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I'm guessing that it's probably inaccurate to do psychoanalysis on either group. If someone can drop the funds for an 11K SF house and still remain financially sound, then by all means, go for it. I only roll my eyes at people who are pushing the envelope trying to impress others and living beyond their means. And there are many more of these people than some might suspect.
i think most* people who get into multimillion dollar homes are waelthy enough to take it on. i agree with the poster above then its the people in the near millions who generally stretch their middle class income. but come on, if you can easily afford 11k sq.ft. you can easily afford to fill it nicely, i know i would! think indoor pool, dedicated theater, excersize, gaming room, etc...its fun to think about filling it!!
I think that's what some people (not necessarily you) think/say to make themselves feel better.
*shrugs* I think most people who say what I say have read the stats... I don't have any 'feelings' one way or the other on the situation.
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Originally Posted by tlh1005
I doubt most of those multi-million dollar home owners are living from paycheck to paycheck.
Someone who 'lives' in a multi-million dollar home doesn't necessarily 'own' a multi-million dollar home. While I don't know if "most" are living paycheck to paycheck, I'm comfortably saying that many are. Far more than you (and you specifically) would believe.
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Originally Posted by tlh1005
Smart spending and conservative investing can make you a millionaire on an income less than six figures.
No argument there.
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Originally Posted by tlh1005
This is in my mind the millionaire next door.
Define it however you wish, but if you get the book, you'll see that that wasn't the point. The authors set out to see how real millionaire's lived, since most people had the illusion that they 'mostly' lived in exclusive neighbohoods in multi-million dollar homes. But the opposite turned out to be true. (Well not the 'opposite'...but they found that most millionaires - even the 'multi' ones, lived 'next door' to 'you and me'.)
I doubt the authors did their research, made up statistics, and wrote their book simply to make themselves 'feel better'.
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Originally Posted by tlh1005
That wealth is not comparable to someone who inherited a few million, a VP making a half million + stock options, or the surgeon grossing $700k each year.
OMG! What kind of example is THAT?!?!?! How many surgeons actually gross $700k each year?!?! Only 7% even make over $375k!!!
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Originally Posted by tlh1005
Did the stats you read happen to also mention the age ranges of the families worth $6.8 million? That value means something different to me if the family is below the age of 40 Vs. nearing or at retirement age.
*shrugs* You seem to have a lot of unique and different values and meanings....
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Who is the prototypical American millionaire? What would he tell you about himself?(*)
* I am a fifty-seven-year-old male, married with three children. About 70 percent of us earn 80 percent or more of our household's income.
* We have an average household net worth of $3.7 million. Of course, some of our cohorts have accumulated much more. Nearly 6 percent have a net worth of over $10 million. Again, these people skew our average upward. The typical (median, or 50th percentile) millionaire household has a net worth of $1.6 million.
* Most of us (97 percent) are homeowners. We live in homes currently valued at an average of $320,000. About half of us have occupied the same home for more than twenty years. Thus, we have enjoyed significant increases in the value of our homes.
* Most of us have never felt at a disadvantage because we did not receive any inheritance.
*shrugs* I think most people who say what I say have read the stats... I don't have any 'feelings' one way or the other
Like I said, not specifically you. Some of the posts here are purely judgmental of something I don't think a lot of people truly understand.
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Originally Posted by Gurl
OMG! What kind of example is THAT?!?!?! How many surgeons actually gross $700k each year?!?! Only 7% even make over $375k!!!
I know a few surgeons who make that and more. Am I saying that most do, NO. I'm not sure what you're getting at, especially with pointing out the 7%. I was comparing a salesperson with a surgeon. I didn't quantify anything with the word "all" or make any other blanket generalizations about salaries and professions. I didn't extrapolate any data, I just gave a specific example.
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Originally Posted by Gurl
I doubt the authors did their research, made up statistics, and wrote their book simply to make themselves 'feel better'.
I'm not attacking the views of the book and never stated any disapproval or knowledge about their stats. What I'm speaking out against is the judgment passed in a lot of the posts in this thread.
