Why rich people don't feel rich

Anonymous
Anonymous wrote:
Anonymous wrote:"Yes, many people are in peril, one paycheck or illness away from disaster. That should be a wake up call to our nation."

Maybe our nation needs to stop taking so much of our money so that we can save more and take care of ourselves instead of being on the edge of poverty b/c we pay so much to support others.


Until then, people need to stop upgrading their technology every year or two and start investing the big bucks. We have one 6 year old computer. No iPad, iPhone, etc. and we just now got a flat screen tv when our old one broke. Two old cars that we fix rather than trade in. This lifestyle is sadly very out of fashion. On the other hand, we had our first million by age 40, so we'll have the last laugh. Uncool but rich.


I agree 100%. The only reason we have some of the nifty tech stuff is because my husband's job provides it for work. Otherwise, we definitely would NOT have an iPad for him. I am using a borrowed computer for work because the one I bought died on me in less than 2 years. I can't bring myself to go and purchase a new one when my boss can set me up with an old laptop that works just fine, right? We also drive paid off cars without most of the fancy new tech in them - shoot, mine doesn't even have a CD player. I don't have an ipod/mp3 player and still read real books. I hope to say we'll have 1mil by 40, but we shall see - we're 33 now, so we have a few years. We're just happy to have anything in savings right now.
Anonymous
Anonymous wrote:
Anonymous wrote:"Yes, many people are in peril, one paycheck or illness away from disaster. That should be a wake up call to our nation."

Maybe our nation needs to stop taking so much of our money so that we can save more and take care of ourselves instead of being on the edge of poverty b/c we pay so much to support others.


Until then, people need to stop upgrading their technology every year or two and start investing the big bucks. We have one 6 year old computer. No iPad, iPhone, etc. and we just now got a flat screen tv when our old one broke. Two old cars that we fix rather than trade in. This lifestyle is sadly very out of fashion. On the other hand, we had our first million by age 40, so we'll have the last laugh. Uncool but rich.


This is actually faulty thinking. $1000 for a new computer is not what makes people poor. Are there people who spend money where they shouldn't? Of course, but what enables someone to sack away $1 mil include things like 1) not having educational debt, 2) good investments (including real estate), 3) lack of catastrophic incident (illness, laid off, natural disaster), 4) good salary and benefits. Assuming that one has worked full time since the age of 20, you would need to make at least $50K/year (simplified math here, but you get the point) to earn $1mil by 40. The median household income in the US is about $52K. If your household lived on $52K/year, how much do you think you would realistically be able to save?

Anonymous
Anonymous wrote:
Anonymous wrote:
Anonymous wrote:"Yes, many people are in peril, one paycheck or illness away from disaster. That should be a wake up call to our nation."

Maybe our nation needs to stop taking so much of our money so that we can save more and take care of ourselves instead of being on the edge of poverty b/c we pay so much to support others.


Until then, people need to stop upgrading their technology every year or two and start investing the big bucks. We have one 6 year old computer. No iPad, iPhone, etc. and we just now got a flat screen tv when our old one broke. Two old cars that we fix rather than trade in. This lifestyle is sadly very out of fashion. On the other hand, we had our first million by age 40, so we'll have the last laugh. Uncool but rich.


This is actually faulty thinking. $1000 for a new computer is not what makes people poor. Are there people who spend money where they shouldn't? Of course, but what enables someone to sack away $1 mil include things like 1) not having educational debt, 2) good investments (including real estate), 3) lack of catastrophic incident (illness, laid off, natural disaster), 4) good salary and benefits. Assuming that one has worked full time since the age of 20, you would need to make at least $50K/year (simplified math here, but you get the point) to earn $1mil by 40. The median household income in the US is about $52K. If your household lived on $52K/year, how much do you think you would realistically be able to save?



I thought the point of the post was "If you'd stop spending your money on stupid crap, maybe you'd feel a little richer on your rather sizable household income"
Anonymous
To 10:52, you underestimate the role of overspending in preventing people from becoming millionaires.

