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Old 09-04-2014, 03:12 PM   #41
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We tend to worship the millionaire next door on this forum. But there are people out there for whom a 3,000 sqft colonial and a BMW are still well below what they could afford. Sometimes people look rich because... they are rich, richer than most us millionaires next door ever will be!
We grew up being told those people might be wealthy but they weren't really happy (as if we were happy but oh well). Having met a few of them, I am sorry to report that they are no unhappier than anyone else.
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Old 09-04-2014, 03:26 PM   #42
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A man is rich if he makes more than his sister-in-law's husband.

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Old 09-04-2014, 04:10 PM   #43
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A man is rich if he makes more than his sister-in-law's husband.

It is all relative.
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Old 09-04-2014, 04:25 PM   #44
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We tend to worship the millionaire next door on this forum. But there are people out there for whom a 3,000 sqft colonial and a BMW are still well below what they could afford. Sometimes people look rich because... they are rich, richer than most us millionaires next door ever will be!
+1. Absolutely!
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Old 09-04-2014, 04:36 PM   #45
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The most recent Census Bureau number I could find is from 2010 when they counted 114,800,000 households in the U.S.

So if the top 5% have a net worth of $1.3M, that would be 5,740,000 households at that level.

So being in that select group means that you're just one in nearly six million. Somehow that doesn't sound quite as elite as the OP's article seemed to imply.
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Old 09-04-2014, 04:41 PM   #46
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But our system heavily taxes those working the hardest for their money, and taxes very little of the "compounding"money. The growing disparity you speak of is magnified by this system favoring capitalist wealth at the expense of labor income. This ultimately means we have very low class mobility, in fact we have one of the lower rankings for the 1st world.
I don't disagree with any of this, but I also don't have a good idea of how to fix it other than to encourage others to "create wealth" rather than just "make money." I certainly wouldn't advocate estate/wealth taxation.
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Old 09-04-2014, 05:13 PM   #47
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I'm rich by the article's criteria of earned income and net worth, but I can't identify with the people on the yacht and if you were you use my annual spending of $36k you might consider me something other than affluent.
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Old 09-04-2014, 05:15 PM   #48
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I don't disagree with any of this, but I also don't have a good idea of how to fix it other than to encourage others to "create wealth" rather than just "make money." I certainly wouldn't advocate estate/wealth taxation.
I'd consider dividends and capital gains as just regular income that would be taxed at your marginal income tax rate.
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Old 09-04-2014, 05:30 PM   #49
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Although I still think we should have a reasonable inheritance tax (one that would effect me) - once we solve the pesky family farm thing.
Why?

I've always thought an inheritance tax was inherently unfair.

Person A earns many millions in his life, saves/invests most of it and wants to give it to his relatives. His choice.

Person B earns the same amount and blows it all on fast boats, fast cars and fast women. Also his choice.

Why should person B get a pass while person A has to have what he wants to do lessened?
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Old 09-04-2014, 05:37 PM   #50
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All this just makes politicians think about a wealth tax. Add up what you have every year and tax it at X%. And won't that encourage people to save LOL!
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Old 09-04-2014, 05:39 PM   #51
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You can stop right at age. Anything looking at household averages w/o regard to age won't tell us much at all about sho is or is not 'rich'.




Not just 'the farm thing', any small business with assets to keep the business going. And how about someone with a (or more) special-needs child or grandchild? Some kind souls have adopted several special-needs children. Leaving millions could really help provide a lifetime of needed support. And before you start talking about special trusts or anything - those will be used by clever lawyers and rich clients to provide for the 'special-needs' of their heirs (poor darling gets depressed w/o Dom Perignon with dinner!).



I just don't see that as a major issue. It's like saying that very few people would contribute to the Red Cross when there is a disaster, because they personally never experienced a typhoon, hurricane, or tsunami. Or that a well-fed person just doesn't understand that it is bad to be starving, or that someone who is cancer-free can't understand that having cancer can be a very bad thing. The problems with our reps go far beyond that, but I'll stop there.

