Being rich is expensive

[JustCurious]

This article explains how "being rich is expensive" because it is expensive to maintain luxury homes, cars, send your kids to private schools, etc. But "being" rich is not expensive, it is buying expensive stuff that is expensive. You can "be rich" and not buy expensive stuff.

Being rich is expensive - Jun. 5, 2014

Of course I know what I am saying is obvious to the smart people on this board, but I thought this article was worth sharing. I think it is further evidence of the widespread mentality in our society that people spend as much as their income and access to credit will allow.

 

[Travelwanted]

To your point, being poor is expensive too if you really can't afford the lifestyle you are living! Hence our motto: LBYM.

 

[Meadbh]

There's a difference between "being rich" and "acting rich".

 

[FIREd]

I agree that "living a wealthy lifestyle doesn't come cheap". But living a wealthy lifestyle is a choice.

 

[Chuckanut]

There's a difference between "being rich" and "acting rich".

+1

I remember a book that claimed the worst thing a parent could do for a child was to help them buy a house in a neighborhood that was well above their means. In an attempt to 'keep up with the Jones', the kids paid more taxes, had higher house expense, bought more expensive cars, furniture, food, wine, etc. The end result was that these children ended up less well off financially after a number of years compared to young folks who bought in neighborhoods they could afford.

 

[Andre1969]

Being rich isn't expensive. But acting rich can be!

 

[easysurfer]

It's not what you earn but what you keep.

 

[FUEGO]

That sounds horrible. I'd hate to be rich! What a curse.

 

[daylatedollarshort]

I want to work part time as the maid and flight attendant for these people, and invest the money.

"Having a housekeeper for just a few hours each week day can add up to more than $20,000 a year, according to Quintessentially People, a group that helps wealthy clients find household staff."

"The pilot on your private plane will run you about $300,000, and the flight attendant another $150,000."

Maybe there is a market for showing wealthy people how to not get fleeced by household staffing companies?

 

[rodi]

From the article:

But the reality is that having a lot of money costs a lot of money, and living a wealthy lifestyle doesn't come cheap.

LOL - And here I thought having a lot of money GAINED you a lot of money in dividends, capital gains, appreciation, compounding, etc.

I must be doing something wrong.

 

[meierlde]

The author of this piece never read the Millionaire Next Door. As many here have suggested put the facade of being rich on is expensive. But then Sam Walton did not really do that, all be it for a time he was the close to being richest person in America.
Or put another way if you pick the wrong set of Jone's to keep up with it can get expensive.

 

[daylatedollarshort]

The author of this piece never read the Millionaire Next Door. As many here have suggested put the facade of being rich on is expensive. But then Sam Walton did not really do that, all be it for a time he was the close to being richest person in America.
Or put another way if you pick the wrong set of Jone's to keep up with it can get expensive.

The latest version of that book actually is called Stop Acting Rich and Live like a Real Millionaire:

Michelle Singletary - To truly become rich, you need to stop acting like it

 

[scrabbler1]

I bought one thing with my pile of money - the ability to maintain my daily, low-key LBYM lifestyle without having to work. And that to me is more valuable than anything else.

 

[Chuckanut]

Anybody remember the BBC show "Flame Trees of Thica"? The father told his daughter that when he was rich he would do nothing 'because that is the most expensive thing a person can do.' Sometimes I feel very rich, but usually for only a few hours.


Sent from somewhere in the world with whatever device I can get my hands on.

 

[jerome len]

Sometimes some companies and tradespersons soak who they think are the rich. My Dad was an Electrician, he traded work with all the other tradespersons either free or at a very low cost. As his son I enjoyed a lot of free work as well. Back in those days it was "us guys against those guys" Those guys were rich guys, either owning their own business, being in upper management or living in an upscale community. Then, I became one of "those guys".
Today, I still know and like a lot of tradespeople. Our all around handyman charges by the neighborhood......neighborhoods under $300,000 he charges $70 an hour.....over $400,000......$95 an hour. ....."they can afford it".....Is this fair? not really but the key is to treat everyone with respect....many rich people don't.....I'm lucky that I've been financially successful.....but, I remember my roots.....I always offer tradespeople a bottle of water, show them a restroom, tell them I appreciate what they do.....and, I sort of miss the old days and really wish I had the skills my Dad had.....but I don't and enjoy my accomplishements......I'm not really rich......I'm just successful and am one of "those guys" as identified by individuals working most of the trades.

 

[mystang52]

Here's a close-to-home study in contrast: Just yesterday my closest friend called me from his hotel - he's on assignment for his j*b. He told me how depressed and tired he was. He mentioned he probably has to work another 6 or 7 years (we're both just shy of 62) and he envied me. He acknowledged his and his wife's lifestyle mistakes over the years and noted how DW and I took a different approach yet still managed to take vacations every year....not to mention my ER.
Oh, and by the end of the conversation he told me he just bought a $2500 "fat bike" because he deserves it. He already has two other bicycles he hardly uses.

 

[JoeWras]

I have a "rich" family member who spends more on pool upkeep, maid service, yard service and real estate tax than all of my expenses combined (except my income tax).

