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I think that if you have that much money you are in the top 1% of the world. (_maybe_ 2%) I don't know a single person with that kind of cash. The most wealthy

I think that if you have that much money you are in the top 1% of the world. (_maybe_ 2%) I don't know a single person with that kind of cash. The most wealthy people I know (they live in $500k+ home, their neighbours have million dollar homes) in rich area of Chicago and makes a combined $400k (estimated) in income between him and his wife, don't have even close to that in the bank. (what they do have they have to budget to save up, though they live really well despite this...) I really think Silicon Valley is disconnected from the rest of the world's realities.

dgacmu 8y ago
Go read "The millionaire next door" -- it's eye-opening, particularly about the relative importance of saving and keeping a cap on expenses. Saving $500k should be trivial on the $400k annual income you describe. Dual income, put $46k per year into tax advantaged retirement accounts (401k + backdoor Roth). Wait 8 years including interest. Done. Edit: Found a PDF online: https://www.pdfdrive.com/the-millionaire-next-door-book-manteshpdf-davidbeitlercom-d15297184.html https://www.pdfdrive.com/the-millionaire-next-door-book-mant... (and verified that it actually downloads).
- RobertRoberts 8y ago
  They pay over 12k a year in property taxes alone. They pay tons of local and state taxes, etc... Yes of course they could do more and be smarter with their money, but it's really expensive to live where they are at, but it's also why they make so much as well. I've read plenty of books on getting rich, and all it takes is a couple disasters or huge expenses (adopting kids, legal fees, tax audits, etc...) and all those money making plans are worthless. They don't solve real life problems, they only work for those with charmed lives. I think you are surrounded by rich people and don't realize the vast majority of people live pay-check to pay-check or worse.
  - dgacmu 8y ago
    I'm not talking about normal people. I'm talking about the couple you described that makes slightly more money than I and my wife and yet has less than half the savings I do. Edited to add: And I'm surrounded by academics more than anything else. To quote the millionaire next door (page 136): > Isn't it interesting that a disproportionately high number of used-car shoppers come from the ranks of teachers and professors? > How did Dr. Bill, an engineering professor who never had a total household income of more than $80,000 become a millionaire? [...] His success in accumulating wealth is based on living well below his means. The professor is a classic example of a used vehicle-prone shopper. [...] You'd be surprised how well that description fits me and many of my colleagues. So in a sense, yes, I'm surrounded by rich people, but they're rich because they're comparatively frugal, not because we all earn bay area tech salaries (trust me, we don't -- I grouse enough about this that I wrote a blog post about it a few years ago: https://da-data.blogspot.com/2016/12/finances-for-recent-cs-phds-headed-to.html https://da-data.blogspot.com/2016/12/finances-for-recent-cs-... )
    - RobertRoberts 8y ago
      So was I...
jurassic 8y ago
The phenomenon of high-income low-net worth is described in detail in the personal finance classic The Millionaire Next Door. I strongly recommend it even though some aspects are quite dated. You didn’t give an age for your $400k/yr couple but they are well-positioned to accumulate significant wealth in a short amount of time if they prioritize saving. The lesson of TMND is that it’s very easy to be an under-accumulator of wealth on any income if you are not prioritizing savings and budgeting. I completely agree that Silicon Valley is disconnected from the reality in many other places.
puranjay 8y ago
This entire discussion is really an eye opener. People are worried that $1M in the bank in their 30s isn't enough, or that $300k salaries aren't good. I mean, $300k would make you a rich person outside of literally 5 cities in the world. You can just take your $1M in savings, move to a cheaper city, and live off it for years. Heck, it doesn't have to be some third world country either; a city like Atlanta will give you a huge house for $400k and plenty left over to live off for a decade. The Bay Area is divorced from reality
- RobertRoberts 8y ago
  I have a client that spent over $1M in medical expenses alone for one of his kids. It's destroyed his finances. People that think "just read this book on investing" to solve financial problems either don't have kids or have never suffered devastating financial hardships.
mancerayder 8y ago
My plan is to move outside of the US - the quality of healthcare in the US is one of the worst in the world, unless you are rich. But if you saved 1m to retire on, and something expensive happens, oops, you won the American bad luck medical lottery, you're kaput. Make money in SV or another high paying locale, don't piss your money away on silly cars that drive themselves or homes to impress your friends, and when you're ready move to a place like Spain, France, even Canada if cold is your cup of tea. There's nothing riskier than not working, not having Medicare and not being very rich in the US. How do you know you don't have a chronic medical condition that manifests in your 50s?
- DVassallo 8y ago
  OP here. I got health insurance from ACA. $15K/year premium for a family of 4, no lifetime claim limit, and no health requirements to enroll. Sure $15K a year is expensive, but not “rich” expensive. I lived in 3 different countries (EU and US), and the health care quality in the US is superior by far. The problem in the US is that it’s not available to everyone.
  - sidlls 8y ago
    It might not be "rich" expensive, but $15k per year is more than a third of the take-home pay of the median income. That's certainly "well above average" expensive, and prohibitive when necessities like housing and food are factored in. It may as well be "rich" expensive to most by far.
    - DVassallo 8y ago
      Those with median income will get subsidies on ACA though. IIRC, subsidies were available for household incomes less than ~$110K in my state, and the subsidies grow the lower your income is. Not disagreeing that it's expensive though. Basic healthcare should be universal, like fire and police protection.

