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Old 03-24-2009, 02:30 PM   #121
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What's your definition of the "truly wealthy-rich?" Try to specific with some numbers......
Sorry don't have a number

I'd have considered a million rich back in the 70's and early 80's. Today I just think the word conjures up a sense of truly significant wealth. Blame the media if you want. For example belt tightening for the rich in these tough times might be selling the vineyard in Tuscany or putting the Gulfstream into a timeshare to help offset costs. Sure, the family with a 100 goats might be considered rich next to the family with 2 goats. Just one of those crazy 4 letter words open to a wide range of interpretation
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Old 03-24-2009, 04:42 PM   #122
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Sorry don't have a number

I'd have considered a million rich back in the 70's and early 80's. Today I just think the word conjures up a sense of truly significant wealth. Blame the media if you want. For example belt tightening for the rich in these tough times might be selling the vineyard in Tuscany or putting the Gulfstream into a timeshare to help offset costs. Sure, the family with a 100 goats might be considered rich next to the family with 2 goats. Just one of those crazy 4 letter words open to a wide range of interpretation
I recommend a book by Lee Eisenberg, former EIC of Esquire magazine. I'm sure most on this forum have heard of it and some have read it. "THE NUMBER". (Sorry, I forget my 8th grade citation etiquette.)

I didn't learn much "practical" info in this book - such as AA, LBYM, etc. I did pick up some self psychology however. One of Eisenberg's "Bottom Lines" or take away messages is called "...almost everybody suffers from reference anxiety."

I'd always wondered about the phenomenon TargaDave pointed out above. It occurred to me that I had done the same thing 'to myself' over the years. I recalled a time in college when I didn't have a dime, yet had everything I needed. Then when I first got a job at Megacorp, I thought I was rich - for a month, anyway. After that, I always could (and sometimes did) compare myself to folks in my own work group, my old study group at college, by peers in other Megacorps or academia, etc. etc.

In simplest terms, it's a form of "keeping up with the Joneses." Never got into that too deeply, but here's where I learned something about myself. Eisenberg suggests there is a more insidious version of this phenomenon "...spiraling lifestyle entitelment." Or "When is good, good enough?" He explains it better than I can, but he gives an example of tastes in vodka. When you're a college student, any rot-gut will do. When you actually start to make some money, you move up to the "good" stuff. Then you find out there is "better" stuff and eventually, you buy only the "best". You still get just as wasted, but how could you ever go back to the rot-gut or even the good stuff?

Vodka is a bad example for me, but I can see this phenomenon in say, housing, TV sets, "toys" and other aspects of my lifestyle. While I consider myself an official member of the LBYM club, I can see lots of "life style creep" over the years.

Eisenberg also offers a "borrowed" definition of rich which includes some numbers. I won't quote the book further, but check it out (before inflation makes it obsolete!) at the book store or library sometime. The surprising thing is that when I just look at the numbers which define various levels of being "rich", they simultaneously seem too high and too low.

I'll give you an example. We (at least I) think of folks who fly private jets as being "rich". The top number Eisenberg lists as in the "rich" category is $100 mil. He doesn't go beyond that because his definition considers those folks "uninteresting" since they already have everything anyone could want. Don't think anyone on the board would argue that $100 mil is not rich.

But, I have an interest in such things as private jets. Can't explain it, I just do. I got to ride on Megacorp's Gulfstream a few times and now I try to follow prices of such "birds". I watch all the shows on the "mega-rich" and their toys. Jets and their outfitting are a big part of these shows.

So, consider that a new Gulfstream IV costs about $50 mil and you can see that even a rich person (with ONLY $100 mil) has to watch his pennies when he trades up to a G IV. Otherwise, his wife may not get to buy her 120 foot (sorry honey, we can't afford the 180 foot) yacht! Those poor rich people!

SO... It really is all relative. Anyway, the book helped me examine my thinking on wealth and "richness". Don't know if anyone else worries (or thinks) about such things. Guess they must or we wouldn't be having this discussion.
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Old 03-24-2009, 05:38 PM   #123
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SO... It really is all relative. Anyway, the book helped me examine my thinking on wealth and "richness". Don't know if anyone else worries (or thinks) about such things. Guess they must or we wouldn't be having this discussion.
I don't think about it often but... Today we pulled into a space in the KOA in San Antonio and there was one of those Mega-sized RVs in the space next to us. The type of RV I seen last month at a trade show for $450,000 and up. As I was setting up a guy (in his 70's?) came out and sat down at the table and opened a beer... said it was time for a "cold one." His RV had a really (I mean REALLY) nice trailer attached to it. I asked what he had in the trailer and he told it was for the car. We talked a bit while I set up. I went inside to finish up and he pulled a fantastic looking old (late 60's?) Gold Cutlass 442 out of the trailer and parked it along side his RV.