"Of course, but what enables someone to sack away $1 mil include things like 1) not having educational debt, 2) good investments (including real estate), 3) lack of catastrophic incident (illness, laid off, natural disaster), 4) good salary and benefits. Assuming that one has worked full time since the age of 20, you would need to make at least $50K/year (simplified math here, but you get the point) to earn $1mil by 40. The median household income in the US is about $52K. If your household lived on $52K/year, how much do you think you would realistically be able to save?"

1) Wrong, DH and I had $100,000 of educational debt
2) Investments: run of the mill mutual funds and our primary residence, no other investments;
3) lack of catastrophic incident - suffered two layoffs before we were 40
4) good salary and benefits - yes, we have those.

Neither of us started working until age 25, yet in 13 years we went from a negative net worth to $1 million. We did it primarily by living well beneath our means (and #4).

Anonymous
Anonymous wrote:To 10:52, you underestimate the role of overspending in preventing people from becoming millionaires.

"Of course, but what enables someone to sack away $1 mil include things like 1) not having educational debt, 2) good investments (including real estate), 3) lack of catastrophic incident (illness, laid off, natural disaster), 4) good salary and benefits. Assuming that one has worked full time since the age of 20, you would need to make at least $50K/year (simplified math here, but you get the point) to earn $1mil by 40. The median household income in the US is about $52K. If your household lived on $52K/year, how much do you think you would realistically be able to save?"

1) Wrong, DH and I had $100,000 of educational debt
2) Investments: run of the mill mutual funds and our primary residence, no other investments;
3) lack of catastrophic incident - suffered two layoffs before we were 40
4) good salary and benefits - yes, we have those.

Neither of us started working until age 25, yet in 13 years we went from a negative net worth to $1 million. We did it primarily by living well beneath our means (and #4).



What was your income? That will tell us a lot.
Anonymous
Anonymous wrote:I have not read all the posts, but My husband makes $75k a year and I make $12K a year. We are very frugal and I only work 1 day a week. My MIL does childcare. We have never been on a real vacation, and our cars are five+ years old. We get most of our taxes back in April. But this was our decision, we had kids right away and we never went to college. I have no problem with people earning a lot of money. I think our tax system is horrible. I know because of our income and the amount of kids we have, we probably make more take home then a lot of people who put have four year degrees. How fair is that?


Your husband doesn't have a college degree and makes 75K a year? Wow - I just broke the 75K barrier (I make 78K) and not only do I have a college degree but a graduate degree too. And 10 years work experience. I'd say he's doing really, really well.
Anonymous
To 14:17. what was my/our income when? When we started working, when we got married, when we became millionaires?
Anonymous
Anonymous wrote:
Anonymous wrote:I have not read all the posts, but My husband makes $75k a year and I make $12K a year. We are very frugal and I only work 1 day a week. My MIL does childcare. We have never been on a real vacation, and our cars are five+ years old. We get most of our taxes back in April. But this was our decision, we had kids right away and we never went to college. I have no problem with people earning a lot of money. I think our tax system is horrible. I know because of our income and the amount of kids we have, we probably make more take home then a lot of people who put have four year degrees. How fair is that?


Your husband doesn't have a college degree and makes 75K a year? Wow - I just broke the 75K barrier (I make 78K) and not only do I have a college degree but a graduate degree too. And 10 years work experience. I'd say he's doing really, really well.


My husband brought in over 100K last year with no college degree, but that doesn't mean he doesn't wish he had gone to college. So now we just concentrate on making sure our kids have every option available to them. We make a good living, but we want more for our kids, if they so choose.
Anonymous
Anonymous wrote:
My husband brought in over 100K last year with no college degree, but that doesn't mean he doesn't wish he had gone to college. So now we just concentrate on making sure our kids have every option available to them. We make a good living, but we want more for our kids, if they so choose.


