Being Wealthy Scares Me

I’m doing everything I can to ensure Girl Ninja and I are well taken care of, not just in retirement, but throughout our entire life. I know if I work hard, spend diligently, and save consistently, we can live a comfortable life. Heck, we might even end up being rich.

Funny thing is, being rich scares me…bad. I was reading through an article on CNN the other day titled “Secrets of Extreme Savers“. In the article, eight different families are highlighted for being crazy awesome savers, often banking 50% or more of the their take home pay. Their savings habits have, over the years, made them wealthy. I enjoyed reading each families story. It reminded me hard work pays off.

While I enjoyed the testimonies, I was totally caught off guard by some of the comments people left on the article. Here are a few that stood out…

“Show average Americans saving…not lawyersbusiness owners people making six figures or a couple pulling in 250k a year.”

“Apparently the point of this article is that, if you make well over a 6-figure income and live in a low cost of living area, you can save a lot of money. Glad to see CNN worked hard to find something relevant to the majority of the population.”

“All these people make an excellent living. I found this article completely useless. Except for the one woman who has multiple streams of income. That is a useful idea.”

“I just love it when they post articals about wealthy people that are able to save 1/2 their pay. LOL!! Any idiot can save 50% of his or her income if their banging down 200k a year, UNREAL..”

Let’s play a game shall we. It’s called “I spy.” Ready? I spy with my little eye something bitter, something jealous, and something pathetic. Do you know what it is? If your guess was those four commenters, you’d be 100% right.

While I understand the majority of people don’t make a six figure income, I hardly beljeve that rendered the article useless. People seem to write off the fact that even though these people made a lot of money, they chose to save most of it, instead of spend it. I find that encouraging and motivating.

Articles like these scare me. They make me think twice about amassing a small fortune. Will people appreciate the fact that I worked hard, and saved/invested a ton to get rich? Or will they say I’m not relatable and a poor example of financial responsibility since I have so much more money than them?

I’d ask why there is such a resentment towards the wealthy, but I don’t feel like opening up that political can of worms. All I’m saying is this, If someone works hard (aka goes to law school or starts their own business) and ends up making a generous salary, we should be excited for that person and excited that we to have the potential to do something similar. No bitterness or envy necessary.

What do you think? Do you side with the commenters? Did you find those stories motivating or annyoing? Why is it a bad thing to be wealthy?

 

71 thoughts on “Being Wealthy Scares Me

  1. To be honest, I find them annoying. It’s great that they’re able to live modestly and responsibly, but when each of their household incomes in two, three, four, five, six, etc. times that of the average household income in the city where I live (Toronto), it’s not exactly useful or motivating to read about it. I try not to be bitter, but I can’t help but think, “Well, yeah, I could save that much if I quadrupled my income, too!”

    The truth is the percentage doesn’t matter so much as the total income you’re bringing in. I scrimp and save and starve (kidding! …sort of) to save 20 – 25% of my income, which I know looks good number-wise (especially when my rent is about 50% of my take-home), but my income is so low, that it’s really not a significant amount of savings. My income is low because I chose to go into an industry that isn’t exactly lucrative, which, in all fairness, was my choice, but sometimes it’s a tough pill to swallow. I don’t begrudge those that made different choices and are able to sock away huge amounts of money by scrimping, but it’s not something I need to read about because I’m doing all the things they are, but only able to put away a fraction of what they can. Know what I mean?

  2. Yep, sucks to be a saver. Us savers get called all sorts of names. I’ve even been told that money is my God. I don’t understand jealously in the world. Often times, but not all the time, these same people have never made the sacrifices that us savers have made. Our reward…is to bathe in our riches…eventually.

  3. LOL! I could have written those! A few posts ago, Larry made a good comment directed towards me about how people tend to be jealous of others skill and luck. Even you said it yourself that you never intend to brag about your wealth although your net worth and salary posts do that unintentionally. It’s just human nature to be envious, unfortunately others tend to take their envy to another level and resort to a bitter blog post or even worse, crime. Just look at what’s going on in Wisconsin. People are envious of a teacher’s salary! Can you imagine their furor once they find out what other government employees make when they don’t even have a job?

    It’s great to be wealthy! It’s only bad when so many others are suffering, look at what is happening in the middle east. Even in America it’s getting pretty ugly. The corruption is pretty rampant. How else can the rich be so rich? The gap between the rich and poor is pretty big right now, and that is not good for society. Civil wars and revolutions are the typical results. I hope this is just food for thought. I’m not a TEA party fanatic even though I might sound like one at times. I really hope we find a solution before things get worse in this country. There has to be a better middle ground for all of us. Also, I need a slice of humble pie…I’m blessed with what I have and should not be jealous of others because their are many who have so much less than I…

  4. The reason get upset at these types of articles is because MOST people don’t think that they can ever save that much money over their lifetimes, yet they don’t do anything about it to even try. We can complain about that article too but no, instead we are doing something about it. Getting rid of our debt, which is only just over a year away, will allow us to also save 1/2 of our income to our savings account. We may not be making 6 digit salaries but it won’t matter when we have no debt hanging over us and we can save, save, save! We cannot wait to be able to do what the people in that article do because we ultimately know we can also become wealthy doing this also. Ninja, don’t be afraid to become wealthy, it just proves you were smart with your money.

