How rich are people in this forum lol?

[ROASTM]

Originally Posted by Bonk!

This sounds a bit old school but I've never purchased anything I couldn't pay cash for (except real estate). When I was starting out professionally I put any raises/bonuses into a separate account, figuring I could live without it. That was my 'next car' account and I drove the same thing until that account grew enough that I could afford the next one. Age 55 and no debt except an affordable mortgage.

This is the way.

[Reborn_]

Originally Posted by The J-Man

Other than housing, what exactly is more expensive about California? I hear people complain about this, but I don’t get it. Food? Utilities?

And entertainment. Pretty much everything except groceries/standardized products whose pricing cannot be changed by individual stores. With higher rents/property cost comes higher cost passed to consumer.

And to echo some of the better comments on the subject at hand, financial decisions are often not linked at all to net worth or cash flow in a way that would make sense for your perspective - everyone makes decisions based on financial, personal, and other factors. On top of that, everyone's outlook on 'wise' financial decisions is different.

[dinonz]

I would not gauge a persons wealth on their car. I think Warren Buffett drives a Toyota Corolla. As many have said, what people drive is often for other reasons and not reflective of their wealth or income - to a degree. I have a nice collection of exotics all paid for in cash, so that is a pretty good indication I'm not poor.

Although it's entirely possible to be asset rich and cash poor - you can have millions in assets, and no cashflow/income to support it (paying property taxes, vehicle insurance and maintenance etc.). Even being totally debt free doesn't equate to "living off the grid" and not needing income.

But also I've learned that being totally debt free is not always a good idea. Homes are also not a good investment if you have money, but are good for people on a more "normal" path in life. Buying a home at 25 with a 30 year note means forced savings. Every month you put your money into your home, and over the 30 years you eventually own it outright, and it's increased in value, and so becomes a good asset. I'm building a new home at the moment, and whilst I could pay cash and be "debt free" why would I? I'll end up with a home loan a bit over $1.5 million, at a cost of about $7K a month round figures. With that $1.5 million that I could have paid cash I'll invest in an LLC I know locally that pay 10% return on investment - so I'll make $150K, or about $12.5K a month in income from it. Even after taxes, it pays the home loan for me with extra cash in my pocket.

So before becoming debt free, check to see if you can utilize that money elsewhere to generate more income than you use servicing the debt. It's a bit of a mind-shift for some, but if the numbers stack up it's worth it. I think when I checked that about 5.5% was my magic mark - if I was paying more interest than that pay it off, but under that I was financially better off to invest the money and keep the debt.

[Murf993]

Originally Posted by dinonz

I would not gauge a persons wealth on their car. I think Warren Buffett drives a Toyota Corolla. As many have said, what people drive is often for other reasons and not reflective of their wealth or income - to a degree. I have a nice collection of exotics all paid for in cash, so that is a pretty good indication I'm not poor.

Although it's entirely possible to be asset rich and cash poor - you can have millions in assets, and no cashflow/income to support it (paying property taxes, vehicle insurance and maintenance etc.). Even being totally debt free doesn't equate to "living off the grid" and not needing income.

But also I've learned that being totally debt free is not always a good idea. Homes are also not a good investment if you have money, but are good for people on a more "normal" path in life. Buying a home at 25 with a 30 year note means forced savings. Every month you put your money into your home, and over the 30 years you eventually own it outright, and it's increased in value, and so becomes a good asset. I'm building a new home at the moment, and whilst I could pay cash and be "debt free" why would I? I'll end up with a home loan a bit over $1.5 million, at a cost of about $7K a month round figures. With that $1.5 million that I could have paid cash I'll invest in an LLC I know locally that pay 10% return on investment - so I'll make $150K, or about $12.5K a month in income from it. Even after taxes, it pays the home loan for me with extra cash in my pocket.

So before becoming debt free, check to see if you can utilize that money elsewhere to generate more income than you use servicing the debt. It's a bit of a mind-shift for some, but if the numbers stack up it's worth it. I think when I checked that about 5.5% was my magic mark - if I was paying more interest than that pay it off, but under that I was financially better off to invest the money and keep the debt.

