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When you have enough money (and knowledge to manage it properly) so that you can live a decent (not extravagant) life and don't have to think about it on a regular basis, THEN you are rich.. at least by my definition.
emergency funds are for everyone including those invested heavily. selling equities in a down market and locking in real losses because you dont have enough liquidity is the fastest way to lose it.
just because one has substaintial assets does not mean they planned well for their short term cash needs. i see it in folks planning all the time. they mis-judge expenses and now have to scramble to raise cash.
had some teeth trouble a few years back and in the blink of an eye i needed 25k for implant surgery.
I have cash. Since we are still in the accumulation phase of our lives, every month we have an inflow of cash that goes into a cash fund. Then in March, our tax guy tells us how much to put away into our SEP-IRA, and the cash fund goes down and the process starts all over again. But I always have cash -- like enough to cover your dental implants.
This is how both my husband and I were raised. Our parents did it this way. They saved x amount of dollars each check, and if a vacation was coming up they put away y dollars on top of that. You keep a check on things and know when you need new tires and put away a little each check...
Until Suze Orman, I had never heard the term emergency fund. None of the books I read used the term emergency fund. To me, it's a symbol of everything negative in financial planning. It sets you up to go from putting out fire after fire, and then saving for the next fire, and you never get to the business of setting up a financial life.
I have cash. Since we are still in the accumulation phase of our lives, every month we have an inflow of cash that goes into a cash fund. Then in March, our tax guy tells us how much to put away into our SEP-IRA, and the cash fund goes down and the process starts all over again. But I always have cash -- like enough to cover your dental implants.
This is how both my husband and I were raised. Our parents did it this way. They saved x amount of dollars each check, and if a vacation was coming up they put away y dollars on top of that. You keep a check on things and know when you need new tires and put away a little each check...
Until Suze Orman, I had never heard the term emergency fund. None of the books I read used the term emergency fund. To me, it's a symbol of everything negative in financial planning. It sets you up to go from putting out fire after fire, and then saving for the next fire, and you never get to the business of setting up a financial life.
The emergency fund is there to bail you out when an unexpected expense comes up in the future. If your transmission fails, if you need to be hospitalized, if you lose your job, etc. These can't be planned (although you may want to rely on insurance in addition to an emergency fund.)
I imagine being rich is blessing for some and a curse for others.
In a way, it's irrelevant if there's unresolved emotional baggage that causes disharmony at home. The rich have problems just like everyone else. And until they get that mortgage on their residence paid, they still have to watch the bills, because they've chosen to bite off a bigger piece of the pie, a bigger home, bigger mortgage. Private school tuition for the kids, music lessons for the kids, saving for the kids' college tuition. They're still juggling bills, they're just bigger bills and there are more of them than for regular folks. Unless you're talking about the Rockefellers, the Gates', the Buffets, etc.
Until Suze Orman, I had never heard the term emergency fund.
Me either. The term I was taught was "F--- You" money.
(Perhaps Suze was just being more polite... being on TV and all?)
"Have enough set aside so that at any time you can say "F-Y" to the boss
(or if the boss says it to you) and still know that you'll be able to maintain your life
for the X months it might take to get re-established". (X remains a variable)
There is nothing more freeing in a working persons life or world view than to KNOW
that you really don't have to put up with the stupid $hit they want you to swallow.
And that will show too. Unless you're actually incompetent... the power will get you better earnings.
The reward of wealth is not about having nice cars, big houses, or tons of high end clothing. That's how the non wealthy look at the wealthy. The reward of wealth is stability at its most basic level; shelter, food, and security.
You got that right.
Over the past several years, my husband and I have moved from middle class to definitely well off. By "well off" I mean that we have plenty of cash in the bank, a good savings portfolio, we live in a nice home and both drive fairly new vehicles, we could pay off every bit of our debt immediately if push came to shove (except for our house, so I guess we're not filthy rich!), and we take several very nice vacations a year. So I guess we're pretty well off.
Everyone in town thinks we're "rich." And I guess relatively speaking, we are.
What it feels like to me is that I don't worry about what I put in my grocery cart. If we get an unexpected bill (like $7000 in medical bills recently), we know it won't devastate us and we can and will pay it off within a few months - and COULD pay it off immediately if we had to. When our utility bills are higher than normal (like our awful water bill last month - $300!) we just shrug and say, "Dang. Oh well." and pay it.