I wonder if the OP will drop by and share anything - or did he just throw some gas on a fire to watch people run?

-ERD50
Posting the article was hardly a case of my intending to throw gas on a fire or stir a pot. It was actually sent to me by DW and we both had a good laugh at the idea that based on the article, we would qualify as “rich” both in terms of our household income (we’re both still working) and in retirement savings. This feeling on both our parts stems largely from the fact that early on in our married lives we struggled mightily to pay mountains of medical bills (even after our health insurances paid). Both of our sons had significant medical issues as children – our youngest born prematurely and having to spend time in a NICU. The acuity of their conditions necessitated DW having to leave her job as a teacher (I was the higher earner) to stay home and care for the kids for 8 years. The only way out from under the piles of medical bills was for me to work 2nd jobs and DW to run a small pre-school at home. I guess you could say that the whole experience taught us how to LBYM and we continue that practice today!! Even after managing to pay off our medical debts, I kept working my 2nd job as a sports official for high schools and the NCAA to help us catch-up on retirement savings. After returning to teaching, DW would pick up gigs teaching summer school and doing A.P. testing for her district.
So in summary – DW & I have always considered ourselves more “fortunate” than rich when it comes to our finances. Early retirement – if you can call it that – will be at age 59-1/2 for me. Now, if we are talking about what makes us feel “rich”, it is having each other to lean on and a wealth of life experiences (some of them difficult) to draw from along with two adult sons we are incredibly proud of (both healthy & happy) as well as two very handsome grandsons.
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Old 09-04-2014, 05:48 PM   #52
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But our system heavily taxes those working the hardest for their money, and taxes very little of the "compounding"money. The growing disparity you speak of is magnified by this system favoring capitalist wealth at the expense of labor income. This ultimately means we have very low class mobility, in fact we have one of the lower rankings for the 1st world.

Let's say it a different way - the idea that anyone can achieve anything in america is not a false statement, but it is very far from being the truth too. It just makes a good sound bite.

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While I am not screaming unfair as to me I do understand the process behind it, yet your thoughts are the very reason why I chose not to try to "make some hay" and work while drawing a pension. Being just a middle class income and not really able to capture an out of expertise area high paying job, it just isn't worth it to me to only receive 58 cents on the dollar to work.


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Old 09-04-2014, 05:55 PM   #53
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Why?

I've always thought an inheritance tax was inherently unfair.

Person A earns many millions in his life, saves/invests most of it and wants to give it to his relatives. His choice.

Person B earns the same amount and blows it all on fast boats, fast cars and fast women. Also his choice.

Why should person B get a pass while person A has to have what he wants to do lessened?

Just throwing out a thought on this.... not my thinking, but you asked...



Maybe because Person B has already paid a big part of his money toward taxes buying all that stuff he blew his money on and Person A has not paid his 'fair share'.....
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Old 09-04-2014, 05:57 PM   #54
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If you're really defining rich you've got to count pensions in that too. There are plenty of people with pensions that create more cash flow than a $1.3 million portfolio will spin-off.
Thanks for pointing this out. I have been telling my friends who are govt employees and teachers that they are the nouveau-riche!!! Somehow they don't get it!

Pretty soon there will be 2 classes--those with and those without--pensions...
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Old 09-04-2014, 06:14 PM   #55
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The article title (linked in the OP) suggests that everyone considers themselves middle class. I think this is correct. It's kind of like age - what I considered to be OLD when I was a teenager I now consider to be middle aged. What I consider to be old now- is older than I currently am. So my definition has changed based on my age. I think the same happens with the term "rich"... No one considers themselves rich until there is no denying it. (Once you're shopping for mega-yachts that you plan to pay cash for, to park in front of your mansion - perhaps you'll admit you're rich... but few folks will admit it prior to that.)