dgacmu 8y ago

Go read "The millionaire next door" -- it's eye-opening, particularly about the relative importance of saving and keeping a cap on expenses. Saving $500k should be trivial on the $400k annual income you describe. Dual income, put $46k per year into tax advantaged retirement accounts (401k + backdoor Roth). Wait 8 years including interest. Done. Edit: Found a PDF online: https://www.pdfdrive.com/the-millionaire-next-door-book-manteshpdf-davidbeitlercom-d15297184.html https://www.pdfdrive.com/the-millionaire-next-door-book-mant... (and verified that it actually downloads).

RobertRoberts 8y ago
They pay over 12k a year in property taxes alone. They pay tons of local and state taxes, etc... Yes of course they could do more and be smarter with their money, but it's really expensive to live where they are at, but it's also why they make so much as well. I've read plenty of books on getting rich, and all it takes is a couple disasters or huge expenses (adopting kids, legal fees, tax audits, etc...) and all those money making plans are worthless. They don't solve real life problems, they only work for those with charmed lives. I think you are surrounded by rich people and don't realize the vast majority of people live pay-check to pay-check or worse.
- dgacmu 8y ago
  I'm not talking about normal people. I'm talking about the couple you described that makes slightly more money than I and my wife and yet has less than half the savings I do. Edited to add: And I'm surrounded by academics more than anything else. To quote the millionaire next door (page 136): > Isn't it interesting that a disproportionately high number of used-car shoppers come from the ranks of teachers and professors? > How did Dr. Bill, an engineering professor who never had a total household income of more than $80,000 become a millionaire? [...] His success in accumulating wealth is based on living well below his means. The professor is a classic example of a used vehicle-prone shopper. [...] You'd be surprised how well that description fits me and many of my colleagues. So in a sense, yes, I'm surrounded by rich people, but they're rich because they're comparatively frugal, not because we all earn bay area tech salaries (trust me, we don't -- I grouse enough about this that I wrote a blog post about it a few years ago: https://da-data.blogspot.com/2016/12/finances-for-recent-cs-phds-headed-to.html https://da-data.blogspot.com/2016/12/finances-for-recent-cs-... )
  - RobertRoberts 8y ago
    So was I...

jurassic 8y ago

The phenomenon of high-income low-net worth is described in detail in the personal finance classic The Millionaire Next Door. I strongly recommend it even though some aspects are quite dated. You didn’t give an age for your $400k/yr couple but they are well-positioned to accumulate significant wealth in a short amount of time if they prioritize saving. The lesson of TMND is that it’s very easy to be an under-accumulator of wealth on any income if you are not prioritizing savings and budgeting. I completely agree that Silicon Valley is disconnected from the reality in many other places.

puranjay 8y ago

This entire discussion is really an eye opener. People are worried that $1M in the bank in their 30s isn't enough, or that $300k salaries aren't good. I mean, $300k would make you a rich person outside of literally 5 cities in the world. You can just take your $1M in savings, move to a cheaper city, and live off it for years. Heck, it doesn't have to be some third world country either; a city like Atlanta will give you a huge house for $400k and plenty left over to live off for a decade. The Bay Area is divorced from reality

RobertRoberts 8y ago
I have a client that spent over $1M in medical expenses alone for one of his kids. It's destroyed his finances. People that think "just read this book on investing" to solve financial problems either don't have kids or have never suffered devastating financial hardships.

mancerayder 8y ago

My plan is to move outside of the US - the quality of healthcare in the US is one of the worst in the world, unless you are rich. But if you saved 1m to retire on, and something expensive happens, oops, you won the American bad luck medical lottery, you're kaput. Make money in SV or another high paying locale, don't piss your money away on silly cars that drive themselves or homes to impress your friends, and when you're ready move to a place like Spain, France, even Canada if cold is your cup of tea. There's nothing riskier than not working, not having Medicare and not being very rich in the US. How do you know you don't have a chronic medical condition that manifests in your 50s?

DVassallo 8y ago
OP here. I got health insurance from ACA. $15K/year premium for a family of 4, no lifetime claim limit, and no health requirements to enroll. Sure $15K a year is expensive, but not “rich” expensive. I lived in 3 different countries (EU and US), and the health care quality in the US is superior by far. The problem in the US is that it’s not available to everyone.
- sidlls 8y ago
  It might not be "rich" expensive, but $15k per year is more than a third of the take-home pay of the median income. That's certainly "well above average" expensive, and prohibitive when necessities like housing and food are factored in. It may as well be "rich" expensive to most by far.
  - DVassallo 8y ago
    Those with median income will get subsidies on ACA though. IIRC, subsidies were available for household incomes less than ~$110K in my state, and the subsidies grow the lower your income is. Not disagreeing that it's expensive though. Basic healthcare should be universal, like fire and police protection.