  5. I find it motivating. I think these people are just jealous of other people’s savings. It’s like crab mentality. People will pull you down when they know you are doing great with your life financially. Why can’t we just be happy with what they have and strive more so that we also can save enough money for our future. This is just my opinion and I’m not trying to start a war here. Thanks for this blog.

  6. I think if people work hard, and save hard, why be upset and jealous? They don’t live like they have 6 figure incomes, because they save so much. They’re an inspiration, and give great ideas about how to save, that can apply to anyone. i.e. save by not going out, have automatic withdrawals into savings accounts, go to free museums and camping, etc. Envy only hurts you. The rest couldn’t give a shit if you’re jealous of how much they save.

  7. I’m going to disagree that those people were jealous, I think they were simply voicing that they cannot relate to someone who makes 200k and is able to save, because they likely are making more like 50k and struggling to save, so they’d like to see a family they feel represents their own situation. So I don’t think it’s necessarily a bad thing to be wealthy, it’s just that it’s easier to find motivation from people similar to you. For instance, you’re in my same age range, you & your wife bring in about the same amount of income as my live-in boyfriend & I, and so I find your stories extremely relatable to my own life. If you were making 150k and writing about how proud you were to save 100k of that, I would probably stop reading, and not because I don’t like “rich people” but because *I* am not “rich” so I don’t see the need to torture myself!

  8. I’m kinda split. On one hand, saving 60% of a $250,000 household income actually IS possible by living like what most of us would call “normal” Americans. However, saving 60% of say, an $80,000 household income pretty much means you’d have to be living in an area with a super low cost of living, not have an entertainment or socializing budget, never run into emergencies, and eat ramen three times a week.

    On the other hand, by this article it is very apparent that these people live well under their means. For example, the family from Los Altos Hills, CA – “Instead of socializing in restaurants, Julie organizes pot-luck dinners with friends.” How many of us do that? I might periodically, but by “periodically,” I mean maybe one in five or six times.

    I don’t think the commenters are disgruntled with these “rich” people, but rather upset with CNN seeming to indicate that with a few small lifestyle changes, anybody should be able to save a huge percentage of their income.

    The article has the subtitle “You can put away a lot more than the average American without living a deprived life.” Then, the writers proceed to tell the stories of people that aren’t “average Americans” by definition of income alone. The average American family is not anywhere near a six-figure income, let alone $250,000+.

  9. If you don’t tell them, how will they ever know how rich you are? To me that is one of the biggest points of the “MIllionare Next Door” – They don’t live a lifestyle where they flaunt the wealth and feel the need to impress anyone.

    These people are wealthy not because they make 6-figure incomes, but because they CHOSE not to spend every cent to maintain an lifestyle that they don’t want.

    Many of those who are commenting have lost the forest for the trees:

    Not everyone can go to law/medical/grad school but everyone can do things to maximize their education. It is never to late to go to college and earn a degree.

    Hard work will pay off in the end. What people often see as luck is actually the culmination of years of frustration and toil that was overcome by determination and resolve.

    If people are going to resent me because I seized opportunities when they presented themselves, made sure that I had the skills and knowledge needed to recognize that it was the right opportunity for me and finally worked hard to convert that opportunity into a success, I don’t really care. I don’t really care about what the critic who sits on the sidelines thinks about my life.

  10. I like reading articles like this, because it gives me inspiration. I recently stopped reading a frugal message board, because I was sick of reading about rice and beans. I relate it to my workouts. I like to run or swim with a partner that is slightly faster than me. It gives me motivation and inspiration to improve and run/swim faster and more efficiently. I don’t like being the fastest swimmer in a lane, because I have noone to chase. Similarly, I like to read about people that are wealthier than I am. I found a lot of good info in that article, much of it I knew, but I always need to be reminded. It is also why I follow so many of the A-list bloggers. I like to learn from other people’s success and I think they have a lot to offer.

    I

  11. I don’t know, most of the comments from the people interviewed seemed to reflect “The Millionaire Next Door” exactly. That book makes me think I can save that much when I’m DEFINITELY not anywhere near 6 figures. I think it’s possible, but it takes discipline and a willingness to avoid our consumer culture…maybe those 4 commenters can’t imagine living like that. Or they can’t figure out a place to start.