But we still have our old washer and dryer - they're still working, so why would we buy those fancy new ones? I don't upgrade my phone every year - though I certainly could. I don't buy expensive clothes. I guess what I'm saying is that even though we are able to live very comfortably (and I'm grateful for that) and save money for retirement, we still have to prioritize just like everyone else.
But it's a great relief not to have to worry about how to pay for basic necessities of life. Been there, done that. It builds character, and a great desire to escape that lifestyle though, so I wouldn't say that living within a tight budget is necessarily a bad thing. In fact, it can teach us a lot and actually help us become more financially responsible in the long run.
So emotionally, the stress of paying for basics isn't there, and that's good. But everything else is still there - our own personalities and issues, interpersonal relationships, kids and parents, having enough hours in the day to actually enjoy the rewards of our labor, maintaining and growing our marriage, grief at times of loss, fears and hopes and concerns and blessings - in other words, real life.
well i have to disagree as when i had no money i just had different issues. now that i have a few bucks im held captive to the markets, my investments and interest rates in order to keep that money going through retirement.
there is never a time you are truely free and not held captive by something, just different issues. you really really have to have enough dough behind you to not be dependant on it growing to support you over time. even then you may find yourself captive to to the ravages of inflation and you dont really have enough.
Precisely.
You're never truly "free", you always have someone/something to answer to. Just look at how the 2008 housing market crash devastated so many of these "rich people". Having money can be a blessing and a curse; having too much money can lead to self-destruction (as can having too little).
I grew up on a farm in Iowa and some years we had money, other years we were barely scraping by. When cattle prices and corn/bean prices were high, we lived pretty well- dad bought a new Cadillac or a new truck and we ate well. When the grain and cattle markets were down, we had to stretch every dollar and we didn't get new clothes or go out to eat PERIOD.
Nowadays my parents are retired and live comfortably off the income they receive from land rent, Social Security, investment income, and interest. They snowbird to Arizona in the winter and spring and go back to Iowa during the summer and fall. Are they "rich"? To some maybe, to others maybe not.
It's difficult to define "rich" because you'll always be comparing to your own situation.
I don't know if anyone that ever HAS to work or even HAS to watch their portfolio would qualify as "rich" in my book. I know lots of people that work in the financial sector and maybe a tiny, tiny, tiny fraction have put away enough to have a "self sustaining" portfolio BUT EVEN THEN it is not like they can just buy a "super yacht" or a Gulfstream pirvate jet. I also have knowledge of families that control large non-financial firms, traditional companies that "make stuff" and I would hesitate to call many of them "rich" as even though they have a technical wealth that puts them on the Forbes 400 list with the stock that they control being worth billions of dollars they either are still "working" for the Board of Directors as CEO or have to be COTB and watch over who ever is CEO to make sure the firm remains valuable / competitive...
Evven those with truly GOOFY levels of wealth and well insulated from the daily ups and downs of the stock market STILL need to be aware of the cyclic gyrations of the broader economy. I mean if you think that even the multi-billionaire Ziff brothers can just spend without worrying about whether or not doing so will drive down their wealth into mere multi-millionaire status is kidding themselves. Sure, the nature of frugality is a whole lot difference when you have a billion dollars in the bank, but the fact remains that if that wealth is not growing faster than you spend it it WILL be depleted. Anderson Cooper's great grandfather was Cornelius Vanderbilt. His grandfather, Reginald had an inheitance of about $15M in 1915 and spent lavishly on horses. His mother Gloria was the recpient of a $4M trust fund in 1937. Anderson Cooper has an annual income in excess of $4M which is certainly a very comfortable sum even in expensive NYC but it is unlikely his wealth will ever be anything like that of previous generations.
I've never asked the question..I'd rather ask "what do you do for a living?" But it's none of my business
My other half works for four owners...one is rich ( I think)...owns a big house takes his friends on trips, and has a new car every year. We are invited to some of his parties...honestly, I believe most of his friends are using him and I wonder if he lost all his money who would still be around.....
One of the friends is SUPER loaded..came from a rich family and he is a high profile attorney. One of the nicest guys you will ever want to meet. Drives a beat up Ford truck and wears a hat that literally is falling apart...everywhere. I remember talking with him and his wife who is equally as nice and he said something I'll never forget "the only thing I have is a nice house by the beach...how much money someone has doesn't define him." " I was lucky in life, but I won't let money change me, I have to look at myself in the mirror everyday and be proud of who I am."
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