Is this a common feeling in your early 40s? Feels like friends are getting rich and we're stagnant

[Anonymous]

I don’t know if this makes you feel any better, but we make over $1m a year but haven’t moved because we like our neighborhood and the kids would be upset to have to make new friends, as the only way to get a better house in our school district is to build our own and lots are hard to come by. I think the kids would be upset about leaving our house too. We also don’t have a vacation house although in my mind I want one, we just don’t have the time to justify it with all the kids’ activities and what I would want is hard to find. No family money, we actually bought my in-laws a new house.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:On DCUM, every time someone asks this question, multiple people say: "family money" because then they don't have to think about what they themselves could have done differently. I really don't think receiving large gifts or inheritances from family is as prevalent as you think. Minor downpayments are the most common form of help, but usually don't run into paying for the entire house.

Practically no one ever says: "stock market". Yet for us, that's been the sole driver of our wealth, and I suspect it contributes to the wealth of a lot of my neighbors in Bethesda, along with people who manage or sell successful businesses. We bought high tech stocks when they were cheap because we believed in the product and decades later can sell some stocks to meet our needs.

But how did you have so much excess wealth 20 years ago to invest substantial sums on individual stocks?

We followed the “prudent advice”:

Paid down student loans (guaranteed return as they say) but not too fast as they were tax deductible
Invested in diversified index funds through maxed out 401ks
Kept adding to some long term CDs for building up a down payment on a house (which took a LONG time since houses appreciated faster than the $50k/year we were saving).
Then we had kids, and whose there went $28k/year/kid for daycare
Then we bought a house and suddenly we are dropping $20k for waterproofing a basement…

Dabbling in the stock market is fun, but a) in 2023 you can say tech was great, but you have survivor bias (and honestly most high flying tech are not profitable enough to justify their valuation, like Uber or Tesla, or have already past their prime like Facebook).
In general they recommend against investing large sums in individual stocks unless you don’t care to lose it. And if you don’t care to lose $20Ks of dollars, you are already WAY richer than us and likely OP.

You followed the “prudent advice”. This is exactly your problem. This is OP’s problem.
This is the reason she is left behind. She doesn’t play to win. She plays not to lose.
“Prudent advice” will not get you rich overnight. It will make you comfortable when you get old.
OP’s friends that are getting richer are probably playing more aggressively and taking more risks.
“Prudent advice” is what most people choose to follow. Go to college and get a 9-5 corporate job instead of the
more riskier path of entrepreneurship. Same with investing.

I bet some of OP’s friends took more risks with their investments and got rewarded.

And the data shows that the majority of people who can take risks are wealthy or have a wealthy family etc.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Yes, OP, this has been true for me. It can feel defeating at times, especially knowing this is likely to get worse as we get older. We try to just focus on ourselves, our financial goals, making smart choices for us. Staying of social media helps a lot. We've also started thinking about moving to a lower COL area in a few years when that will be a reasonable option due to jobs. I think where we are now, we're kind of on the bottom end of the range for our peer group in the DMV. We're still very fortunate and I don't want to lose sight of that, but it's hard when the people around you have a lot more. I think moving somewhere that our HHI and financial situation is more "average" would be beneficial for us on a lot of levels.

That's what's giving me anxiety. It's really, really hard to shake this feeling. You feel hopeless and overcome with dread.

What is there to feel hopeless about? Do you own a home and have a job? Retirement savings? That is all you need.

Sounds like advice to keep proles docile.

Sounds like Dave Ramsay Bible thumping crap, while Dave lives in a gigantic mega mansion, flies private, luxury car collection, and puts his kids and their spouses on the payroll in dubious jobs.

[Anonymous]

Anonymous wrote:

Anonymous wrote:It gets so, so much worse. My lifelong friends slow faded me along with their leap to big jobs and >$3M homes.

:// Can you describe how it gets worse? You mean friends move away to posher communities and you sort of fade from seeing them and making time? And of course your kids are in different schools. Before long a couple years have gone by and they have new friends closer to their new nicer homes and you’re an old friend? Or is it even worse in ways I can’t imagine? I imagine not being able to afford the same vacations and/or vacation homes. You’re basically blackballed from that stuff unless they give you a courtesy invitation once a year.