  12. While I definitely think it would be a lot easier for someone making more money to save half their income, I definitely think with some good budgeting skills and hard work someone on a lower income could do the same thing. Or at least get close to saving 50%. Definitely something to inspire towards if you ask me.

  13. I just wrote an article last week entitled “you can save at any income level” and I almost quoted one of those comments verbatum. I’d be willing to bet money that if those commenters salaries doubled, they still wouldn’t be saving money.at least not for very long.

    If you’re running around living a cushy middle class lifestyle and living paycheck to paycheck to do it, your behavior is not going to change if your salary does. My mom saved money when she was earning a minimum wage job. Did we live in a safe neighborhood in a good school district..hell no, but those are wants, not needs. If you need to save money and you don’t make much, guess what, you have to downgrade your lifestyle. I can almost guarantee these people are living larger than what they can afford and that’s what the real issue is. I mean nobody is being forced to live in a high cost of living area and even then, there are such things as room mates.

    Also, most people don’t get high paying jobs handed to them. It takes years of the most challenging majors, student loans and often both spouses working their way up the corporate ladder to get there. It doesn’t just happen and certainly most people aren’t willing to put the work and time in to get there.

    You know what, it’s okay if you don’t make 6 figures. Just don’t bitch about the people who are willing to put the blood sweat and tears to get there.

  14. I don’t think it’s a bad thing to be wealthy as long as you are still in touch with the ‘real world’. If you expect everyone else around you to live the same lifestyle that you can afford, then being wealthy can be bad. If you live your life as a ‘reasonable’ person (that’s in quotes because everyone has a different definition of reasonable lifestyles) and are wealthy, I don’t see a problem with it.

    I look forward to the day that my husband and I are able to save money instead of paying off credit cards, student loans, and car payments. Hopefully we can achieve most of that within the next few months!

  15. Ninja, the average American family makes around $50,000 a year. Any article that shows families making in the $100K+ range is not going to be relevant to most people. If I made five times as much as I make now, then I’m sure I would be better off too. I would have my house paid off in just a few years. I could even tell people how great it is to put 50% of my income to paying off my house and how every year I give 10% to charity. Do you see why the average family would look at such percentages in disgust?
    The simple fact is this: There is a base level of expenses that every family MUST pay to live decently on this earth (e.g. cost of housing/rent, utilities, food, health insurance, etc…)
    Let’s say that for a family of three, the bare bones expenses are $30,000. That means:
    Gross Pay: $50,000
    Less Social Security, Medicare, and Income Taxes (estimated): ($7,125)
    Net Pay: $42,875
    This means that this family could save $12,875 a year on a bare bones budget or 25.75% of their gross income. Now consider that many families have more than one kid or parents that they must help. If a family of three has to cut out all the bells and whistles to save 25% of their income, then what must this family think when they hear about others who enjoy saving 60% of their income?

  16. I agree with Sara, I didn’t see that much jealousy in the comments; they were mostly pointing out that the people in the article were nowhere near their level of income.

    You could just as easily point out that Bill Gates saves 99% of his income so why can’t everyone?

    A much better article would point out families with “normal” incomes who not only save a bit of it, but also take some of the savings and use it for income producing projects or invest it in a small business.

    • “You could just as easily point out that Bill Gates saves 99% of his income so why can’t everyone?”

      +1

      I will remember that line. It is a good summary of the point I was making.

    • “but also take some of the savings and use it for income producing projects or invest it in a small business.”

      And then they are booted from the article because they are successful?

  17. A big reason these people make so much more than the average America is because they possess the qualities that also make them a good saver: self discipline, hard work, dedication, and an ability to plan for the future. They applied these qualities to both their career and to their personal finances. The commenters complaining about how unrelateable these savers are will never make as much money as them or save as much because they lack these qualities.

    • wow. this is ignorant. please read nickel and dimed for a view on how minimum wage workers live. then please educate yourself on low-income schools to see what kind of an education many lower class people receive.

  18. If somebody does (or doesn’t do) something because they’re concerned with what other people think, they need to grow some… well, you know.

    I stopped caring about other people’s opinions a long time ago, and I think society would be better if the rest of us did too.

  19. I don’t have any resentment toward these people, good for you for making large salaries. I’m working my way toward making more money but 100K isn’t going to suddenly rain down on me overnight! I think maybe the better lesson is as you grow your salaries, get married and combine salaries, etc. don’t live outside of your means. Not all of us can sock away 50% today, but as we grow and prosper it’s certainly a great future goal.

  20. Larry’s article was a good one. Income inequality has never been higher in the US. There is a resentment of the super rich because the rich really are getting richer while the poor get poorer and the middle class shrinks. Without arguing about fairness, I have to laugh when high earners freak out over a slight tax increase. Tax rates have never been lower in the US (well, since 1913)! I think there is a sense of greed present, even though it’s not always accurate.

