Being a Millionarie vs living like one
I occasionally listen to self-help finance guys/read their books (think Dave Ramsey). They always talk about how to get to a net worth o $1mn. My thought is, the glamour for most people of being considered a "millionaire" is living a luxury lifestyle. There are people like Buffet who don't care about the money, but I feel that is few and far between.
If you follow golf history, Walter Hagen was quoted as saying, "I don't want to be a millionaire, I just want to live like one." I feel like that describes most people. Thoughts?
Certainly Buffett doesn't have a Leno car collection or race horses but he has stated many times how much he enjoys is private jet travel (as he should).
I agree. Who wouldn't enjoy that.
My question is more geared to having a net worth of about ~1mn to ~2mn. Techincally, you are a millionaire, but you dont live a "millionaire" life as most would perceive.
If you haven't yet, read "Millionaire Next Door" -- highlights this very issue.
Most Americans, at least, want to lead the Millionaire Lifestyle and become such a slave (my words) to achieving that wherein they never actually become a true Millionaire by net worth.
I have read the book. I actually agree with the teachings in the book, mainly as reckless spending does not result in anything for the spender long term.
The thing about being a millionaire by net worth is that few make it there, because they become distracted spenders. I guess I'm just agreeing with the theories of the book.
Where I live everyone is technically a millionaire. Housing has gone up astronomically that’s why.
I think I agree with what you're saying. Having a net worth of 1 million makes you (upper) middle class. When normal people think about living like a millionaire they're thinking about people with a millionaire cash flow. This would obviously require a substantially larger net worth.
Reminds me of stuff like this: https://www.thesportster.com/football/15-broke-nfl-players-who-are-poor…
I don't understand the people with tons of money and no lifestyle. Just enjoy it within reason.
What drives most people to work hard and become wealthy is not the money itself, its what you can buy with the money. I am a believer that material goals help people become even more successful.
I suspect many of those who are totally frugal either got that from their upbringing or developed an emotional attachment to their money.
Agreed. There is always more you can spend your money not, but not necessary more money to do that with. I think that's where most get into trouble with their lack of savings.
For me it’s not about buying the material.
For me it’s about buying time. Spending the money to get others to do things I don’t want to. And also hopefully so I don’t have to work so much.
I personally just want the freedom that comes with money. I don't have much desire to buy expensive cars/ houses/ jewelry/ clothes. I prefer spending $ on experiences.
Yeah, definitely.
To me it’s less about doing as it is the ability to do.
More money will allow you to become more of yourself, having the freedom to explore areas of life you otherwise couldn’t have.
The watches/cars/clothes are just a bonus ;)
Dave Ramsey doesn't believe half the shit he says. It's dumb-down garbage for the masses who are disciplined enough to pay their shit off but not smart enough to understand how to use leverage to build actual wealth. Nobody got wealthy fucking saving sheckels.
You can definitely get wealthy saving... definitely a far better method than blowing all your cash. Agree that his advice is only really helpful for "dummies" & other beginners. His investment advice is laughable (fees, etc.)
I have to kindly disagree with you on that. Someone saving $100k annually for 20 years winds up with $2mm. One big suburban house and they're back to zero. Someone with good financial sense, or with good advisement, obviously wouldn't buy that house cash, but if a $200k down payment could buy the house, he'd have bought it in year 2 of this theoretical 20-year timeline.
My point is that wealth is about cash flow, access to credit, and financial know-how more than it is about any lump sum. In that sense, sure, those financial "gurus" help. It isn't advanced knowledge, but most people are halfway retarded as it is. If he has viewership, it's because people want to hear what he has to say.
I don't think I follow your logic about the house.
If you bought a $2mn house, you have a $2mn asset, so not really back to zero. That asset should also be appreciating. I get that financing the house leaves free cash flow, but you're also paying interest.
I agree you can get wealthy saving, but you can also get wealthy using cash/credit and knowing what you're doing. Getting wealth by saving is all about the amount you are putting away, the rate you are getting. It's probably the better way for most people, as most will never have a net worth close to $1mn. As stated above, most people are morons, and can't properly handle a credit card. They shouldn't be trying to use leverage to achieve alpha.
Back to my original point, I feel that there is a glamor to "living like a millionaire" vs "I have a million dollars in assets/cash, but live off $50k a year." Not saying the second scenario is wrong.
At the end of they day, I feel that most people have a very little understanding of money, and most times they heard the word "millionaire" they think the lifestyle is similar to some billionaire they saw on TV or movie.
Explain to me how one can get wealthy by saving.
I love this comment. SB'd.
