When does having a million dollars not make you rich?

[Ws6]

Originally Posted by ZZman
Apparently when you actually have it.

I have been reading articles that say people who have anywhere from 1-5 million consider themselves middle to upper middle class.

I can only think this perception depends a great deal on age and where you have your $$. Is it retirement accounts or investments/savings.

Interesting stuff.

If I had $1m tax free I'd be happy. Not bragging. Not rich. Just content and soundly stable for life.

 

[joekingcorvette]

Its all about good health my friends. Without good health money won't do you much good.

 

[Skippy722]

Originally Posted by Ws6

If I had $1m tax free I'd be happy. Not bragging. Not rich. Just content and soundly stable for life.


Amen to that.

 

[Mr Nice]

Originally Posted by 14Accent
The only time in my life I'll be worth a million is if I take out a life insurance policy and croak.

I'm 30, single, no kids. I make $80k/yr, own a house worth ~$200k, owe ~$120k on it. Finance a car, not worth anything. Have maybe $20k in an IRA. $15k in credit card debt. I'm not rich, I'm barely middle class, and I work mu butt off to maintain it.
But... it beats being on food stamps.

Get rid of that credit card debt ASAP and invest that money.
Car and house debt is OK with your small loans.

Roth IRA is your best friend if you have 30 years to invest.

 

[Lubener]

A million is not a big deal today. Easily obtainable and exceeded by anyone who invests early, wisely, stays out of debt (credit cards and auto) and lives on less than they make.

 

[Fawteen]

Getting to a million dollars of net worth is fairly easy. Don't go into debt for depreciating assets like vehicles, and pay off home loans within 5 years. Live frugally and below your means for a number of years while you're starting your career life and building wealth. Once that wealth starts to build it will snowball on its own if you understand investing. Also work to build a financial foundation that includes multiple income streams rather than just a single 401K, IRA or worse yet, just social security.

Net worth and liquid net worth are two different things. Invested wisely, a liquid net worth of a million dollars can generate a decent income without touching the principle. But for retirement a person has to be in a financial position to retire. I occasionally see people who are in their 50's and 60's running around with credit card debt, mortgage payments and stupidly buying/leasing new vehicles every 3-4 years. Those people are the ones that can't afford to retire on just one million dollars because they're still in debt at that age. You'll see them still working the door at Walmart when they're 70 because they have to continue to work-they've been enslaved to their debt.

There's no better feeling than knowing everything you own is paid for, and other than utility bills you're not a slave to debt. No house payment to write a check for, no vehicle payments, zero credit card debt-everything you earn is yours to do with what you please. You're now in a position where people are paying you instead of you paying them.

Originally Posted by PandaBear
You can't even pay off a house with only 1M, it is not "rich" anymore. I'd say 10M+ is the new definition of "rich".


If your signature is correct, you choose to live in one of the most grossly overpriced, overtaxed, and overinflated areas of the United States. You pay the highest prices for just about everything on earth, and get very little return on your investments other than human waste in the streets and third world diseases in your homeless infested cities.

Around these parts $180,000 will buy a very nice 2400 square foot 4 bed, 2+ bath home with a 2 car garage on a nice lot in a nice subdivision. Property taxes on that home are less than $500/year with the homestead exemption, and the state portion of those property taxes drops off when you reach 65. Pension and social security income are not taxed. The beaches of the Gulf are just an hour away, and the Appalachian mountains are just 3 hours away.

So with "only 1M" you can easily pay off a house if you choose to do so. But if you have to have that hamster-wheel California lifestyle, then you won't be paying it off anytime soon.

 

[Mr Nice]

The problem is that many Americans think big debt equals net worth.

If another recession hits like we had in 2009 lots of over leveraged folks will be in big financial trouble if either spouse lose their job and family can't keep heads above water.

Will the housing market crash in the next 2-3 years ?



I have to admit I'm getting very antsy and been selling stocks and rebalancing my 401K.....

It's been a good 10 years and now it's time to take profits off the table.

 

[Astro14]

Originally Posted by KJSmith
Go talk to a wealth manager.

One million = 40k per year.... for the rest of your life.

40k a year does not make one rich.....middle class at best.



That's what I was going to say...

