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Dad, Are We Rich?

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Re: Dad, Are We Rich?

#101

Post by strikelaserclaw »

rootusrootus wrote: post #28
docker_up wrote: post #6

My kids asked me this and I said we are "comfortable". We are easily 1%-ers in terms of income level but we don't consider ourselves rich. I consider someone rich who has the luxury of not working and still maintaining a very good lifestyle. In Silicon Valley you can't do that without substantial net worth. The reason why we don't consider ourselves rich is because both my wife and I have to work very hard. We love o…

The way I look at it is that there is a significant difference between being 1%-er by income, and 1%-er by net worth. The former is not terribly uncommon in the tech industry, but the latter is what counts as real wealth.

Even in the tech industry it is uncommon to make top 1% income, even if it is household income.

Re: Dad, Are We Rich?

#102

Post by LarryDarrell »

scient wrote: post #68
themagician wrote: post #49

Only wealthy people have a hard time figuring out what the correct measurement is for rich. It’s a total lack of perspective. It’s always laughable to me what rich people consider “middle”. It’s like the word has a different meaning. Middle, to a wealthy person, extends from the middle all the way up to the top 10% by any measure. Maybe even to the top 5% of they want to talk about how expensive it is where they live…

I think you are the one lacking perspective here. The same way you are trying to make a point, I can make a counter point. The person making $20 is considered comparatively rich by someone making less than a dollar a day in some underdeveloped country. Everything is relative. If you make $100k and you live paycheck to paycheck because of housing costs, education costs, grocery cost etc., how can you claim their shoul…

Until we've gotten rid of nation states, don't even bring up undeveloped countries. There's no surer way to break the "unbending arc of justice" than to tell the unfortunate/unlucky in your own country, "Yes, but have you seen what life is like in Indonesia?" It cuts both ways. We should tax the wealthy here punitively, since after taxes, they still would be rich in developing countries after all.

Re: Dad, Are We Rich?

#103

Post by harryh »

rootusrootus wrote: post #99
harryh wrote: post #93

Earlier quoted context omitted.

I very strongly suspect that the overlap between people in the 1% income level and people in the 1% wealth level is extremely high.

That may very well be true, but I don't have any good data. To hit 1% in income, you need to make about 750K a year. To hit 1% in net worth, you have to clear a bit more than 10M. So the question would be how many people hit 750K for a year, or a few years of their life, without accumulating 10M in net worth? Depending on lifestyle and location, I bet there are plenty of people who make a load of money but also spend…

Look at it from the other direction: How many people are in the top 1% of NW but fail to be in the top 1% of income? Surely some but I bet not a ton.

EDIT: I found this - https://economix.blogs.nytimes.com/2012/01/17/measuring-the-...

"Some readers wondered if the 1 percent by wealth weren’t an entirely different group of people from the 1 percent by income. But there is substantial overlap: the Fed data suggests that about half of the top 1 percent of earners are also among the top 1 percent in the net worth category.

Almost all the rest of the top earners are still in the top 5 percent when it comes to net worth."

Re: Dad, Are We Rich?

#104

Post by rootusrootus »

strikelaserclaw wrote: post #101
rootusrootus wrote: post #28

Earlier quoted context omitted.

The way I look at it is that there is a significant difference between being 1%-er by income, and 1%-er by net worth. The former is not terribly uncommon in the tech industry, but the latter is what counts as real wealth.

Even in the tech industry it is uncommon to make top 1% income, even if it is household income.

Agreed. It's higher than I remember. OP mentioned making 1% money, but he may be under the same delusion I am :). 1% is 750K, and that is exceedingly rare in tech. Aside from some niche cases like self-driving car engineers at Google, it probably only happens in senior management.

Re: Dad, Are We Rich?

#105

Post by pimmen »

sudosteph wrote: post #67

It's a bit ridiculous to see the hoops that some of the wealthy will jump through so they don't have to feel guilty about their position in the world. The person writing this article is almost certainly "rich" by any reasonable standard. Meanwhile, most families making 60k in the US (especially in areas with the best job markets and high COL) - are not. The world income comparison thing at the end is not meaningful i…

I agree. I’m from an upper-middle background and my parents always try to downplay it. They’ll say things like ”well, they say we’re rich but you know we don’t see how we could afford going abroad this year, you know with the renovations going on” and I’ll respond ”yeah, you do have less money after you spend it on a vacation home, a boat (with a luxurious boat house) and on fixing it up. I think everyone would agree that you can’t indulge yourself in luxuries like travelling abroad before you’ve covered your basics like you’re doing now”.