Glad he found a lucrative career that doesn't require a degree.

My husband went from HS to the military, then took 10 years (well, 8.5 actually taking classes with a couple breaks for various reasons) to get a degree part-time while working full-time. I am so very proud of him for sticking it out and getting that degree. It was a sacrifice for our whole family (we had our daughter just as he was getting into his tougher classes), but no one can ever take that away from him. He worked with several guys as a gov't contractor who had years of experience but no degree, so while they were making good money, they really couldn't leave their current employer because any higher positions elsewhere required a degree. He didn't want to find himself in that position somewhere down the road.

He is quite adamant that our children will go to college out of HS and graduate in 4 years. He really regrets that he put himself into the position of needing the military to clean up his act and not being able to do college the way I did. Like you said, he wants better for his kids (and obviously, I agree with him on this point).
Anonymous
Anonymous wrote:
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.

I cannot stand these self righteous people. This forum seems to be full of them.
Yes, life can be hard. Yes, we do not all start out with the same opportunities. For some the only way to get a job is to get an education first, and the only way to get even that, is to take out loans, and then you find that the market plummets and there is not that much employment in your field, and the priveledged still pick on you because of your humble background.
And when the market really plummets, everybody suffers. Do not walk around telling people they have been stupid because they became home owners.
Jus shut up for a while.
I would really like that
Anonymous
Anonymous wrote:
Anonymous wrote:I have not read all the posts, but My husband makes $75k a year and I make $12K a year. We are very frugal and I only work 1 day a week. My MIL does childcare. We have never been on a real vacation, and our cars are five+ years old. We get most of our taxes back in April. But this was our decision, we had kids right away and we never went to college. I have no problem with people earning a lot of money. I think our tax system is horrible. I know because of our income and the amount of kids we have, we probably make more take home then a lot of people who put have four year degrees. How fair is that?


This simply isn't the case. Does anyone here ACTUALLY know how the tax system works? It is a GRADUATED tax system. That doesn't JUST mean the rich pay more.

Here is a very oversimplified explanation.

Let's say there are three tax brackets...
0 - 35K pays 10%
35K - 100K pays 20%
100K+ pays 30%

Now, if you make 35K, you pay 3,500 in taxes and take home 31500.

If you make 200K, you DO NOT pay 60K in taxes.

You pay 10% on your first 35K, 20% on the next 65, and 30% only on the last 100%. You'd pay 3500 + 13000 + 30000 for a total of 46500. That is a long way from 60K. You are not paying 30%... you are paying an actual tax rate of 23.25%. So, the likelihood that someone earning less gross pay is taking home more net pay is unlikely, unless there are massive differences in deductions and such.

That is why all the hemming and hawing over the 250K limit was more bluster than anything else. If you were earning 251K, then you only saw the slightest difference in that last 1K and still had an overall lower tax bill because of the tax breaks on the first 250K.

Our financial illiteracy is astounding.


As someone who never really understood how tax brackets work, this was a very helpful explanation.

btw, I think our HHI makes us rich ($165k) but I don't feel rich because of the almost 20% of our salaries we have to sock away to retire semi-comfortably. My retired parents and in-laws have very generous pensions and health care for life from their former employers. We Generation Xers are going to be lucky to get a penny from Social Security, a band-aid from Medicare and on top of all that, no pensions.
Anonymous
Anonymous wrote:btw, I think our HHI makes us rich ($165k) but I don't feel rich because of the almost 20% of our salaries we have to sock away to retire semi-comfortably. My retired parents and in-laws have very generous pensions and health care for life from their former employers. We Generation Xers are going to be lucky to get a penny from Social Security, a band-aid from Medicare and on top of all that, no pensions.

Yes, you are definitely well off. Just to be able to stash away such a large percentage of your income means you are not just getting by.
I do not worry for generation X:ers. By the time they retire they will be in the majority (largest voting pool, too few children), so they can just vote for themselves all the retirement benefits they want, and the working people will have to pay for it.

