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Old 01-06-2012, 01:39 PM   #41
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As everyone has stated, you cannot define rich by income alone.

However, if I was posed the survey question and had to give an answer. I would assume that the person/family are in their 20's, no significant assests, will reach a high standard of living in the SF bay Area ($1.5M house, luxury items and plenty of spending money) in a short time frame and be able to save and invest to reach financial independance in 20 to 25 years.

My answer is: $450,000 per year
That must be the after tax number!
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Old 01-06-2012, 02:00 PM   #42
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I just find it interesting that level for 'the rich' seems to be lowered every time you turn around.

What happened to the 'rich' making $250K a year? Now it is $150??!!!! Before you know it, people making $75K will be considered rich and 'not paying their fair share'.

It just seems that while the cost of everything keeps going up the price of being rich keeps going down!
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Old 01-06-2012, 02:16 PM   #43
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In my early days of working, I felt rich when I was earning more than I spent so I was able to sock some money away. In my later years of working (full-time, not part-time), I felt rich when one not two biweekly paychecks covered my monthly bills.

In my final years of working (part-time), I felt rich because I could take a big pay cut and still cover my expenses (like in my later FT working years), while having more time to myself, and seeing my assets grow immensely.

But when I ERed in 2008, I felt rich when my assets could generate the same amount of income my (P/T) job did without any sacrifice in my lifestyle. Like what Nun wrote, my $1M (about 2/3 of it in taxable accounts) generates more than enough to cover my expenses even if it is less than when I was working FT. Being able to do that without working is the big plus.
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Old 01-06-2012, 02:35 PM   #44
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Tiger Woods' ex wife Elin is apparently rich. The paper reports she just tore down the house she paid over $12 million for when they got divorced. She's rebuilding.

We're all rich or we wouldn't be paying attention to web sites like this. My younger brother figured it out about 10 years ago--he has been striving to get to the point where if everything goes south, he can sell burgers at McDonalds and still get by. You get rid of car payments, pay off your mortgage and don't have any debt.

I and my wife are definitely rich, we just don't seem to have a lot of cash in our pockets at any given time. Or are we just cheap? Definitely not that. Frugal? Maybe, but we have some nice things and two houses. A better word might be intentional, most of the time. We intentionally don't carry debt and we intentionally save money consistently. We intentionally avoid taking money out of savings except for a real emergency and there aren't many of those. But yeah, we're rich, we just don't feel like it. So are you.
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Old 01-06-2012, 02:46 PM   #45
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I think you're spot on and your profile/outlook represents 90% of the people on this forum...as you say, if not, we wouldn't be here.

We used to call any interest paid (mortgage, cards, etc) as 'paying the man'...any time we paid off a debt, we called it 'stikin' it to the man'.
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clearly subjective, but...
Old 01-06-2012, 03:09 PM   #46
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clearly subjective, but...

I would say "rich" generally connotes having the financial resources to live in an affluent manner (very nice, big house; nice car; driver, housekeeper, nanny; first class travel) without deminishing their asset base to do so. Thus, rich varies with the costs of the area the person chooses to live. In some lower cost areas, someone could live an affluent lifestyle for ~$1-2mm for housing and ~250k per year for an affluent lifestyle. This would mean a net worth of $8mm (1.75mm +250/.04) would make someone "rich". In manhattan to be considered rich the person would probably need closer to 10mm for housing (6mm for nice place in the city and 3-4mm for hamptons house) and probably need 800k-1mm per year, thus requiring more like 30mm to be considered rich. That is not to say that these are ideals everyone should aspires to, just a way of quantifying the concept of "rich" in objective way.
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Old 01-06-2012, 03:15 PM   #47
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It occurs to me that defining rich in OUR society is difficult. It's only when we compare to the 3rd world that it becomes obvious how "rich" most Americans are. But, to compare to our fellow Americans, it gets much more difficult. I think the problem stems from the fact that (with the exception of the very lowest financial rung - those living in cardboard boxes under the overpass) all Americans have access to essentially all the same things (except for those few at the very, very top who can afford, say, a private jet of their own). Let me explain my point of view.

Even the poorest Americans (assuming they play the "game" - maybe stand in line at a gummint office, etc.) have enough food to eat (food stamps), a place to live (rent control, housing subsidies, etc.) and clothing (Walmart or Salvation Army - hey, don't knock it! Some of my finest Aloha shirts came from Salvation Army.) So, realistically, what in America, can the "rich" have that the "poor" can't have. I'm sure you can find a few things (but, saying 2 houses is a cheat - you can't live in two at once.)

