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Creating Wealth and the people you know who have it ...
Posted on 3/22/09 at 8:30 pm
Posted on 3/22/09 at 8:30 pm
For the sake of this thread, let's define wealth as an income in xs of 300k/ yr with assetts > $1M .. I'm talking the well-to-do neighbor down the street, not 'rock star' wealth.
What I've noticed that most of these people have in common is that someone in their family, some ancestor, worked their arse off. That doesn't mean this person doesn't or hasn't worked hard as well.
More specifically, someone sacrificed, sort of grandpa worked two jobs. One generation set up the next generation; often times the third generation actually blows it cuz they don't remember the sacrifice.
I don't know any 'lottery' winners, entertainers or Initech employees who got hit by a drunk driver as they backed out of their driveway.
Your thoughts?
What I've noticed that most of these people have in common is that someone in their family, some ancestor, worked their arse off. That doesn't mean this person doesn't or hasn't worked hard as well.
More specifically, someone sacrificed, sort of grandpa worked two jobs. One generation set up the next generation; often times the third generation actually blows it cuz they don't remember the sacrifice.
I don't know any 'lottery' winners, entertainers or Initech employees who got hit by a drunk driver as they backed out of their driveway.
Your thoughts?
10
Posted on 3/22/09 at 8:41 pm to Fat Man
I know a lot of wealthy "ex-realestate" types, that are not particularly intelligent, or from fortunate backgrounds. Just saying...
Posted on 3/22/09 at 8:50 pm to Fat Man
I would hope that anyone with an income of $300K a year would have assets worth more than 1 million dollars
Posted on 3/22/09 at 8:57 pm to Cold Cous Cous
quote:
I would hope that anyone with an income of $300K a year would have assets worth more than 1 million dollars
Depends on how long they've been making the 300k. But I see your point. My dad makes a little over 100k and has over 1MM in assets.
Posted on 3/22/09 at 9:16 pm to Fat Man
I know several people in this category.
The ones I know the best have earned it themselves from the ground up. Key is owning your own (successful) business.
The ones I know the best have earned it themselves from the ground up. Key is owning your own (successful) business.
Posted on 3/22/09 at 9:31 pm to Fat Man
quote:
e specifically, someone sacrificed, sort of grandpa worked two jobs. One generation set up the next generation
I think that it comes back to the 'greatest generation', & what they did following WWII. The economy was booming, home ownership increased, GI bill, plus a believe in savings learned from the Great Depression.
It was not only the wealth that they were able to pass on, but also the opportunities they provided. Their daughters were really the first to enter the workforce on such a large scale.
Posted on 3/22/09 at 11:04 pm to clamdip
quote:
Key is owning your own (successful) business.
or being a surgeon...
Posted on 3/23/09 at 12:37 am to ForeLSU
You probably should not equate annual income with wealth, net worth is a better definition. I know more than a half a dozen people that have a net worth over 1 million, and never had a household income over 100k. On the other hand I know an equal number of people with annual incomes of 200k and up that have net a worth less than zero. It works both ways, no matter how much or how litte you make, some people are better at managing money than others.
Posted on 3/23/09 at 4:58 am to TigerintheNO
The greatest acheivment of the 'greatest generation' was their good fortune to have intelligent leaders that were not completely controlled by corporations and especially, corporations constructing military hardware. Ike warned of this looming problem upon his retirement.
As someone above mentioned, it did not hurt that these Americans were emerging from the great depression and knew the importance of savings. Their capital from excess labor earned during WW2 was diverted into purchases of war bonds during the war, so American corporations had a large pool of capital to draw from at the end of WW2 when manufacturers retooled and expanded for post war production. In addition, some of the savings accumulated during WW2 was available for consumption after the war.
It did not hurt America's prospects that the remainder of the world's manufacturing economies were in ruin at the end of WW2. We were the last man standing.
I am not trying to take anything away from the accomplishments of the 'greatest generation', simply pointing out that they worked their way out of dire straits under leadership that did more good than harm.
As someone above mentioned, it did not hurt that these Americans were emerging from the great depression and knew the importance of savings. Their capital from excess labor earned during WW2 was diverted into purchases of war bonds during the war, so American corporations had a large pool of capital to draw from at the end of WW2 when manufacturers retooled and expanded for post war production. In addition, some of the savings accumulated during WW2 was available for consumption after the war.
It did not hurt America's prospects that the remainder of the world's manufacturing economies were in ruin at the end of WW2. We were the last man standing.
I am not trying to take anything away from the accomplishments of the 'greatest generation', simply pointing out that they worked their way out of dire straits under leadership that did more good than harm.
Posted on 3/23/09 at 9:40 am to Cold Cous Cous
quote:
I would hope that anyone with an income of $300K a year would have assets worth more than 1 million dollars
depends on how long you have been making 300k+. Even if you save 30% of your income, it would still take time to get up to the 1M zone.