Mr Bush and his likes will be long gone when I retire
Anonymous
Anonymous wrote:
Anonymous wrote:
Anonymous wrote:I have not read all the posts, but My husband makes $75k a year and I make $12K a year. We are very frugal and I only work 1 day a week. My MIL does childcare. We have never been on a real vacation, and our cars are five+ years old. We get most of our taxes back in April. But this was our decision, we had kids right away and we never went to college. I have no problem with people earning a lot of money. I think our tax system is horrible. I know because of our income and the amount of kids we have, we probably make more take home then a lot of people who put have four year degrees. How fair is that?


This simply isn't the case. Does anyone here ACTUALLY know how the tax system works? It is a GRADUATED tax system. That doesn't JUST mean the rich pay more.

Here is a very oversimplified explanation.

Let's say there are three tax brackets...
0 - 35K pays 10%
35K - 100K pays 20%
100K+ pays 30%

Now, if you make 35K, you pay 3,500 in taxes and take home 31500.

If you make 200K, you DO NOT pay 60K in taxes.

You pay 10% on your first 35K, 20% on the next 65, and 30% only on the last 100%. You'd pay 3500 + 13000 + 30000 for a total of 46500. That is a long way from 60K. You are not paying 30%... you are paying an actual tax rate of 23.25%. So, the likelihood that someone earning less gross pay is taking home more net pay is unlikely, unless there are massive differences in deductions and such.

That is why all the hemming and hawing over the 250K limit was more bluster than anything else. If you were earning 251K, then you only saw the slightest difference in that last 1K and still had an overall lower tax bill because of the tax breaks on the first 250K.

Our financial illiteracy is astounding.


As someone who never really understood how tax brackets work, this was a very helpful explanation.

btw, I think our HHI makes us rich ($165k) but I don't feel rich because of the almost 20% of our salaries we have to sock away to retire semi-comfortably. My retired parents and in-laws have very generous pensions and health care for life from their former employers. We Generation Xers are going to be lucky to get a penny from Social Security, a band-aid from Medicare and on top of all that, no pensions.


I wrote that post. Glad it helped you.

Part of the problem is that the retirement benefits enjoyed by our parents and our parents' parents were not a realistic, long-term viable situation. So, if we want to have the pensions and benefits our parents did, it's just not going to happen. That isn't the reality now and really shouldn't have been the reality now. That sense of entitlement is part of what has gotten us into the situation we are in now.
Anonymous
Anonymous wrote:
Anonymous wrote:
Anonymous wrote:
Anonymous wrote:I have not read all the posts, but My husband makes $75k a year and I make $12K a year. We are very frugal and I only work 1 day a week. My MIL does childcare. We have never been on a real vacation, and our cars are five+ years old. We get most of our taxes back in April. But this was our decision, we had kids right away and we never went to college. I have no problem with people earning a lot of money. I think our tax system is horrible. I know because of our income and the amount of kids we have, we probably make more take home then a lot of people who put have four year degrees. How fair is that?


This simply isn't the case. Does anyone here ACTUALLY know how the tax system works? It is a GRADUATED tax system. That doesn't JUST mean the rich pay more.

Here is a very oversimplified explanation.

Let's say there are three tax brackets...
0 - 35K pays 10%
35K - 100K pays 20%
100K+ pays 30%

Now, if you make 35K, you pay 3,500 in taxes and take home 31500.

If you make 200K, you DO NOT pay 60K in taxes.

You pay 10% on your first 35K, 20% on the next 65, and 30% only on the last 100%. You'd pay 3500 + 13000 + 30000 for a total of 46500. That is a long way from 60K. You are not paying 30%... you are paying an actual tax rate of 23.25%. So, the likelihood that someone earning less gross pay is taking home more net pay is unlikely, unless there are massive differences in deductions and such.