They also belong to a country club... I'm not even including that. They are 8 years older than me and I ask when they will retire. The answer: "No time soon." Gotta keep working to live that lifestyle!

 

[timo2]

Being poor is expensive also, as being able to afford to buy only the smallest cheapest product means you lose the ability to buy in bulk or take advantage of sudden discounts at the wrong time of a pay period on household items used every day. That really adds up over the year.

 

[aim-high]

I bought one thing with my pile of money - the ability to maintain my daily, low-key LBYM lifestyle without having to work. And that to me is more valuable than anything else.

EXACTLY!!!

I'll take that over fine dining, fancy cars, extravagant vacations, big homes, and a super high paying stress filled job.

 

[daylatedollarshort]

Sometimes some companies and tradespersons soak who they think are the rich. My Dad was an Electrician, he traded work with all the other tradespersons either free or at a very low cost. As his son I enjoyed a lot of free work as well. Back in those days it was "us guys against those guys" Those guys were rich guys, either owning their own business, being in upper management or living in an upscale community. Then, I became one of "those guys".
Today, I still know and like a lot of tradespeople. Our all around handyman charges by the neighborhood......neighborhoods under $300,000 he charges $70 an hour.....over $400,000......$95 an hour. ....."they can afford it".....Is this fair? not really but the key is to treat everyone with respect....many rich people don't.....I'm lucky that I've been financially successful.....but, I remember my roots.....I always offer tradespeople a bottle of water, show them a restroom, tell them I appreciate what they do.....and, I sort of miss the old days and really wish I had the skills my Dad had.....but I don't and enjoy my accomplishements......I'm not really rich......I'm just successful and am one of "those guys" as identified by individuals working most of the trades.

A big part of our lower expenses in retirement has been having the time to get competitive bids and buy products and services in lower rent cities. The next major service on my car is $300 less by going to a dealer in a lower rent city. I switched to a stylist at a strip mall from the one in the trendy high rent area. We shop 10 minutes away at a pack it yourself grocery store owned by Lucky's with all the same products except the prices are at least 30% lower then the retail stores in our neighborhood, sometimes even much more on the sale items.

I am getting competitive bids now on some contractor work and the first guy instead of replacing a few boards in a deck with some dry rot said we really needed to replace the whole deck. The second contractor added on extra work that was unneeded and then called and said if his bid wasn't competitive to let us know and he would work with us on the numbers. It was like a few of them said, "While we'd like to try to overcharge you but if you are savvy to that let us know and we'll come back with a more fair bid." I am glad we have the time now to get many bids and go with the contractors who submit fair bids from the get go.

 

[W2R]

Of course I know what I am saying is obvious to the smart people on this board, but I thought this article was worth sharing. I think it is further evidence of the widespread mentality in our society that people spend as much as their income and access to credit will allow.

(emphasis mine) Exactly. After all, if people didn't believe that it is normal to spend every cent they can get their hands on, then more of them would be able to stop "working for the man". Many commit to ridiculously long and hard work hours to pay for an inflated lifestyle. Instead of doing that, they could retire and enjoy their lives like we are doing if they understood that this mentality is a crock of untruths.

Past polls of our members have shown a very high median net worth, with quite a few of us having over a million in investible assets, IIRC (I don't have a link but that is my perception). Yet what do we discuss? Ripping dryer sheets in half, how to fix things instead of buying new, how much we can cut our utility expenses, and so on.

 

[kcowan]

I have found that the relentless focus on costs has made more of an impact than my investments portfolio. The only extravagance is in dinners out every so often.

 

[heeyy_joe]

"The second contractor added on extra work that was unneeded and then called and said if his bid wasn't competitive to let us know and he would work with us on the numbers".

Now that's RICH!

 

[daylatedollarshort]

I have found that the relentless focus on costs has made more of an impact than my investments portfolio. The only extravagance is in dinners out every so often.

I am surprised there is not more of a focus on costs and expenses on this forum compared to rates of return, annual expenses and net worth. We have found it easier to cut our expenses by 25% or more when we could never make those kinds of risk free returns consistently in the stock market for the next 30 or so years.

A light bulb on controlling costs went on for me when I was flipping through a homesteading magazine at a relative's house and I realized how little the people featured in the magazine were living on per year and getting more fresh air, exercise, sunshine, home cooked meals and family time than we were. We didn't want to grow our own food or do anything labor intensive, but just reading about simple and sustainable living after that helped us to really slash our costs without adding a lot of extra work.

Usually the milestone thread is all about savings and net worth and not expense lowering, even though lowering expenses may often have a greater impact on ability to retire early.

 

[kaudrey]

I am surprised there is not more of a focus on costs and expenses on this forum compared to rates of return, annual expenses and net worth. We have found it easier to cut our expenses by 25% or more when we could never make those kinds of risk free returns consistently in the stock market for the next 30 or so years.

I think it isn't that we don't think about it, but just that most of us are kind of "past" that part. Meaning, if you are planning to retire early, planning so much for it that you are frequenting this site, then you are already LBYM and pretty cost conscious.

I don't talk about costs because I pay myself first. Max out our 2 401(k)s, extra to the taxable account automatically on pay day etc. We can only spend what is left, and have a good idea of what we can and can't do in a given month.