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Climbing the Wealth Ladder

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Re: Climbing the Wealth Ladder

#11

Post by 3dprintscanner »

eppp wrote: post #2

I'm not sure exactly what the article is trying to accomplish but it does feel in about the right ballpark for the levels. I don't think I'll ever get to the vacation one but simply paying last debt off really took a lot of weight off. Sure borrowing at low interest makes math sense but having a paid off house just feels good.

It's taking the approach that the best way of gaining wealth is to convert earned income into unearned (passive) income over time. That once the basic necessities are covered the bulk of your nontrivial expenditure should really be investments and that your elective consumption should be pegged to some nominally small percentage of your overall wealth. I think this has to come from a place of having something to fall back on at a certain level of wealth, you can take the risk on those investments if the downside wouldn't be any worse than losing your current 'level' of wealth.

Re: Climbing the Wealth Ladder

#12

Post by Kirby64 »

esotericn wrote: post #3
eppp wrote: post #2

I'm not sure exactly what the article is trying to accomplish but it does feel in about the right ballpark for the levels. I don't think I'll ever get to the vacation one but simply paying last debt off really took a lot of weight off. Sure borrowing at low interest makes math sense but having a paid off house just feels good.

I'm not so sure, personally. The six levels: Level 1. Paycheck-to-paycheck: You are conscious of every dollar you spend. This includes people with crippling debt. Level 2. Grocery freedom: How much specific grocery items cost don’t impact your finances. Level 3. Restaurant freedom: You eat what you want at restaurants regardless of the cost. Level 4. Travel freedom: You travel when you want, how you want, and stay wh…

I think you're overthinking this. The article examples maybe aren't descriptive enough.

#4 would mean I don't price shop Airbnb, hotels, and plane tickets so much. Or maybe I just take first class everywhere. Either way, you're talking spending amounts in the $10k+ range.

#5 means you can buy whatever size house you want within limits. That's more a $1M+ decision (although, amortized out long term)

#6 means Bill Gates level philanthropy. Not saying whatever donations you're giving away aren't meaningful, but I doubt you're getting wings in hospitals named after you.

Re: Climbing the Wealth Ladder

#13

Post by jacquesm »

nimbius wrote: post #5

im presently reading Paul Fussells "Class" and this is a fascinating take on the idea in the age of wage stagnation. >the best way to climb the wealth ladder is to spend money according to your level. This is directly contradictory to, and detrimental to, how the US Economy expects its consumers to act. Credit has largely filled the gap of wages and productivity such that consumers now have no real sense of their lev…

>>the best way to climb the wealth ladder is to spend money according to your level.

I would argue that the best way to climb the wealth ladder is to spend below 'your level'. Keeping up with the Jones' who are doing their best to display their achieved status is an excellent way to end up just like they will at the end of a long life of hard work: in hock to the bank for their primary residence and with little to no savings.

Spend less than you could, pay off your primary residence as fast as you can, re-invest whatever you make after that in real estate and the stock market if you have an appetite for it, make your money work for you. Simple rules, nothing flashy and at the rate a typical IT worker can make money it won't be all that long before you will have a nest egg that you can retire on, provided you continue to control your spending.

Re: Climbing the Wealth Ladder

#14

Post by hirako2000 »

eppp wrote: post #2

I'm not sure exactly what the article is trying to accomplish but it does feel in about the right ballpark for the levels. I don't think I'll ever get to the vacation one but simply paying last debt off really took a lot of weight off. Sure borrowing at low interest makes math sense but having a paid off house just feels good.

It tries to tell the bottom 99% how very wealthy people think, and how people think in between and perhaps whats important to do to getting there, and stay there.

What I see with most people around me,who stand at a low level: - spend most if not all or even more than what they can afford. - far more obsessed with getting more money than adapting their expenses. Of course they have no clue how to make more money, so they don't end up financially happy at all.

I think it's a great article as it put things rather simply.

Re: Climbing the Wealth Ladder

#15

Post by jetpackjoe »

esotericn wrote: post #3
eppp wrote: post #2

I'm not sure exactly what the article is trying to accomplish but it does feel in about the right ballpark for the levels. I don't think I'll ever get to the vacation one but simply paying last debt off really took a lot of weight off. Sure borrowing at low interest makes math sense but having a paid off house just feels good.

