Secrets of rich people

[Anonymous]

Anonymous wrote:

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.

This.

[Anonymous]

pp. 10:56's point about some rich people spending money that others in the community do not easily see is correct. Vacations or vacation homes in areas with other rich people, or expensive experiences, fine. But that wealth is downplayed in the primary home community. I agree with that.

[Anonymous]

Anonymous wrote:If I'm going off the behavior I see in my ILs:

Always let the other person pay for dinner.

Always buy for quality. Spend more now to make it last longer.

Seriously. I can remember maybe a handful of times of when the ILs have picked up the check. They offer, sure, but when the other party does the customary, "no, let me" they don't play the game of back and forth, they simply let them.

All of my MILs furniture is decades old, but looks fab because she spent $$$ on it. And they are classic pieces that age well and don't look dated. I have friends who pay designers to flip their living rooms every few years to refresh them, spending $5k-$10k on mostly IKEA and Urban Essentials type places.

I grew up pretty wealthy and around wealthy people; I don't know any rich people like this. Going out to dinner with my parents' friends always ended in a comedic improv of people angling to pay the check for the table. I actually think splitting checks or not offering to pay is a sign of not having money (or not feeling like you have money).

[Anonymous]

Anonymous wrote:

Anonymous wrote:If I'm going off the behavior I see in my ILs:

Always let the other person pay for dinner.

Always buy for quality. Spend more now to make it last longer.

Seriously. I can remember maybe a handful of times of when the ILs have picked up the check. They offer, sure, but when the other party does the customary, "no, let me" they don't play the game of back and forth, they simply let them.

All of my MILs furniture is decades old, but looks fab because she spent $$$ on it. And they are classic pieces that age well and don't look dated. I have friends who pay designers to flip their living rooms every few years to refresh them, spending $5k-$10k on mostly IKEA and Urban Essentials type places.

I grew up pretty wealthy and around wealthy people; I don't know any rich people like this. Going out to dinner with my parents' friends always ended in a comedic improv of people angling to pay the check for the table. I actually think splitting checks or not offering to pay is a sign of not having money (or not feeling like you have money).

Yeah, always letting the other person pay because you hoard money --> super gauche. I mean good lord...I am embarassed for these
people.

[Anonymous]

Anonymous wrote:Max out retirement starting day 1 of a professional job;

Live below your means -- whether that's living on one salary/saving the other; or if you're single/or married but can't do the 1 salary thing -- make it a goal to save 25-50% of one salary at least.

And then what you save from living below your means -- invest it -- at least most of it.

Invest invest invest, even if it's $1000 here and $3000 there, it adds up. For example when I was at a job with a transit benefit, I kept track of how much I was saving by using company funded public transit vs. driving and parking each day -- subtracting out the days I drove anyway or took Uber. I kept track of the amount saved and every few months when that amount added up to $1500+, I threw it in the market. As I saw it, I'd be spending that amount anyway if the co. took away transit, so why not act like it's being "spent" now by throwing it in the market.

I think this is probably the most important lesson my (rich) father taught me. Invest every spare penny, and do it early. He help me set up CDs for any birthday money I got in high school. In college, he helped me set up a Roth IRA and offered to match any contribution I made to it, even if it was just a couple hundred dollars a year. I learned later that as long as I set aside something, he maxed my contribution...but I didn't know that at the time.

The other couple of things:
- Establish credit early on by getting a CC that you pay in full every month. I started off with a $500 limit on a card I pretty much used only to buy textbooks, but it set me on the path to an excellent credit rating.

- Always, live below your means. I guess this is corollary to the above...since I was taught never, ever to carry a CC balance.

Of course, all of these things rely on having a certain amount of money to begin with...and obviously most people's parents aren't maxing their Roth contributions. But even if he hadn't done that, I think just the lesson to invest was an important one. DH's father taught him about investing early on as well, and I think it really colors how we both think of things. None of our siblings have the kind of savings that we do, but they all live "fancier" than we do. In the end, it might not matter with the amounts we will all inherit...but at least in DH's sister's case, we've been able to tell his parents that we've already fully-funded our kids' 529s so they can set any money aside to contribute to SIL's kids college instead.

