Seems like every financial podcast, article or media that I see that has personal finance advice has someone who "started with $300K in debt but is now a millionaire".
I know this is mainly B.S., but what would be the way someone arrives at that value? Do they get out of debt, buy housing rentals but then count the full value of the real estate in their net worth?
Assets - Liabilities = Net Worth.
I'm sure a lot of these gurus are something like $3MM Assets ($300k Lambo, $200k Bitcoin, $2.5MM Real Estate) - $2.9M Liabilities ($300k Loan on Lambo, $2MM Real Estate Loan, $600k Credit Card Debt) = $100k Net Worth
They make money by selling courses to naïve people on how to make money.
If people have no debt, then any assets they accumulate are part of their nw. These days it seems like being worth 1m is not nearly as significant or rare as perhaps 50 years ago either, there are millions of people in the US at that range now
True, I get it's easily to accumulate.
Just seems that people are hopping on financial podcasts and saying they basically cut expenses five years ago, tackled ~$300k of debt and now accumulated $1M net worth. To me, math just doesn't add up, so I was wondering how they are calculating.
Plenty of day trading course seller scum out there. But it really depends on each person's situation. Someone could be in their mid 30s, have 300k in loans and 1m saved up, then pay off their mortgage / student loans over the years and be over a mil, then make courses teaching people how to do the same lol
I noticed even Graham Stephan sells courses now. I've watched his vids for years and seen his channel grow. He teaches people how to become a real estate agent or a youtuber, which makes sense. Found he often has helpful and straightforward insights even on Youtube
now 160k USD is what 100k was maybe 10-15 years ago, so I agree, 1m is not what it was once
tbf they could be doing a DCF on their future cash flows. That or they could be using multiples such as EV/Podcast minutes or whatever. I mean this is still better than how every single ib under the sun is somehow #1 on the league tables
Everyone is worth 7 figures these days.
How much are you worth Isaiah?
Who cares? Let's say you own a $50mm painting, but due to how illiquid it is, you can't sell it for years. What good is that painting? You can't eat it. Similarly a lot of these podcast people might have owned their home for a number of years and accumulated a decent amount of equity through principal paydown and appreciation, but all their net worth is stuck in their home. Their house doesn't put food on the table. That's why as I've grown older, I care much less about net worth and way more about income (specifically fixed income, ideally passive income). So when I plan out my future, I don't think about "what net worth will I be by xyz age," but instead "how much after tax cash flow/income will I be generating." You can inflate your net worth, you can't really inflate your earnings i.e. either $1mm went into your pocket this year or it didnt.
Fair, that's another way to look at it.
Housing is funny because most people don't sell it or "trade" it, so even though its worth a certain amount it doesn't do much for you. Also, if your house goes up in value, typically it doesn't go up in isolation, so even if you sold it most other houses would also go up in value. Additionally, if you had to do a fire sale, you would sell your house for well below what its worth.
tl;dr - cash is king
Cash flow is huge. I am around many people with family money, they have wealth but they don’t have any money to spend. It’s kind of comical, some of them literally have to ask grandparents or parents for a check to be cut to buy furniture for their multi million dollar condo. They are in some ways broke and it definitely impacts them mentally, so they construct elaborate stories as to what they do for a living aka nothing.
Randomly know people like this.
Just throw out the word "consulting" or "advising" and you're all set.
It's not that hard to comprehend what constitutes being a millionaire. If your assets, including your home, 401k, stocks, etc., exceed your liabilities, such as car/student loans, or mortgage by $1M, you're a millionaire. How much of this was hustled for vs having unique advantages (i.e. parents helping with downpayment on house, inheritance, etc.) is TBD.
I know this is WSO where everyone has 8 figures to their name, but it's still not that common to be a millionaire in terms of liquid assets. Most people that are millionaires are considered that because they bought homes many moons ago in places that blew up in real estate value. I'd be shocked if there's that many people who legitimately have a million dollars if you were to exclude their home equity outside of a precious few people who work in elite industries or started lucrative businesses.
At the end of the day, growing your net worth is simple to do but hard to practice. You either have to increase your income or cut down your expenses. The tough part is finding the right balance of enjoying life while you're young and planning for the future. Most people over index on either side and end up feeling unfilled in different ways.
Investing in assets that appreciate is often a common way for people to make money lol whether that’s through equities, re, businesses, alts etc
I’d say there are still tons of people out there who made money other than housing. Lots of small business owners out there for example, you’d be surprised
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