The issue lies in liquidity, you can technically be a millionaire if you have a networth of $1,000,000.01 or more. If 80% of that is tied up in illliquid assests or worse negative cash flow assets (primary residence) you essentially just have a bunch of imaginary money until you relinquish control of said assets and replace them with substitute products (apartment). Its really not until your assets are throwing off enough free cash that you can replace your work that you really have the ability to "live like a millionaire".
Just as there are hierachies based on income.. there are hierachies based on wealth. Being a "low-end millionaire" today means you're still middle class but instead of working you can have enough passive income to provide the same middle class lifestyle. You're still a far cry from being "rich, rich" enough to blow money on luxury trappings.
The word might have been useful as a barometer in the 80s but probably not anymore.
I agree.
I think some people would rather go deeply into debt and live a more "high-class" lifestyle than have a million in the bank but live within their means.
Being a millionaire doesn't get you far in this climate. Honestly I wouldn't be buying luxury items and status statements until I was worth $10m+.
It's all relative, though. A new pair of shoes is a status symbol for most of the world. On this site it's all about the Rollies&Rari's, but waiting till you're worth $10m to buy a new jacket is just craziness.
I think being a minimalist in life can give you great satisfaction too. Self-evaluate your relations, your finances, your possesions and how you can align these to be more efficient and consume less time and energy. Your energy and time is currency too, please also pay head to being a minimalist and having maybe one to two pleasure, it maybe having a good car or starting a business. And try to could down on what you have don't enjoy and have just for a status symbol. When you do become a miniamlist digitally, socially and finacial, you experience a new kind of freedom.
I never really understood why people spend thousands of dollars for luxury goods when they barely make minimum wage (or a little above the line). Food, space to live in, and car/insurance alone eats away a lot of money earned which gives you very little to save. Status symbol is meaningless to me when you are trying to build net worth. I'd rather save the money and purchase/open a small business.
I met and know a quite a few ($5m+ net worth) people throughout my life so far, and have been grateful. These people worked regular jobs, saved up, and started their own business with their money saved up. I know the potential of starting a company can do for a family. These folks actually shop around Goodwill, Big Lots!, Walmart, Target, etc (you get the point) and buy a few good pieces here and there.
@HFT" - I completely agree, and it is something I am experiencing myself. I am not too fond of luxury items, I do love cars (but, they are a huge depreciating asset), but ultimately I want to go down the entrepreneurial route...just a matter of purchasing an existing or building my own.
ironman32 - What is your understanding of money, good sir?
I feel that I have a pretty good understanding of money. My understanding of it is based mostly in simplified terms. I think that I tend to follow more of a blocking and tackling type strategy, and feel that most would benefit from this style as well.
It's funny in a way, I feel that I have bootstrapped this knowledge as I have grown. As child, I knew I tend to think that people with money had things. I came to realize that owning things is actually the benefit of money. Broadly, you can spend money, save it or give it away.
Well it brings up an interesting question. People on this site are pretty focused on maximizing wealth and investing intelligently (as we should be), and spending money on luxury goods you can't really afford is obviously the opposite of that.
But if you don't aspire to have 8 figures in the bank when you retire, or have that million dollar cash flow, why not spend it? This comes with the massive caveat that you should be saving for retirement, which of course few people do. But the money is worthless if it isn't making you happy or saving you stress, and for some people buying new shoes or leasing nice cars is what makes them happy.
And I think there are far more people like Buffet, if on a lesser scale of course, than you realize. The number of NYC families alone that must be sitting on 9 figures worth of real estate, and yet you wouldn't know them from any other person on the street, is probably startling.
I agree with your last paragraph (your whole statement as well). I think that compounding investing/owning a home can get most people to a $1mn net worth. However, getting and staying there requires discipline, which is what most people lack.
I think it's kinda like how people want to play professional sports because they think it's glamorous, but most bulk when they see how much time/effort it requires.
Met and seen plenty of people blow their salaries on luxury goods (bmw, benz, high-end fashion, constant dining and clubs) on social media on a weekly/monthly basis. My friends and I wonder how people can afford such luxury goods (at a young age and knowing their ballpark salaries). They do get attention from others, but it is seemingly short-lived.
I really think it takes a lot of discipline to acquire and build wealth/retirement over the long run. Having money to invest is important too.
I played for the Men's tennis team in my earlier college years. The hours we put in for training were brutal. However, we were one of the top 5 teams in our division/state at the end of the season. I agree with ironman32 as well.
My favorite games to play in my head include:
But, as someone stated above, do what makes you happy. For some, that's driving the BMW with no money in the bank, others its the reverse.
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