    I do not begrudge the rich for getting richer. To me, that’s what should happen. Once you have capital, you should be able leverage it to build more wealth. I also believe that everyone else should also be climbing the ladder too.

  21. The best part of it is that the people who comment could bring home $250,000 if they saved. That kind of money isn’t hard to make in the markets, you just have to have a long-term time horizon and keep your eyes on the prize.

    That’s the main dividing line between rich and poor. It isn’t income, nor is it your career. It’s about whether you plan for the future, or you live in a wholly here and now world.

  22. Right. Who cares what people think? I mean, if you are managing (read: stewarding) your resources well, who gives a fig about other’s opinions? But as I read your post and some of the comments, I think a case could be made that “rich” people have to steward their resources AT LEAST as carefully as those who have much less. Sure, people making 200K a year don’t have to worry about putting food on the table, how they’ll pay for a child being born, or replacing those worn out brakes, but they have their own things to concern themselves with. I don’t know if that makes a lot of sense…. :-\

  23. I started my PF journey by stumbling across Suze Orman on a PBS special and it “finally” clicked with me: I put myself in my financial mess and I had to get myself out. I started reading a ton of articles and blogs, trying to figure out the best way for me to get myself out of debt. After watching Suze, reading tons of blogs and articles…I came to the conclusion that very little out there applied to me. And yeah, I resented articles that talked about saving huge amounts of money when the family/person in question made 3-4X my salary. My frustration came from not finding advice that applied directly to my situation. I was already living cheap (with the exception of eating out) with barely any frills, but still had to pay off the debt, which left me with little to none for savings. Three years later, I’m still paying off the debt, but it will be paid off by June 2011. Do I have savings? Some, but not even in the four digits yet.

    I quit reading articles that were light-year steps ahead of my current position, because it didn’t motivate me. It made me mad, more at my own situation than at the article’s points. I don’t plan on ever making more than $50K/year in my lifetime, so I have to learn to live within that and incorporate the ability to save. I’d guess the commentors were in the same boat; because their situation was so vastly different from the article, they couldn’t relate or were frustrated at their own lack of discipline/moviation/savings. When you finally get sick of debt and start searching for help, it’s hard to find something other than “scrimp on the good stuff”, which is the last thing you want to hear, honestly. Stumbling across articles like this can be disheartening.

  24. I’m commenting before reading everyone else’s – I didn’t want it to sway my opinion. I get what you’re saying Ninja, and think there is something too it. It’s motivating when anyone can save 50% plus of their take home salary. I wonder though – who the intended audience of the article was and wonder if perhaps there could have been some verbage preemptively recognizing some of the ‘why’s’: to ward off some of the naysayers.

  25. The point is to spend less than you make regardless of income level. Yes, it is frustrating for those of us who have lower incomes to see this type of story. However, I have known people who make six figure incomes who were living paycheck to paycheck just like I was. One person I know had to ask her father to borrow money to buy new tires for her car. This was while she and her husband brought home more than 100K per year and lived in a ridiculously low cost of living area.

    Saving is a mindset, a lifestyle. One that doesn’t exactly come naturally to us. However, it can be learned, honed and perfected.

  26. Being wealthy scares me too, but for a different reason. I’m very goal-oriented, so when I have the goal of paying off all of my student loan debt, and saving a certain amount in cash and retirement accounts, I have a clear vision and plenty of motivation.

    But what happens when I reach those goals? I worry that I’ll be like a boat without a rudder – floating along with no clear destination in site. To some, that might sound leisurely, but to me it almost instills a feeling of anxiety.

    That said, as a civil engineer who hopes to make $100k/year eventually, I find these stories comforting. They remind me that lifestyle inflation does not have to occur, and that saving money on some things helps to free up funds for the more important things in life.

    I don’t understand why people think these aren’t “average” Americans. Almost anyone can enter the armed forces, or get a degree in a field that has the potential for bigger earnings (case in point, my engineering degree left me $100k in debt, but by being smart with my payments during grace periods and paying more than the minimums, I knocked off tens of thousands of dollars in interest payments and will pay them all off roughly 10 years early). Once my loans are paid off, that $1300/month will be put into savings for when our future kids go to college, rather than contributing to lifestyle inflation.

  27. My first reaction is jealousy…just being honest but I know I am on the path to be in those people’s situation. Right now it is not possible due to salary, debt and cost of living for me to save 50% of my income but in the next 2 years or so it will be possible. Also, I am not even sure if saving 50% of my income is really something I want to do. Wouldn’t it be sufficient for me to save 30% and be prepared for the future but still enjoy the present….Just my opinion.

