Only because your own customized race of people is one of Oprah’s Favorite Things and the scientists gave it to her to try and get on the show…
By the “Hawtness” of my girlfriend.
I kid
Well, I don’t make $250,000 a year, but I make closer to that than the other numbers. I have neither multiple homes nor multiple cars (well, the nine year old Hyundai is in the garage waiting to be picked up by a charity), and I haven’t taken a vacation in years, unless 4 days visiting the family via air miles counts.
I consider myself to be very well paid, but I think I am far from wealthy, especially by the standards you set in your post.
Heh, I figured another SF Bay Area Doper would have weighed in before I got here.
Yep, it really varies depending on where you live. Someone making $200k/yr while living in a small 1,200 sq ft tract home in the Bay Area doesn’t exactly seem rich compared with someone living on $60k/yr in a 4,000 sq ft mini-mansion in Kentucky.
If we had to define an absolute measure, I’d probably go by annual income after subtracting out typical living expenses for a given area. One number simply doesn’t work – rich in Michigan is poor in Manhattan. (Money apparently goes a lot further in Michigan when it comes to buying property.)
[tangent] Giraffe, I knew exactly what you were linking to before I clicked. FWIW, *Time *magazine reported that right next to Michael Jackson’s glove selling for $350k. I had to ask myself, what if Michael Jackson had worn two gloves?? [/tangent]
I have a passive income that exceeds seven figures. I live modestly, 60K a year pays my expenses. I figure my children and grandchildren will make out like mother-fuckers when I die. And that’s OK by me. I’ve never lusted for diamonds or trinkets of that nature. I’m quite happy to live in the country with my horses, and the means to keep them. It’s the simple life for me…
As others have said, it is highly situational.
I’m a Canadian lawyer, live in Toronto - a very expensive city. I live in a modest 3 bedroom house in a very nice neighbourhood. I own a single car - which I bought used - a Ford Taurus. I do not own a cottage, boat, etc. though I have access to a parent’s cottage. I take one reasonably expensive vacation a year.
I made around $280,000 CAN last year (less this year, though); more usually, I make around $250,000. I am not “rich”, in my opinion; I’m reasonably well off.
I can set money aside, I make extra payments on my mortgage. The following is off the top of my head, since I don’t have my accounts with me, but it goes something like this:
After tax (a huge amount), mortgage, J/K school, and other such expenses, I typically set aside $4,000 a month; I usually get back around $12,000 on my RRSP contribution, for a total of around $60,000 in savings - which I save in the following manner:
- $2,500 to RESP (registered educational savings plan) for the kid;
- $5,000 to the new tax-free savings plan;
- $24,000 in extra mortgage payments;
- The remainder, into RRSP (Registered Retirement savings Plan - I still have room to fill up).
My major expenses are:
-
Mortgage: $1,250 every 2 weeks, or $32,500 per year (excluding the extra payments);
-
Taxes: the big bite; takes around 40% of gross income - at $250,000, that would be $100,000; add another $6,000 in property taxes, that’s $106,000.
-
Private J/K for the kid: around $8,000
-
Gym membership, personal trainer: around $8,000
-
Various sorts of insurance (health is a perk covered through work): $3,000
Add it all up (expenses, taxes, savings) it is $217,500; that leaves $32,500 to spend for the year on everything else, for myself, my wife and my kid:
- An expensive vacation for three for a couple of weeks - can easily cost $8,000. The rest can go on stuff like:
- Groceries, gas, entertaining family and friends;
- Clothes, furniture, computer stuff, toys, books and the like;
- Money set aside for a new car and other major, predictable expenses.
In short, I can afford some luxuries (gym membership, private J/K, fancy vacation). I can afford anything in the way of minor toys. All this, and set some cash aside.
I cannot, without giving something up, afford stuff like a fancy car, expensive jewelry, a second home, or a luxury vehicle like a fancy boat. If I tried, I could not set money aside.
I am a financial planner who works on an non-commissioned basis doing planning for high net worth clients, almost all of whom range in age from 55-80. I don’t work with the ultra high net worth, so the average client might have a net worth of about $3-4 million with a fairly high variation lower and higher.
