Why rich people don't feel rich

[Anonymous]

Anonymous wrote:

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.

I guess you rent and don't have any loans? I also assume one of you SAH, thus no childcare costs, when you made $60K? Apples and oranges to how dual income professionals live. Repaying student loans is not optional.

[Anonymous]

Anonymous wrote:

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.

The guy on the bottom didn't go to college, doesn't own a home, will never retire and will live off social welfare programs. How is it even relevant to compare his financial situation to a couple that goes not only to college but to business school or law school and spends 10 years repaying loans?

[Anonymous]

Anonymous wrote:

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.

Thank you! This point can't be made often enough. Unless your debt is the result of catastrophic health issues, it was a choice. Maybe a good choice (the educational debt that allows you to hold that high paying job) or a bad choice (the McMansion in Loudoun that plummeted in value), but still a choice. We're not talking about non-english speakers who were duped into taking out loans they could never afford - these are people who earn enough income to be in the top 5% or so of earners in the county. If your income can't support your lifestyle or debt service, that's unfortunate - but it's on you. Earn more, or alter your circumstances so you have to pay less. Either way, stop freakin' whining about it, and take some ownership. Sheesh.

Short version - just because you don't feel rich doesn't mean you aren't rich.

Short version - it's what you keep, not what you earn, that determines whether or not a household is "rich."

[Anonymous]

Anonymous wrote: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.

Agreed. Let's dispense with the tired "same job in Iowa" hypothetical. (And why is it always Iowa?) How about the guy who changes your oil? Or the lady that cleans your house? Or the first-year teacher at your kid's school? They have eactly the same cost of living issues you do - but at about 1/10th of your income. Still don't feel rich?

No, they don't have the same cost of living issues. They are not trying to save to put their kids through college - their kids will get grants. They aren't trying to put away enough to retire. They're not looking to buy a $500,000 house with just their nuclear family. Totally different cost of living issues than an upper middle class family.

[Anonymous]

Short version - it's what you keep, not what you earn, that determines whether or not a household is "rich."

If by "keep" you mean after taxes - sure. If by "keep" you mean "after my obligations, the vast majority of which are voluntary, are paid for," that's ridiculous. If you make $400k a year, but have an expensive mortgage, 2 car payments, maximize your retirement savings, contribute to a 529 account, and pay private school tuition you won't have a lot left over. But you're sure as hell rich.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

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.

I guess you rent and don't have any loans? I also assume one of you SAH, thus no childcare costs, when you made $60K? Apples and oranges to how dual income professionals live. Repaying student loans is not optional.

New poster here- Yes, they are different situations, but it's a fair comparison. Taking out loans, staying at home vs working- all choices. No, repaying loans aren't optional, but taking them out sure was.

[Anonymous]

Anonymous wrote:

Anonymous wrote: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.

Agreed. Let's dispense with the tired "same job in Iowa" hypothetical. (And why is it always Iowa?) How about the guy who changes your oil? Or the lady that cleans your house? Or the first-year teacher at your kid's school? They have eactly the same cost of living issues you do - but at about 1/10th of your income. Still don't feel rich?

No, they don't have the same cost of living issues. They are not trying to save to put their kids through college - their kids will get grants. They aren't trying to put away enough to retire. They're not looking to buy a $500,000 house with just their nuclear family. Totally different cost of living issues than an upper middle class family.

They're not going to do those things because they can't afford them, not because they don't want to. You can afford them, which is part of what makes you rich. Why is that so hard to understand?

Any by the way, there's no need to buy a SFH for $500,000 - you can easily find housing for less than that. Once again, that's a choice.

[Anonymous]

There seems to be a lot of stigma associated with being "rich" in this board. I'm financially rich by any of the standards given (other than that my husband and I earned our money by working, no family money involved), and am happy about it. It has allowed me to live where I want, to have our kids go to the schools of our choice, for us to take low-paying jobs we care about without worrying about financial consequences, to help our extended family, and to give time and money to organizations we feel do a lot of good. Frankly, I'm thrilled. What the heck is wrong with that?

[Anonymous]

Let's see... two cars... professional child care... owning a home... living with all the amenities and luxuries that city living provides... yea, that's pretty fucking good.

I'm not sure what the latter means (I don't live in the city - I live in MC but I'm still not sure what it would refer too but maybe that's because I don't think the city/this area are nicer to live in than most small towns). But my point was that my family is fortunate to afford to have 2 cars, childcare that's not horrifying and the other pretty darn normal things I listed before. Again, don't list the income and instead list the attributes of that type of life and most middle class americans out there in the rest of the country would think it looks normal/middle class. I don't KNOW anyone outside of metro areas that has 2 adults in the home and does not have 2 cars. I also don't know anyone that doesn't either use "professional" childcare as you term it (presumably this means a professionally run daycare in a center or home?) or else have their child cared for by a grandma. The very unfortunate poor among us can't afford them, but that doesn't make them "high living".

That's the whole POINT of this argument. People get hung up on the salary income figure, but totally ignore that the actual life it purchases in metro areas is usually not wildly divorced from what most of the country would consider a typical middle class life (and what many would consider no where near enough space for a home and way too long a commute to tolerate).