    So I think I will take my jealousy back and say good for them and use their stories to show me what is possible in the future if I so desire.

  28. Simple solution is to earn more.

    I’m sick of the jealous class warfare. Stop whining and focus your efforts on working your way up to earning six figures. If you are bored at your job or see no room to advance… time to change! Also, if you love you job and don’t make much, then your spouse had better be working too.

    Read through the articles and look at the occupations of these people, they all seem to be self made, working to get where they are. When people to complain about how it’s easy for them to save, they ignore all of the hard work they’ve put in. The people who complain are generally too lazy to put in the effort to advance and feel the need to put others down to justify their situation.

    I applaud these people, they’ve worked hard, built huge nest eggs and will thoroughly enjoy retirement.

      • Lame? Not a chance, but please elaborate.

        Easy? Not a chance. CEOs, entrepreneurs and other self-made millionaires did not get to where they are by sitting around complaining about how much better other people have it. They were off building businesses, working on their careers, taking risks. They were all taking the most difficult road possible, why? Because it produced the highest possible returns.

        Average Americans are unwilling to take risks and even try something new. I work in corporate America, and all around me are people who have had the same job for 10, 20, 30 years. They resist change at every corner, they complain about how they were passed over for promotions or management opportunities. When asked if they tried to rotate into a different position they say “no way, it’s too risky, I’m really good at this and I don’t want to be new”.

        Look at half of the people in that CNN link, there are 2 high ranking military personnel, 3 entrepreneurs, you don’t get there by not taking risks.

        Sure in a tough economy it is much more difficult to advance, but it’s not impossible.

        So is it easy? Absolutely not. Can anyone do it? Absolutely.

  29. Kevin: Five words. Who cares what people think?
    krantcents: Why are you so concerned about other people? The only people that matter is your own family!

    Allow me to offer a reply. Because we are a society, not only a collection of individuals all scrambling to climb higher on a totem pole while kicking those who are falling lower and lower. The gap between rich and poor is increasing at an ever accelerating pace in this society. As Nicholas Kristof put it in the NY Times article I linked, “inequality leaves people on the lower rungs feeling like hamsters on a wheel spinning ever faster, without hope or escape.”

    Some here would have it that income doesn’t matter, that saving and building a comfortable net worth is within everyone’s range. And no doubt there are examples of low-income people saving, just as there are of high-income individuals squandering their fortunes. But for the most part, it’s obviously a great deal more of a burden to save and invest if your income barely supports the necessities of life, and forces you to live in an unsafe neighborhood with substandard schools and indequate medical care. Of the commenters here, only Tom in reply 19 seems really to grasp that fact.

    Ninja doesn’t want to open a political can of worms, but sorry, the can is already open and the worms are crawling all around him. For him, the commenters he quotes are “something bitter, something jealous, and something pathetic.” I would suggest instead turning to page 1 of “The Great Gatsby” and reading Nick Carraway’s opening statement: “In my younger and more vulnerable years my father gave me some advice that I’ve been turning over in my mind ever since. ‘Whenever you feel like criticizing any one,’ he told me, ‘just remember that all the people in this world haven’t had the advantages that you’ve had.'”

    The politics are unavoidable, and they play into our actions every day. Do you contribute to charity so that people below the poverty line have something to eat? Do you tip decently so that people whose income is mostly tips can have a little more money in their pockets? If you are a business owner, do you hire new workers so that the unemployment level in this country might start to fall? do you give your employees reasonable raises so they can prosper too, or is your sole concern your short-term profit margin and how much you can line your own pockets? Do you vote for leaders who advocate shared sacrifice, with most of it going towards the super-affluent who will feel it least, or do you vote for those who offer policies that will continue to enlarge the gulf between the highest .1% and all the rest of us?

    I want to make it clear that I’m no kind of socialist and that I do not object to people doing well in life. I follow almost all of those “secrets of extreme savers” myself (except multiple income streams), they’ve given me a reasonably strong balance sheet, and I consider these precepts nothing more than good financial sense for anyone. But not all the people in this world have had the advantages that I’ve had. The problem is not wealth per se but proportionality. We’ve had 30 years in this country of a tiny group accruing all the real wealth while most of the rest of us feel like hamsters. This isn’t the America I was born into, in the Eisenhower-Kennedy years, when the gap between the highest and lowest earners was far less and the middle class had some hopes of getting ahead. Now we’ve got an economic culture dominated by outsourcing, downsizing, and layoffs; where pensions have been eroded in favor of riskier defined-contribution plans; and where all the economic benefits are going to the favored few.

    • Hey what about my post? 🙂

      I wholeheartedly agree with your post and wanted to thank you for providing the link regarding The Banana Republic.