This, or more often they remain in the same area and level up. Their kids are in better schools than yours. Their homes are stunning forever homes. They won’t come to yours. They are senior / influencers in their jobs / fields and hold a different place in society. They have ascended. They are no longer just your friend. With that they are more discerning about who is in their lives, who has access, how they spend their time, what benefits them and their kids which is all anyone cares about after mid-to-late 40s (or before). They see you once or twice a year and respond to texts with short polite non-engaging responses that indicate you aren’t a priority. It’s not a we moved away fade. It’s a we moved up and you didn’t and won’t.

[Anonymous]

The explanation is they made partner at (fill in the blank thing everyone around here does- law firm/consulting). That often happens around 40, give or take a few years. Plus, most firms have just had 2 years of killer returns.

[Anonymous]

Anonymous wrote:Would a $2M house make you happier than a $1M house OP?

In this area? Absolutely. What a stupid question.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Would a $2M house make you happier than a $1M house OP?

In this area? Absolutely. What a stupid question.

[Anonymous]

Anonymous wrote:The explanation is they made partner at (fill in the blank thing everyone around here does- law firm/consulting). That often happens around 40, give or take a few years. Plus, most firms have just had 2 years of killer returns.

This. My friends all became senior at the same time and the life style I was just catching up to exploded. These are 20-year career investments now paying off and paying dividends. These people made many good career choices and if you haven’t been doing the same for 20 years no, you will never catch them.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Yes, OP, this has been true for me. It can feel defeating at times, especially knowing this is likely to get worse as we get older. We try to just focus on ourselves, our financial goals, making smart choices for us. Staying of social media helps a lot. We've also started thinking about moving to a lower COL area in a few years when that will be a reasonable option due to jobs. I think where we are now, we're kind of on the bottom end of the range for our peer group in the DMV. We're still very fortunate and I don't want to lose sight of that, but it's hard when the people around you have a lot more. I think moving somewhere that our HHI and financial situation is more "average" would be beneficial for us on a lot of levels.

That's what's giving me anxiety. It's really, really hard to shake this feeling. You feel hopeless and overcome with dread.

What is there to feel hopeless about? Do you own a home and have a job? Retirement savings? That is all you need.

Sounds like advice to keep proles docile.

Sounds like Dave Ramsay Bible thumping crap, while Dave lives in a gigantic mega mansion, flies private, luxury car collection, and puts his kids and their spouses on the payroll in dubious jobs.

I giggle about him telling his young callers that they should pay for college themselves while he put all of his kids on his payroll and paid for their college.

[Anonymous]

Anonymous wrote:More people have parental/family wealth than you probably realize. (This is true for me and it's hard not to be bitter!)

Others are living way beyond their means.

Others may have side gigs you don't know about OR make a lot more in their main gig than you expect.

Focus on yourself and your own happiness.

I think the first 2 are really more common than you think. Or people make way more money than you realize they do.

I try to focus on making sure we are financially healthy, which involves NOT comparing myself to other people's wealth. We make the choices that are right for us, and we will never live in a $1.5M house. That's ok!

My inlaws lived a life many people would have found cushy. Top private schools, lots of hired help, my MIL was a SAHM. Then thing went south, they got cocky and invested a ton of money into a business that failed and were essentially penniless in their 50s. Actually, worse than penniless because they had debt.

They've crawled their way out, 20 years later. But it was a stressful times for awhile. They are still working in their mid-70s too, though they are finally a bit more comfortable now with social security and medicare.

[Anonymous]

I know several couples where all the money comes from one side of the family and if they divorce, the other one will be living a VERY different lifestyle than they are while married.

So what I'm saying is, just wait until everyone is in their 50s. Also find friends who seem to be living a lifestyle similar to yours. They are out there.