The problem with defining what is wealthy is that without knowing it we change our lifestyles to match the income and assets available. Many clients consider maid service, or psychotherapy or business class airline tickets to be a necessity. They didn’t use to feel that way, but as their income grew they increased consumption to match and got used to the luxuries that afforded. Even more importantly they moved from the upper middle class suburb they were living in to a better location. In their new place they are now ‘normal’.
Rich people, in the most positive sense of the word, are those people who after living their life, savings prudently for their retirement and other goals, and protecting themselves from catastrophe, have money left over.
Wealth, in a net worth sense, is almost meaningless detached from lifestyle. I just spoke with a family this week with a net worth of $3 million who I would expect to be broke within ten years.
If you make $250,000 a year and I make $40,000 you are rich.
If we both make $250,000 a year we are both comfortable.
If I make $1,000,000 a year and you make $250,000 well then you are getting by and I am comfortable.
If I make $25,000,000 per year, well then you are all McDonalds employees to me.
So it is a matter of debt ratio and perspective.
Man, I look at homes and the mind boggles how someone could have the money to own and maintain a house. I’ve never made more than $30,000 a year, so to me, anyone that owns a home is “rich”.
When I see really nice homes, it’s just that much father removed from what I see as realistically achievable for me, too. It’s practically like being an alien.
I used to think that people that had super-nice homes were rich. But then it turned out that their household income was often times less than mine. I could never understand how they could afford $350,000+ houses. With the current state of the housing market in Michigan and the sub-prime fallout, I now realize, haha, they couldn’t afford their houses. Thanks to them and their lot, I’m upside down, but it’ll be okay, because I can still afford the house.
Another thing to remember (although you are right, a lot of people CAN’T afford their homes), is that all wealth doesn’t come from income. I’ve known a number of people who live well beyond their “apparent means” - including neighbors down the street. Turns out her father is very wealthy - something I don’t think she’d ever disclose, but was dropped by her ten year old. Aha! That explained a lot.
I just threw out some random examples. 
To me, you count as pretty wealthy. You just spend $24,000 per year on your kid’s school, your personal trainer, and maybe a vacation for your family - rather than on luxury items etc. Someone I know makes somewhat less than you, but because he he has no kids (and doesn’t work out) he has load of ‘toys’ and takes a lot of vacations.
For reference, I make around $20k per year. My fixed expenses are only $950 per month though, so I can save money and afford small luxuries. When I was a teenager a few years ago, our family of 5 was living here in the Philadelphia burbs on less than $30k per year, so I feel pretty flush compared with that!
I go with Andy Rooney’s explanation. Rich is when you can throw away a bar of soap because the brand name has been scrubbed smooth.
**Malthus ** would be an example of “rich” but not “wealthy” (just based on what he wrote). Most of his money is going to sustaining his familie’s lifestyle. If he lost his job tomorrow, he would burn through his savings at a rate of about $10,000 a month. His primary asset is a house I estimate around $500,000 to$700,000, but without his income, that too would be in danger.
Not knowing anything else about Malthus, it would not be hard to imagine him as someone constantly stressed out about work and keeping up appearances. That is not wealthy.
If you ever get a chance, I recommend the book “The Millionare Next Door”. It really goes into why a lot of people who you would never think of are actually pretty wealthy. Mostly the reason is that they live within or well below their means. They have decent paying jobs but don’t live in trendy expensive neighborhoods where they are expected to keep up with the Joneses. They don’y buy expensive cars or personal trainers they rarely use.
If Warren Buffet (net worth $37 billion) woke up with Oprah money ($2.7 billion) he would jump out the nearest window.
I agree that it is largely based on location. $100k a year combined income doesn’t sound like much in Washington DC, for example. I was talking to someone from a small town in Wisconsin about houses in DC and he was shocked to hear what a $400k house in DC is like.
I consider my self to be wealthy.
We owe nothing. We’re retired. Good health. We have a very nice house in a very good neighborhood. We have lots of friends. Our son is doing well and likes hanging out with us. And Ms Hook and I like each other. We have enough coming in that we can do just about anything we care to do. For instance we spent 10 weeks this year just traveling around the country. We’ll do about the same next year.
