Do you know any truly rich people (someone who consistently maked $500+k per year)?

DocLove wrote:

'Why don't teacher's make much money? It's because just about anyone can do it.'

No, it's because there is no profit in it. I doubt you would make a good teacher by the way

By the way have you ever heard of the credit crunch. A lot of very well paid people didn't see that coming.

The poor compensation of teachers is strictly due to the overwhelmingly public nature of the job. If the education system was as privatised as are doctors, dentists, engineers, lawyers, etc., are, we would see very smart, ambitious people going into the teaching field for exorbitant salaries, teaching the best students at the best schools. Similar to the private university system, but even that is not a free market, because it is still subsidised at some level by the government.

To say there is no profit in it is an oversimplification. The reason just about any idiot (and there are a lot of idiots in teaching) can teach is our standards are so low. Our educational outcomes, poor compared to the rest of the world, are a product of the low quality of our teachers, the low quality of their parents, and the low expectations of everyone involved. Very few people have an incentive to be accountable for poor outcomes, because there is not enough "profit" in it for anyone involved. Altruism only gets a small number of excellent teachers so far. At some point, you need a critical mass of excellent teachers, administrators, students, and parents to demand much higher standards. The only thing that can do that is a market. There is no market for a low-end education.

As far as the credit crunch, a lot of very well paid people did see it coming, encouraged it, and made a hell of a profit off of it. You're naive if you think otherwise. Read a frickin newspaper.

I know plenty of people making much more than that, due to the nature of my work (investment banking). While wealthy people, especially those in finance or large corporations, are generally more arrogant, there is zero doubt in my mind that the top 1% in terms of self made wealth are also the top 1% in terms of talent, ambition, intelligence, and hard work. Obviously the correlation isn't 100%, as a small portion is attributable to luck and connections, but it is very strong, and anyone who thinks otherwise is either ignorant or simply deluding themselves.

I went to a top 3 public school for undergrad, so not an elite school but good enough where any opportunity I wanted I had. It wasn't hard to get in(lazy as shit in highschool, but 1560 SAT), but even in a top college there's a huge gap between the best and the average in terms of intelligence/work ethic/ambition. Those with the best grades, who studied instead of partied, ended up with the best jobs and are now all millionaires or on their way to becoming one. Honestly, in areas like banking, private equity, etc, the path to success/wealth is pretty straightforward. Those with the talent and focus make it, always. But even with that, the rich, for the most part, work far harder even out of school. My coworkers and I average 90-100 hours of work per week out of college at the analyst level. Hours are better now, but the first few years are pure hell. Is it worth it for everyone? No. But I can say with confidence the average middle class person doesn't have what it takes to be a self made millionaire (assuming no luck).

I'm still fairly young, and I'm no where close to being "truly" rich (though I am easily in the top percent for my age), but it never fails to amuse me when the masses claim corporate corruption, or greedy execs, or some other dumb reason explains the wealth disparity in America. There's a good reason why doctors, lawyers, engineers, bankers, etc make much much more money than teachers, plumbers, waiters, etc. They provide valuable, rare, and desired skills that the market - not any one corrupt individual - is willing to compensate for. People never cease to complain about execs getting huge bonuses...while it may seem ridiculous on the surface, the execs aren't paying themselves. They're getting paid by the company's shareholders who decided they were worth that much and helped them profit to a satisfactory degree. Every self made billionaire, is of course unnecessarily wealthy, but there is no doubt they have generated much more wealth than their net worth. Not to mention the millions they give in taxes and charity. Simply put, earned wealth has a correlation (again, not a perfect one, obviously) to your worth to society, as harsh as that sounds.

Teacher compensation is not poor in general. Compare their income to sociology majors, art history and the rest of their peer group. Teachers get to live solid middle class lifestyles on 10 months of work. And no getting a Masters in education is no where near as hard as getting a law or engineering degree. No one wants to be held accountable because then we would have to deal with the fact that somewhere around 20-40% (depends on the study) of the teachers are incompetent and need to be fired (retraining can be tried but in general if you suck initially you suck afterwards). Firing that many people is impossible. Replacing that many would also be almost impossible.

