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Climbing the Wealth Ladder

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Re: Climbing the Wealth Ladder

#71

Post by bronco21016 »

hultner wrote: post #60
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…

I wouldn't fully agree with this, I'd say income that non-linear to amount time spent it the highest driving factor. Let's take an example. I'm going to use Swedish living conditions and salaries as an example as that's where I live but they are close to most European/western countries. We have a frugal grocery store cashier who makes $2000 USD/month after taxes. We have a high level executive in a medium-sized compa…

I think you’re both right. The combination of multiplying income while also saving more and more of that income is the key to jumping wealth levels.

It’s certainly possible to live a comfortable life on the cashiers plan but if the executive spent just half of their career living like the cashier then he would quickly pass up the cashier on the wealth ladder.

Re: Climbing the Wealth Ladder

#72

Post by tooMuchCensor »

Retric wrote: post #50
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, what’s useful about this mentality is not about becoming a multimillionaire, it’s about having your wealth match your income. A doctor making 250k is often living pay check to pay check while spending crazy money. Even with a steady paycheck their not accumulating wealth. Even worse, a football player with a 20million dollar contract is likely to end up broke if they instantly maximize their spending. Howeve…

I'm not sure I have sympathy for my fellow 10%ers who can't manage their 6 figure incomes.

Overspending is not an excuse. When you only need tens of thousands of dollars to live and thrive, anything beyond is excessive.

I know my peers that overspend, I weep for them. I don't envy the limo you take, I feel bad that those things are where you find pleasure.

Re: Climbing the Wealth Ladder

#73

Post by moralestapia »

I hate being negative but this article, despite its good intent, just tries to force some very shallow abstractions to the point where it's ridiculous ...

On the first example of levels, it's funny that 'guys that can eat where they want' are on the same level (3) as 'billionaries'.

Then goes on with the very old (and wrong) belief that for a high net worth individual 50K is chump change and equivalent to a normal guy throwing away a dollar ...

Then the "improved" levels do not really make sense as levels: travel freedom can be much more than expensive than house freedom, for sure!; also, one could engage in a philantrophic cause without belonging at the absolute peak of wealth.

Another one is how at the highest level in his chart, he uses the expression "What are prices?", implying that people at the highest bracket just do not look at price tags anymore. Honestly, plenty of rich people live fairly frugal lives, while on the other end plenty of people at the bottom spend in a lot of things without thinking twice about the cost and its impact on their lives.

And then there is no advice on how to actually climb such arbitrarily defined ladder ...

Re: Climbing the Wealth Ladder

#74

Post by beamatronic »

So...a couple of these posts are about climbing the income ladder. If you want to climb the wealth ladder here’s my advice. Buy a single-family home, in an area with good schools, that you can afford with a 30 year fixed mortgage. You will need 20% down, so you won’t be able to reach the “food freedom” or “travel freedom” levels as described here until your home purchase is completed. This is almost foolproof over the long term.

Re: Climbing the Wealth Ladder

#75

Post by gpderetta »

nradov wrote: post #54
jacquesm wrote: post #46

Earlier quoted context omitted.

Key bit: right now. What will you do when interest rates change and you end up with an obligation to pay the now much higher monthly amount? If you have your interest locked down for an x period of time and you intend to keep your property always ensure that you can pay off enough of it to be able to continue to live there even if interest rates go back into the 5-10% range.

Most borrowers have 30 year fixed rate mortgages so future changes in interest rates are largely irrelevant to them.

Depends on the country I guess. In Italy very long term fixed interest rate mortgages are common. In UK most mortgages have a very short (2-4 years) fixed interest period and have to be renegotiated after that.

Re: Climbing the Wealth Ladder

#76

Post by icedchai »

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…

Most people have it wrong. While salary increases are necessary, they are not sufficient. You need to save and invest aggressively. I'm not talking saving 10%. I'm talking 30%, 40%, maybe even more, if you want to achieve financial independence in under 15 to 20 years.

The first few years, maybe the first decade, are tough. After that, it becomes self sustaining: you eventually make more in gains (unrealized, ideally) than you do working.

Re: Climbing the Wealth Ladder

#77

Post by slumdev »

Not a good article.

There are three steps on the wealth ladder:

1. Wage slave - Most people will never leave this step, no matter how many ugly Merc SUVs they own or first-class flights they've taken.

2. FU Money - This person has enough money set aside to walk if they don't like a job or a customer.

3. F-Everyone Money - This person doesn't need to work at all.

Re: Climbing the Wealth Ladder

#78

Post by atwebb »

CPLX wrote: post #29
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…

Yup. I see this kind of logic in personal finance discussions all the time but it's bullshit. There simply aren't any spending decisions you can make that will change you from not wealthy to really wealthy. Those things can just move you from poor to middle class at best, or to a better level of middle class. Outside of real outlier status where you're paid really, really large amounts of money for your services (lik…

Gotta disagree, I have personally watched people spend away 2-300k a year for decades. It's easily millions, especially considering the ROI of the markets since the 80s.

Re: Climbing the Wealth Ladder

#79

Post by lowercased »

esotericn wrote: post #62
CPLX wrote: post #29

Earlier quoted context omitted.

Yup. I see this kind of logic in personal finance discussions all the time but it's bullshit. There simply aren't any spending decisions you can make that will change you from not wealthy to really wealthy. Those things can just move you from poor to middle class at best, or to a better level of middle class. Outside of real outlier status where you're paid really, really large amounts of money for your services (lik…

It can give you the breathing room to actually _do_ something that can change your status and allow you to have a decent shot at "own the means of production", though. I've probably had hundreds of conversations with people who will say "well, not everyone can afford to move town" or "not everyone can afford to take a week off work" or whatever else. That's an enormous handicap - you're basically a slave to your curr…

"not everyone can afford to take a week off work"

even if you can, financially, it's often hard to do so mentally/emotionally. if you're taking time away from work, that means no income - whether you desperately need it or not may be immaterial to the mental state you've built for yourself.

Re: Climbing the Wealth Ladder

#80

Post by isoskeles »

CPLX wrote: post #43
jlawson wrote: post #34

Earlier quoted context omitted.

Saving money, even from a salary job, gives you the breathing room you need to take economic opportunities. For example, if you save a year of expenses you can start a software business without external capital or connections. Most of the paths from middle-class to wealth involve avoiding frivolous spending.

Yes but if you borrow like a maniac from credit cards and default on everything and live in a van but still start a successful software business you still get wealthy. My point being that actually owning that successful business is the mechanism for wealth. Avoiding frivolous spending can be very, very helpful to achieving that status, as you point out correctly, but it isn't actually the status itself. This article…

> you still get wealthy

Do you think the bad habits go away just because you succeeded? That’s not how life works, and the evidence is people who win the lottery.

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