I got a first cousin that’s worth, easily, $300 mil. He’s been divorced three times. His kids are a train wreck. He’s 72 and doesn’t want to quit making money because, “What would I do?” He lives alone in a 25,000 sq ft house when he isn’t hanging out on his island in Belize*.
*Which, rumor has it, is for sale for $75,000,000.
I suppose it all depends on basis of comparison; sure I can afford some luxuries, but in my mind these are relatively modest. “Wealthy” I associate with fancy cars, vacation properties, etc.
OTOH, I can well remember when I was a sculptor’s assistant (my first adult job), when buying a book was a luxury I couldn’t afford.
Yup, I’m nowhere near being “wealthy”. To my mind, ‘wealthy’ means having your luxuries without the necessity of working.
Heh pretty good estimating - when I bought my house four years ago it was $670,000 (now it’s worth more like $900,000).
Mortgage is almost paid off though; I already had half in cash and I’ve been investing heavily in extra payments. I owe about $100,000 which I could, if I wanted, pay off today with some help from long-term savings.
If I lost my job our lifestyle would be unsustainable, but I have an emergency fund which would last about six months before I’d have to dip into long-term savings.
I’m not one for keeping up with the Jonses though … far from it. Most of my spending is on stuff that’s invisible to others. Though I do admit to enjoying having a house with some nice old features, it isn’t by any means large or luxurious.
Though I will cop to having one very expensive ambition - one day, I want to build an addition having a purpose-built library room with nicely carved wooden shelving and a skylight.
Work stress - yup, that goes with the territory.
Hey, I use mine. I have to. 
It’s part of my long-term plan to turn myself around - five years ago, I was 240 pounds (I’m 6’), didn’t exercise, and a heavy smoker. 
Now, I’m around 195, I work out with the trainer, and don’t smoke. This sedentary lifestyle combined with high stress isn’t good for me … the value of a personal trainer is about 50% that you have a personal appointment with him, and so much greater incentive to exercise, in spite of the fact that you are too busy, too tired, etc.
I never understood the point of living well below your means, simply to be rich. My in-laws did that their whole lives, to the point of obsession. They owned investment properties and ended up with a nice pile, but their kids remember their childhoods as miserably deprived of anything fun. (Added bonus: the money the parents scrimped their whole life to save was partly blown by one daughter’s scamming drug addict husband on hookers and blow for himself. Sad story that.)
I could easily cut out many luxuries from my budget and save a lot more money, but in aid of what?
OTOH, too many people live well above their means, and that is of course worse. In my opinion, balance is best - spend on some luxuries within your means, always remembering to save a bit for a rainy day and retirement.
You are absolutely right that true ‘wealth’ has little or nothing to do with how much money you have in the bank.
If you don’t have enough to actually fulfill your everyday needs (food, clothing, shelter, health), that can certainly make you miserable.
Outside that, though, well. . .we may or may not be wealthy (depends on who you ask, but I certainly don’t think of us that way; we live in a little nowhere WV town; the nicest apt. in the building to be sure, but still, when we’re not living in it, it rents for $450.00 a month. . .) have one car that is considered “low-end luxury” (It’s a BMW, but only a 3 series), one car that’s a total beater.
But. . .if I look at today’s Woot and decide it’s something I really want, I can buy it. If I decide I really don’t want to cook dinner tonight, it’s not a big deal if I spend $15.00 on me and my ‘girl’ going out. I didn’t bat an eye at spending $35.00/ticket to take her to a live stage presentation of Annie (her all-time favorite musical).
We don’t make a ton of money. But we live within our means, which means that, while I try hard not to “impulse buy”, I can buy what I really, really want (most of the time). Plus, my kidney health has been good since my right one was removed; my kids all love me; my husband loves me; I have clean clothes to wear, a roof over my head, and heaven knows, plenty of food to eat!
So in those terms, I’m much wealthier than a lot of folks I know, including folks that have a much higher bank balance than me!