Both grandfathers, an uncle a second cousin and my dad.

Actually, three of those five would stick their nose up at the title of the thread. 500k/yr is nothing. I'm not an elitist snob, but that's how they see it.

I know a guy who makes abt 500k a year going over the seas to multinational corporations to help with disputes. This guy knows how to insert himself into a conversation; I've never once heard him say something that could be taken negatively. Actually, he makes you feel good pretty much every time he talks.

He's taken me out on his sailboat from his beach house. He has two other houses (very high-end houses in high-end neighborhoods).

Also know a lawyer (not through the need of his abilititties) who has a couple houses/condos and he drinks top grade whiskey and eats at all the best restaurants in the city all the time; Not sure how much he makes, but he's supposedly the best in his field.

Also know a scientist guy working in DC for the gov't in nat'l security for things like chemical warfare. Booksmart guy. Has clearance to any building in DC (which is hard to get). Again, I have no idea how much he makes, but it's a lot, and he has computer monitors in every room in his house, wireless keyboards, home-technology like you wouldn't believe. Some of them are extremely interesting, some extremely boring.

I'm related to a billionaire. No lie. Nice guy.

I'm in this category and have been for a while. I work daily as a CEO for a company. I believe that we live well below our means and most people would not know my income level by the outward manner in which we live. We do live in a nice neighborhood and drive nice cars.

As another poster pointed out, money does help when issues come up; like car repair, college expenses, European travel for the family, new cars, etc. We are fortunate enough that we don't have to budget for any of these things. And we never have to argue over finances at the house. The biggest benefit in my opinion was that my wife never worked and she was around for the kids all the time and she volunteered at school, gymnastics, etc.

I will continue to work because I like the challenge of it.

Do you really not know any talented, ambitious, intelligent, and hardworking people who are concerned with things other than making money? Have you never met a university prof who is really into his/her field of study? Or a teacher who really cares about teaching? Even a mechanic who is really into cars?

Most of the absurdly wealthy people I know are smart enough to make that money but stupid enough to think that it is worth doing...

If this is true, you have an incredibly limited social circle...

What percent of the population works in areas outside of banking, private equity, etc.? Do you think that the lure of those professions is so overwhelming that all talented, ambitious, intelligent, and hardworking people work in banking, private equity, etc.?

Ahh-- "the masses." I guess since all the talented, ambitious, intelligent, and hardworking people work in banking and private equity, it would be impossible for someone not in those circles to come up with an explanation for wealth disparity other than those all talented, ambitious, intelligent, and hardworking work in banking and private equity.

So-- please explain to the masses why capitalism doesn't work on banking and private equity. Capitalism inherently abhors uneven distributions of wealth. If people can make more money in profession A than in profession B, people in profession B will switch to profession A. Salaries in A will drop, salaries in B will rise, until an equilibrium is reached. 101 supply and demand.

Why hasn't that happened in banking? In fact, over the last 20 years, the exact opposite has happened. Banking used to be a mildly lucrative profession-- akin to dentistry or veterinarians. Over the last 20 years, salaries in the banking and private equity markets have risen completely out of proportion with the rest of the professions. And yet- the capitalist reallocation of resources into banking and private equity-- which would drive salaries in those professions down-- hasn't happened.

Why doesn't capitalism work in banking and private equity? Might it be that banking and private equity are not, in fact, open markets? Might it be that barriers to entry into the banking and private equity markets have risen? Might it be that our regulatory system has been captured by banks/IB's/et al.?

The masses await your explanation....

First of all-- have you ever met a poor plumber? Most plumbers I know make more than engineers. In fact-- they made more than bankers did in the 1970's.

In a market economy, this is true. Why doesn't capitalism, and the market economy, work in banking?

