"Consider carefully whether the extra step is worth it". This is what I'm wondering about everyday /s
Climbing the Wealth Ladder
261–270 of 323 posts
Re: Climbing the Wealth Ladder
#262Earlier 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…
>Outside of real outlier status where you're paid really, really large amounts of money for your services (like notable entertainer or cardiac surgeon) the way to wealth is to own the means of production. Period. This is a lazy view, or a really privileged one at least. I know a couple of people in their fifties who have retired from putting as much money into the market as possible (post-tax and pre-tax) while livin…
You two are talking past each other.
There wealth as a token of who is winning some game: he who has the most $$$ wins (what I don't know - this is a religion question). You need to own means of production to win this game. If you are reading this, you probably have no chance of getting here, but is fun to dream about.
There is also wealth as in you don't have to hold a job to maintain your lifestyle. When you are young this is impossible (except for a few who inherit money or win the lottery), but if you live below your earnings and invest the rest well you can get to the point where you no longer need to work. (Some people choose to work anyway, others will retire)
Re: Climbing the Wealth Ladder
#263I'm really not a fan of this breakdown because it seems to put each order of magnitude increase in liquid net worth as equal space on the graph. What percentage of people fall into each level. Maybe 50-60% of American adults fall into level 1? Surely, most folks will never reach Level 3 on this chart. While this is an interesting way for someone who has made significant increases in their income over the years, I don…
It's entirely possible for a wage earner to become a millionaire in the USA. Anybody with a middle class income can do it. It's not even complicated or hard to figure out. The problem is that it requires discipline and living under your means. The first step is to eliminate debt and don't make stupid purchases. Debt includes credit card, personal loans, car loans, and mortgages. Stupid purchases are things like expen…
> it would take you about 26 years to make your first million dollars
Try again. In 26 years your $1 million in today's money is worth $526,235 assuming 2.5% inflation, and is easily vanquished in the U.S. with any major health emergency. On an average salary you'd have to save and invest 40-50% of your income to have any sort of meaningful effect long term and even then you have to hope you don't hit any unexpected emergencies. The penalty in the US for being poor is to pay more for everything and always be poor. The privilege for being rich in the US is to pay less for everything and always be rich. There is no upwards economic mobility via savings on an average salary in the US. Not even close. The only path to serious wealth in the US is by owning a ridiculous amount of capital, typically by birth-lotto, and leasing its usage.
Re: Climbing the Wealth Ladder
#264Earlier quoted context omitted.
I think the problem is in America the frugal clerk makes 3000/month, a white collar professional makes 8000/month and a high level executive makes 14000/month after taxes. And I wonder if I'm being too stingy with our executive here...
Way too stingy. Engineers here make $14,000 - $33,000 / month, average is closer to the bottom of that though. Those engineers have executives too.
Where is "here?" The average engineer salary (even if you say software dev only) in the US is absolutely not $170k/yr, it's closer to half that.[0] And $400k/yr is dentist-level money. I'm not saying nobody makes that, lots of devs (in absolute terms) do, but it's about as helpful as saying "businesspeople make $40M-$40B a year" when the vast majority of them make $65k/yr as a middle manager.
[0] https://www.google.com/search?q=median+software+engineer+sal...
Re: Climbing the Wealth Ladder
#265Earlier quoted context omitted.
> Except that the most interesting part of life is over What makes life beyond 55 uninteresting?
I think that depends on who you ask. People in their 20s still think people in their 50s are old.
Life expectancy is somewhere roughly in the 70s-to-80s. So it's not entirely surprising that if you tell someone "statistically, I have as much remaining time to live as you've been alive" they're going to think you're old.
Now if you actually step back and move the early part of life where you can't do much you can see it's much closer to middle-age than it is to death.
Re: Climbing the Wealth Ladder
#266Earlier quoted context omitted.
I would concur. However, spending wisely needs coupled with higher income. That's what most people don't apply. Save 10% or more of your income at all times, see your revenue continously increasing, even if not tremendously, and in matter of a few years you can start investing (housing, business, whatever) See yourself spending near all you get, even getting significant income increases and you get stuck into a loop…
Saving 10% on a median income adds up to roughly three thousand dollars saved, a year. Depending on the amount of risk you're willing to accept, you may find yourself making between ~2 to 10 grand over a 10 year period from interests alone. I think those numbers are reasonable (and that saving in general is absolutely worth it), but I don't think they're significant enough to grant you upwards mobility. Even furnishi…
According to my handy amortization calculator,
$3000/year = 250/mo starting from 0, 10 years = 120 months, 3%/year (S&P500, after taxes and inflation), gives $34,935.36.
20 years gives $82,075.50.
Re: Climbing the Wealth Ladder
#267I 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 think you can get from level 1 to level 4 just by being careful and wise. You might even get to level 5 by the time you die. But level 6 will require taking risk and that risk paying off big-time. Usually it requires taking several risks. Jay-Z got from level 1 to level 6 by taking the risk of going public with his craft. He decided he would put in the work, make the connections, and not fear the rejections. The re…
I think you misspelled "a very great deal of luck". How many rappers aren't Jay-Z?
Re: Climbing the Wealth Ladder
#268Earlier quoted context omitted.
I mean, I agree about envelope budgeting and smart saving. Avoid debt is essential to financial health. > Anybody with a middle class income can do it. This seems obviously false to me. Let me construct a reasonable case for someone who is middle class income but who I do not believe will be able to meet your savings goals. Let's assume a single parent, at the median income level of $31,000/year living in Seattle. Th…
I hate to break it to you buddy but 31k is the poverty line, not middle class. http://www.commerce.wa.gov/wp-content/uploads/2019/03/DRAFT-...
Any definition of the middle class that doesn't include the middle of incomes seems wrong to me. Median means half above, half below, how would that not be the "middle" class?
Re: Climbing the Wealth Ladder
#269Earlier quoted context omitted.
Where I live (the Netherlands) that means bout 10.000 pre-tax. And that is quite a lot, it is like a group manager (i.e. 50 people to manage) in a medium to large size company. Executive level is probably more. But not a lot.
Same in Sweden, about 10k pre tax to take home 5k. I looked up median salaries for CEOs in Sweden last year which was $7600 pre-tax where only service and the industrial sector is over that, industrial is the highest with $9150 pre-tax, that is at the CEO level, putting your take home salary with tax bracket 34 at about 5k/month, so it's probably a bit high for a high level executive at a mid-sized company.
Where is the incentive then? The difference in skill, responsibility, stress, workplace demands, etc between a cashier and a CEO are nuts. How do people do that for a few grand every month?
Re: Climbing the Wealth Ladder
#270I 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…
Summarized: nobody in the history of humanity ever got wealthy from having a job. If you want to get rich you have to learn how to invest other people's money and make it work for you. This is also my main take away from "rich dad, poor dad" (the book). It is so simple, yet I was so blind to this for a long time.
Depends what you mean by "wealthy". In these comments, it's a motorized goalpost on wheels.