A cousin. He had a great job, lived the high-flying single life. Good looking, socially connected.
Started drinking. He kept his job while he went through rehab, then started drinking again. Lost his job.
He found other work but lower-paying, factory and manual labor stuff. He downsized his lifestyle and spending somewhat. He finally quit drinking for good, becoming a long time AA member and sponsor. He received a lot of monetary help from the family and we were hopeful this would be the watershed moment.
Then is became apparent to us that he had replaced the drinking addiction with a gambling addiction.
He is still working in a factory, he’s is in his mid-70’s and gambles away every spare cent after paying lot rent on his falling-down mobile home. The family has stopped lending him money. He has no savings.
LIVING rich is expensive. Being rich can be pretty profitable if you don’t invest in gold futures you know nothing about.
My parents bought a townhouse from a woman’s estate. And they started hearing neighborhood gossip when the snow melt and the neighbors started coming out.
The woman had been married to a very successful attorney. He had lived frugally and invested in real estate - owning several buildings in downtown Minneapolis.
When she died, the estate sold the house at a loss. Her jewelry had all the stones missing (and she had some NICE jewelry). She died fairly young (70s)
Her husband had passed on ten years before. She bought a townhouse, and spent a lot of money decorating. But it was booze, boys, and gambling that did her in. She bought one of her boyfriends a sports car. The kids think another may be responsible for the missing gemstones. She managed to set fire to her townhome at least twice - requiring remodeling and redecorating. Having lived with a frugal husband, she splurged on vacations for her and her boyfriend. Men may have simply walked away with money.
$2M is not really enough “not to work again”. You can get maybe $50K/year (if you want safe return on the money) before taxes and inflation. With taxes and inflation that really becomes something like $35K or less. Per year. Yes, you can live on that, but very frugally. Definitely not a “millionaire” lifestyle.
However, $15 million - assuming you take a lump sum and pay taxes and are down to $7 million, is still $300,000 a year in income - a very respectable “well off” amount of money that will allow for a nice home, vacations, a nice car - and never needing to work again.
The problem is people see $15M and go buy a Lamborghini and a $2M home. $15M pre tax isn’t Lamborghini and $2M home territory unless you have some way to keep getting a million dollars a year once your capital is spent. $15M is a $500,000 home an his and hers BMW 4 series territory - nothing to sneeze at.
I think part of the problem with that is that our conception of a millionaire and the millionaire lifestyle dates from early Hollywood films. But because of inflation, you’d need twenty million or more to match that lifestyle.
A former college roommate made millions during the dotcom era. He bought a big house outside Palo Alto, California but later had to declare bankruptcy after the dotcom collapse.
And, while I don’t know him, there’s the story of Halsey Minor, who made many millions as the founder of CNet. He also had to declare bankruptcy eventually.
I really don’t know many rich people. Well, sort of friends with some folk that did well during the first dot-com bubble and came out okay. But okay isn’t rags.
So the biggest slide are some in-laws. They owned their own business for years that had a bit upscale clientèle. Did really well. Big house and all that. But spent the money almost as fast as it came in.
When their business tanked due to better competition, they didn’t have much. Older, on SS, etc. But they have to work doing really menial stuff to make ends meet. If they had saved half of what they made, they’d be doing really well.
This is exactly correct. Most lottery winners are working class and never learned to manage money well. The dotcom type millionaires fare better in general because they generally grew up middle or upper middle class and learned to save and budget.
Another good example. Many of them grew up working class as well. I have read that the NFL gives rookies classes on financial management to help avert some of that.
Working class people are also more likely to have friends and family who need financial assistance. I know I would have a hard time saving my lottery winnings if everyone I knew was barely keeping their heads above water. Even if I didn’t really want to help them, it would be hard for me to say no to requests for money.
Also, it has got to be weird to have the nice house and car and other luxuries while everyone in your social circle is still living in shacks. So I imagine that for many people in this situation, it’s either ditch the social circle and be lonely with all that wealth. Or share the wealth while keeping your identity as a “regular guy”.
