[3602]

Rich: If you have more than enough money to fulfill your basic needs (food, water, shelter), you're rich.

 

[baka1969]

Being rich is having a loving family and people that you care for and that care for you. All the rest is a pile of manure. I've had money. I've not had money. Losing my family made me the poorest person I know.

 

[3602]

Funny, our 'Economy and Contemporary Society' class was just walking about 'wealth'...

 

[mrarroyo]

Quote:

Originally Posted by krmathis /img/forum/go_quote.gif Hmmm, good question. I would say that you have an annual income of at least 5-10 times the country average. All in all economic freedom to buy pretty much anything you want, like a really nice property in the finer areas of the city, a yacht, cabin in the mountains, exclusive holidays abroad, ... I am not there myself, although I am well within the top 1% richest people in the world!

It takes $47,500 to be on the top 1% in the world. As stated by others it depends on your total net worth and where you are located.

 

[Uncle Erik]

Wealth is not about Dollar amounts.

I've seen people with mid six-figure incomes blow loads of it on cars and clothing (horrible way to spend money; you get almost nothing from them unless you buy antiques and classics), the housing bubble, and lots of meaningless crap.

Wealth is not having to worry about money and contentment with what you have.

I feel lucky. Thanks to the job, we're buying a house for cash in the next week or two. My car will be paid off in 2-3 months, and I have a spare car and motorcycle, also paid for. The house, cars and bike are nothing fancy, but they're all reliable and fun. I'll also pick up 3-4 rental units this year, and more as they turn up. I'm 37 now and expect to retire around 45.

It won't be with a Gulfstream or a private yacht, but I will consider myself much better off than those who bust it 12 hours a day and blow big money on stuff with little value. For me, 30-40 years of sleeping in, tinkering with my hobbies and travel is worth more than 30-40 years of earning $500k a year and spending $500k a year with little return on the expense.

You really don't need that much to get by once your house and vehicles are paid off and you have some unearned income. I already have a good set of kitchen gear and know how to cook. I can eat exceptionally well for $10-$15 a day. Travel is relatively cheap if you go off-season and are content (I am) with local family-run hotels. Movies, music and books are cheap and plenty entertaining. DIY projects are reasonable, too, and I have the tools already.

Also, a lot of luxury goods simply aren't worth it. A lot of the fancy stuff comes with hideous repair/maintenance bills and depreciates rapidly. Buying quality used goods and DIY give you the same level of performance (if not better) while saving huge amountsof money.

The worst thing to me is paying interest on a depreciating asset. Take a close look at what you buy. Consider the interest you pay and what the asset will be worth in time. You can spend $35k on a new BMW plus interest. Over ten years, you'll probably be $50k in and have a $5k asset. If you buy a 1957 Thunderbird for $35k, odds are it will be worth $35k or more in ten years. Heck, I paid $700 for my motorcycle, and I could sell it for $1k or more. If it becomes collectible (possible), then I might get $4k or $5k for it ten years out. I paid $800 for my other car about 20 years ago. It would fetch about $5k now. In other words, I get the utility from these assets and won't lose anything.

Anyhow, take a hard look at what you spend and what those assets are ultimately worth. Forget marketing, forget hype and forget fashion. If your income is greater than what you spend, it is possible to retire early, own non-depreciating assets and enjoy the rest of your life.

 

[3602]

Erik, what job do you have?

 

[chesebert]

Public Service Announcement: JP Morgan private banking minimum stated capital is $25million in liquid assets for individuals. so stop thinking and start working/saving.

 

[krmathis]

Quote:

Originally Posted by mrarroyo /img/forum/go_quote.gif It takes $47,500 to be on the top 1% in the world. As stated by others it depends on your total net worth and where you are located.

Sure! The price level in the country you spend your money make a huge difference.

 

[skyline889]

Quote:

Originally Posted by Uncle Erik /img/forum/go_quote.gif Wealth is not about Dollar amounts. I've seen people with mid six-figure incomes blow loads of it on cars and clothing (horrible way to spend money; you get almost nothing from them unless you buy antiques and classics), the housing bubble, and lots of meaningless crap. Wealth is not having to worry about money and contentment with what you have. I feel lucky. Thanks to the job, we're buying a house for cash in the next week or two. My car will be paid off in 2-3 months, and I have a spare car and motorcycle, also paid for. The house, cars and bike are nothing fancy, but they're all reliable and fun. I'll also pick up 3-4 rental units this year, and more as they turn up. I'm 37 now and expect to retire around 45.

I think mortgages are getting a worse rap than they should. With interest rates as low as they are right now, it almost doesn't make sense to pay in cash if you have the assets available to do so. If you have good credit, you can get financing as low as 5% APR. If you make the right investments, you can easily earn 6% after taxes. Hypothetically, say you were to buy a $600,000 home and put $150,000 down. At 6% a year, compounded over 30 years, you'd be able to take that $450,000 and turn it in to almost $2,600,000. By foregoing the 30 year mortgage, you'd only be saving yourself $420,000 (Interest payments at 5% APR). $2,600,000 vs $420,000 and don't forget the interest from the mortgage is tax deductible.