I don't know if that is "Rich" but he seemed to be "rolling in it."
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Old 03-24-2009, 05:46 PM   #124
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I recommend a book by Lee Eisenberg, former EIC of Esquire magazine. I'm sure most on this forum have heard of it and some have read it. "THE NUMBER".
Selling "The Number"
"The Number"
The 'New York' Number
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Old 03-24-2009, 06:50 PM   #125
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Sorry don't have a number...Sure, the family with a 100 goats might be considered rich next to the family with 2 goats. Just one of those crazy 4 letter words open to a wide range of interpretation
I found the number. It would be the price tag on this baby: http://www.burjdubaiskyscraper.com/Burj_Dubai.jpg
The financier has to be one serious goat owner. No low profile going on at this address.
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Old 03-24-2009, 06:56 PM   #126
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We don't discuss our finances with anyone since the first time we realized we made more than DW's parents. That was a long time ago.

We do have close friends we are going to Hawaii with that we discuss everything with, however. Part of what makes it easy to do so is they make significantly more than us (both doctors). They are getting pretty comfortable discussing it with us as they see we aren't going to be resentful of what they have earned. They live below their means (which means their house would be an extreme stretch for us to afford) and after my prompting, put all their retirement funds into Vanguard Target Retirement, and they max everything. So we count ourselves extremely lucky to have friends we can have these kinds of conversations with.

It's all relative. He bought a brand new Lexus IS350 and got teased by his partners for going cheap, as they all drove 911 Turbos or something like it. And her BMW 325i is six years old! But for them, this is living very frugally.
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Old 03-24-2009, 08:10 PM   #127
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...
When you're a college student, any rot-gut will do. When you actually start to make some money, you move up to the "good" stuff. Then you find out there is "better" stuff and eventually, you buy only the "best". You still get just as wasted, but how could you ever go back to the rot-gut or even the good stuff?

Vodka is a bad example for me, but I can see this phenomenon in say, housing, TV sets, "toys" and other aspects of my lifestyle. While I consider myself an official member of the LBYM club, I can see lots of "life style creep" over the years...
Let's face it. We all succumb to this "hedonic adaptation". As you progress in life and your career, hopefully you start making more and more money. Or it might simply be that your expenses go down as you pay off your house, stop having to buy furniture, etc... So, who can resist treating him/herself to something one would have regarded as an unthinkable luxury in his/her days as a poor student. Bye bye McDonald's. Hello French restaurants.

I have always been a delayed-gratification type, but still got a kick out of reading a book by Andrew Tobias where he preached rationing of luxuries. I have been practicing it, but the fact remains. My standard of living necessarily improved with my career advance and age. I could only slow it down, but, being a mere mortal, could not stop it.

On the other hand, there is a reverse psychological effect of the hedonic adaptation. One consoles himself that he has "been there/done that" when no longer able to afford the things he was getting used to. People are better survivors than they think.

We will all be OK. I was just joking about not being in the "rich man's sunny world".
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Old 03-24-2009, 08:45 PM   #128
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Let's face it. We all succumb to this "hedonic adaptation". As you progress in life and your career, hopefully you start making more and more money. Or it might simply be that your expenses go down as you pay off your house, stop having to buy furniture, etc... So, who can resist treating him/herself to something one would have regarded as an unthinkable luxury in his/her days as a poor student. Bye bye McDonald's. Hello French restaurants.

I have always been a delayed-gratification type, but still got a kick out of reading a book by Andrew Tobias where he preached rationing of luxuries. I have been practicing it, but the fact remains. My standard of living necessarily improved with my career advance and age. I could only slow it down, but, being a mere mortal, could not stop it.

On the other hand, there is a reverse psychological effect of the hedonic adaptation. One consoles himself that he has "been there/done that" when no longer able to afford the things he was getting used to. People are better survivors than they think.