I'm not so sure, personally. The six levels: Level 1. Paycheck-to-paycheck: You are conscious of every dollar you spend. This includes people with crippling debt. Level 2. Grocery freedom: How much specific grocery items cost don’t impact your finances. Level 3. Restaurant freedom: You eat what you want at restaurants regardless of the cost. Level 4. Travel freedom: You travel when you want, how you want, and stay wh…

I think the labels are not very helpful, but tying each level to 0.01% of an individuals net worth is. For example, I still don't flinch at paying 1 or 2 dollars more for items at the grocery store, but I do for paying 10-20 dollars more for items at a restaurant.

"Travel" can mean grey hounds and motels, or first-class flights and luxury hotels. Philanthropy can be donating $100,000 or giving a buck to a guy on the street.

The key take away from the article, at least for me, is how much you flinch at extra costs, and that being about 0.01% of what you have in the bank.

Re: Climbing the Wealth Ladder

#16

Post by baking »

I have a problem tying wealth to consumption. I always look at menu prices but I'm a lot better off financially than many people who don't seem to care how much they spend. Maybe because I do look at menu prices.

Other than that, this is basically a base 10 view of wealth. Each zero matters as much to you as the last one. Under that theory, Bloomberg is to me as I am to someone living paycheck to paycheck, but I feel much closer to the person living paycheck to paycheck.

Re: Climbing the Wealth Ladder

#17

Post by esotericn »

eightysixfour wrote: post #9
esotericn wrote: post #3

Earlier quoted context omitted.

I'm not so sure, personally. The six levels: Level 1. Paycheck-to-paycheck: You are conscious of every dollar you spend. This includes people with crippling debt. Level 2. Grocery freedom: How much specific grocery items cost don’t impact your finances. Level 3. Restaurant freedom: You eat what you want at restaurants regardless of the cost. Level 4. Travel freedom: You travel when you want, how you want, and stay wh…

> And #4 doesn't even interest me (I actively don't _want_ to have a private jet or whatever). I don't believe his intent was "private jet" it was "you can pick first class without concern and you don't have to look at the hotel/rental home prices."

That doesn't change my point.

House freedom is way below that.

There's an inbuilt assumption that you desire extravagance, which inevitably places philanthropy last. My point is that it's a choice.

Re: Climbing the Wealth Ladder

#18

Post by throwawayhhakdl »

tibbon wrote: post #7

This is similar to how I’ve thought about money for a while. Through high school, I had dollar problems. As in, things in the $1-9 range were pretty important. Through college I had $10 problems. Early career it become $100 problems. Now anything under $1000 just doesn’t strike me as an issue. New hot water heater? Just go buy it. $10k things however are what feel like real issues now- new roof? I can do it, but’s it…

I agree with this. Although I don’t think I’m exposed to anything over $1k as a potential risk as I don’t own a car or a home, short of a lawsuit I suppose.

I feel very wealthy, though in the scheme of things I am not.

Re: Climbing the Wealth Ladder

#19

Post by baking »

disintegore wrote: post #8

I understand this isn't the point of the article, but it seems like a roundabout way of saying "don't overspend". This part in particular bothers me : > More importantly though, the best way to climb the wealth ladder is to spend money according to your level. As far as I (a non-economist) can personally tell, any notion of climbing up some abstract wealth ladder is synonym with a salary increase for the vast majorit…

This obviously depends on your age and the reliability of your income.

Re: Climbing the Wealth Ladder

#20

Post by hirako2000 »

Kirby64 wrote: post #12
esotericn wrote: post #3

Earlier quoted context omitted.

I'm not so sure, personally. The six levels: Level 1. Paycheck-to-paycheck: You are conscious of every dollar you spend. This includes people with crippling debt. Level 2. Grocery freedom: How much specific grocery items cost don’t impact your finances. Level 3. Restaurant freedom: You eat what you want at restaurants regardless of the cost. Level 4. Travel freedom: You travel when you want, how you want, and stay wh…

I think you're overthinking this. The article examples maybe aren't descriptive enough. #4 would mean I don't price shop Airbnb, hotels, and plane tickets so much. Or maybe I just take first class everywhere. Either way, you're talking spending amounts in the $10k+ range. #5 means you can buy whatever size house you want within limits. That's more a $1M+ decision (although, amortized out long term) #6 means Bill Gate…

That's why we don't call small donations acts as philanthropy.

It surprises me how philanthropic individuals are sold as benefactors who are a solution to solving problems linked to lack of resources, for those in needs around the world. I think it rather servers themselves instead, an effective PR routine that comes with decent guilt therapy.

It's one of those things like "expat" sounding all so good compared to those job stealing "immigrants".

Maybe we should all give a portion of our monetary power to those in needs, displacing what we would normally give to Unilever-like producers. It would skip the inefficient intermediary.. I digress.. The scale ain't right, but the idea is spot on.

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