      I find it funny that there are people who think that those in the lower class are lazy. That’s like me saying the rich are corrupt. I see the error of my statement, I hope others do the same. Hate getting older, the stereotypes get so reinforced as I experience more.

    • Larry, do you really believe that everyone is entitled to a middle class lifestyle regardless of their income? It’s that kind of thinking that has people racking up crippling credit card debt and being even worse off then if they just lived within their means.

      I’m definitely one of those people who grew up in a bad neighbhorhood and it wasn’t heaven but I didn’t get knifed to death I turned out fine. Part of it was because my mom prioritized her spending and sent me to catholic school but I’m so thankful she lived debt free and kept that stress out of my life growing up.

      I think you’re right. Historically in America, it was quite common to be better off than your parent’s generation (like me), but I think the tide is turning and this generation might be forced to downgrade from the lifestyle they were used to growing up with. Honestly from the people around me, most people don’t downgrade even if they should. If anything they upgrade.

      • “Larry, do you really believe that everyone is entitled to a middle class lifestyle regardless of their income?”

        I didn’t say that, did I? In fact I didn’t say that anyone is “entitled” to anything. In fact what I said was that “I consider all of those ‘secrets of extreme savers’ nothing more than good financial sense for anyone.” But the tide you are talking about is turning in two directions – downwards or at best stagnant for 99% of the population and upwards, upwards, upwards for the top 1%. And that has been the direct result of failed economic policies that have led not to “trickling down” but rather to “gushing up.” Yes, of course, we all have a personal responsibility to live within our means. But that doesn’t mean that those with the greatest power have to continue stacking the cards against the overwhelming majority, and that they should then complain about being “punished” for their own success, as if the very wealthiest are the real underclass in this society.

        And yes, thanks to Stacking for seeing my side, and to Ryan as well.

    • Politics have very little to do with it. Sure, they create forces that can play for or against you, but by and large it’s your own personal responsibility to close that gap. On a micro level, it’s your own actions that create (or destroy) opportunities.

      I am all for shared sacrifice, but if a super-affluent individual wants to spend a billion dollars on a mega yacht and give $0 to charity, that is their choice, it’s the money they made with their own blood, sweat and tears. Who are we to tell them what to do with their hard earned money?

      Also, to answer your questions: Yes, I donate $5 a day to a variety of charities. Yes, I am a generous tipper ONLY if they earned it.

  30. Here is a weird circumstance, after reading the comments and the original postings, I want to give you this situstion. I am a single (divorced) worman, who has had to support (most of the time) her complete family. I racked up credit carad obligations to the tune of almost $100,000 once, when I was working. Now, retired I pull in a net income of 22,000 a year, but pay 785.00 to the cc companies (about 9500 per annum). Now, I would be able to save that 9,000 per year if I didn’t have to pay it out. People have said to me, declare bankruptcy, but that is not in my lexicon. So I am saving $25 per month, living frugally, am overweight so am not starving, but have to admit my rent is really low due to the largess of one of sons. But, if I paid regular rent, I would be able to save 5,000 a year, but at my age, what for? I’d rather go see Europe! I guess the only way I will see Europe is to be teleported there after my demise! Too much emphasis on savings, riches, spending, poverty, acquisitions, whatever. It boils down to the same….in the end we’re all on our backs, staring blankly at the sky!

  31. Aside from the question of who is the average american, how do they prosper in an economy of outsourcing? We are growing increasingly into a country of middle men whose sole job function is to connect two services. Salaries for top 1% have increased dramatically over the years while the vast majority’s salary has stayed pretty stagnant over years. I just got my yearly raise. You know what it was? 12 cents per hour. Roughly 200 dollars a year. (less than 20 hours a week)

    Im a late twenty’s college kid, i work part time in retail and hopefully when i graduate ill be able to find a job making over 50k a year outside of retail.In the real world ill probably find something for about 50k a year for 60 – 80 hours a week salary, roughly 12.50 -18.75 an hour depending on the hours im ‘highly suggested’ to work. That converts my 50k a year at 40 hours a week to significantly less.

    My future is currently rather bright, i will have my bs in finance, and i might even get my masters before i turn 35. What about the legions that work retail? The ones who make minimum wage, and scrape to make ends meet?

    I dunno, but i know i have no answer for them when they scoff at people making more than them. Not only are they in a bad position financially, they often lack even basic financial insight that would assist them to get out of their situation. Simply saying i worked hard to get where i am, too bad for you, overlooks a greater problem. These people are your customers, if they cant afford your services, you’ll be right there with them shortly.

    • I have an answer for them. START SPENDING LESS THAN YOU MAKE! Regardless of your income, you can live on less than that. And if you can live on less than your income, then you can use the difference to better your circumstances. It’s called capitalism – the best financial system yet invented.