[Anonymous]

I love how everyone keeps saying they live modestly on 300K and don't feel rich. Who is it living in all those gorgeous homes along Fox Hall? I've seen quite a few lavish homes in Great Falls, Fairfax. Hell even my neighborhood in Springfield has some incredibly big, nice homes down the street. Someone has decided to live in those houses because there are plenty in the surrounding areas. And the PP talking about people not driving luxury cars is full of it. You don't even have to be in a parking garage in Bethesda to see the large number of new and luxury cars being driven in this area. We are all fortunate to be in an area where a lot of nice things are attainable. There's a good reason the cost of living is higher.

[Anonymous]

We are certainly well off but I don't feel rich... we have good income, 2 kids one in private school, one in daycare, nice house but substantial mortgage. We take nice but not amazing vacations. We do better than most and I am grateful. But why don't we feel rich? Not entirely sure, but for as hard as I work now and as hard as I worked through college and grad school and with the responsibility I have a work, I thought I would have more money or maybe, it would be better to say, I thought I would have less concerns about money and continuing to afford a decent standard of living for life. We are not reckless with our money. We do have more than 6 months expenses in liquid assets and are quickly accumulating retirement savings, and are on track to have no mortgage at retirement yet I worry. My retirement money is not guaranteed - it is in the stock market and as a non-citizen in an international agency, I get a letter every year from social security informing me that I will never be entitled to any - thats ok I don't pay in (and am not allowed to pay in) but if my savings ever run out I will have literally zero. (I also get a letter from my home country saying that based on my current contributions I would get $20 a month - again I don't pay in but am not allowed to pay in.) My plan is now to essentially never retire - Of course my agency will force me out at 65 and my grandparents lived into their 80s, smokers all! so I expect/hope to live 20 years after retirement from my first career. Maybe I would fel rich if I were not thinking of a second career parttime in retail - which I did for a few years before working my ass off to get to college to avoid a life working in retail.... so while for now I have it good but I feel economically vulnerable and definitely do not feel rich.

[Anonymous]

Anonymous wrote:

Let's see... two cars... professional child care... owning a home... living with all the amenities and luxuries that city living provides... yea, that's pretty fucking good.

I'm not sure what the latter means (I don't live in the city - I live in MC but I'm still not sure what it would refer too but maybe that's because I don't think the city/this area are nicer to live in than most small towns). But my point was that my family is fortunate to afford to have 2 cars, childcare that's not horrifying and the other pretty darn normal things I listed before. Again, don't list the income and instead list the attributes of that type of life and most middle class americans out there in the rest of the country would think it looks normal/middle class. I don't KNOW anyone outside of metro areas that has 2 adults in the home and does not have 2 cars. I also don't know anyone that doesn't either use "professional" childcare as you term it (presumably this means a professionally run daycare in a center or home?) or else have their child cared for by a grandma. The very unfortunate poor among us can't afford them, but that doesn't make them "high living".

That's the whole POINT of this argument. People get hung up on the salary income figure, but totally ignore that the actual life it purchases in metro areas is usually not wildly divorced from what most of the country would consider a typical middle class life (and what many would consider no where near enough space for a home and way too long a commute to tolerate).

this still goes back to choices. and a higher salary, while not affording the kind of life it might in other parts of the country, does at least give people options that many others do NOT have.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

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.

I guess you rent and don't have any loans? I also assume one of you SAH, thus no childcare costs, when you made $60K? Apples and oranges to how dual income professionals live. Repaying student loans is not optional.

Repaying student loans may not be, but everything else is optional. Have you seen the thread where people are talking about how much they make and what their mortgages are? The problem with people complaining about feeling poor is they've forgotten what is a want and what is a need. No one needs to own a home (and certainly not with a $3000+ mortgage!) If you have a child you will need childcare, but so many people have convinced themselves that they NEED a nanny. There are thousands working low paying jobs in this same high cost of living region you are in. If they can do it, you definitely can.

I do rent and do have loans. Neither one of us stayed home. We both work full time and pay for full time care. And now we have two kids. We make more money but spend the same in rent. We don't want to spend an extra $1000 or $2000 to have a nice kitchen. So we stay in a small place and save money in every way we can. I've lived through not knowing what I'm going to eat for the day. Renting a room in a basement, with no car, no phone, nothing. So telling me that you're struggling with the 10K left each month is ludicrous. We have everything we need and then some.

[Anonymous]

I think 14:08 sums this thread up nicely. The rich don't FEEL rich because they simply don't want to. Refuse to even. She listed a ton of things that should make it obvious to even the dumbest person that she is rich. And then proceeded to say she's not rich because her money may not be guaranteed in the future. OK then.

[Anonymous]

Just because you are not living a Real Housewives of Beverly Hills existence doesn't mean you aren't rich. Some people have an idea in their mind what that means, and feel they aren't reaching it. But facts are if you are in the top 2% of wage earns (250K), than you are rich, or upper class, using that standard. What the hell are the 98% below you if you aren't? It's time to embrace it. It's gonna be OK.