You can help a lot of people on $300,000 a year - if everyone you help AND yourself expect to live a modest lifestyle. And you can do it sustainably. But it means that you give modest help. Probably no one gets a nice house and car and other luxuries.
I don’t know if I’d say “Riches to Rags” exactly, but prior to the 2001 dot-com/IT crash, I did know quite a few middle-aged guys who had worked their way into fairly responsible and high-paying IT positions without having degrees or anything like that.
When the crash came, they were usually among the first let go, and very few of them ended up getting back to where they’d been, with most having an extended stretch of unemployment after their layoffs. An example is a guy I worked at Sports Authority with while I was in graduate school. He’d been a network engineer of some sort who worked for EDS or Perot Systems or somewhere like that prior to the 2001 bust, and in 2003, there he was selling golf clubs and baseball gloves at Sports Authority. He didn’t have a whiz-bang college degree, and was in his 40s at the time, so he wasn’t having any luck at all.
My SO’s grandfather, and his father before him, was a contractor who helped rebuild the city after it was bombed in WWII. We know that for some time he owned large amounts of property right in the city centre. From what I’ve heard it sounds like it would’ve been worth millions in today’s money.
It’s gone, and nobody knows why. He’d even remortgaged the house, so that it wasn’t even paid off when they both died. We have absolutely no idea of what happened to all the money. He was an honest family man and they always lived frugally, but it seems like there must be some piece of the puzzle missing.
By “property right in the city centre”, do you mean real estate? Afaik real estate doesn’t get “lost” the way that cash and stock certificates can be lost. Deeds can be lost, and property can be lost to squatters (adverse possession), and tax seizures, but generally the land still exists and you can get a court to rule on whether or not you still own it and provide the necessary paperwork to replace lost deeds, etc.
Are you talking about land, buildings, fields, etc. that were swallowed into the sea by tidal waves, earthquakes, or dam construction?
I was watching some documentary on HBO about basketball draft picks. One of the coaches or whoever was breaking down a $3 million contract into monthly revenue and expenses. When you start taking out agent fees, taxes, other costs, trying to buy Bentley’s for all your family and friends, that ends up being not that much monthly takehome. Particular if you don’t turn into the next Kobe Bryant and that $3 million is all you ever make in your basketball career.
I don’t have any specific first-hand stories. But I do recall a story about some Wall Street trader who lost his $300 k a year job and ended up having to take a host job at The Palms (a fancy Manhattan steak restaurant). The sounds like a lot of money, but the story went into their $11,000 a month Upper West Side apartment, wife not working and all the other rich affectations. They could barely make ends meet when he was working.
I know how much my wife and I make combined, and I have a pretty good idea what other people make. I’m continuously shocked by what people purchase, given their income.
Some people are just comfortable living with huge debt, assuming that they will eventually get that corner office job or whatever. A relatively sensible (at least financially) investment banker friend of mine was telling me about his experience buying their Manhattan condo. Now I would guess his place is $1.5 million or so. Expensive for most people obviously, but reasonable given his and his wife’s income. But when he was looking, relators were trying to get him to buy $4, 5, even $10 million places. Apparently, in some investment banking and hedge fund guy circles, there is this mentality of buying much more than you can afford, with the assumption that it will drive you to work that much harder. Which seems insane to me (and my friend fortunately).
A lot of that happened in tech in the 90s as well. I didn’t know anyone personally, but there were a ton of stories about people who bought huge homes by leveraging stock options, only to have the options bottom out. Now they have a house they can’t afford with huge property taxes and sometimes a tax liability on the options.
Anyhow, the point as always is live within your means and tuck away any major windfall someplace smart as if you never received it.
No, sorry, they were sold and the money is gone. The property is definitely still there!
We don’t know anything about the circumstances of the sale, and where the money went. I suppose we could probably find out how much he sold it for, but really, what would that tell us? Either he sold it for what it was worth and then “misplaced” millions, or he for some reason sold it for peanuts and we’ll never know why…
