For example, people who live in Glenmaura (Moosic, PA) or Edwards Manor (Bel Air, MD). Are they considered rich or middle class?
Where you live doesn't tell you if a person is rich or not. There are lots of ways you can end up living in a house in a "wealthy" area (inheritance, bought before it got super expensive, way over extended yourself with giving a ton of your cash toward a down payment and then taking a huge loan, so "house poor", bought when you had a better income). Too many people care about presenting a front of wealth by buying a more expensive home than they should, more expensive cars than they should.
So, how do you define it then? In my OPINION, you are wealthy when you no longer have to work (you still can, but you don't HAVE to), your housing is taken care of (paid for house), you live in an area that you WANT to live in, and you have enough extra money beyond daily living expenses to do the things you want to do (travel, buy extra things you WANT, etc.).
So, you could be "wealthy" if you owned a $299,900 house outright in Augusta, GA like this one - https://www.realtor.com/realestateandhomes-detail/5157-Copse-Dr_Augusta_GA_30909_M54280-52149?ex=2943207425 - you were no longer working (because you didn't need to), and you had an annual income through investments and Social Security of $100,000 or so. That would get most people what they want. So, while I could accept maybe even some lesser amounts even, that's a good example of what I would minimally consider for a person to be "wealthy."
The race in question (1985 Oak Harbor Invitational) happened in spring of 1985, but to set the scene properly, we need to go back a year to 1984. Scott Fry and I were both juniors; he at the then AA school of Sandusky Perkins, and me at the then AAA school Perrysburg; so we didn't race each other often (as if my getting killed by him would be racing him). Scott ran 9:11 that day to win the 3200. His teammate came in second in 9:44. I came in third. On to 1985. Scott's teammate is now graduated, and Scott runs the 1600 in 4:10 to win. I come in second. Scott then runs the 800 in his LIFETIME PR of 1:57 to win. I did not run the open 800.
It's now time for the 3200. I hadn't lost a 3200 all season, but I was prepared to do so today as I am always realistic. The weather that evening was absolutely perfect for running. We toe the line. Scott jumps the gun and is DQ'd. He is so pissed he immediately jumps the fence and reportedly runs through the streets of Oak Harbor, and many disgruntled fans boo and start to leave as the meet is just about over. I win the race by a fair margin to chants of "YOU SUCK, YOU SUCK, YOU SUCK"! My coach turns to the crowd and says, "Come On, he's just a kid!" Some fat guy with a beverage in his hand yells, "Well, he SUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUCKKKKKKKKKKKKKKKKKKKKKKKSSSSSSS!", and I swear he spilled a little bit when he said that.
I still have the little medal hanging off the blue ribbon today. It SHOULD belong to one Scott Fry.
Rich isn’t dependent on how liquid your assets are in the present moment. The person that spends his entire income and makes it rain just looks rich.
Where did I say a person needs to spend their entire income and "make it rain?"
But yes, you need to have disposable income to be "wealthy." Having disposable income doesn't mean you HAVE to spend it. You can use disposable income to invest/save and become even more wealthy.
A person who has NO disposable income yet lives in a paid-for $2.5 million house is NOT wealthy, but a person who lives in a $300,000 paid-for house who doesn't work and yet has an income of $100,000 annually IS wealthy in my opinion. Now, the person who lives in the $2.5 million house could sell it and use the proceeds to help with income and then BECOME wealthy, but they are not that if they don't have any disposable income.
Flagpole is 100% correct on this. Actual rich/wealthy people would agree. Liquidity, or the ability to quickly have liquidity is a major indicator. The value of your primary home as a percentage of your overall net worth is an indicator. If your primary home is not entirely paid off (or very close to it) and it's worth say 1M, and you have another 2M in protected retirement accounts you are not rich. You arent that liquid without penalties. You are rich when you have no house payment and you can buy, within reason, anything you want whenever you want and don't need a 401k withdraw (assuming under the penalty age). The biggest misconception is people who are wealthy vs people on their way to becoming wealthy. That's me. Income between 400k and 500k per year, no debt except for 250k left of mortgage at 2.25% interest on a house worth 1.5M. I would not call myself rich but probably a lot would. If I could suddenly not make income I would not be okay in the long term (obviously I have short to middle term cash for something like this). That's the difference between wealthy and not wealthy. In 5-7 years the house will be paid off entirely and I save half of what I make so at that point maybe I'd be "rich."
Where did I say a person needs to spend their entire income and "make it rain?"
But yes, you need to have disposable income to be "wealthy." Having disposable income doesn't mean you HAVE to spend it. You can use disposable income to invest/save and become even more wealthy.