I mentioned a personal jet. But, realistically, "poor" people in America fly. Maybe not as often, maybe not to as exotic destinations, but they do fly.

So, my point is that it actually IS very difficult to say what is "rich" and conversely, what is "poor" in the "Western world". The real distinctions, for the most part, between rich and poor are in quantity and quality. These may be difficult to define ("How many houses can you use?" or "Would you actually PREFER to fly to Vale for skiing or would a gambling junket to Vegas be more fun to you?") Your answers to these questions may reveal YOUR definition of rich, but not everyone's definition of rich.

But to be specific about my situation, the richest I ever felt was before we got kids in the mid '90's and my assets were growing so fast that my results exceeded my salary several years in a row. THAT felt rich.
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Old 01-06-2012, 05:07 PM   #48
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This is going to sound strange, but the richest I have ever felt was as a 21 yo LTjg, with 5 yrs longevity due to being in the reserves through college. I rented an apartment in a Newport, RI mansion, drove a 911T Porsche, and could fit everything I owned in my car. I'd go skiing on the weekend, eat out whenever I cared to, and was paid to travel to exotic places. Women invited ME to their college dances and parties. I had very little responsibility, and I loved what I did. Yep, I've never been that rich since.
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Old 01-06-2012, 05:30 PM   #49
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Interesting thoughts, all. I'll throw a couple things in the mix.

I teach freshman at university and we do a class on financial management. One of the questions I like to ask is "Do you want to be wealthy?" and to have a discussion about their answers. Most of them say no. They associate "being rich" with greed, superficiality, being a slave to the job, and not caring about people. They say " I want to pay my bills with a little extra for fun." in my mind, FIRE is exactly that, minus the requirement of working. I wonder if this "wealth makes you a bad person" mindset is growing more pervasive.

Another thing that came to mind in reading your posts was the fact that DH and I have talked about how our high income is in some ways more stressful than when we were just starting. When you're 20 and broke you don't worry about losing it all. When you finally land a sweet gig you are keenly aware it can't easily be replaced. We've also talked about how the delta between our financial security and that of our extended family makes us a tad uncomfortable. When your brother saves for 6 years to afford a very modest vacation, it makes you feel bad to share your excitement about a fancy trip to Spain. The tendency is to clam up.

I suppose what I'm saying is that the tendency to not want to say you are rich may exist, in part, because identifying as a rich person has some baggage associated with it.

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Old 01-06-2012, 05:43 PM   #50
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I would say "rich" generally connotes having the financial resources to live in an affluent manner (very nice, big house; nice car; driver, housekeeper, nanny; first class travel) without deminishing their asset base to do so. Thus, rich varies with the costs of the area the person chooses to live. In some lower cost areas, someone could live an affluent lifestyle for ~$1-2mm for housing and ~250k per year for an affluent lifestyle. This would mean a net worth of $8mm (1.75mm +250/.04) would make someone "rich". In manhattan to be considered rich the person would probably need closer to 10mm for housing (6mm for nice place in the city and 3-4mm for hamptons house) and probably need 800k-1mm per year, thus requiring more like 30mm to be considered rich. That is not to say that these are ideals everyone should aspires to, just a way of quantifying the concept of "rich" in objective way.
I agree. I get so tired of hearing about how rich we are because we don't live on the sidewalk in Calcutta and eat an occasional 2nd hand lentil.

Ha
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Old 01-06-2012, 06:54 PM   #51
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According to the Fed website the top 1% makes 380,000/year or has 13 million in assets. I believe that's in 2009 terms.
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Old 01-06-2012, 09:59 PM   #52
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.....Real rich people don't want to show off their wealth for two reasons: [1] they don't want to be targeted for their wealth; stay below the radar. [2] material wealth is no longer important to them, they're already financially secure, so they don't need to show off.

Who knows, maybe they even have push reel mowers in their garages.
I actually have a push reel mower in my garage. Not sure what to make of that though.
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Old 01-07-2012, 12:56 AM   #53
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I just find it interesting that level for 'the rich' seems to be lowered every time you turn around.
It means that everyone is getting poorer even for the rich.
Soon an asset of $1 dollar is considered rich when everyone else has nothing.
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Old 01-07-2012, 02:08 AM   #54
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I feel rich whenever my portfolio sets a new personal high watermark. Like in May of 2011.

I feel poor now.
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Old 01-07-2012, 03:04 AM   #55
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It turns out Newt Gingrich's 2.6M/year doesn't qualify him as rich either.