      You should be able to live quite efficiently on $20k or so a year. So if you earn $50k+, then you should be able to invest $10k+ per year. In 20 years, you should be earning more from your investments than what you earn from your job.

      The problem is that people don’t comprehend compound gains. All they see are short-term benefits and problems.

      • I currently make about 10k a year. I can believe a single person could wisely live making 20k a year. Id be curious to see their balance sheet though.

  32. “You should be able to live quite efficiently on $20k or so a year.”

    Please itemize that for me – shelter, food, etc., and tell me how you can do it. And would you be able to live (quite efficiently) on $20K?

      • Not comfortable, but very affordable.

        Also, @ $20K/yr, you are basically banking your entire paycheck.

        Let’s break this down, and assume it’s a 1 person family.

        $20,000 per year = $1600 per month.

        $400/mo – 1 room efficiency
        $100/mo – Utilities
        $100/mo – Entertainment
        $300/mo – Food
        $100/mo – Misc Spending
        = $1000/mo leaving $600 leftover

        It’s not rocket science, it’s minimalism.

        • Exactly Tom.

          Would I want to live like that forever? Heck no. Long enough to build a solid capital base? Absolutely!

          Can decisions and mistakes be made that would make things more difficult? Oh, say get pregnant and have children without a plan or live a dangerous and unhealthy lifestyle? Yup.

          Regardless, in nearly all circumstances, if you spend less than you have coming in, then over time, a capital base can be built. While that base is being built, time can be spent on self-education to learn what to do with the capital base.

        • You forgot some things:

          Federal Income Taxes – (Small, but should be thought of).
          FICA taxes – Take $1,530 off the top ($127.50 a month)
          Health costs – Insurance, co-pays, glasses to see at your job, dental visits, etc… (Say $250 a month)
          Keeping is round, let’s say an extra $400 needs to be added to your equation.

          This leaves $200 a month or 12% of their gross paycheck. (Better hope they don’t go to a church that wants their 10%, just kidding).

          So, it is possible, but it is still not relatable to those that choose (the key word here) to live at 40% or thier gross pay. The rich that choose to save get to pay off their houses early. The poor that choose to save, get to live another day. Do you see why these two classes are in very different situations?

          • Yes… Thank you, FICA is a killer. $400 extra is a good round number.

            So I agree that they are not comparable, but my question is: what are they doing to increase their pay? “I work hard at my job” doesn’t cut it anymore.

          • @ The other tom
            At individual (microeconomic) levels, your idea of the frugal life will work, but the issue I see is more societal (macroeconomic). Because of the way we are set up, there will always be working poor. In an ideal societal, these working poor would be teenagers who could live for free with mom and dad. Over time, they would get an education/training and move up to more sustainable levels.

            There is only one problem: It takes free time and money to get education/training. If our working poor were teens, then that would be ok because mom and dad could foot the bill; however, this is by far not allways the case. Thus, the working poor are stuck unless they are willing to risk their health working double shifts, taking trade classes, and getting little sleep. They are also forced to put off starting a family (creating loneliness) if they ever want a shot in life. If they do try to date, they risk finding a partner that will bankrupt them. =(

            So, in short, life for the rich earners is an more of an accounting equation, a game to be played. Life for the working poor is a struggle to survive.

            The question today is: How do we make a society were everyone can have a decent life (more communist) and at the same time, be fair by letting those that work hard/smart enjoy the fruits of their labor (more like capitalism). We don’t want free riders, but we also don’t want to trample people in the name of economic efficiency.

          • @ Tom (w/capital T),

            I understand what you are saying, but I disagree with the hardships that you mention (double shifts, little sleep, etc). Many working professionals take night classes, I take night classes. Many people are quitting their $20K/yr jobs to go back to school or trade school. The federal student loan program is very generous. Granted you do not want to be living off student loans and P/T income, but that’s life. Everyone has student loans, and, to be frank, they suck. They suck, but they are worth it, especially if you start earning $50K right off the bat. Society already allows for everyone to have a decent life.

            My point is, there are so many opportunities to advance in your career and in life, but few people actually take the necessary risks. They are content to earn the $20K or the average, but complain about the growing divide between them and their less risk averse peers.

        • But you really didn’t respond to my question, Robert Muir. Are you living on $20K a year, or is living in poverty just something that you expect of others?

          See, Ninja, you don’t have to feel guilty about your net worth or wealth. Suffering is only for others.

          And with that, I’m out of here once and for all. You yuppies have fun.

          • No, I’m not living on $20k because I don’t have to. I’m 50 years old, now debt-free with a solid capital base and I’m living the dream!

            Hopefully there are folks with less closed minds than yours that can learn something.