[Anonymous]

Anonymous wrote:

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!

i would guess the new immigrant PP, worked a small business and never paid taxes. I know them...used to be one of them. They game the system....low documented income also qualifies their kid for all kinds of need based college aid, in addition to other freebies. Believe me, the immigrants know all the tricks.

[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.

LOL

LOLOL

[Anonymous]

I had the academic stats for a top MBA program but didn't consider it

What type of job pays $350k?

[Anonymous]

Second another poster’s suggestion to read and digest info in the book “The Millionare Next Door”. One point he makes is that those who appear to be the most weathy may not actually have a great net worth/bottom line, because they’ve spent too much money on consumable/non-durable goods. People who lived modestly did not look wealthy, but had a great financial net worth because they hadn’t blown their money on a flashy life style - they still had that money in their pocket, so to speak. He used the Texas reference “Big hat, no cattle”. Most of his millionares owned non-flashy small companies and lived in middle class neighborhoods, bought used cars and lived modestly. I lived in the south in college years, and quickly learned it was considered in bad taste to dress or act wealthy; the richest guy in town might be wearing ratty clothes and driving an ancient car. I learned to like that behavior and those manners.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Max out retirement starting day 1 of a professional job;

Live below your means -- whether that's living on one salary/saving the other; or if you're single/or married but can't do the 1 salary thing -- make it a goal to save 25-50% of one salary at least.

And then what you save from living below your means -- invest it -- at least most of it.

Invest invest invest, even if it's $1000 here and $3000 there, it adds up. For example when I was at a job with a transit benefit, I kept track of how much I was saving by using company funded public transit vs. driving and parking each day -- subtracting out the days I drove anyway or took Uber. I kept track of the amount saved and every few months when that amount added up to $1500+, I threw it in the market. As I saw it, I'd be spending that amount anyway if the co. took away transit, so why not act like it's being "spent" now by throwing it in the market.

I think this is probably the most important lesson my (rich) father taught me. Invest every spare penny, and do it early. He help me set up CDs for any birthday money I got in high school. In college, he helped me set up a Roth IRA and offered to match any contribution I made to it, even if it was just a couple hundred dollars a year. I learned later that as long as I set aside something, he maxed my contribution...but I didn't know that at the time.

The other couple of things:
- Establish credit early on by getting a CC that you pay in full every month. I started off with a $500 limit on a card I pretty much used only to buy textbooks, but it set me on the path to an excellent credit rating.

- Always, live below your means. I guess this is corollary to the above...since I was taught never, ever to carry a CC balance.

Of course, all of these things rely on having a certain amount of money to begin with...and obviously most people's parents aren't maxing their Roth contributions. But even if he hadn't done that, I think just the lesson to invest was an important one. DH's father taught him about investing early on as well, and I think it really colors how we both think of things. None of our siblings have the kind of savings that we do, but they all live "fancier" than we do. In the end, it might not matter with the amounts we will all inherit...but at least in DH's sister's case, we've been able to tell his parents that we've already fully-funded our kids' 529s so they can set any money aside to contribute to SIL's kids college instead.

Haha I mean...it sounds like your secret is "have a rich father".

[Anonymous]

Anonymous wrote:I had the academic stats for a top MBA program but didn't consider it

What type of job pays $350k?

I graduated in 2011, so seven years later I'm at 350k cash comp with another 150k annual equity grants. I'm the GM of a line of business at a publicly traded financial services company.

My first few years out of the MBA I worked at BCG. that's what got me this job.

[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.

I'm the LL Bean poster and the reason I brought this up is because I think of it as a secret of rich people--not to care about consumer goods, whereas other people with much lower incomes are overspending on those items. All that spending adds up, becomes a habit, and then people never get a chance to put money aside or invest, and live paycheck to paycheck.

Sure, spending within means is fine, but I think we are discussing spending beneath one's means in this thread.

[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.

I'm the LL Bean poster and the reason I brought this up is because I think of it as a secret of rich people--not to care about consumer goods, whereas other people with much lower incomes are overspending on those items. All that spending adds up, becomes a habit, and then people never get a chance to put money aside or invest, and live paycheck to paycheck.

Sure, spending within means is fine, but I think we are discussing spending beneath one's means in this thread.

I hear you.

[Anonymous]

The secret to be rich, is to start off rich

[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.

+1 This is what we did and it's amazing how much we saved. It eventually allowed my DH to take some real business risk that ultimately paid off in a big way.