I always hear that people are living beyond their means, but…

[Anonymous]

It will not be evident until retirement. People can live on cash flow while they have that cash flow. When the source of that cash flow is employment income, and employment ends, income has to be replaced by something else. That can be income from deferred compensation, pensions, Social Security, annuities, or investments/savings. People with little real wealth will have correspondingly few or only low-value such post-employment income sources, and their lifestyles will have to adapt accordingly.

This. We are retired, have saved for it, and are now enjoying some travel (not extravagant, but it's not free), enjoying activities here, and still fixing up our yard since we are home more to enjoy it. Meanwhile our neighbors who moved in at exactly the same time we did and who have very similar jobs and same number of children (who all went to college . . . ours even went to more expensive colleges) are not in a situation where they can retire. They are a few years older than we are (late 60's). They drive nicer cars and take more expensive vacations every year (treat the adult kids to vacations as well). The difference is that they did not save like we did. And the wife really wants to retire. Her job is not easy.

[Anonymous]

It's honestly really hard to gauge how other people are doing financially. There's their income, which you could guess at pretty easily, and their housing costs, which you can also probably guess at pretty easily.

But there are all these other factors. Student loan debt, family money, whether they are needing to support other family members in some way, what kinds of other help they get from family (like grandparents paying for private school, or funding down payments, or maxing out annual gifts), there might be health expenses you can't possibly know about. It can go one way or the other and you just have no idea.

And it's psychological, too. I have some friends who I would assume are very well off -- Big Law partner at a firm where I know what that means in terms of income. They live in a big house in a very pricy neighborhood. But they probably talk about "affording things" more than any of my other friends. They do not take a lot of vacations and the ones they take often aren't particularly extravagant. They do spend money on cars but nothing insane for what I know their income must be. I honestly don't know if maybe they have other expenses that are putting pressure on them, or potentially they are just the sort of people who stress about money a lot. Both grew up UMC but that doesn't mean they didn't grow up without money stress (UMC people can get laid off, their businesses run into rough patches, they have unanticipated medical expenses, etc.).

Meanwhile, we have other friends who might seem overextended from the outside (both of student debt, bought a house even they admitted at the time was more than they could afford, working for government or NGOs where income can never go that high) and they take two foreign vacations a year, always have new everything, and never express any money concerns. Are they just good with money, have secret sources of money we don't know about, or just chill people who don't talk about it publicly? Could be any of the above or something else I haven't thought of.

Which is why you can't compare yourself to other people on this point. You just don't know. Keep your head down and focus on your own finances. Look for advice from neutral resources, not your peers. Their situation is unlikely to be as similar to yours as you might think.

[Anonymous]

Anonymous wrote:No, I don’t think a good portion of people who seem to be doing well really aren’t. This is what people who don’t have a decent money like to think. From what I cans see, it’s just not true. Maybe they have a bad year and don’t go skiing in vail one year, but they still go away for a big summer and spring break trip.

I see people mention that a lot (mostly on this board) and use the term house poor but its like a comfort to assume others are in a bigger nicer home because of a bad choice that will not end well. Therefore, you are actually in the smarter position long run. I think it's a common sentiment/salve in neighborhoods with a wild mix of housing (teardowns to modern luxury). I think in established multi million neighborhoods people don't second guess wealth as much.

[Anonymous]

Anonymous wrote:

Anonymous wrote:It will not be evident until retirement. People can live on cash flow while they have that cash flow. When the source of that cash flow is employment income, and employment ends, income has to be replaced by something else. That can be income from deferred compensation, pensions, Social Security, annuities, or investments/savings. People with little real wealth will have correspondingly few or only low-value such post-employment income sources, and their lifestyles will have to adapt accordingly.

This is correct. My in-laws lived *at* their cash flow level for years and years, and lived an arguably upper class lifestyle that whole time. Now, however, they can’t retire because their housing expenses are such that their retirement cash flow wouldn’t cover it. They have slowed down spending a lot in recent years, but the lack of retirement planning/ saving is a problem.

Same thing for my in-laws. These types end up bitter. They overspent for years and thought they were so much better than everyone sending their kids to privates and expensive OOS colleges. Now they criticize people who retired early like my parents who retired in their 50s.

[Anonymous]

Only jealous and mean people say that everyone is overextending themselves. Plenty of us just have more money.

[Anonymous]

Anonymous wrote:It's honestly really hard to gauge how other people are doing financially. There's their income, which you could guess at pretty easily, and their housing costs, which you can also probably guess at pretty easily.