 

[Leo99]

Originally Posted by Astro14
Originally Posted by KJSmith
Go talk to a wealth manager.

One million = 40k per year.... for the rest of your life.

40k a year does not make one rich.....middle class at best.



That's what I was going to say...




Exactly, It's only 40k per year if you want to leave the million to someone else after you leave this world. But, it's all about cash flow.

 

[ARCOgraphite]

Originally Posted by Mr Nice
The problem is that many Americans think big debt equals net worth.

If another recession hits like we had in 2009 lots of over leveraged folks will be in big financial trouble if either spouse lose their job and family can't keep heads above water.

Will the housing market crash in the next 2-3 years ?



I have to admit I'm getting very antsy and been selling stocks and rebalancing my 401K.....

It's been a good 10 years and now it's time to take profits off the table.




When I heard the news yesterday, Oh boy!
I ran home around 2:30PM EST and did a quick
re-balance (again)
to get from 45% equities
down to below 20%

Just in case.

I may eventually loose some upside at this game but I sure am breathing a little easier.

 

[BISCUT]

Originally Posted by joekingcorvette
Its all about good health my friends. Without good health money won't do you much good.


Cheers to that! #1 is health.

 

[BISCUT]

Originally Posted by ARCOgraphite
Originally Posted by Mr Nice
The problem is that many Americans think big debt equals net worth.

If another recession hits like we had in 2009 lots of over leveraged folks will be in big financial trouble if either spouse lose their job and family can't keep heads above water.

Will the housing market crash in the next 2-3 years ?



I have to admit I'm getting very antsy and been selling stocks and rebalancing my 401K.....

It's been a good 10 years and now it's time to take profits off the table.




When I heard the news yesterday, Oh boy!
I ran home around 2:30PM EST and did a quick
re-balance (again)
to get from 45% equities
down to below 20%

Just in case.

I may eventually loose some upside at this game but I sure am breathing a little easier.


Hard to address when we don't know your end dates and your targeted amount at retirement.

 

[gfh77665]

Originally Posted by Mr Nice

Will the housing market crash in the next 2-3 years ?


Overall, no. The growing population and social isues will continue to drive people out of the inner cities, into the suburbs, then the exurbs, creating stable supply and demand. Also, the banks are no where near as leveraged as they were during the foreclosure crisis. The banks have to sucessfully pass financial "stress tests" regularly.

There very likely will be a crash in the few grossley overheated markets, like San Francisco, New York, etc. The rest of the country wil likely have moderate price gains. Undervalued markets like Texas, will continue to climb.

 

[Rmay635703]

Originally Posted by gfh77665
Originally Posted by Mr Nice

Will the housing market crash in the next 2-3 years ?


Overall, no. The growing population and social isues will continue to drive people out of the inner cities, into the suburbs, then the exurbs, creating stable supply and demand. Also, the banks are no where near as leveraged as they were during the foreclosure crisis. The banks have to sucessfully pass financial "stress tests" regularly.

There very likely will be a crash in the few grossley overheated markets, like San Francisco, New York, etc. The rest of the country wil likely have moderate price gains. Undervalued markets like Texas, will continue to climb.


There will be a loss of property "values" in most of the country, it just won't be anything like 2007-2011.

The reasons this time have to do with jobless idiots and large investment interests alike expecting to be flipping homes for twice the price in under 6 months, coupled with slowing jobs. There are only so many suckers to buy these homes and in most markets the number of homes that have been on the market a LONG time is increasing dramatically. Locally there is a $260k house that's been on the market 2 years marked down to $160 and still not moving.

Even one of my friends picked up a Boston house for $60k out of receivership.

The metrics simply aren't in favor of expanding home prices in most areas.

Real estate is increasingly cyclical and a sustained increase is simply impossible.

US Population growth is expected to go negative within the next decade, this won't bode well for property prices

 

[JeffKeryk]

Regarding house prices, they are declining in Silicon Valley. But the better neighborhoods, of course, drop less.
I know of a recent sale, near the new Apple Spaceship, 1650 square feet, 3/2, small lot, 50 years old ranch style, remodeled reasonably, that I thought would go for close to $2M or perhaps more.
It sold in 2 days for $1.9M; there were multiple offers.
A Google Director and his wife (PWC Consultant) put $50K down and will make $7K monthly payments.
A year ago this was an easy $2.1M sale. Or more.