We will all be OK. I was just joking about not being in the "rich man's sunny world".
Maybe it's because I don't have a college degree or any truly marketable skills but I can't imagine spending all the money I make now after 9 years of raises. If I lost my job I would be lucky to find a job that paid $25K/yr starting out. I currently make around $45K/yr after 9 years in the same company and working a shift that pays extra because of working weekends and nights. I started making $20K/yr and once I reached $25K/yr I stopped increasing my spending because I knew if I bought a house that made things tight at $45k/yr then i'd be screwed if I was only making $25K/yr. I guess it's different for people with college degrees. If you get layed off at one company you can go to another one and make just as much sometimes even more. If I was able to find a job doing the same thing as i'm doing now I would have to start over at their bottom pay which is probably <$25K/yr on a standard M-F 8-hour/day shift. So bottom line is I feel it's a neccesity to live on half my pay because I could be making half my current pay at anytime. So my expenses will never go higher than where they are now unless I keep this job past the point of reaching FI so I can improve my standard of living. Not everyone has the luxury of increasing their standard of living every year without risk of losing everything.
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Old 03-24-2009, 08:55 PM   #129
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If you get layed off at one company you can go to another one and make just as much sometimes even more.
No, it's not true. College graduates THINK they can always make more with the next job. The reality is that job skills get outdated, and works get outsourced. If we stayed in one place, our pay kept increasing as we gained seniority, not too differently from you. When a megacorp goes belly up, everybody hits the street, and may have to start from scratch. The upper managers may even find themselves unemployable.

Still, don't you allow yourself some luxury, no matter how little, when your pay increases year after year? The trick is to keep it down, and to build up a portfolio. I have been doing that a lot better than all people I know in real life, people in this forum notwithstanding.
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Old 03-24-2009, 09:12 PM   #130
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Still, don't you allow yourself some luxury, no matter how little, when your pay increases year after year? The trick is to keep it down, and to build up a portfolio. I have been doing that a lot better than all people I know in real life, people in this forum notwithstanding.
No, not yet. If I get used to spending more than what i'd make if I had to start over then I won't be able to get by without significant sacrifices. So I just get by on very little. Since i've never known anything else, I don't miss it....much. Maybe when I reach 6 figures in non-retirement savings i'll allow myself some luxuries but that's several years off.
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Old 03-24-2009, 09:18 PM   #131
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Well, didn't you get yourself a new toy recently (a laptop)?
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Old 03-24-2009, 09:26 PM   #132
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Well, didn't you get yourself a new toy recently (a laptop)?
Yes, I did do that. But, I got a used one that only cost me $450. I consider that a near necessity though because my 7 year-old desktop was days from dead so I had to get something. I guess I have and will buy myself a few small luxury items but nothing that'll increase my monthly expenses just things that are one time expenses that I can easily afford.
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Old 03-24-2009, 09:32 PM   #133
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I consider that a near necessity though .
Don't we all think so?


Just teasing.
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Old 03-24-2009, 09:41 PM   #134
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Don't we all think so?


Just teasing.
I guess I could just go to the library a couple times a week and use their computers for free but a computer and high-speed internet are a couple luxuries I do allow myself to have. Examples of luxuries I don't allow myself would be large HDTV w/surround sound and nice furniture. I've never bought a piece of furniture in my life(not counting my bed). I don't use my living room at all but allowed my family to give me a couple things. My parents gave me a used futon and my grandmother gave me her 20 year-old swivle chair. That's all the furniture I have in my livingroom or will have for many years.
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Old 03-24-2009, 09:42 PM   #135
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Aaron, the way that you handle your finances makes a lot of sense to me. And you are right - - a $450 laptop is not extravagant for someone who uses a computer a lot, especially when you consider that it will last for several years and provide you with entertainment and information during that time. If it lasts for 4 years, that is just a little over $9/month.
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Old 03-24-2009, 09:42 PM   #136
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I hear ya.
Been there done that as a DINK couple, both GS-13 Engineers. No matter what you do, there will always be a grouse who has to try to ruin your day. Today's economy may drive the frequency of comments in an exponential fashion.

Good plan to keep asset details to yourselves, even family. Some would say "especially" family.
Ah, I just got this today at lunch. I was just sitting around, and the guy who just had a baby was all resentful that I'm getting juicy assignments because of my single guy lifestyle. I thought, "Hm...you want to have people IMing you at 8 PM asking you to give them this or that or have conference calls from 7-8:30 PM because an important West Coast customer only has time that late? Be my guest."