[Anonymous]

Anonymous wrote:The explanation is they made partner at (fill in the blank thing everyone around here does- law firm/consulting). That often happens around 40, give or take a few years. Plus, most firms have just had 2 years of killer returns.

I know someone who is head partner (don’t know the proper name, and this is for one of the accounting divisions) for their city’s office of a big 4 firm.

They live in a $600,000 house in a middling part of their city, and the kids go to the local parochial school. I am not sure if they’re just being frugal?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:On DCUM, every time someone asks this question, multiple people say: "family money" because then they don't have to think about what they themselves could have done differently. I really don't think receiving large gifts or inheritances from family is as prevalent as you think. Minor downpayments are the most common form of help, but usually don't run into paying for the entire house.

Practically no one ever says: "stock market". Yet for us, that's been the sole driver of our wealth, and I suspect it contributes to the wealth of a lot of my neighbors in Bethesda, along with people who manage or sell successful businesses. We bought high tech stocks when they were cheap because we believed in the product and decades later can sell some stocks to meet our needs.

But how did you have so much excess wealth 20 years ago to invest substantial sums on individual stocks?

We followed the “prudent advice”:

Paid down student loans (guaranteed return as they say) but not too fast as they were tax deductible
Invested in diversified index funds through maxed out 401ks
Kept adding to some long term CDs for building up a down payment on a house (which took a LONG time since houses appreciated faster than the $50k/year we were saving).
Then we had kids, and whose there went $28k/year/kid for daycare
Then we bought a house and suddenly we are dropping $20k for waterproofing a basement…

Dabbling in the stock market is fun, but a) in 2023 you can say tech was great, but you have survivor bias (and honestly most high flying tech are not profitable enough to justify their valuation, like Uber or Tesla, or have already past their prime like Facebook).
In general they recommend against investing large sums in individual stocks unless you don’t care to lose it. And if you don’t care to lose $20Ks of dollars, you are already WAY richer than us and likely OP.

You followed the “prudent advice”. This is exactly your problem. This is OP’s problem.
This is the reason she is left behind. She doesn’t play to win. She plays not to lose.
“Prudent advice” will not get you rich overnight. It will make you comfortable when you get old.
OP’s friends that are getting richer are probably playing more aggressively and taking more risks.
“Prudent advice” is what most people choose to follow. Go to college and get a 9-5 corporate job instead of the
more riskier path of entrepreneurship. Same with investing.

I bet some of OP’s friends took more risks with their investments and got rewarded.

Exactly. This is the point I was trying to make earlier.

[Anonymous]

Anonymous wrote:Age 35-45 for a lot of people is when -
Drs finish residency and specialty training.
Lawyers and consultants make Director / Partner - or know they won’t take that path.
PhDs finish post-docs and fellowships and get a well paying job.
GS15s decide to go to non-fed industry jobs.
Stock options vest,
Couples know how many kids they will have.
The highest daycare and nanny bills dwindle down to after school care and some camps.
The student loans are paid off.
Parents start dying and leaving inheritance.

If just a few of these things are true, it can seem like a family’s finances change overnight. In a 5 year span, our HHI went from $200k to $300k, my company’s stock doubled, and our childcare bills went from $50k/yr to $20k/yr.

This was the case in my circle, too. For a while it felt like everyone was in a somewhat similar boat but, during this period, some people were able to dramatically increase their incomes because they worked in specific industries while others are making just a bit more than they were 5yrs ago. Fortunately, we did all still remain friends

[Anonymous]

I was economically lapped by my classmates by the time I was 30 and got over it a long time ago (in my 50s now). Have you noticed that we live in one of the wealthiest areas of the country and many folks are making six figures. As does their spouse. Plus stock options and bonuses and frequent flyer miles (from work travel) and other perks from work. Also, if they were able to get into real estate or stocks, they have enjoyed the greatest run up in asset values ever seen. All that's before we get into inheritances as we are in the middle of the largest wealth transfer in history. And, yes, a tax regime that favors the wealthiest to a degree not seen in more than a century.

No, you'll never catch up. But it's OK. You're doing just fine.