Quote:

Originally Posted by Uncle Erik /img/forum/go_quote.gif It won't be with a Gulfstream or a private yacht, but I will consider myself much better off than those who bust it 12 hours a day and blow big money on stuff with little value. For me, 30-40 years of sleeping in, tinkering with my hobbies and travel is worth more than 30-40 years of earning $500k a year and spending $500k a year with little return on the expense. You really don't need that much to get by once your house and vehicles are paid off and you have some unearned income. I already have a good set of kitchen gear and know how to cook. I can eat exceptionally well for $10-$15 a day. Travel is relatively cheap if you go off-season and are content (I am) with local family-run hotels. Movies, music and books are cheap and plenty entertaining. DIY projects are reasonable, too, and I have the tools already. Also, a lot of luxury goods simply aren't worth it. A lot of the fancy stuff comes with hideous repair/maintenance bills and depreciates rapidly. Buying quality used goods and DIY give you the same level of performance (if not better) while saving huge amountsof money. The worst thing to me is paying interest on a depreciating asset. Take a close look at what you buy. Consider the interest you pay and what the asset will be worth in time. You can spend $35k on a new BMW plus interest. Over ten years, you'll probably be $50k in and have a $5k asset. If you buy a 1957 Thunderbird for $35k, odds are it will be worth $35k or more in ten years. Heck, I paid $700 for my motorcycle, and I could sell it for $1k or more. If it becomes collectible (possible), then I might get $4k or $5k for it ten years out. I paid $800 for my other car about 20 years ago. It would fetch about $5k now. In other words, I get the utility from these assets and won't lose anything. Anyhow, take a hard look at what you spend and what those assets are ultimately worth. Forget marketing, forget hype and forget fashion. If your income is greater than what you spend, it is possible to retire early, own non-depreciating assets and enjoy the rest of your life.

Why is it so terrible for people to work hard for what they find enjoyable? Not working 60-70 hrs a week may be more important to you, but that's not to say that this is true for everyone else. I'm not saying anyone wants to work that much, but if the trade-off is being able to afford the things you've been dreaming about since you were 8, some are willing to do it. While I do agree that buying used or buying classics is technically a better investment, not everyone aspires to own a '57 Thunderbird or a '67 Corvette. If someone has always dreamed of walking into a Mercedes or a Ferrari dealership and coming out with a brand-new, shiny car, who's to begrudge them for working to achieve that?

 

[logwed]

Quote:

Originally Posted by 3602 /img/forum/go_quote.gif Erik, what job do you have?

I do believe that he's some sort of attorney.

 

[Happy Camper]

Ask Bernie.

 

[tvrboy]

Quote:

Originally Posted by Uncle Erik /img/forum/go_quote.gif long quote

I agree 101%. This is my philosophy to headphone purchasing and allows me to experience a lot of high end stuff for not much cash outlay. Buying and selling used, each $600 headphone costs me about $40 at the MOST in shipping. You can take $300 and buy a HD600, K701, DT880, D2000, and ESW9, (one at at a time of course) and get $250 back from that. Now, $50 to listen to 5 great headphones is a good deal, even if you can only listen to one at a time. I simply don't understand why people buy new headphones, unless they just can't find them on the used market. Same thing with cars - What. People always want to have a "brand new" car. Almost everyone of my young friends has sunk tens of thousands of dollars into a loan on a new car, just cause they wanted something new.

 

[tvrboy]

Quote:

Originally Posted by skyline889 /img/forum/go_quote.gif I think mortgages are getting a worse rap than they should. With interest rates as low as they are right now, it almost doesn't make sense to pay in cash if you have the assets available to do so. If you have good credit, you can get financing as low as 5% APR. If you make the right investments, you can easily earn 6% after taxes. Hypothetically, say you were to buy a $600,000 home and put $150,000 down. At 6% a year, compounded over 30 years, you'd be able to take that $450,000 and turn it in to almost $2,600,000. By foregoing the 30 year mortgage, you'd only be saving yourself $420,000 (Interest payments at 5% APR). $2,600,000 vs $420,000 and don't forget the interest from the mortgage is tax deductible. Why is it so terrible for people to work hard for what they find enjoyable? Not working 60-70 hrs a week may be more important to you, but that's not to say that this is true for everyone else. I'm not saying anyone wants to work that much, but if the trade-off is being able to afford the things you've been dreaming about since you were 8, some are willing to do it. While I do agree that buying used or buying classics is technically a better investment, not everyone aspires to own a '57 Thunderbird or a '67 Corvette. If someone has always dreamed of walking into a Mercedes or a Ferrari dealership and coming out with a brand-new, shiny car, who's to begrudge them for working to achieve that?