I once heard that happiness is at its max with a salary of around $60k per year. Explanation was that 60k is enough to pay your bills, take your 1-2 vacations, have a good car, and live your life...and anything more than that amount of money just makes you want more.

I am assuming that this 60k figure is for a single person though as I cannot see a family living happily and comfortably off 60k. My parents made about $50k combined, had 3 kids, and we barely scraped by... I'm talking soup and PBJ for dinner several nights a week, not one vacation, and we each got $100 to buy new school clothes, shoes, and supplies at the beginning of the year and that was it for the year. I used my $100 to buy new running shoes and took the rest to a thrift store for my clothes.

More people should know that there is nothing wrong with growing up like this. I appreciate things a lot more than my peers who grew up spending their summers in France and drove BMWs in high school.

Thanks for all of the great posts!

'As far as the credit crunch, a lot of very well paid people did see it coming, encouraged it, and made a hell of a profit off of it. You're naive if you think otherwise'

So Lehman brothers deliberatly went bust? I used to work for Moody's and sent them a chq for £60k they sent it back as they didn't know what it was for. Half of the other banks would have followed too if they were not bailed out

Same for me.

Dont for a second though feel bad for teachers - - they get tons of vacation, summers off, set hours, no one bugs them in the middle of the night, generous pensions paid for by you the taxpayers, health insurance. Plus if they are good, they get nice personal satisfaction of helping shape kids' lives. All in all not a bad gig. Sometimes I wish I had done that, life would be simpler (like the 60K theory proposed above).

My wife's uncle is very rich (100million+). He once told this story:

"A lot of people come up to me and say, if I had one hundred million dollars, I would retire in a second. I tell them, 'That's why you will never make 100 million dollars'"

Pretty good quote I think.

DocLove wrote:

So Lehman brothers deliberatly went bust? I used to work for Moody's and sent them a chq for £60k they sent it back as they didn't know what it was for. Half of the other banks would have followed too if they were not bailed out

Maybe you're not from the states, but teaching here is a lower to middle-middle class job. Go to a school and look at who's taking education classes, it's not the best and the brightest students.

Personally I dont even know why we think elementary school teachers need to have a college degree. A college degree to teach kids how to tell time, multiplication, and basic reading? Really?

DocLove, can I ask you a question? Are you retarded?

Lehman Brothers didn't intend to fail, but you can bet that other investment banks had a stake in 1)encouraging the failure of IBs other than their own, and 2)making money off the failure of investments that other IBs held.

It's been in the news for years that these IBs were shorting each other like mad.

Makes sense that you worked for Moody's cos they didn't know what the hell was going on either. F*** it! Give everything a Aaa rating!

Rich Person wrote:

I do not. Do you?

If you define rich by the INCOME they make, then yes, I know people who make that kind of income annually. If though you factor in their debts, those "rich" people who make that income aren't really all that rich.

I like to do the test of if you suddenly won $10 million dollars, how much of it would you actually get to keep after paying off debts. Of course the error in this is that a penniless homeless person with no debts would be a the top, but I give the edge to someone with an income or marketable skills. Many people in this country are debt free including the house, and that should be everyone's goal.

The people I know that I consider to be the wealthiest (financially) are people who made decent income (maybe $100,000+ a year between two earners), were out of debt 10+ years before retiring and invested a ton of their income for retirement. I know a married couple that were teachers who meet this criteria, and they own two homes outright (spending their winters in Arizona), have very good retirement income and are really enjoying life, and of course they were just 57 when they retired. Awesome.

In reply to goldman, the young investment banking guy:

Tell us about the valuable innovations your industry has bestowed upon our country and the world in the last 10 years. As you say, the best and the brightest do very well in investment banking, so they must have produced some great things. I'd love to hear about some of these innovations (or are they essentially embezzlements and frauds your industry has taken to the mainstream)?

I am in the OP category. I do not consider myself truly rich. In fact, relative to my neighbors and coworkers, I would say I'm about average.