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Originally Posted by Gurl
Define it however you wish, but if you get the book, you'll see that that wasn't the point. The authors set out to see how real millionaire's lived, since most people had the illusion that they 'mostly' lived in exclusive neighbohoods in multi-million dollar homes. But the opposite turned out to be true. (Well not the 'opposite'...but they found that most millionaires - even the 'multi' ones, lived 'next door' to 'you and me'.)
*shrugs* You seem to have a lot of unique and different values and meanings....
It makes sense to consider other variables in the stats such as age. It might be unique but I consider it gathering more information to draw a better conclusion.
Again I make no points about the book. I have little knowledge of the content of this book and cannot speak concerning it. Your use of the term "real millionaires" is what I am getting at. I believe there are a lot of people with a net worth of $1 million and greater. I can believe that most millionaires live next door to the average Joe. My point again is that people with a modest income can become millionaires by leveraging investments and wise spending. Your excerpt from the book illustrates what I am trying to say. The engineer who makes $125k a year can easily be a millionaire by the age of 57 but can he by reasonable standards afford a multi-million dollar 11k SqFt. home solely on that salary, No. There are however different professions here in the triangle where people earn significantly more. There is also a class who have inherited money and trust funds. While money is money there is certainly more buying power for a person who can amass their wealth rapidly as opposed to someone who did so over 25 years of employment and good investments. These are the people whom I believe are purchasing 4.5+ million dollar estates.
I hear this book mentioned a lot when people bring up immense wealth (things like 11k SqFt. homes), and to the detriment of the authors, I think some people use it to justify a possibly incorrect belief that people who live in very expensive estates can't really afford them.
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Originally Posted by Gurl
Someone who 'lives' in a multi-million dollar home doesn't necessarily 'own' a multi-million dollar home. While I don't know if "most" are living paycheck to paycheck, I'm comfortably saying that many are. Far more than you (and you specifically) would believe.
Hmmm. a lot of shrugging..... Anyway, I can just agree to disagree. I don't think either of us have concrete proof that *many* people who are living in multi-million dollar homes are/aren't living paycheck to paycheck. I know that my assumption is based on what I believe to understand about economics, human nature, and wealth. The problem for me is that some people seem to base the opposite conclusion solely on the fact that they just don't understand how so many people can afford such luxuries.
If you use the same logic of the original question, then:
Who needs a Rolex when one can buy a reliable watch for $20?
Who needs a Ferrari or Austin Martin when a Corolla will do the same job?
Who needs a diamond stone when cheap piece of glass looks exactly the same?
Who needs 30 pairs of shoes when she cannot wear more than one pair at a time?
What would a wealthy person do with the money if he doesn't spend it?
If rich people don't spend their money, the gap between the rich and the poor will widen. When rich people spend their money, they effectively create jobs for the poor.
Having high end homes and artifacts has different effects on different people. Some people may have sense of accomplishments, some may have sense of security, and others just want it to show off.
If I were wealthy, I would want a 20K sqft. home not 11K.
When the person files for bankruptcy, or suddenly sells off purchases they recently made, or actually, you know, TELLS me they are having financial problems when I know they have issues with overspending.
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Originally Posted by tlh1005
Like I said, not specifically you. Some of the posts here are purely judgmental of something I don't think a lot of people truly understand.
I guess I'm confused here. Why would you assume that many people here on this thread don't "understand"? Do you believe you understand the wealthy more than the rest of us? You have no idea what we do for a living or what our past life experiences have been. I actually have spent a good deal of my life living around and with people that might be defined as "upper-income", and I've seen a lot first-hand- both the positive and the negative. You'd be surprised how close a few rich people are to losing everything. When we describe things we've actually seen and experienced, you accuse us of just giving anecdotal evidence, and when others throw out real, actual statistics, you come back with your anecdotal evidence. For some reason, this topic seems to hit a very sensitive spot. I'm sensing some serious defensiveness here and I'm not sure where it's coming from. For me, the issue is not at all an emotional one.