What I'm seeing in the thread is an aversion to calling yourself rich. - Rich is perpetually other people. But it all depends on who you're comparing yourself to.

I lived for 4 months in central China surrounded by poverty. In striking contrast, less than a year after I returned to the US I got a job making well over $100k while still in my early 20's. I think it would be an incredible insult to my Chinese friends I left behind to not consider myself rich. "Yeah, I make more in a month than you make in 10 years, but I'm not rich, you should hear about this other guy I know who makes every month what I make in 10 years, now he's the rich one."

Of course if you compare yourself to billionaires you're not going to consider yourself rich.

But if I compare myself to everyone I've ever met in my life, even people I've just bumped elbows with, I'd have to estimate I have more assets and income than about 95% of them. I've thought of myself as rich ever since I was a teenager. Even though my parents never would have dreamed of putting that label on themselves.

Great post.
I know why rich is a label people aren't comfortable with but don't accept that rich is or certainly should be a pejorative. I want everyone to be rich, just like I'd want everyone to be a great athlete, great humanitarian and live to ripe old age.

I worked in Silicon Valley so I certainly wasn't in the top 5% by those standards, but by US standard and certainly world standards I am rich.

People have different talents, and different skills. God knows at times in Jr High I would have traded a few IQ points for the ability to not embarrass myself on the basketball court, baseball field, tennis court, art class or shop class. My hand to eye coordination is probably in the bottom 5%.

It is funny parents are extremely proud when their kids scores in the top 5% in the SAT, goes to an elite college, does well in virtually any sport, appears in plays. Even adults are generally comfortable acknowledging that they are a excellent golfer, bowler, chess player, cook, gardener, but you apply those same criteria to wealthy and naw were just middle class.
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Old 01-07-2012, 07:02 AM   #56
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Rich is when you can hire servants for cooking, cleaning, organizing, watching kids, etc. and it's not a stretch (e.g. upper middle class people have nannies, and it's often a significant expense for them).

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Old 01-07-2012, 07:04 AM   #57
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According to Scott Burns one needs $4 million to be independently upper middle class: http://assetbuilder.com/blogs/scott_...not-apply.aspx
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Old 01-07-2012, 11:14 AM   #58
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That is because as soon as people confirm that you are well off, somebody starts trying to get at your money (whether by straight-out asking, suing you over a trifle, trying to get you to chip in for something that they and others want).

Bragging about your kids is a way of bragging about yourself at one remove, so it's allowed.

Bragging about your accomplishments is allowed, because then people know if they want to invite you to bowl with them, etc. I stopped telling people how much I loved gardening after a couple of pushy dames tried to push me into working in THEIR gardens for free "Because you love it so much."

Now, what I have never fully understood, is why we are not allowed to brag about our looks. Maybe because it's obvious to everyone who is gifted in that department, and who isn't, so why discuss it?

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Great post.
I
It is funny parents are extremely proud when their kids scores in the top 5% in the SAT, goes to an elite college, does well in virtually any sport, appears in plays. Even adults are generally comfortable acknowledging that they are a excellent golfer, bowler, chess player, cook, gardener, but you apply those same criteria to wealthy and naw were just middle class.
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Old 01-07-2012, 01:10 PM   #59
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I think one thing that keeps most people from "feeling" rich is a shifting frame of reference.

My wife and I make a combined income that puts us near the top 10% of households, and we live in the Minneapolis area, so we don't have to contend with the massively inflated costs of the coasts.

By every objective measure, we are very well off. However, our friends make similiar money. Our parents make more, my boss makes much more. I am involved in a hobby that has me interacting with people who probably make 10 times what I do. That makes it harder to feel "rich".

What is funny is that all of those "rich" people have the same thing going on. The doctor that makes me feel "poor" when I visit his home is interacting with other doctors, some of them in specialties that make 10 times what he makes. Where I feel in awe of his fancy house, he feels in awe of his friend's mansion on the lake.

I'm sure that the guy with the house on the lake knows people that make him feel "poor".

At the end of the day, I think the only people that really end up feeling rich are Warren Buffett and Bill Gates.
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Old 01-07-2012, 01:21 PM   #60
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Rich is when you can hire servants for cooking, cleaning, organizing, watching kids, etc. and it's not a stretch (e.g. upper middle class people have nannies, and it's often a significant expense for them).

Amethyst

We have this discussion all the time. Even if we were that wealthy we are too private to ever warrant a house large enough to require "servants."

I wonder how many people it takes to run Candy Spelling's 56,000 sq ft LA bungalow.
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