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Old 12-27-2010, 05:30 PM
 
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Quote:
Originally Posted by user_id View Post
If one does nothing with their money what is the point of having it? You may as well be poor.
They are investing it so they can live a better life. It will be there for them when they need it the most.

If you stay poor, then you will have lot of issues in life.

 
Old 12-27-2010, 05:42 PM
 
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Quote:
Originally Posted by Merc63 View Post
Money can be spent. A lot of assets can't unless you sell them, at which pioint you have mroe money. So there's a difference between being poor na having no assets like a house and not being ABLE to spend money on living, and spending the money you earn on living and things and ending up with no money, but having experienced more.
A House isn't always an asset if you owe more then its worth.
 
Old 12-27-2010, 05:45 PM
 
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Quote:
Originally Posted by user_id View Post
So you should just accumulate assets and never sale and/or spend the income you derive from them? Again, what is the point? You can't take them to the grave.

Someone that has a lot of wealth but drives a piece of junk, wears old cloths, lives in a small run down house, etc, etc may as well be poor.
They are still well-off then the poor and middle class folks.

They do spend money on expensive stuff but still end up being frugal because of their assets worth. Don't forget beneficiaires.
 
Old 12-27-2010, 05:50 PM
 
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If your lifestyle did not change in this Recession negatively then you are doing well.

Quote:
Originally Posted by Keim View Post
No. You should accumulate them with a goal towards securing your future, and living free.



Then I might as well be poor. I am one of those guys. My family income is in the mid 5 figures. My 1950s house is 2200sf, the average age of my three vehicles is 19 years old. My family frequently shops at thrift stores. I try to save at least 10% of each paycheck. More when I can.

No, I'm not rich. But I am under forty, with mid six figures in the bank, and no debt.

Why do I choose to live significantly under my means?
1. Financial security: What would you do if your household income decreased by 25%? Mine did, and I survived with NO change in lifestyle. What about an unexpected health issue? I had one. Again, I navigated it with minimal disruption. If you don't save how do you pay for your kids braces, education, etc? What about your eventual retirement and old age?

2. The possibility of early retirement in the future, when I can live off of a 4% annual withdrawal rate, without reducing principal.

3. The feeling of freedom I get by being able to do what I want, when I want, and not being tied down to my employer if it becomes intolerable.
 
Old 12-27-2010, 05:55 PM
 
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Living in the Bay Area is not modest unless you have a very high stable long term income.

Quote:
Originally Posted by user_id View Post
If you are living off your assets, then you are spending some of the income that is derived by them...


How much you save in relation to your paycheck and the size of your house are not meaningful indicators. Also, how exactly is three cars modest? One car is modest. There are many 1950's ~2000 sf homes in, for example the bay area, that are millions.

Anyhow, I'm talking about people with a lot of money that don't utilize it, not people with very modest salaries that live very modestly. From the sounds of it your lifestyle matches your income, spending an extra 10% would not dramatically change your lifestyle.


Saving 10% of your income is not living "significantly" under your means.

Anyhow, the amount you have saved doesn't match your income, there is no way you've saved that much "in the bank" by just saving 10% of your income, unless of course your income use to be significantly higher in the past. Well that...or you won a lot in Vegas.
 
Old 12-27-2010, 05:56 PM
 
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Quote:
Originally Posted by Keim View Post
I save at least 10%. Sometimes much more, was about 25% before having kids. Started early, so compound interest has worked strongly in my favor.
Each kid you have is a Liability.
 
Old 12-27-2010, 05:57 PM
 
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What is your age?

Quote:
Originally Posted by HappyTexan View Post
You're definitely on the right track. I too have lived like that and am taking an early, really early retirement next year. I have always lived below my means. Does that make me poor..no way. I just made more money then I needed to live happily. And now I can continue to live that way without having to work for someone else.

Deep down..I'm a blue collar person with a white collar job.
 
Old 12-27-2010, 06:00 PM
 
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Quote:
Originally Posted by HappyTexan View Post
If you live the lifestyle before then it will not be difficult to maintain after.
People who live for the moment and then panic are the ones who will be shocked when they cannot live that way after retirement.
They might end up at McDonald's at age 70+.
 
Old 12-27-2010, 06:11 PM
 
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How about eating home cooked fresh meal? Brown bagging?

Quote:
Originally Posted by NCN View Post
I think it would probably shock you to see the net worth of a group of people seated in any room such as a town hall meeting. The ones with the good balance sheets are probably not the ones with the designer bags, acrylic nails or the one driving the latest car or giving the most parties or the one with the most elaborate home. The millionaire may be the one that doesn't even have a cell phone.

You cannot accumulate money by drinking, partying or smoking it away. The millionaire also does not want to bring attention to what he owns, because he will then become the target of someone who wants what he has.

Sometimes you can just know someone has money. The really good indication that the one who can afford what he wants is the safe car, warm coat, comfortable shoes. or that is my opinion. They do not have to impress anybody, because they are impressive without trying. It is that nice couple down the street that may have never had an alcoholic drink in their lives and they may eat at Wendy's because the food there is healthy.
 
Old 12-27-2010, 06:14 PM
 
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If you invest in the Stock market, that is business. When you withdraw money, you get a 1099.

A business can turn into a liability though.

Quote:
Originally Posted by user_id View Post
The book is not a study of anything, its just a book trying to paint a particular picture. There was never any proper scientific studies completed to support the claims in the book. The book spends the vast majority of its time analyzing cherry picked examples. Now, there is some worth in looking at the examples, but making general conclusions from them is not appropriate.



No that isn't what the average millionaire does, most wealth is generated via business. Amusingly the book you are citing supports this as well, most of the people were business owners. A business is an asset, it can be bought and sold just like any other asset and it contributes to your overall net worth.



Feel free to cite a study that shows this.
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