Posted on 3/23/09 at 9:46 am to MileHigh
quote:right, someone making over $300K is paying 6-figures in taxes, and could be sending a sizable chunk of change to pay for his/her house, cars, country club, private schools, etc...
depends on how long you have been making 300k+. Even if you save 30% of your income, it would still take time to get up to the 1M zone.
and while the house is an asset, there is no telling how much equity the person has in it.
This post was edited on 3/23/09 at 9:47 am
Posted on 3/23/09 at 10:25 am to Chicken
'and while the house is an asset, there is no telling how much equity the person has in it.'
I find it amusing that when houses were going up they were described as investments and now that they are going down they are described as assets.
Nothing personal Chicken, simply an observation.
I find it amusing that when houses were going up they were described as investments and now that they are going down they are described as assets.
Nothing personal Chicken, simply an observation.
Posted on 3/23/09 at 11:14 am to MileHigh
Well I'm assuming that the people we're talking about are over forty years old and have had some time to build up wealth. Most people don't just go from 0 to $300K (although I'm well aware that some do, like these 23 year old finacial analysts at investment banks). And as for your private school payments, country club dues, leased Lexus, etc. cry me a river. Those are choices you make.
Edit: also, I would be appalled if a married homeowner making $300K is paying over 6 figures in taxes.
Edit: also, I would be appalled if a married homeowner making $300K is paying over 6 figures in taxes.
This post was edited on 3/23/09 at 11:17 am
Posted on 3/23/09 at 11:39 am to Cold Cous Cous
quote:
Edit: also, I would be appalled if a married homeowner making $300K is paying over 6 figures in taxes.
Well then be appalled because you will.
Posted on 3/23/09 at 11:45 am to Cold Cous Cous
Remember the 36%+ marginal tax rate before the Bush tax cuts? It is coming back and the IRS has done a pretty good job of eliminating tax shelters and investments generating passive losses to offset income over the last decade or so.
I do believe a lot of what the OP said is true. Accumulation of wealth in families is often a factor of time and savings and the 3rd generation behind a couple of generations that have saved and let time work to build their wealth may be more apt to mis-management.
I do believe a lot of what the OP said is true. Accumulation of wealth in families is often a factor of time and savings and the 3rd generation behind a couple of generations that have saved and let time work to build their wealth may be more apt to mis-management.
Posted on 3/23/09 at 11:49 am to BB19
quote:
Edit: also, I would be appalled if a married homeowner making $300K is paying over 6 figures in taxes.
Well then be appalled because you will.
+1.
The original point of the thread was not "what constitutes wealthy" although that is an interesting topic. The point was that most of the affluent I know either sacrificed themselves or their ancestors sacrificed. The antithesis of this would be thosed trapped in a cycle of poverty.
Re: What constitutes wealth? I purposely chose cash flow and assetts. $300k / year with no assetts and high expenses in not really wealthy. $1M in land or house with no cash flow is not wealthy. There needs to be some of both.
Re: $300k / yr is what it takes to accumulate wealth .. $100k/ yr goes to Uncle Sam, $100k/yr for a family to live well / comfortably, and save $100k/ yr X 10 yr = $1M. Obviously, there are other combinations; it's just a scenario.
Posted on 3/23/09 at 12:10 pm to Cold Cous Cous
quote:
Well I'm assuming that the people we're talking about are over forty years old and have had some time to build up wealth. Most people don't just go from 0 to $300K
Right, but my income ramped pretty quickly in 2007/08. The wife and I try to save about 30% of our pre-tax income, we don't always succeed though. Its going to take quite a few years at our current saving rates for us to hit 1M. Even if I do at some point make over 300k, I won't get near to it for a while.
I think it takes decades to get up the million plus in assets for us regular folks. Some people get lucky with their job, or with family income, but if you start at zero.....its going to take a long time.
quote:
Edit: also, I would be appalled if a married homeowner making $300K is paying over 6 figures in taxes.
I would be surprised too if they are paying 100k in income taxes (for a 300k income person). Maybe 100k in income taxes plus payroll plus property taxes, but just income, its doubtful.
Posted on 3/23/09 at 12:21 pm to MileHigh
Assuming no deductions, no kids, $300K agi, you're looking at about $77 grand in income taxes. So depending on property taxes and state income taxes, it's probably just barely possible to hit $100K.
But this assumes no mortgage, no IRA, literally somebody paying the maximum amount of taxes they possibly can.
I guess if you count sales tax as well you will be over $100K. Sales tax is the "silent killer" because you don't get a statement at the end of the year showing what the total damage is like you do for income and property taxes.
But this assumes no mortgage, no IRA, literally somebody paying the maximum amount of taxes they possibly can.
I guess if you count sales tax as well you will be over $100K. Sales tax is the "silent killer" because you don't get a statement at the end of the year showing what the total damage is like you do for income and property taxes.
Posted on 3/23/09 at 12:35 pm to Cold Cous Cous
Posted on 3/23/09 at 12:46 pm to Cold Cous Cous
quote:
But this assumes , no IRA
The wouldn't be eligible for a traditional IRA.
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