I live in a nice house in a very nice neighborhood within a very nice town with excellent public schools and close proximity to a large city... but its about 2500 sq ft and on a 1/4 of an acre of land. So its no palace. My taxes are very high, but my mortgage isn't so bad because I plunked over 50% of the value of my house into a down payment. This left me cash strapped for a year or so, but I've built that back up to a comfortable level and it keeps increasing.

My wife is very chill... much more so then me. She shops for clothes for my young kids (under 4) largely at Target, sometimes JCrew or Gap if we want something nice for them. Why do you need anything better when they're just going to destroy them anyway? I mow my own lawn (only one in my neighborhood, but I think it sets a good example for my kids. I don't want them growing up thinking they can expect to buy themselves out of work). We used to have a cleaning lady once a week, then it went to once every other week, and now its not at all (when we were cash strapped, we got rid of her, and haven't added it back despite no longer being in a pinch).

Our biggest expense other then our house (mortgage, repairs, etc) and taxes is food and a club we belong to. I like golf and it was a good way to meet people in my town, so we splurged. Food is definitely an area where we spend more then an average family... we go out a lot, but that got very expensive and we have cut back from 3-4 times a week at $50-$100 a meal (you can't spend less, even at the cheap restaurants, for a family of 4 in my town) to a couple of times a month. This was purely because it was getting expensive... so we try and budget as well. Our attitude before was eating out was a default to cooking. Now we treat it a special occasion/luxury rather then an accepted default option.

We shop at Costco, and as I said, Target, and I rarely buy new clothes (basically get stuff for Christmas, and that's what I wear all year).

We save a lot of money, but I consider that for retirement (would like to retire young), and a lot of my pay comes in company stock. So although my income and net worth is growing and decently high relative to most in this country, outside of food, housing, taxes, and the aforementioned club, we probably live like a family making 100k rather then 500+k. And keep in mind, our housing is not extravagant. Its a type of house that someone making 100 or 200k could afford in a different area of the country.

I take issue with the tax agenda of Obama (and I am a democrat... but that is because of social reasons, not fiscal... though my social agenda will always trump my fiscal beliefs in voting). The reason why is the following:

Yes, I may make a good amount of money... more then 98% of Americans... but I consider the majority of that money as non-negotiable savings. In other words, I put a large chunk of money in the bank, and it STAYS there. NO MATTER WHAT. So I am living like someone making a fraction of what I make because I chose to SAVE. If I get taxed, you aren't eating into my disposable income, because in my mind, I don't have any. I have savings that don't get touched, and you're taxing my savings. So I don't live "rich" even though Obama would call me such. I really might as well not have 1/2 of my income on a given year, because its gone and stocked away. I'll grab it when I'm 45 or 50. The way I was raised, that is being responsible, and by repealing the Bush tax cuts, you're punishing me for my responsibility.

If I was making 50k a year, I wouldn't have a plasma tv, drive a BMW, buy a second home, leverage up my first one, and have no savings (all of which I don't do while making much more then that). I would figure out how to live on 30K so I could save 20k (clearly making the math easy and not talking about tax effects). I challenge many 50k per year households to say the same. My first job I made $42k and saved $10k while living in NYC. I was single, but still pretty good if you ask me. My thinking from those days has changed little.

Flagpole, you are obsessed.

Who cares? Honestly, you worry your whole life about the most ridiculous financial crap. Make money, it is pretty easy. Make a lot. Spend what you want. Quit worrying so much.

I am 31. I have a $710,000 home. My mortgage is down to $128,00 right now.

I have over $535,000 in mutual funds and $38,000 in various savings accounts. No other debt.

I work my ass off and spend my ass off. I spend cash. I drive a shit car b/c I hate washing cars. I'd rather ride my bike. If I liked cars, I'd buy a damn nice one and enjoy it.

I have a wife and two girls. They are in private school. Yes, even the wife. Getting her MFA.

Just make money and enjoy life man. You are so damn obsessed with moving to some awful tract house in Arizona.

STOP IT!!!!!!!! Buy a f***ing awesome vintage Wurlitzer and play the hell out of it.