Secrets of rich people

[Anonymous]

Anonymous wrote:Not hard at all. Buy a few places, rent them out and watch equity grow. I'd be on a rental nr 4 or 5 if I hadn't been illegal for 15 years. I have some catching up to do, but I alwyays wondered why Americans didn't buy a place or 2 and rent it out since rents are very high in DC. Many were my coworkers and somehow they were unable to save up the down payment and have a good credit it took to get a pace in Adams Morgan for example. I saved over $10k in 1998 making only ca $24k a year. I coudln't however buy the $74k 1-bedrooms on Columbia Road. An American could've but many never bothered. I figured their parents will leave them their houses. Many drank too much, smoke too much and were too cool to settle down.
For the richer crowd I suggest to wait to buy the million dollar shit-schack in upper NW. It's not going up, it's already up and it will take all you HHI of $300-$350k for the next 30 years to live in it. Stay in smaller homes or apartments a little bit longer. Kids ages 1-7 don't really complain about how much space they have at home, you do.
Got to keep the housing price low and work hard 22-40.

Great advice!

Most other countries are overcrowded and for generations people have known that RE is a sure thing. That "wisdom" gets passed on to children (like you) some of whom end up here. Only in the US do you see RE booms and busts where RE actually goes down in price! Unheard of is most crowded countries.

I'd add that kids of all ages don't care about the size of the house. My kids are in MS and HS and we recently visited a friend's new house in Great Falls, about 3 times the size of ours. They were wowed by the house but on the way back both were clear that they like their "home" better and would not want to move to a different house. They thought a large house was a waste of money. Wonder why adults don't think that way.

[Anonymous]

Anonymous wrote:

Anonymous wrote:If you have two incomes, pretend you only have one and invest the other. Do this forever, and you'll be rich.

This is what we've done. We weren't handed anything. It's not a secret. We don't appear rich, although we are.

That only works if you could live on one of the two incomes. In a high cost of living area like DC, many people cannot. In fact, I would venture a guess that most people cannot.

If you have two professional incomes, you can live on one of them. If DC is too expensive for you, don't live in DC; it's not a requirement. If you have the kind of job that is only available in DC, then you can live on that income alone.

[Anonymous]

"Wonder why adults don't think that way. "

Some of us do.

[Anonymous]

Anonymous wrote:If you have two incomes, pretend you only have one and invest the other. Do this forever, and you'll be rich.

This is what we've done. We weren't handed anything. It's not a secret. We don't appear rich, although we are.

Same here.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:The secret to how people got rich on DCUM is largely: they went to law school, they got a job at a big firm, they never left.

It's not that they're so much better at managing their money than you. It's that they make a sh*t ton of money because of the industry they are in. It's not a function of logic or fairness.

this is a good point. so many lawyers here

+1

They be smarter than you. And they want wives that match them. Not you.

I went to a top 5 MBA program and make over $350k in cash, $500k counting equity. My work is far more interesting than what most lawyers do. but okay.

LOL

[Anonymous]

Anonymous wrote:

Anonymous wrote:Not hard at all. Buy a few places, rent them out and watch equity grow. I'd be on a rental nr 4 or 5 if I hadn't been illegal for 15 years. I have some catching up to do, but I alwyays wondered why Americans didn't buy a place or 2 and rent it out since rents are very high in DC. Many were my coworkers and somehow they were unable to save up the down payment and have a good credit it took to get a pace in Adams Morgan for example. I saved over $10k in 1998 making only ca $24k a year. I coudln't however buy the $74k 1-bedrooms on Columbia Road. An American could've but many never bothered. I figured their parents will leave them their houses. Many drank too much, smoke too much and were too cool to settle down.
For the richer crowd I suggest to wait to buy the million dollar shit-schack in upper NW. It's not going up, it's already up and it will take all you HHI of $300-$350k for the next 30 years to live in it. Stay in smaller homes or apartments a little bit longer. Kids ages 1-7 don't really complain about how much space they have at home, you do.
Got to keep the housing price low and work hard 22-40.