I think we all justify applying the term "middle class" to ourselves because it's so easy to feel like others have more, and that we're somehow deprived because we can't afford (or won't spend money on) the finer things like expensive cars, first class tickets, or beach front homes.

I tend to identify as middle class - but two houses on my street are listed for close to $1M. If they sell for close to that - it means my house is worth a lot more than I thought - and my net worth is bigger than I thought. Maybe I'm rich after all.

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Agree with this. By this article, we qualify for the top 10% (and then some) in our mid-30s by both income and net worth. But we don't feel rich, and we don't live lavishly, particularly compared with the area in which we live.
You live in a very affluent area. You can be quite wealthy and feel poor compared to residents of your town. I'm in a similar boat - since I'm "La Jolla adjacent" - and a lot of the places I go to run errands are in La Jolla or frequented by folks from La Jolla. I may be driving DH's '95 PU, and parking next to the tesla or 7 series beamer at Ralphs... Hard not to feel middle classed in comparison.
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Old 09-04-2014, 08:41 PM   #56
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But our system heavily taxes those working the hardest for their money, and taxes very little of the "compounding"money.
Those working hardest for their money or more heavily taxed

That opinion might fit your ideology but I'm not sure how you would even begin to objectively defend it.

That being said, the "compounding money" has already been taxed once at the "heavier level" when it was first made via said hard work.

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Old 09-04-2014, 08:57 PM   #57
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Thanks for pointing this out. I have been telling my friends who are govt employees and teachers that they are the nouveau-riche!!! Somehow they don't get it!

Pretty soon there will be 2 classes--those with and those without--pensions...

That is not true. I spent a long layover in Dallas talking with a very nice lady who was a painter (non-skilled) for a university. She does not get a "gold-plated" or "Cadillac" pension and was worried about how she could pay for her prescriptions.
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Old 09-04-2014, 11:05 PM   #58
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Those working hardest for their money or more heavily taxed

That opinion might fit your ideology but I'm not sure how you would even begin to objectively defend it.

That being said, the "compounding money" has already been taxed once at the "heavier level" when it was first made via said hard work.


Is their a type of money that hasn't been taxed before? It goes in circle, taxed when it changes ownership.

And if you don't believe that good honest people work their asses off until they just about die and pay higher overall taxes due to consumption and income taxes , then im sorry, i dont argue math with anyone..


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Old 09-05-2014, 07:17 AM   #59
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Is their a type of money that hasn't been taxed before? It goes in circle, taxed when it changes ownership.
"compounding money" isn't super special exempt money that "rich" people get paid in, it was once "labor money" and thus already subject to "heavier taxation". Thus defeating any point you were trying to make regarding the unfair nature of taxing heavier the money made through "harder work".


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And if you don't believe that good honest people work their asses off until they just about die and pay higher overall taxes due to consumption and income taxes , then im sorry, i dont argue math with anyone..
I never said anything of the sort. I simply pointed out that your comment:

"But our system heavily taxes those working the hardest for their money"

Is a ridiculous comment and nearly impossible to defend.

Let me know once you've come up with an objective methodology for measuring how hard people are working across all fields of work.
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Old 09-05-2014, 07:31 AM   #60
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So why would this be a hard call? Money in your 30s is "more valuable" than money in your 60s, IMO. Thus equal amounts at those different ages points towards the 30s being better off than the 60s, regardless of proximity to retirement.
Oh, I meant that in the context of the message I was replying to, where the poster said that how "rich" you are should be a correlation to how close to being financially independent you are, and then mentioned not feeling "rich" because despite having $600K at age 32, they felt pretty far off from the FI mark.

So yeah, I'd much rather have $600K at 32, than at 65-70. But, $600K would be more likely to let a 65-70 YO be FI than a 32 YO. So by that particular metric (proximity to FI), it's a hard call. Of course, at 65-70 you may only have a few good years left...
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