A person who has NO disposable income yet lives in a paid-for $2.5 million house is NOT wealthy, but a person who lives in a $300,000 paid-for house who doesn't work and yet has an income of $100,000 annually IS wealthy in my opinion. Now, the person who lives in the $2.5 million house could sell it and use the proceeds to help with income and then BECOME wealthy, but they are not that if they don't have any disposable income.
You seem to fundamentally misunderstand how wealthy people access capital. At a certain level of wealth access to incredibly low interest lines of credit against your assets become available. You don't need liquid assets to live like a baller if you can tap into a revolving line of credit of 20m dollars at 1% interest.
Thus, it is is perfectly reasonable for most or nearly all of one's assets to be tied up in real estate, private equity or other more difficult to liquidate investments while still having sufficient access to capital to do whatever your view or "acting rich" looks like.
Your comments are not at all antithetical to what I've said.
You are using a VERY extreme example here. If Elon Musk were to put all of his wealth into real estate, yes, he would still be "wealthy" because he has enough to easily liquidate that if he needs to. There is some low-level of wealth in real estate where that could be the case also. Typically people with $20 million in real estate are earning income from those properties...they don't just live in a $20 million house.
There are a LOT of people in this country who live in paid-for houses that are worth multiple millions of dollars but who have nothing else outside of that. I have a friend who was in that situation. He bought a house in the 80s in the SF Bay Area for a reasonable amount of money, but then over time his house became worth many millions of dollars. He continued to work to support himself, pay his bills and the large property tax, and then when he retired in his 60s, he sold the house, banked the money and bought a very nice house in Virginia then for under $300,000 (this was a few years ago now) and he's using the proceeds of the sale of the expensive house to greatly fund his retirement. He was not wealthy at all when he was in the SF Bay Area, but when he changed his location and created disposable income from what was tied up in his house, he became so.
Where did I say a person needs to spend their entire income and "make it rain?"
But yes, you need to have disposable income to be "wealthy." Having disposable income doesn't mean you HAVE to spend it. You can use disposable income to invest/save and become even more wealthy.
A person who has NO disposable income yet lives in a paid-for $2.5 million house is NOT wealthy, but a person who lives in a $300,000 paid-for house who doesn't work and yet has an income of $100,000 annually IS wealthy in my opinion. Now, the person who lives in the $2.5 million house could sell it and use the proceeds to help with income and then BECOME wealthy, but they are not that if they don't have any disposable income.
Flagpole is 100% correct on this. Actual rich/wealthy people would agree. Liquidity, or the ability to quickly have liquidity is a major indicator. The value of your primary home as a percentage of your overall net worth is an indicator. If your primary home is not entirely paid off (or very close to it) and it's worth say 1M, and you have another 2M in protected retirement accounts you are not rich. You arent that liquid without penalties. You are rich when you have no house payment and you can buy, within reason, anything you want whenever you want and don't need a 401k withdraw (assuming under the penalty age). The biggest misconception is people who are wealthy vs people on their way to becoming wealthy. That's me. Income between 400k and 500k per year, no debt except for 250k left of mortgage at 2.25% interest on a house worth 1.5M. I would not call myself rich but probably a lot would. If I could suddenly not make income I would not be okay in the long term (obviously I have short to middle term cash for something like this). That's the difference between wealthy and not wealthy. In 5-7 years the house will be paid off entirely and I save half of what I make so at that point maybe I'd be "rich."
You sir, are CORRECT! I would also classify you as someone who is on his way to becoming wealthy, and there is no reason to believe you won't make that.
Steve - do you ever post on Yahoo Finance on individual stock message boards? I used to read posts by a guy who went by "Steve" who had a very similar writing style to you. Just curious, I was always entertained.
Yes indeed and I am multi-accounting on that particular board but not on this one. Thanks for your appreciation.
That's awesome! I think you may have associations with Pete and Anthem?
For example, people who live in Glenmaura (Moosic, PA) or Edwards Manor (Bel Air, MD). Are they considered rich or middle class?
Where you live doesn't tell you if a person is rich or not. There are lots of ways you can end up living in a house in a "wealthy" area (inheritance, bought before it got super expensive, way over extended yourself with giving a ton of your cash toward a down payment and then taking a huge loan, so "house poor", bought when you had a better income). Too many people care about presenting a front of wealth by buying a more expensive home than they should, more expensive cars than they should.
So, how do you define it then? In my OPINION, you are wealthy when you no longer have to work (you still can, but you don't HAVE to), your housing is taken care of (paid for house), you live in an area that you WANT to live in, and you have enough extra money beyond daily living expenses to do the things you want to do (travel, buy extra things you WANT, etc.).
So, you could be "wealthy" if you owned a $299,900 house outright in Augusta, GA like this one - https://www.realtor.com/realestateandhomes-detail/5157-Copse-Dr_Augusta_GA_30909_M54280-52149?ex=2943207425 - you were no longer working (because you didn't need to), and you had an annual income through investments and Social Security of $100,000 or so. That would get most people what they want. So, while I could accept maybe even some lesser amounts even, that's a good example of what I would minimally consider for a person to be "wealthy."