Great advice!

Most other countries are overcrowded and for generations people have known that RE is a sure thing. That "wisdom" gets passed on to children (like you) some of whom end up here. Only in the US do you see RE booms and busts where RE actually goes down in price! Unheard of is most crowded countries.

I'd add that kids of all ages don't care about the size of the house. My kids are in MS and HS and we recently visited a friend's new house in Great Falls, about 3 times the size of ours. They were wowed by the house but on the way back both were clear that they like their "home" better and would not want to move to a different house. They thought a large house was a waste of money. Wonder why adults don't think that way.

Does this mean you were undocumented and did not pay taxes or you were paid in cash? That would be a great way to amass wealth!

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:The secret to how people got rich on DCUM is largely: they went to law school, they got a job at a big firm, they never left.

It's not that they're so much better at managing their money than you. It's that they make a sh*t ton of money because of the industry they are in. It's not a function of logic or fairness.

this is a good point. so many lawyers here

+1

They be smarter than you. And they want wives that match them. Not you.

I went to a top 5 MBA program and make over $350k in cash, $500k counting equity. My work is far more interesting than what most lawyers do. but okay.

Yes, since most others make their $350k in chicken or pelt trade.

[Anonymous]

Anonymous wrote:It is very difficult to build wealth as a wage earner. You need to have passive income from your own business, rental properties, or other investments to build wealth (more quickly and efficiently). W-2 earners pay a lot in taxes as a % of their income.

That said, regardless of your source of income, always live below your means, don't dip into principal, and pay yourself first, as other PPs have mentioned.

While it's true that wage earners are typically not able to build wealth, it's not for the reason sited - taxes as percentage of income. Wage earners, with few notable exceptions, simply do not make that much money, which when combined with the standard cost of maintaining a standard level of living, does not leave much to invest beyond retirement/index funds and the like. A few really tighten their belt and go into investment properties, but that is also a slow and long process.

[Anonymous]

I went to a preppy New England boarding school and the biggest difference I noticed is that people who are rich don't need to prove to anyone they are rich. If anything, they competed over who lived a simpler life. There were no BMWs on campus, though I'm sure at least some parents could afford to buy a new car for their high school kid. People wore a lot of LLBean and JCrew (durable but not flashy). I really liked this laidback approach and it rubbed off on me. I was not ashamed of getting hand-me-down baby clothes--I thought it was practical. I don't want to drive a fancy car, because I feel like it's in poor taste/flaunting one's money. And this approach for the most part does keep you from going overboard. We don't spend our whole pay check, but without that much conscious effort.

Also, my DH is good with finances, which has set us way ahead. Again, it's not something easy to replicate, because I for one can't force myself to care, but I do recognize that it works. He thinks about best ways of handling money, does some research, and acts accordingly. I can spend hours reading child care forums, but financial stuff is boring to me, and would be hard to do on my own.

I think this is really why rich people want their kids to be surrounded by the other rich, so that these good habits stick.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Not hard at all. Buy a few places, rent them out and watch equity grow. I'd be on a rental nr 4 or 5 if I hadn't been illegal for 15 years. I have some catching up to do, but I alwyays wondered why Americans didn't buy a place or 2 and rent it out since rents are very high in DC. Many were my coworkers and somehow they were unable to save up the down payment and have a good credit it took to get a pace in Adams Morgan for example. I saved over $10k in 1998 making only ca $24k a year. I coudln't however buy the $74k 1-bedrooms on Columbia Road. An American could've but many never bothered. I figured their parents will leave them their houses. Many drank too much, smoke too much and were too cool to settle down.
For the richer crowd I suggest to wait to buy the million dollar shit-schack in upper NW. It's not going up, it's already up and it will take all you HHI of $300-$350k for the next 30 years to live in it. Stay in smaller homes or apartments a little bit longer. Kids ages 1-7 don't really complain about how much space they have at home, you do.
Got to keep the housing price low and work hard 22-40.

