Comments on: Am I rich? Do you think you’re rich?

By: Hannah

Hannah — Thu, 25 Sep 2008 13:33:38 +0000

Another interesting question is: “What does it mean to be middle class?” My husband and I make a combined six figures, but we live in NYC. I don’t think we’re particularly extravagant spenders. We’re able to put a significant amount into our 401ks and max out our IRAs. We were able to take a nice trip to Europe this year. (Won’t do that again next year.) But if we had kids … that would be it. I think we could still max out our IRAs but we wouldn’t be able to save for anything else significant, and we wouldn’t be able to put much money away for our kids’ college education. We wouldn’t be able to pay much more in rent — and we currently have a VERY good deal. Yet, we’re in probably the 90th percentile of American households.

By: Jon Kepler

Jon Kepler — Sun, 21 Sep 2008 21:31:10 +0000

Kitty, as far as I know, the definition does not include personal residences.

By: kitty

kitty — Thu, 18 Sep 2008 16:09:50 +0000

My math is a bit off, I didn’t adjust for mortgage. Let’s say the person has already paid off mortgage…

By: kitty

kitty — Thu, 18 Sep 2008 16:09:16 +0000

Jon, this seems like a good yardstick. The only problem I see with it – I just looked up the definition is this line from the definition: “a natural person who has individual net worth, or joint net worth with the person’s spouse, that exceeds $1 million at the time of the purchase;”

I wonder if net worth is inclusive of primary residence or not. I’d say if it is not, than yes, it’s a good definition. By if it does, I am not sure… Here in Westchester, an average house is over 600K. Same houses people bought in the 90s for 200K. So somebody with a house and only 400K in non-retirement and retirement (not yet taxed) investments will have a net worth of $1 million. But I don’t think this person is rich. Of course, this is just a matter of definition…

By: Jon Kepler

Jon Kepler — Thu, 18 Sep 2008 05:52:44 +0000

Are accredited investors rich? Maybe that’s a better yardstick to use. If they’re not, shouldn’t they be clamped down upon just like the people who don’t qualify to be accredited investors? Just thinking out loud.

By: Marci

Marci — Thu, 18 Sep 2008 02:30:29 +0000

and at $20,000/yr, but debt free, I consider myself middle class Big range there ! LOL!

By: Anonymous

Anonymous — Thu, 18 Sep 2008 01:12:57 +0000

Rich is always “more than I make”.

My wife and I do pretty well. In our early 30s, we’re making ~$400K combined. Yet while most people would call us “rich”, I’d consider us middle-class.

By: marci

marci — Wed, 17 Sep 2008 17:58:00 +0000

I like Cindy B.’s defininition (above) or rich..
“Rich is when you do not have to work to earn a living.
You would work only if you choose to work.
You have enough to live on your investments.”

If that’s it, then I’m there – but no one else would probably think so.
I make about $20,000/yr… but am debt free including my house. I chose to work to keep the health insurance paid, but with my retirement savings, I could quit work at any time I wanted and live on my investments,etc…. I take home about $1000/month now and am very comfortable… but I doubt others would think that as rich, while I most certainly do My basic expenses are about $375/month. When I do retire, I will have more than $1000/month coming in in investment income, so then I will REALLY feel rich

Yes for me, knowing I can quit work any time and continue my present lifestyle makes me feel rich. Rich enough, in any case!

By: kitty

kitty — Mon, 15 Sep 2008 21:13:37 +0000

Suzie -just because we said we don’t consider ourselves rich, doesn’t mean we don’t save over half of our salaries or live the life of luxury. Nor does it mean that we need to feel defensive. It just means that we have other criteria or fears – dependency on continued employment, ability to handle real emergency – where emergency is on the scale of “got really ill and need expensive treatment” not “oh, I need to fix my car”. Sure, occasionally I think how great it’d be to be able to afford all of these fancy things I see when I visit Manhattan, but this is really not the most important thing.

I drive a Honda Civic (OK, it was bought new, but I paid cash for it), I live in a townhouse style condo. I take my own lunch to work and rarely eat out. Yes, I have some jewelry, but nothing particularly expensive. I do allow myself to spend money here and there – vacation, theater tickets, etc., but always well within what I can easily afford.

But I know how much a serious health problem may cost. My mother has just been diagnosed with lung cancer (no, she has never smoked and neither has anybody in her or my family). The drug she is taking cost $4000 a month. She is OK because it is covered by medicare plan D, but what if someone encountered this type of an expense and it hadn’t been covered? I do not clear enough after taxes to cover this type of an expense and still pay my bills – after taxes, 401K contribution and other deductions (e.g. health) I am left with about $4500 net. A friend of mine had hundreds of thousands in medical bill after her husband was diagnosed with sarcoma and insurance company refused to pay for a particular type of chemo after the fact. Yes, after a lot of calls and appeals, they did pay for it, but where would she be if they hadn’t?

Of course, it is all relative. I am rich compared to someone living on smaller income while having a family of 4 – I can cash flow the expense many people need to spend months saving for. I am rich compared to my relatives in Russia, and I do bring them cash and behave as a “rich American” when I visit. I am rich compared to myself growing up as a child in the Soviet Union to the first years in the US, etc.. But to me being really rich is about being secure in being able to cover a real emergency.

By: Susie

Susie — Mon, 15 Sep 2008 19:01:10 +0000

@CD et al.

Apparently it really DOES depend upon how you define rich. For me, it’s defined by having far more than enough money to cover my minimal basic living costs. Note I said minimal. Do I think I’m rich? I certainly am, comparatively world-view speaking. I have not only shelter, but very sturdy, comfortable, attractive shelter. I have clothes that I chose based on how they look, not just that they were available; I have shoes; I have daily, fresh, potable water; I have reliable transportation; I have good health and access to excellent healthcare. As I believe Johanna pointed out, Western nations are abundantly rich – even our poorest citizens are comparitively rich.

In our particular nation, however, I might be considered poor, or close to it. No, my net savings are not greater than yours – I’ve only been earning this much money for 3.5 years. However, I have not increased my spending on my standard of living, so all of that extra money has gone into savings. I would like to think that if my income doubled or tripled so that I did earn 100k plus, I would continue the same way and put all excess money into savings. In which case, with compound interest, I’d be a millionaire in less than 10 years.

I’m really amazed at the defensiveness of folks who are in the 100k+++ bracket at being called rich, likes its shameful or undesirable. Why is that? Why do you not want to be considered rich based on your income (rather than your jewelry or car or mansion)? And why are you assuming it’s a negative judgement upon you?