But there are all these other factors. Student loan debt, family money, whether they are needing to support other family members in some way, what kinds of other help they get from family (like grandparents paying for private school, or funding down payments, or maxing out annual gifts), there might be health expenses you can't possibly know about. It can go one way or the other and you just have no idea.

And it's psychological, too. I have some friends who I would assume are very well off -- Big Law partner at a firm where I know what that means in terms of income. They live in a big house in a very pricy neighborhood. But they probably talk about "affording things" more than any of my other friends. They do not take a lot of vacations and the ones they take often aren't particularly extravagant. They do spend money on cars but nothing insane for what I know their income must be. I honestly don't know if maybe they have other expenses that are putting pressure on them, or potentially they are just the sort of people who stress about money a lot. Both grew up UMC but that doesn't mean they didn't grow up without money stress (UMC people can get laid off, their businesses run into rough patches, they have unanticipated medical expenses, etc.).

Meanwhile, we have other friends who might seem overextended from the outside (both of student debt, bought a house even they admitted at the time was more than they could afford, working for government or NGOs where income can never go that high) and they take two foreign vacations a year, always have new everything, and never express any money concerns. Are they just good with money, have secret sources of money we don't know about, or just chill people who don't talk about it publicly? Could be any of the above or something else I haven't thought of.



Which is why you can't compare yourself to other people on this point. You just don't know. Keep your head down and focus on your own finances. Look for advice from neutral resources, not your peers. Their situation is unlikely to be as similar to yours as you might think.

DP, Agreed, for context, as immigrant Asians we have a frugal mentality. Our HHI is 600K, PITI is less than 3K, mid 40's, kids in public school.. ~$3M NW but we still stress about money. I am just the type of person who just stresses about the money. Even if our HHI was a $1M, it's just a personality trait

[Anonymous]

Anonymous wrote:

Anonymous wrote:It's honestly really hard to gauge how other people are doing financially. There's their income, which you could guess at pretty easily, and their housing costs, which you can also probably guess at pretty easily.

But there are all these other factors. Student loan debt, family money, whether they are needing to support other family members in some way, what kinds of other help they get from family (like grandparents paying for private school, or funding down payments, or maxing out annual gifts), there might be health expenses you can't possibly know about. It can go one way or the other and you just have no idea.

And it's psychological, too. I have some friends who I would assume are very well off -- Big Law partner at a firm where I know what that means in terms of income. They live in a big house in a very pricy neighborhood. But they probably talk about "affording things" more than any of my other friends. They do not take a lot of vacations and the ones they take often aren't particularly extravagant. They do spend money on cars but nothing insane for what I know their income must be. I honestly don't know if maybe they have other expenses that are putting pressure on them, or potentially they are just the sort of people who stress about money a lot. Both grew up UMC but that doesn't mean they didn't grow up without money stress (UMC people can get laid off, their businesses run into rough patches, they have unanticipated medical expenses, etc.).

Meanwhile, we have other friends who might seem overextended from the outside (both of student debt, bought a house even they admitted at the time was more than they could afford, working for government or NGOs where income can never go that high) and they take two foreign vacations a year, always have new everything, and never express any money concerns. Are they just good with money, have secret sources of money we don't know about, or just chill people who don't talk about it publicly? Could be any of the above or something else I haven't thought of.



Which is why you can't compare yourself to other people on this point. You just don't know. Keep your head down and focus on your own finances. Look for advice from neutral resources, not your peers. Their situation is unlikely to be as similar to yours as you might think.

DP, Agreed, for context, as immigrant Asians we have a frugal mentality. Our HHI is 600K, PITI is less than 3K, mid 40's, kids in public school.. ~$3M NW but we still stress about money. I am just the type of person who just stresses about the money. Even if our HHI was a $1M, it's just a personality trait

How do you have PITI under $3k! Do you live in Loudoun County?

[Anonymous]

Anonymous wrote:

Anonymous wrote:I hear how many people live beyond their means. And that those people’s lifestyles will change as they get older and have to figure out retirement (or they aren’t able to retire). I’m just not seeing this with the UMC people I know. The people that seemed to have money just continue to. They really do, it seems. People don’t seem stressed about being overextended on CC debt etc. Obviously, people don’t always share their financial stresses but there would be signs. Is this just because I roll in boring circles with people in “boring” jobs who are risk averse? Or do you think a good portion of people who seem to be doing well financially really aren’t?