I'm not gonna begrudge you that. You can have your new $50,000 C-Class. I'll take a last-generation C63 AMG for a lot less. Or an ooooold E500 for almost nothing. We'll see who has more fun with their car

 

[skyline889]

Quote:

Originally Posted by tvrboy /img/forum/go_quote.gif Same thing with cars - What. People always want to have a "brand new" car. Almost everyone of my young friends has sunk tens of thousands of dollars into a loan on a new car, just cause they wanted something new.

To this extent I agree. If you have to take out a loan to buy a car, you shouldn't be looking at a new car. A new car is a luxury and you'll save yourself a lot of money by going used, as buying goods like speakers or cars new is probably the worst investment you can ever make. If you have excess discretionary income however, if you want to buy new, I don't see why not. Yeah you'll lose money but it's a minor trade-off and one that's probably not even worth the time to consider if you have enough money to pay for a $100k-150k car in cash. Also, if everyone refused to buy new, the used car market would dry up. People buying new benefits the rest of us who're shopping used.

Quote:

Originally Posted by tvrboy /img/forum/go_quote.gif I'm not gonna begrudge you that. You can have your new $50,000 C-Class. I'll take a last-generation C63 AMG for a lot less. Or an ooooold E500 for almost nothing. We'll see who has more fun with their car

The last generation C63 is still the current generation C63 and goes for only about $10-12k less than a brand new C63 as it was just released. If you were to buy a used C63 now, you'd still be looking at a significant amount of depreciation down the road. Even with the old E500, you're still looking at a significant amount of depreciation because for Mercs, depreciation doesn't level out 'til around the ten to fifteen year mark. If you're going to buy a Merc, depreciation is just something you have to live with unless you never plan on selling the car or plan on buying a very old car.

 

[Konig]

Quote:

Originally Posted by Uncle Erik /img/forum/go_quote.gif Wealth is not about Dollar amounts. I've seen people with mid six-figure incomes blow loads of it on cars and clothing (horrible way to spend money; you get almost nothing from them unless you buy antiques and classics), the housing bubble, and lots of meaningless crap. Wealth is not having to worry about money and contentment with what you have. I feel lucky. Thanks to the job, we're buying a house for cash in the next week or two. My car will be paid off in 2-3 months, and I have a spare car and motorcycle, also paid for. The house, cars and bike are nothing fancy, but they're all reliable and fun. I'll also pick up 3-4 rental units this year, and more as they turn up. I'm 37 now and expect to retire around 45. It won't be with a Gulfstream or a private yacht, but I will consider myself much better off than those who bust it 12 hours a day and blow big money on stuff with little value. For me, 30-40 years of sleeping in, tinkering with my hobbies and travel is worth more than 30-40 years of earning $500k a year and spending $500k a year with little return on the expense. You really don't need that much to get by once your house and vehicles are paid off and you have some unearned income. I already have a good set of kitchen gear and know how to cook. I can eat exceptionally well for $10-$15 a day. Travel is relatively cheap if you go off-season and are content (I am) with local family-run hotels. Movies, music and books are cheap and plenty entertaining. DIY projects are reasonable, too, and I have the tools already. Also, a lot of luxury goods simply aren't worth it. A lot of the fancy stuff comes with hideous repair/maintenance bills and depreciates rapidly. Buying quality used goods and DIY give you the same level of performance (if not better) while saving huge amountsof money. The worst thing to me is paying interest on a depreciating asset. Take a close look at what you buy. Consider the interest you pay and what the asset will be worth in time. You can spend $35k on a new BMW plus interest. Over ten years, you'll probably be $50k in and have a $5k asset. If you buy a 1957 Thunderbird for $35k, odds are it will be worth $35k or more in ten years. Heck, I paid $700 for my motorcycle, and I could sell it for $1k or more. If it becomes collectible (possible), then I might get $4k or $5k for it ten years out. I paid $800 for my other car about 20 years ago. It would fetch about $5k now. In other words, I get the utility from these assets and won't lose anything. Anyhow, take a hard look at what you spend and what those assets are ultimately worth. Forget marketing, forget hype and forget fashion. If your income is greater than what you spend, it is possible to retire early, own non-depreciating assets and enjoy the rest of your life.

+1

Why young professionals who rein in big bucks do not understand this is beyond me. I guess the social pressure of keeping up with your peers is just too much for them to keep a sensible mind. I notice a stark contrast between the mentality of a business owner in small town vs young professionals in big cities. My dad do business with a guy who wear tattered Tshirts, still drive a 1998 pickup truck but owns a $100mil+ business in Kansas. He brought my dad to his basement once to see his stacks of cash accumulated over the years ($half mil in one big and there are 36 bags) and the stacks of invesment grade gold bars.

Alot of people are misinformed that your assets = wealth without accounting for the liabilites. Being wealthy = work hard without jeopardizing your health and family relations, constantly live BELOW your means and spend on necessities and invest prudently.