Sunnyvale, CA

 

[wings&wheels]

Originally Posted by JeffKeryk
Regarding house prices, they are declining in Silicon Valley. But the better neighborhoods, of course, drop less.
I know of a recent sale, near the new Apple Spaceship, 1650 square feet, 3/2, small lot, 50 years old ranch style, remodeled reasonably, that I thought would go for close to $2M or perhaps more.
It sold in 2 days for $1.9M; there were multiple offers.
A Google Director and his wife (PWC Consultant) put $50K down and will make $7K monthly payments.
A year ago this was an easy $2.1M sale. Or more.

Sunnyvale, CA


Odd, if it sold in 2 days w/ multiple offers it sounds like it could/should have been priced higher. May have been some other factors driving the price and sale timeline.

Crazy money, but boy did we enjoy living in Palo Alto....

 

[JeffKeryk]

Originally Posted by wings&wheels
Originally Posted by JeffKeryk
Regarding house prices, they are declining in Silicon Valley. But the better neighborhoods, of course, drop less.
I know of a recent sale, near the new Apple Spaceship, 1650 square feet, 3/2, small lot, 50 years old ranch style, remodeled reasonably, that I thought would go for close to $2M or perhaps more.
It sold in 2 days for $1.9M; there were multiple offers.
A Google Director and his wife (PWC Consultant) put $50K down and will make $7K monthly payments.
A year ago this was an easy $2.1M sale. Or more.

Sunnyvale, CA


Odd, if it sold in 2 days w/ multiple offers it sounds like it could/should have been priced higher. May have been some other factors driving the price and sale timeline.

Crazy money, but boy did we enjoy living in Palo Alto....

I was afraid of the recession. Yes there is $$ here, but there are still only so many people who can afford this kinda money.
I believe the market is continuing to slow.

 

[Andrew1972]

Honestly I feel I guess upper middle class with a nearly $1M(60% Home) net worth at age 47. My wife only works 20hrs so we pull in $170k income and 3 kids it does not seem like as much as you'd think.

She drives the new vehicle a base model 18 VW Tiguan and myself a $3k at best 200k Acura MDX.

I think our area is just $$$$. Median income in town is $106k.

 

[The Critic]

Originally Posted by madRiver
Honestly I feel I guess upper middle class with a nearly $1M(60% Home) net worth at age 47. My wife only works 20hrs so we pull in $170k income and 3 kids it does not seem like as much as you'd think.

She drives the new vehicle a base model 18 VW Tiguan and myself a $3k at best 200k Acura MDX.

I think our area is just $$$$. Median income in town is $106k.


My new town is $147K, but it doesn't feel particularly special.

I think the number can be a bit deceiving. Certain areas are fueled by "old money" so the statistics are not reflective of this.

 

[fdcg27]

Originally Posted by gfh77665
Originally Posted by Mr Nice

Will the housing market crash in the next 2-3 years ?


Overall, no. The growing population and social isues will continue to drive people out of the inner cities, into the suburbs, then the exurbs, creating stable supply and demand. Also, the banks are no where near as leveraged as they were during the foreclosure crisis. The banks have to sucessfully pass financial "stress tests" regularly.

There very likely will be a crash in the few grossley overheated markets, like San Francisco, New York, etc. The rest of the country wil likely have moderate price gains. Undervalued markets like Texas, will continue to climb.


The long term trend for houses in the 'burbs, much less the boonies, is probably not all that good. The population is aging and as people grow older, they sell their homes as they reach the point where they no longer wish to or are physically unable to care for their homes. They seek apartments and the average age of those in established higher-end rental buildings is surprisingly high. There is also a trend toward younger people seeking urban housing, either gorgeously redone old office buildings or new builds on tear-down sites. Many young people are either single or attached through marriage or merely partnership and plan no offspring. For such people, the fears of the social problems and lousy school systems of many older cities are of much less importance and there is a street level walkable vibrancy to urban living that you just don't get in the 'burbs, the mall being but a poor and synthetic substitute for this.
I think anyone banking on cashing out of an outsized house to partially fund their retirement may be making a fool's bet, although this does depend upon the time horizon anyone might be looking at.