That is why all the hemming and hawing over the 250K limit was more bluster than anything else. If you were earning 251K, then you only saw the slightest difference in that last 1K and still had an overall lower tax bill because of the tax breaks on the first 250K.

Our financial illiteracy is astounding.


As someone who never really understood how tax brackets work, this was a very helpful explanation.

btw, I think our HHI makes us rich ($165k) but I don't feel rich because of the almost 20% of our salaries we have to sock away to retire semi-comfortably. My retired parents and in-laws have very generous pensions and health care for life from their former employers. We Generation Xers are going to be lucky to get a penny from Social Security, a band-aid from Medicare and on top of all that, no pensions.


I wrote that post. Glad it helped you.

Part of the problem is that the retirement benefits enjoyed by our parents and our parents' parents were not a realistic, long-term viable situation. So, if we want to have the pensions and benefits our parents did, it's just not going to happen. That isn't the reality now and really shouldn't have been the reality now. That sense of entitlement is part of what has gotten us into the situation we are in now.



Curious if you feel Medicare and Social Security are also unrealistic entitlements? Will our children be saying exactly what you say about pensions but about Medicare and Social Security? "It isn't the reality now and it shouldn't have been the reality then".
Anonymous
Anonymous wrote:
Anonymous wrote:
Anonymous wrote:
Anonymous wrote:
Anonymous wrote:I have not read all the posts, but My husband makes $75k a year and I make $12K a year. We are very frugal and I only work 1 day a week. My MIL does childcare. We have never been on a real vacation, and our cars are five+ years old. We get most of our taxes back in April. But this was our decision, we had kids right away and we never went to college. I have no problem with people earning a lot of money. I think our tax system is horrible. I know because of our income and the amount of kids we have, we probably make more take home then a lot of people who put have four year degrees. How fair is that?


This simply isn't the case. Does anyone here ACTUALLY know how the tax system works? It is a GRADUATED tax system. That doesn't JUST mean the rich pay more.

Here is a very oversimplified explanation.

Let's say there are three tax brackets...
0 - 35K pays 10%
35K - 100K pays 20%
100K+ pays 30%

Now, if you make 35K, you pay 3,500 in taxes and take home 31500.

If you make 200K, you DO NOT pay 60K in taxes.

You pay 10% on your first 35K, 20% on the next 65, and 30% only on the last 100%. You'd pay 3500 + 13000 + 30000 for a total of 46500. That is a long way from 60K. You are not paying 30%... you are paying an actual tax rate of 23.25%. So, the likelihood that someone earning less gross pay is taking home more net pay is unlikely, unless there are massive differences in deductions and such.

That is why all the hemming and hawing over the 250K limit was more bluster than anything else. If you were earning 251K, then you only saw the slightest difference in that last 1K and still had an overall lower tax bill because of the tax breaks on the first 250K.

Our financial illiteracy is astounding.


As someone who never really understood how tax brackets work, this was a very helpful explanation.

btw, I think our HHI makes us rich ($165k) but I don't feel rich because of the almost 20% of our salaries we have to sock away to retire semi-comfortably. My retired parents and in-laws have very generous pensions and health care for life from their former employers. We Generation Xers are going to be lucky to get a penny from Social Security, a band-aid from Medicare and on top of all that, no pensions.


I wrote that post. Glad it helped you.

Part of the problem is that the retirement benefits enjoyed by our parents and our parents' parents were not a realistic, long-term viable situation. So, if we want to have the pensions and benefits our parents did, it's just not going to happen. That isn't the reality now and really shouldn't have been the reality now. That sense of entitlement is part of what has gotten us into the situation we are in now.



Curious if you feel Medicare and Social Security are also unrealistic entitlements? Will our children be saying exactly what you say about pensions but about Medicare and Social Security? "It isn't the reality now and it shouldn't have been the reality then".



And what about health care for all? Is that another unrealistic, non-viable long term situation?
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