I've seen some trust fund babies blow their entire inheritance on expensive hobbies, fun, or even drugs. And I've seen others who find meaningful work and give back to the community. I've seen multimillionaires lose everything and I've seen people of modest means build a fortune. If you believe that it's difficult for someone who can afford an 11 million dollar house to go broke, just look at all the celebrities who went from rags to riches... and back to rags again. And think of all the second or third generation inheritees who inherited more wealth than drive. Just because your great grandfather was smart and tenacious enough to build a fortune doesn't mean that you will be smart and savvy with that money yourself.
Personally, I am not a big fan of trust funds for kids because I saw how screwed up so many of my peers became in college when they had no motivation to succeed. So many of them spent endless years in college and skiing and getting high, when their peers without trust funds had to suck it up and prepare for a career. Even though my father did very well, I had no sense of how well he did until I was finished with school and starting my career. I'm not saying that ALL trust fund kids are screwed up, but I will say that it can be challenging to remain focused and work hard to succeed when you know there will always be a safety net. Smart wealthy people still make their children understand the value of hard work and of having financial responsibility. They don't bail out their children every time the kids get in trouble and they don't give their children the message that the rules of society do not apply to them because they are "special".
I guess the poster child for this for me is Paris Hilton. If Paris Hilton had been made to scrub a few floors and "rough it" a few years, she might not be the laughingstock of the Western World right now. Her parents did her no favors. Children need to experience frustration and they need to have challenges.
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Hmmm. a lot of shrugging..... Anyway, I can just agree to disagree. I don't think either of us have concrete proof that *many* people who are living in multi-million dollar homes are/aren't living paycheck to paycheck.
Well, you'd probably have to run in those social circles to find these things out. It's amazing how much people gossip about others' financial situation. And sometimes, people just tell you things. Maybe they need a shoulder to cry on or something... *shrugs* This is why I generally don't discuss my finances with friends.
Gurl, you're making total sense to me. I think "The Millionaire Next Door" is a fabulous book.
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What would a wealthy person do with the money if he doesn't spend it?
If rich people don't spend their money, the gap between the rich and the poor will widen. When rich people spend their money, they effectively create jobs for the poor.
Wow- I've heard that one all my life. Didn't buy it then and don't buy it now. That's a gross rationalization made by the rich and those who aspire to be rich. Then again, I am extremely left-leaning, so it's probably pointless to argue this point, as we are coming from two different value systems.
IdaClaire, notice I didn't single any specific person out for being judgmental and I'm not going to go back through and site each one at this point. That may or may not include you but for some reason you feel as if it is directed towards you. Why?... Either way there are definitely some judgmental posts in this thread.
What social class you've been a part of is of no significance to me. I'm only looking for logical reason to substantiate some of the judgment passed.
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Originally Posted by IdaClaire
I'm sensing some serious defensiveness here and I'm not sure where it's coming from. For me, the issue is not at all an emotional one.
I’m not sure what you’re trying to imply here?
I assume your mention of anecdotal is referencing my contrast between a surgeon making $700k and a salesman who brought in $225k last year. I didn't use that comparison to prove that people can afford a 4.5 million dollar home. What I said was that those two are different. My point was that while BOTH could overspend, it's easier for me to see how the latter would end up in a bind before the former.
You miss my point about the stats of the Millionaire Next Door. Again I haven't read the book. Based on the presentation of the data given by Gurl I believe the data! Let me say this again, I agree with the data based on the way it's been presented!
What I don't agree on is the way that some readers have taken that data and inferred other conclusions which are in my book incorrect. I have a problem with the way some have interpreted the data, and this is a common problem when statistics are presented (especially in the news). In my original post about this book, I asked about the age range of the majority of the millionaires studied. Later it was posted that this was 57. The bottom line for me is the fact that 80% or (most) millionaires live in what many would call modest homes HAS NO DIRECT CORRELATION TO THOSE WHO LIVE IN 11k SqFt. estates. The excerpt from the book goes on to further say the median of the millionaires have a net worth of 1.6 million. Since the term millionaire encompasses a large range of wealth between 1 million and just under 1 billion, this puts a very large population at the left end of the plot. Everything about that data screams retirement wealth and home equity. Of course that population can’t afford a 4.5 million dollar estate. The excerpt backs up what I originally said about the differences between a person with immense wealth (that 6% Gurl sited) and the average millionaire. One side CAN easily afford an 11k SqFt. home while the other CAN'T. If the number of these types of estates being built was large then I'd feel different, but in the overall population of homes the number of these estates is miniscule.
