True. I used to have an annuity of about $700 a month and I got a 1099 each year telling me how much was taxable and I had to declare it on my 1040. It was a small enough amount, though, that I never owed any taxes.
I already kind of live without looking at the price tag, but part of it is that I’m “a two-stars hotel kind of gal”: with a few exceptions, I happen to prefer stuff in the medium ranges to the things that are supposed to be super-mega-good. And I make enough that when I decide I’m going to gift myself a Damn Good Computer, I can get a Damn Good Computer without breaking the bank (but again, I get rid of the temptation to buy the most expensive one in the store real quick as soon as I look at the specs; very often the most expensive one doesn’t have the best specs).
Within our needs and wants, we’re already there (and then some). We followed the “pullin 4-step, guaranteed path to wealth”. Hard work, discipline, compound interest, and time. We started nearly 4 decades ago with monk-like frugality and made sure lifestyle didn’t rise at the same rate as income. As time passed and accounts and investments grew, we relaxed the frugality rules and gradually reached a point where money is rarely an issue. I tell my kids that wealth is money you haven’t spent. And as it grows it will act as a buffer, a shield, and if necessary, a weapon.
Mizpullin works in the finance biz, and she says every sob story that crosses her desk has the same elements. Too much house, too much car, and too much debt. If you have a decent income and control those three elements, you can acquire at least some wealth. When my eldest was considering jobs in various cities, I told him to compare the salaries not as dollars, but as a ratio of housing costs. (i.e. in city A he would make 0.35 houses a year, but in city B he would only make 0.28 houses a year). After watching several people/relatives crash and burn, it’s easy for me to get on a rant about this.
Yes I am. Well… one of 'em anyway, and I paid cash for it. No jet of course, but according to the folks at Sea Ray I have a yacht. (They insist on calling it that, but at 30ft LOA it’s really a smallish cabin cruiser.)
I was on welfare and living extremely poor for two years. I now have a job that pays me enough to live better, but my brain won’t accept the idea. I’m still living poor, and don’t know if more money would change that.
If you’re living poor and saving or investing the excess, that’s not a bad thing. Heck, it’s not a terrible thing if you’re living poor but donating the excess.
Yeah? I can’t afford health insurance, so I do without. I can’t afford a new car, so I do without. Got a fleet of old beaters, any of which could leave me stranded at any time. I gamble I don’t get sick or my car don’t break. Seems like the financially responsible option to me.
To answer your next question, *" What do you do if you get sick?", *I’m gonna ask you, “What are you paying for when your *not *sick?”.
Unless you are either lucky or talented in the one-in-a-million class, there are only two ways to get money: Inherit it or steal it. You will not create any new wealth in your lifetime, you can only direct the redistribution of someone else’s money to yourself.
Given that, you are left with limited practical choices.
- Wait to inherit it, if there is a realistic prospect of that.
- Find a way to direct the flow of existing wealth to yourself. For most people, endure a job or two., with a week or two for yourself.
- Learn to live contentedly with a sum of wealth that is attainable with an acceptable modicum of effort doing something you like doing
I chose Door Number Three, and in my old age, I thank my lucky stars that I did.
Are you single?
It’s a different calculation when you are married.
I am solidly middle class but make enough money that I don’t actively “worry” about having the funds to afford stuff. But I’m decidedly frugal: my car is nearly 10 years old, I’m not especially fashion-conscious, I didn’t buy a house that I knew I’d struggle to afford, etc. I wonder sometimes if any amount of money would change that. I can’t imagine EVER paying the kinds of figures people throw around for tickets to a sporting event. I don’t need or necessarily want a fancier car. But I don’t know if that’s because I’ve taught myself how to live nicely within my means or because I’m naturally cheap, no matter what my income 
I make good money, and when my immigrant wife finds a job, we will be making great money. Of course “good” and “great” are relative – my brother’s family already regards me as “rich.”