Just so we’re clear Flagpole, your definition of wealthy includes someone who worries about getting their welfare check from the government every month? I think you’re mixing up your own status (barely able to retire) with actual wealth.
Doesn't matter - you can't take it with you when you go, and we all go. Imagine some people's shock when they die and find out it really wasn't about the money...
Doesn't matter - you can't take it with you when you go, and we all go. Imagine some people's shock when they die and find out it really wasn't about the money...
It does matter.
It matters where your kids grow up.
It matters because it determines what schools your kids will attend.
It matters because your family will be in a secure house.
It maters because you will have secure, reliable transportation.
It matters because your family will be fed and clothed.
It matters because it will affect your level of health care.
It matters because it will determine where you spend your last remaining years alive.
It freakin matters.
Now... it is up to each individual to determine what they consider "excess".
Where you live doesn't tell you if a person is rich or not. There are lots of ways you can end up living in a house in a "wealthy" area (inheritance, bought before it got super expensive, way over extended yourself with giving a ton of your cash toward a down payment and then taking a huge loan, so "house poor", bought when you had a better income). Too many people care about presenting a front of wealth by buying a more expensive home than they should, more expensive cars than they should.
So, how do you define it then? In my OPINION, you are wealthy when you no longer have to work (you still can, but you don't HAVE to), your housing is taken care of (paid for house), you live in an area that you WANT to live in, and you have enough extra money beyond daily living expenses to do the things you want to do (travel, buy extra things you WANT, etc.).
So, you could be "wealthy" if you owned a $299,900 house outright in Augusta, GA like this one - https://www.realtor.com/realestateandhomes-detail/5157-Copse-Dr_Augusta_GA_30909_M54280-52149?ex=2943207425 - you were no longer working (because you didn't need to), and you had an annual income through investments and Social Security of $100,000 or so. That would get most people what they want. So, while I could accept maybe even some lesser amounts even, that's a good example of what I would minimally consider for a person to be "wealthy."
Just so we’re clear Flagpole, your definition of wealthy includes someone who worries about getting their welfare check from the government every month? I think you’re mixing up your own status (barely able to retire) with actual wealth.
Um...NOOOOO.
1) I am not "barely able to retire." Silliness.
2) Who says these people are "worried" about receiving their SS check? No worries. It comes. It's also not welfare. It is earned. They paid into it while working, and the more they made (up to a point), and the longer they work, the more they get.
3) Bare minimum to be "wealthy" is to still have 60% of your income from a source other than SS. So, you need $60,000 (if living in a $300,000 house in Augusta, GA) coming from your investments annually. With taking 4%, that's $1.5 million in investments. If you have that plus no debt including a paid for house that costs $300,000 in Augusta, GA (or other like low-cost of living areas), plus $40,000 from SS, you are wealthy. That is my bare minimum standard. SS is earned income, and it gets to be part of the equation.
Agree. I usually agree with your stuff Flagpole but this is a horrible interpretation of wealth. It is la poor man's definition of rich and one of the drivers behind why so many people who come into money quickly end up broke.
Flagpole is obsessed with being “liquid” so that he has enough cash for appetizers at Applebee’s or for a crazy weekend in Branson
Don’t forget bowling league mad money. Bus fair to Trump protest in 2024.
You are in the minority in hiw you define it. You seem to think someone earning $500k per year isn't rich if they don't have significant savings. But if they enjoy working and their job is stable, they can earn $500k every year forever. That is richer than me even though I have significant savings.
You are in the minority in hiw you define it. You seem to think someone earning $500k per year isn't rich if they don't have significant savings. But if they enjoy working and their job is stable, they can earn $500k every year forever. That is richer than me even though I have significant savings.
In that scenario I don't think the person is rich (high income and no / limited savings and debt is unknown), especially if they live in the bay area, NYC, LA, Seattle, San Diego, etc. That person is likely on their way to being rich. Current income is not a guarantee of continued income, no matter how stable someone thinks it is.
The person who previously posted the scenario where someone can draw 200k per year, without a reasonable chance of losing the ability to do it (somewhere around 7-8M that generates 2.5-3% income per year is low risk) and no other debt - that person would more or less be considered rich by most people in America.
The less money someone grew up on and where they live generally dictates what they would consider to be rich. Personally, in Southern California for example, I think rich is around $15-20M liquid/near liquid assets (doesn't have to just be cash and equities) with no significant debt (or debt that can't be restructured easily). That means I could very safely generate at least $500K per year in income with no debt...that's rich to me. That means travel wherever, whenever, stay at the Four Seasons, fly first class, etc. That's what I think of as the class of rich that is short of those buying airplanes and big yachts.