Great advice!

Most other countries are overcrowded and for generations people have known that RE is a sure thing. That "wisdom" gets passed on to children (like you) some of whom end up here. Only in the US do you see RE booms and busts where RE actually goes down in price! Unheard of is most crowded countries.

I'd add that kids of all ages don't care about the size of the house. My kids are in MS and HS and we recently visited a friend's new house in Great Falls, about 3 times the size of ours. They were wowed by the house but on the way back both were clear that they like their "home" better and would not want to move to a different house. They thought a large house was a waste of money. Wonder why adults don't think that way.

That's cute, they are just trying to make you feel better. <---sarcasm.

Look, lets not pass judgement on what other people choose to do with their money. Your decision is not superior to theirs and vice versa. Don't use anecdotal observations, especially from that of a child, to determine what is and is not a good housing decision. It is poor parenting to teach your kids to look down on other people's subjective preferences.

[Anonymous]

Anonymous wrote:I went to a preppy New England boarding school and the biggest difference I noticed is that people who are rich don't need to prove to anyone they are rich. If anything, they competed over who lived a simpler life. There were no BMWs on campus, though I'm sure at least some parents could afford to buy a new car for their high school kid. People wore a lot of LLBean and JCrew (durable but not flashy). I really liked this laidback approach and it rubbed off on me. I was not ashamed of getting hand-me-down baby clothes--I thought it was practical. I don't want to drive a fancy car, because I feel like it's in poor taste/flaunting one's money. And this approach for the most part does keep you from going overboard. We don't spend our whole pay check, but without that much conscious effort.

Also, my DH is good with finances, which has set us way ahead. Again, it's not something easy to replicate, because I for one can't force myself to care, but I do recognize that it works. He thinks about best ways of handling money, does some research, and acts accordingly. I can spend hours reading child care forums, but financial stuff is boring to me, and would be hard to do on my own.

I think this is really why rich people want their kids to be surrounded by the other rich, so that these good habits stick.

That's probably the local culture and is not representative of all rich or wealthy people, or even a majority thereof. You do what you want and what makes you happy, while at the same time don't ridicule others who choose to behave differently with their money. It just as inane for you to find it in poor taste for others to spend their money as others may shun your thrifty lifestyle. There is no right or wrong answer in this, as it falls down to subjective preference. As long as the spending is within their means, there is no negative lesson to be learned from rich people spending their money in ways that pleases them.

[Anonymous]

Anonymous wrote:

Anonymous wrote:I went to a preppy New England boarding school and the biggest difference I noticed is that people who are rich don't need to prove to anyone they are rich. If anything, they competed over who lived a simpler life. There were no BMWs on campus, though I'm sure at least some parents could afford to buy a new car for their high school kid. People wore a lot of LLBean and JCrew (durable but not flashy). I really liked this laidback approach and it rubbed off on me. I was not ashamed of getting hand-me-down baby clothes--I thought it was practical. I don't want to drive a fancy car, because I feel like it's in poor taste/flaunting one's money. And this approach for the most part does keep you from going overboard. We don't spend our whole pay check, but without that much conscious effort.

Also, my DH is good with finances, which has set us way ahead. Again, it's not something easy to replicate, because I for one can't force myself to care, but I do recognize that it works. He thinks about best ways of handling money, does some research, and acts accordingly. I can spend hours reading child care forums, but financial stuff is boring to me, and would be hard to do on my own.

I think this is really why rich people want their kids to be surrounded by the other rich, so that these good habits stick.

That's probably the local culture and is not representative of all rich or wealthy people, or even a majority thereof. You do what you want and what makes you happy, while at the same time don't ridicule others who choose to behave differently with their money. It just as inane for you to find it in poor taste for others to spend their money as others may shun your thrifty lifestyle. There is no right or wrong answer in this, as it falls down to subjective preference. As long as the spending is within their means, there is no negative lesson to be learned from rich people spending their money in ways that pleases them.