For things like first class, it depends on the distance and upcost. Typically I’m tourist, especially given that domestic first class doesn’t give lounge access.
I deny ourselves a lot of “luxuries”; my “poor” brother spends a lot of his money at Tigers games. Those are expensive (parking, tickets, food). I don’t bother, leaving me that excess money to save.
I routinely drive old cars. My SUV is 12 years old (it was only four when I bought it). It doesn’t have air conditioned seats or a nav system, but it gets me through then snow. I do have a 2017 Fusion, but (1) it’s a company lease car (i.e., cheap and all inclusive), and (2) I get free electricity at work. Also, it’s an awesome car at a cheap price. Free electricity figured a lot into my decision. It costs me $303 per month, and that includes insurance and maintenance.
In essence, I’m frugal. I make good money, but I save my max. 401(k), max. backdoor Roth, and go to estate sales instead of Ethan Alan (except my bed, before I discovered estate sales).
When it comes to clothes, I buy what fits, usually at the outlets. I like Van Heusen. It it garbage? I don’t know; it looks professional and it fits well.
My house is in a great neighborhood with awesome schools. Taxes are dirt cheap (okay, not many city services). It’s significantly larger than I need, but I’m hedging the bet – I will have a family to take advantage of the space and the schools. Interest is cheap, and it makes sense to over-buy right now instead of later at higher rates.
I brown bag my lunch. If I let potatoes get so many eyes that they’re worthless I get upset. If the coriander turns brown I get angry that we bought too much.
Is this worth anything: I grew up poor. Food stamps poor. Single mother poor. I value every cent, and track each and every one for waste. “Waste” is relative, of course. My large house is wasteful without a family (but I’m hedging my bet, while you buy lottery tickets).
I was slightly dismayed at the co-pay for my wife’s surgery today. On other hand, I was dismayed that all of the leading office visits were “free” – basic care I should pay for.
I have a positive net worth. Not in the millions, but positive. I certainly didn’t inherit it, and I didn’t steal it, and my path depended on luck almost as much as skill. I deserve what I have. I worked for it.
On the first point IME it depends on the person, but it’s subject to the second point.
Speaking, as you are I think, just from general observation and experience, with a bit of reference to ‘studies’, people who have nothing much and come into a lot of money from a windfall are likely to be careless or compulsive spenders. It’s much less likely for people who work their asses off to get there. Note: no political debate about the role of luck, general fairness of society, appropriate tax rates etc is implied or invited here. I’m just referring to the plain fact that many financially successful people reasonably believe they built their fortunes to a large degree with their own sweat and that’s a big factor in whether to then piss that money away. Finally, people who started out in life wealthy have less of a clear tendency in either direction, IME. Sometimes they take after their parents who are often people who again see their own sweat and blood in every $ they made, and families really wealthy over more than a couple of generations are more common on TV than in real life.
Also there’s a difference between ‘spending expands to fit (or exceed) income’, which is what I’m mainly referring to in previous paragraph, and the absolute level of spending. A $10k bracelet or a first class ticket on a long flight still wouldn’t be negligible if you had an average-range income and $10k (as OP clarified) a month was added to it. Some people have way more than that, and/or are later on in life facing ‘you can’t take it with you’, and a $10k expenditure even on a non-necessity really is pretty negligible.
There’s an expression “shirtsleeves to shirtsleeves in three generations”. It suggests that if the first generation creates a family fortune, it’s often gone within two generations. Partly this is because there are more and more heirs who are sharing the money, and partly it’s that the generation that didn’t earn the money but just inherited it is foolish about spending it. I have relatives where the sons who inherited a family business did a poor job of managing it.
Yes the oft quoted (in usually more elaborated translation) Chinese version is 富 不過三代, rich-not-pass-three-generation.
That said IMO more than a few people who’d rather be rich use the stereotype of venal rich people or their rotten kids to comfort themselves, and that might also go back to ancient China.