Taking a different direction, I know the lending standards got pretty relaxed over the past 5 years, but the banks aren't just funding multi-million dollar loans with a blind eye. Then there are those who would pay cash rather than finance at all.
What would a wealthy person do with the money if he doesn't spend it?
Wow, that’s a good one!
You could restore an endangered historic building.
You could support the North Carolina Symphony.
You could help a family whose father was killed in Iraq.
You could buy the Dix Property to preserve it for worthy purposes.
You could buy thousands of acres of rain forests and preserve hundreds of species facing extinction.
You could build a really fine house of a reasonable size.
You could fund the completion of the Cathedral of St. John the Divine.
You could be a patron of a great artist.
You could endow the professorship of someone who might discover a cure for a disease.
I would be embarrassed to be seen in a Rolex watch or a Ferrari or a 20,000-square-foot house because all the people I love and respect would know of the worthy things I could do with that money. They would know I had nothing better to do than to show my wealth. They would know I have a lot of money but am morally and mentally bankrupt.
That’s the value system that my family and friends were taught. And yes, we must make judgments every day, in order to direct our own lives. It’s a very old-fashioned value system, really.
What would a wealthy person do with the money if he doesn't spend it?
Wow, that’s a good one!
You could restore an endangered historic building.
You could support the North Carolina Symphony.
You could help a family whose father was killed in Iraq.
You could buy the Dix Property to preserve it for worthy purposes.
You could buy thousands of acres of rain forests and preserve hundreds of species facing extinction.
You could build a really fine house of a reasonable size.
You could fund the completion of the Cathedral of St. John the Divine.
You could be a patron of a great artist.
You could endow the professorship of someone who might discover a cure for a disease.
I applaud this and agree that these are all good things someone can do with wealth. As far as judgment goes, some of the acts you've mentioned above would result in an organization recognizing the gift either in print or even using the namesake in relation to the recipient of the gift. Just as some of the judgment passed here, I've heard people elsewhere commenting that these sorts of things are also done out of ego... that he/she wanted their name on the back of the program guide, or at the entrance of the building.
I’m not understanding (other than it being human nature) why someone else wants to pick apart the finances of others or try to diminish any accomplishments they’ve achieved by speculating that they are living beyond their means.
You are correct that we all pass judgment in some manner. I am guilty myself at times; the difference is that I've seen some people try to justify that judgment with logic that doesn't add up correctly.
What would a wealthy person do with the money if he doesn't spend it?
Wow, that’s a good one!
You could restore an endangered historic building.
You could support the North Carolina Symphony.
You could help a family whose father was killed in Iraq.
You could buy the Dix Property to preserve it for worthy purposes.
You could buy thousands of acres of rain forests and preserve hundreds of species facing extinction.
You could build a really fine house of a reasonable size.
You could fund the completion of the Cathedral of St. John the Divine.
You could be a patron of a great artist.
You could endow the professorship of someone who might discover a cure for a disease.
I would be embarrassed to be seen in a Rolex watch or a Ferrari or a 20,000-square-foot house because all the people I love and respect would know of the worthy things I could do with that money. They would know I had nothing better to do than to show my wealth. They would know I have a lot of money but am morally and mentally bankrupt.
That’s the value system that my family and friends were taught. And yes, we must make judgments every day, in order to direct our own lives. It’s a very old-fashioned value system, really.
All what you mentioned above is good, but can't one be wealthy and charity giving?
Not everyone wearing a Rolex or living in a big house is morally bankrupt. You and I don't know how those people spend their money, and how much they give.
Bill Gate and Warren Buffet pledged most of their wealth to charities, but they still live in a big homes and wear expensive suits..don't they.
If a person earned his money in a legit way, then he has the right to spend his earning anyway he likes it. He doesn't even have to give to charity. This is a personal choice, not a mandate.
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