separate things. There are people with high incomes who have high debt and no assets- a negative net worth. At the same time, there are people who make a low income, but are savers, and manage to accumulate assets (like U-Va professor Larry Sabato, who lived on mac n' cheese and donated $1M to U-Va, all from investment proceeds and his academic's salary.) It is easier to become "rich" if you have a high income. But the bottom line is, you must live on less money than you make and save/invest the rest.

The term is High Income Not Rich Yet ("HENRYs"). This is the complaint about the $250k tax wars. In this area, a family could make $250k, but has two parents working, kids in daycare, student loans for the education needed to get the high-paying job, and a house in Loudon that has depreciated in value and now is worth less than the mortgage. That is not "rich."

It is much easier to be "rich" in the lower-cost of living areas where a real mansion (not McMansion) can be bought on a low salary, that doesn't require paying much in taxes.

You have a point, but not a good one. Just because you decide to spend all of your high income doesn't mean you're not rich. You could do the same things people that live on far less do, but you choose not to. If everyone could make the same amount of money in Iowa, as they do here, then more people would do that. But the reality is most of the time, lower paying jobs come with those lower cost of living areas. My husband and I lived in DC comfortably on 60K combined. Now we make closer to 130K and feel very fortunate.

[Anonymous]

Anonymous wrote:Whine, whine, whine. Cake. Eating it. Bleh.

I FEEL RICH!

We are healthy, our roly-poly baby makes us so happy, we are moving into our first home, life is full of hope!

[Anonymous]

Anonymous wrote:

The term is High Income Not Rich Yet ("HENRYs"). This is the complaint about the $250k tax wars. In this area, a family could make $250k, but has two parents working, kids in daycare, student loans for the education needed to get the high-paying job, and a house in Loudon that has depreciated in value and now is worth less than the mortgage. That is not "rich."

It is much easier to be "rich" in the lower-cost of living areas where a real mansion (not McMansion) can be bought on a low salary, that doesn't require paying much in taxes.

Exactly. I am very fortunate, but my financial reality in this area is not that of someone making the same salary in Iowa. And the tax code pretty much ignores that.

The fucking move to Iowa! You knew the deal when you moved here. It's not like someone tricked you. DC has a high cost of living. Money doesn't go as far here. The federal government does not offer cost of living adjustments (though they do in some effect with tax breaks on mortgage interest and the like). If you'd rather deal with Iowa cost of living, move there. If you prefer your DC salary, stay here. But you likely can't have a DC salary and Iowa cost of living in your current profession. That's just the reality of the situation. And any whining to the contrary is just that... whining.

[Anonymous]

If you can afford a decent home, food, education, retirement and college savings, clothing, transportation, and activties for your family, then you are doing pretty well - maybe even rich. After all, anything else is a luxury.

[Anonymous]

But you likely can't have a DC salary and Iowa cost of living in your current profession. That's just the reality of the situation.

of course. But that's the whole point. There's an effort to demonmize those making higher salaries (but primarily living in very high cost of living areas) w/ no admission of the fact that the cost of living in those locations is so high. If we have a progressive income tax on the theory that those w/ more can and should afford to pay more then it makes no sense not to take cost of livign into account. If we move to a flat tax, then it should not be taken into account - you live where you want and pay the same tax as anyone else. I'm not a fan of the flat tax since I think it would be too onerous on the poor and generous to those well off, but I also think it's crazy to have drawn a line to define "rich" when in reality it's lots of dual income working professionals living in far more modest homes than those in Iowa making half that amount while spending significant amounts of each day commuting to even afford those modest houses.

I am lucky. I absolutely agree with that. But the premise of the post is why you don't feel rich, despite a higher income compared to the rest of the country. I and the other posters that aren't just saying "stop whining" are replying to that point.

[Anonymous]

Anonymous wrote:

But you likely can't have a DC salary and Iowa cost of living in your current profession. That's just the reality of the situation.

of course. But that's the whole point. There's an effort to demonmize those making higher salaries (but primarily living in very high cost of living areas) w/ no admission of the fact that the cost of living in those locations is so high. If we have a progressive income tax on the theory that those w/ more can and should afford to pay more then it makes no sense not to take cost of livign into account. If we move to a flat tax, then it should not be taken into account - you live where you want and pay the same tax as anyone else. I'm not a fan of the flat tax since I think it would be too onerous on the poor and generous to those well off, but I also think it's crazy to have drawn a line to define "rich" when in reality it's lots of dual income working professionals living in far more modest homes than those in Iowa making half that amount while spending significant amounts of each day commuting to even afford those modest houses.

I am lucky. I absolutely agree with that. But the premise of the post is why you don't feel rich, despite a higher income compared to the rest of the country. I and the other posters that aren't just saying "stop whining" are replying to that point.

They're being demonized (if they are really being demonized at all) by people making 1/10th of their salary and dealing with the same cost of living. Maybe you are not as "rich" as you'd like to be, but from the guy on the bottom, you are and that is why he perceives you the way he does. Again, you have to take the bad with the good. Being wealthy comes with certain negatives, including the perception. Is it fair? Probably not. But it's the reality. Would you change positions with the guy making $20K a year in DC? No. So, again, quit your bitching.