  33. I didnt mean to cause the firestorm, and i actually did learn something from the discussion.

    It really is all about the time value of money when broken down into is most basic ideals. I trade hardship, and spend well within my means so that when im 50, i hope to have the american dream as well.

    Though i do agree with those that say the difference between saving for the rich and poor are wildly different, ie a new house, or food on the table. I dont know that it is as simple as some claim it to be as we have already discussed.

    Im sorry tom that you felt the way you did, and never meant to cause that reaction.

  34. Wow I can’t believe not one person commented that I used the wrong “your” in my cartoon above. Man, my grammar really sux…errr…i mean sucks.

  35. When it comes to your personal spending habits, you are damned if you do, damned if you don’t in the eyes of other people. Personally, my husband and I save 70% of our net income. We’re currently living in a very small house. Recently, some family members approached us and told us that it is unfair to our children that we make them live in such close quarters.

    My husband and I then explained that we are currently saving to pay cash for our dream home. In six years, we should be able to afford a beautiful home with more than enough room for everyone, up in the hills. At which point, the same family members scoffed and made fun and said that we’d never be able to afford the bills and we’d have cardboard boxes for furniture inside our new home.

    The lesson I learned right there is that you can’t please anyone but yourself when it comes to your finances. Look like you’re spending too little and people will accuse you of being cheap. Look like you’re spending too much and people will accuse you of being (as my dad likes to call it:) “Captain Big Ass.” And if you’re genuinely successful and frugal and let someone glimpse into your finances… people will still have a hard time being sincerely happy for you.

  36. Pingback: Weekend Link Love
  37. Hi there. Long time troll, first time comment.

    I do think there is an anti-rich sentiment being stoked by at least one political party (to say no more), and they are unfairly characterized as greedy, dishonest, etc. Most of that labeling is sour grapes, if you ask me. On the other hand, money in large quantities (no matter how it is gained) does tend to change people. I know a few “rich” people (I also knew a few before they were “rich”) and there seems to be a negative personality impact (a polite way of saying a few are just jerks). I don’t know what it is, but some of them make me aspire to remain happily and firmly in the middle class.

    An anecdote from the other side: there’s a beer store that I frequent (not TOO frequently) run by an immigrant couple from Indonesia. They told me how they sent their daughter to medical school, without debt, by their modest income from the store and doing odd jobs. Their secret? They saved just about every penny they earned. I was inspired as I paid for my case of Sam Adams.

    Anyway, I love your blog. Keep up the great work!

  38. Ninja, if you live modestly, how do I know how much you have in the bank? Warren Buffet in an interview a year or so ago talked about having friends over and watching the 40 in plasma TV. He has no boat, no expensive cars. He happens to have name recognition, but most rich folk look like you or me. The guy driving the BMW? It’s probably leased or carrying a large loan. If you always live on 15-20% less than you earn, you’ll find good things come your way. As we got older, we pushed our saving rate to just over 20%. Time is on your side.

  39. I have no fear of being rich or well off. My parents were a lower-middle class household – we never lacked for anything and I don’t really remember my parents having trouble paying the bills except for maybe on a couple of occasions, but we didn’t really travel, drove cars into the ground etc. My mom got sick and even though insurance and benefits paid for a lot, we still had to shell out big bucks to make our house accessible for her.

    When I was 24 years old, I lived in a seedy apartment with 6 other people and struggled to pay off my (future) wife’s $50K student loan on about a $28K salary. I had paid my way through school by working 3 jobs, so at least I had no debt, but I didn’t have any equity either. There were a lot of nights where I wondered what was going to happen to us. We had hung heavy drapes in the apartment to make a fourth bedroom for us – our shelving units were milk crates and banana boxes stacked sideways. We slept on an air mattress on top of a broken sofa bed. All the apartment mates would drink ourselves silly because we hated our jobs. But somehow I kept on getting up in the morning, socking away money when I could, taking extra work when I needed it, stopped drinking and started working out…

    Now I’m 34 with two wonderful boys and a loving wife. The student debt has been paid off for years. I make six figures and am due a sizeable raise this year, and am recognized as a high-flyer in my organization. My wife makes an excellent secondary income (about $60K) and is in a great job where she’s gaining valuable experience. We own a fair-sized house (we could have bought bigger but have more than enough for our needs) and our kids’ educations and our pensions are being taken care of.

    What I struggle with now is determining the finance/happiness equation. My wife and I certainly have more room to grow in our respective organizations, but with both love our current jobs and they’re more than enough to take care of the bills. We want to have a lot of time with the boys, but we also don’t want to settle with our jobs. It’s not even about the money anymore, it’s about the challenge and growth. I could care less what others think of us but my stress is that we only get one life and I want to get through it with no regrets, either personally or professionally, and that’s a difficult tightrope to walk.

Comments are closed.