I’m very thankful for the economic position I was born into. I have a lot of personal problems with my parents but as I’ve listened to other people’s upbringing I have realized I owe a substantial part of my success to luck. If my kids ask me about our financial position I’ll tell them the truth and if they feel entitled to being spoiled then that’s a different problem entirely. Telling them that their good home, their schools and their health care are not indicators of wealth will give them the impression everyone has it, or that it comes easy. That is a really bad message.

Re: Dad, Are We Rich?

#106

Post by sorokod »

jedberg wrote: post #90
sorokod wrote: post #75

Earlier quoted context omitted.

What is so special about "current" in "my current lifestyle"? I am not saying it's a bad definition, but it highlites the choices that one can make, and so subverts the whole concept of "rich".

The purpose of "current" is to ground you and give you a baseline. If you're relatively happy with your current lifestyle, can you lock it in now and stop working? If yes, then rich, if no, then keep saving/investing/growing your income. My overall point is that there is an upper limit to that number, after which no lifestyle (barring crazy outliers like buying a yacht a week) would require you to keep working.

You are converting (like many of us do) something tangible - let's say money, to something less tangible, let's say happines. To simplify things it's like reducing a fraction where you focus on numerator and I am saying that denominator has a role in the overall result as well.

You can work on achieving the desired numerator or consider that reducing the denominator can result in increased "happines" too.

Re: Dad, Are We Rich?

#107

Post by jedberg »

turk73 wrote: post #42
jedberg wrote: post #5

Earlier quoted context omitted.

That just means you can live on a budget of $40K a year, which is totally reasonable for a single person who isn't in a big city. And that's great! If that's what you want to do, then by all means. But that life isn't for everyone. And if you plan to have kids and go on vacations, then purchasing power is important. I have a friend who did exactly that. We worked together in tech for 10 years, he lived super frugally…

Except it's not that realistic. I have more than that generating passive income and I still can't yet quit my job even though I live in moderate cost of living state. That COL is rising, especially insurance and upcoming education costs. I've been trying to work it out, but mostly I just need to add to the pile until the passive numbers work out better an do so reliably in good and bad years. $40K on $1M means you ha…

Instead of ditching programming, why not find a remote coding job that pays less but only requires you to work 20 hours a week to get everything done?

Re: Dad, Are We Rich?

#108

Post by jedberg »

benj111 wrote: post #50
jedberg wrote: post #7

My measure of rich is "Can I live my current lifestyle without regular income from a job?". If the answer is yes, then you are rich. The trick here is to make sure to keep your lifestyle costs in line with your salary when you first start out, so that as your income grows you can save. So yeah, if you want a big house and nice cars and nice vacations, you wouldn't consider yourself rich compared to people who don't h…

That makes rich relative though? If you're into fast cars and faster women but you're only earning $1million a year you aren't rich, whereas if you live like me, you're rich because you have $1million in the bank. While I don't think your definition is bad per se, if you start mixing with people who define wealth as $10 in the bank, you aren't going to have a very useful conversation, so I think you at least need a d…

> That makes rich relative though?

Yes, that was my main point. But my other point was that there is an upper limit, probably in the tens of millions, where no matter what your lifestyle is you can afford it without work.

Re: Dad, Are We Rich?

#109

Post by jedberg »

gnaritas wrote: post #41
jedberg wrote: post #7

My measure of rich is "Can I live my current lifestyle without regular income from a job?". If the answer is yes, then you are rich. The trick here is to make sure to keep your lifestyle costs in line with your salary when you first start out, so that as your income grows you can save. So yeah, if you want a big house and nice cars and nice vacations, you wouldn't consider yourself rich compared to people who don't h…

That's wealthy, not rich. Rich people live off income, wealthy people live off net worth.

Everyone lives off income, it's just that some people get that income from their investments (ie. net worth) and some work for it (and business owners do both). And some people still work when they don't need to anymore. But still, being rich means not needing to work (in my mind).

Re: Dad, Are We Rich?

#110

Post by geggam »

brokensegue wrote: post #92
geggam wrote: post #78

Earlier quoted context omitted.

If you are single maybe. I think of a middle class man being what my old man was. Single income, wife stayed home and he provided for everyone. 4 kids. Good luck having 2 homes and some porsches with only 500k in the valley supporting a wife and kids

plenty of people support a family on $60k/yr so take the remaining 440k minus taxes and buy two porsches outright. You should be able to save enough for a down-payment on each house given a year of saving.

No one supports a family on 60k a year. Healthcare alone for a family runs 20k/yr plus simply for insurance
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