BGF's method of dealing with this kind of crap: make some sarcastic and off color comment and indicating that there is more of that where it came from. That usually shuts them up.
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Old 03-24-2009, 10:15 PM   #137
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Maybe it's because I don't have a college degree or any truly marketable skills but I can't imagine spending all the money I make now after 9 years of raises. If I lost my job I would be lucky to find a job that paid $25K/yr starting out. I currently make around $45K/yr after 9 years in the same company and working a shift that pays extra because of working weekends and nights. I started making $20K/yr and once I reached $25K/yr I stopped increasing my spending because I knew if I bought a house that made things tight at $45k/yr then i'd be screwed if I was only making $25K/yr. I guess it's different for people with college degrees. If you get layed off at one company you can go to another one and make just as much sometimes even more. If I was able to find a job doing the same thing as i'm doing now I would have to start over at their bottom pay which is probably <$25K/yr on a standard M-F 8-hour/day shift. So bottom line is I feel it's a neccesity to live on half my pay because I could be making half my current pay at anytime. So my expenses will never go higher than where they are now unless I keep this job past the point of reaching FI so I can improve my standard of living. Not everyone has the luxury of increasing their standard of living every year without risk of losing everything.
My wife and I both have a college degree and we do the same thing. We still live the same way we did 5 years ago when we made half as much money. Since 2004 our expenses have actually decreased a bit on average (and quite a bit more if you take inflation into account). Our income could be cut by 60% tomorrow and we wouldn't miss a beat. We do it because we feel very lucky to be making what we consider to be a lot of money for our age, but we don't take it for granted. We know that things can change really quickly. It happened before and it will probably happen again. So we bank every pay raise and every bonus. We still splurge, but only within the bounds of our budget (which still has 40% dedicated to discretionary spending). Our goal is to maintain our current lifestyle, which at some point we may have to start adjusting for inflation, all the way through the rest of our careers and through retirement regardless of earned income.
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Old 03-25-2009, 11:48 AM   #138
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I don't think about it often but... Today we pulled into a space in the KOA in San Antonio and there was one of those Mega-sized RVs in the space next to us. The type of RV I seen last month at a trade show for $450,000 and up. As I was setting up a guy (in his 70's?) came out and sat down at the table and opened a beer... said it was time for a "cold one." His RV had a really (I mean REALLY) nice trailer attached to it. I asked what he had in the trailer and he told it was for the car. We talked a bit while I set up. I went inside to finish up and he pulled a fantastic looking old (late 60's?) Gold Cutlass 442 out of the trailer and parked it along side his RV.

I don't know if that is "Rich" but he seemed to be "rolling in it."
Ron, I don't know if I'd want the massive RV, but I'd sure as heck like that car! Whoa!
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Old 03-25-2009, 02:51 PM   #139
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It's not just that private sector employees *wanted* to keep their salary secret, though I'm sure some did. Most private sector employers generally forbid employees from discussing salary, with disciplinary action up to and including termination for those who don't comply.
Reminds me of waay back when IBM pcs were just replacing terminals in our company. One of the accounting folks wrote a program so the mainframe would think the pc was a terminal. Great program - unfortunately, one of the files that were transferred to the pcs. was the previous years w-2's for the whole company! I accidently found it while wondering what all the extra files were. Luckily, I had access to all the local plants, and one Sunday went in and quietly deleted all the files. When I told him, he bought me a bottle of scotch for saving his job!
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Old 03-25-2009, 05:58 PM   #140
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Put it another way. Let's say you are driving a Suburban. In your mind it's a rather small car compared to the car of your dreams, the Hummer H1. But would other people who drive compacts, sedans and small SUVs really think that a Suburban is a small car?
Well, I drive a Suburban. A 1999 C2500. Small it is compared to a bus or a Mack truck. It actually dwarfs a hummer. At 7200 lb it is heavier (weighed on a commercial scale recently, while picking up 3 tons of rocks with my trailer). Yes it does drive very nice thank you. Sucks gas too. I still like it.

On the rich Q. DW and could not be considered rich by the $ 1 million standard. Far from it (on the low side) But we are comfortable, lack for nothing.

As for keeping a low profile, no lower than all my life. Driving a Jaguar does not quiet equate to incognito. Make up for looking rich behind the wheel by wearing properly broken in clothes.

I did buy my car and sub used. For far less money for car and sub together than most spend on an economy small car. Knowing how to fix things is a real asset.
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