Are you the same poster who keeps starting threads rooted in comparisons of others?

Op here. I’m not. But it was prompted by the thread about the person whose friends are all richer than they are. There were multiple posts where people said they are probably living beyond their means. I just don’t see that. Perhaps it will be evident at retirement, as PPs said.

[Anonymous]

Anonymous wrote:At this point I’m just planning to die before having to worry about funding a long retirement.

I know some people like that who blow out every dime they make and seem to enjoy their life in the here an now. If they worry about the future, they don't say it. They also seem to be aiming for a shorter life span due to alcohol, food and smoking.

[Anonymous]

Anonymous wrote:

Anonymous wrote:No, I don’t think a good portion of people who seem to be doing well really aren’t. This is what people who don’t have a decent money like to think. From what I cans see, it’s just not true. Maybe they have a bad year and don’t go skiing in vail one year, but they still go away for a big summer and spring break trip.

I see people mention that a lot (mostly on this board) and use the term house poor but its like a comfort to assume others are in a bigger nicer home because of a bad choice that will not end well. Therefore, you are actually in the smarter position long run. I think it's a common sentiment/salve in neighborhoods with a wild mix of housing (teardowns to modern luxury). I think in established multi million neighborhoods people don't second guess wealth as much.

Eh, maybe some people feel that way, but I think it's that most people just know a few people who really are living beyond their means (usually family members or friends where you know the real situation and see how the house of cards is built) and want to caution others who ask about their finances on a forum. I'll caution people on this forum who ask about whether they can afford a house that's at their limit that they don't want to be "house poor" because I've known actual people in that situation and it sucks for them. But I don't go around thinking about other people's finances if they're not asking on a forum.

I do think though there's a certain genre of these popular personal finance gurus like Dave Ramsey whose schtick is to try to create a sense that other people are living beyond their means and by taking his advice you're one of the select few who is not. I've seen that sometimes gets echoed in advice here not realizing that a lot of his audience are people who are in circles where everyone has a lot of cc debt and not a lot of money. He --and other gurus of that type--I think do appeal to people who get comfort by thinking that others are somehow deluded and they are not. They don't realize that they are overgeneralizing when they see people who have a high income, high net worth, can afford their spending and use low interest rate debt strategically. It doesn't fit into their gurus "rules" so they assume they are one of the deluded types he rails against.

[Anonymous]

DP, Agreed, for context, as immigrant Asians we have a frugal mentality. Our HHI is 600K, PITI is less than 3K, mid 40's, kids in public school.. ~$3M NW but we still stress about money. I am just the type of person who just stresses about the money. Even if our HHI was a $1M, it's just a personality trait

For 600k HHI and that low PITI, your NW is kind of low.

[Anonymous]

Anonymous wrote:

DP, Agreed, for context, as immigrant Asians we have a frugal mentality. Our HHI is 600K, PITI is less than 3K, mid 40's, kids in public school.. ~$3M NW but we still stress about money. I am just the type of person who just stresses about the money. Even if our HHI was a $1M, it's just a personality trait

For 600k HHI and that low PITI, your NW is kind of low.

Ha, you wish. Their HHI a has obviously grown over time.

[Anonymous]

People in this thread are mostly saying that it's rare for people to live beyond their means and actually everyone is simply incomprehensibly wealthy, but I remember during the Kavanaugh nomination this board being absolutely DOMIINATED by people saying "It's 100% normal to have the same mortgage for 26 years and still owe exactly as much as the house is worth, and have six figures in personal loans and six figures of credit card debt! That's what it's like to live inside the Beltway, and anyway their parents will die eventually and they can live on their inheritance then!"

So, y'know. Grain of salt and all.

[Anonymous]

Anonymous wrote:People in this thread are mostly saying that it's rare for people to live beyond their means and actually everyone is simply incomprehensibly wealthy, but I remember during the Kavanaugh nomination this board being absolutely DOMIINATED by people saying "It's 100% normal to have the same mortgage for 26 years and still owe exactly as much as the house is worth, and have six figures in personal loans and six figures of credit card debt! That's what it's like to live inside the Beltway, and anyway their parents will die eventually and they can live on their inheritance then!"

So, y'know. Grain of salt and all.

This kind of debt would likely kill me from stress so no worries about a retirement income.

[Anonymous]

UMC has $100,000 of credit card debt??

yikes