In many ways, I identify with LL Bean poster, but I see what you're saying here, too. The ultimate irony of LL Bean poster is the fact that these kids and families are all so eager to brag about how simple they are within the context of a $50k per year private boarding school. That's like buying a brand new BMW every year (and then driving it off a cliff uninsured).

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I went to a preppy New England boarding school and the biggest difference I noticed is that people who are rich don't need to prove to anyone they are rich. If anything, they competed over who lived a simpler life. There were no BMWs on campus, though I'm sure at least some parents could afford to buy a new car for their high school kid. People wore a lot of LLBean and JCrew (durable but not flashy). I really liked this laidback approach and it rubbed off on me. I was not ashamed of getting hand-me-down baby clothes--I thought it was practical. I don't want to drive a fancy car, because I feel like it's in poor taste/flaunting one's money. And this approach for the most part does keep you from going overboard. We don't spend our whole pay check, but without that much conscious effort.

Also, my DH is good with finances, which has set us way ahead. Again, it's not something easy to replicate, because I for one can't force myself to care, but I do recognize that it works. He thinks about best ways of handling money, does some research, and acts accordingly. I can spend hours reading child care forums, but financial stuff is boring to me, and would be hard to do on my own.

I think this is really why rich people want their kids to be surrounded by the other rich, so that these good habits stick.

That's probably the local culture and is not representative of all rich or wealthy people, or even a majority thereof. You do what you want and what makes you happy, while at the same time don't ridicule others who choose to behave differently with their money. It just as inane for you to find it in poor taste for others to spend their money as others may shun your thrifty lifestyle. There is no right or wrong answer in this, as it falls down to subjective preference. As long as the spending is within their means, there is no negative lesson to be learned from rich people spending their money in ways that pleases them.

In many ways, I identify with LL Bean poster, but I see what you're saying here, too. The ultimate irony of LL Bean poster is the fact that these kids and families are all so eager to brag about how simple they are within the context of a $50k per year private boarding school. That's like buying a brand new BMW every year (and then driving it off a cliff uninsured).

PP here, yes the irony is there, plain as day. People all have areas where they prefer their money to go into, because it makes them happy - that's their goal. The most common place to put money is to spend it and buy material things. Some people do this on the daily things they use, such as houses, cars, clothing, jewelry, and etc. Others spend it on things that people do not see - vacation homes, vacations, expensive meals, exclusive education, an extensive library, various indulgent hobbies, and etc. There are also of course some people who put money away in investments as an interest - they like seeing that number increase faster and faster. I've been very careful to point out to my kids to not ridicule others for their subjective preferences and choices - this is what turns people into mean and jealous individuals.

[Anonymous]

Sometimes people have as a part of their comp package at work cash allowances for cars and also country clubs (initiation and monthly dues and work related expenses paid for but you have to pay for your own personal expenses) - mostly in sales/executive positions.

In some industries, salary is only a small portion of total comp. For instance, salary may be $200K but bonus is $100-$200K and stock another $100-$200K.

In some situations where there was once big family money but it has since evaporated, family may still own (because it was passed down) the mansion/estate, but live in the coach house and rent the big house because they cannot afford to maintain it otherwise - they keep and house and can list the address as their own.

Private clubs usually have a 35 and under initiation fee which is much lower than the "grown-up" fee. '

Really, really rich people have way more money than you think. And, more often than not, that wealth is downplayed.

[Anonymous]

I grew up rich and would consider our family rich now (no lawyers, both work for non profits). We spend less than we make and we don't take loans. This was learned growing up. My adult lesson for staying rich is taking care of my health. I've seen first hand that unexpected health issues can nearly bankrupt you ($7k/month assisted living for dementia, for example) so I try to stay on top of what is preventable.