Your points are all valid. There are uber rich with much different rules, there are rich which I suspect is your category who clearly play be different rules and then there is the rest of the population with varying degrees of wealth, debt, liquidity, assets etc. For most of them they are trying to live a comfortable lifestyle, good cashflow and owning a nice home with some toys (which could be a big screen or a sports car). They try to pay off their home and have some money set aside to retire, which may look like sitting in their garden or doing world travel. A few folks have the luxury of having $1.5M cash on hand to make those types of financial decisions. Lots of us could make investments like you suggest if we had the cash on hand. I'm not rich, but I've done well. If I had it all to do over I'd have made a few decisions differently and been much better off financially, but I have no real complaints, although I must say I am envious of your collection of exotics.

[Dino GT]

Originally Posted by Murf993

That's "Fuck You" money. Isn't that from a real estate listing a year or two ago?

Yes it is, at the time it was the most expensive private home for sale ever.

[dinonz]

Originally Posted by Murf993

Your points are all valid. There are uber rich with much different rules, there are rich which I suspect is your category who clearly play be different rules and then there is the rest of the population with varying degrees of wealth, debt, liquidity, assets etc. For most of them they are trying to live a comfortable lifestyle, good cashflow and owning a nice home with some toys (which could be a big screen or a sports car). They try to pay off their home and have some money set aside to retire, which may look like sitting in their garden or doing world travel. A few folks have the luxury of having $1.5M cash on hand to make those types of financial decisions. Lots of us could make investments like you suggest if we had the cash on hand. I'm not rich, but I've done well. If I had it all to do over I'd have made a few decisions differently and been much better off financially, but I have no real complaints, although I must say I am envious of your collection of exotics.

Yeah - there are people at all points on the scale and the "rules" for each are different. For those living paycheck to paycheck, the rules are "try to stay alive". For those wise enough to squirrel money away, there's a different set of rules. For years I worked hard but felt I was getting nowhere, and even now I would say there's many on the forums earning way more than I am (I don't think I have a really high salary - certainly not in the 1% I know that) - where my lifestyle has come from is founding a company that has slowly grown over the 10 years from 3 people to about 300, and is now worth serious money. You don't have to invent the next Facebook or SnapChat to do well, but I will never be in Zuckerberg's league money wise either.

[Murf993]

Originally Posted by dinonz

Yeah - there are people at all points on the scale and the "rules" for each are different. For those living paycheck to paycheck, the rules are "try to stay alive". For those wise enough to squirrel money away, there's a different set of rules. For years I worked hard but felt I was getting nowhere, and even now I would say there's many on the forums earning way more than I am (I don't think I have a really high salary - certainly not in the 1% I know that) - where my lifestyle has come from is founding a company that has slowly grown over the 10 years from 3 people to about 300, and is now worth serious money. You don't have to invent the next Facebook or SnapChat to do well, but I will never be in Zuckerberg's league money wise either.

A little luck, a lot of hard work and the willingness to take some risk can all go a long way.

[dinonz]

Originally Posted by Murf993

A little luck, a lot of hard work and the willingness to take some risk can all go a long way.

Yeah - and being single and child free helps. Married or with children, peoples risk aversion might be higher. I was in a position of "why not" and am lucky how things turned out.

[sygazelle]

Originally Posted by The J-Man

Other than housing, what exactly is more expensive about California? I hear people complain about this, but I don’t get it. Food? Utilities?

Here you go:

https://www.numbeo.com/cost-of-livin...2=Denver%2C+CO

[Sara]

Originally Posted by zx10guy

Ha. I see your daughter and three horses and raise you my daughter, three motorcycles, and a sailboat.

I see your daughter, three motorcycles, and sailboat and raise you private school tuition, 4 hermit crabs, and botox and lip filler addictions on a single income with no child support.. #wonderwoman

[sygazelle]

Originally Posted by hubbahubba

Net worth is very fungible. Cash flow is all that matters for lifestyle. Unless you are REALLY rich....

Okay, I'm willing to learn something new.

Can you tell us how exactly net worth is fungible? More importantly, how exactly why net worth fungibility is even relevant to the OPs post?

[P1]

Gotta love the predictable humble brag responses these types of threads bring.

[sygazelle]

Originally Posted by hubbahubba

Net worth is very fungible. Cash flow is all that matters for lifestyle. Unless you are REALLY rich....

Net worth, income vs. expenses, and cash flow are all interrelated.

You are correct that cash flow can drive lifestyle, but only in the short term. That term ends when you run out of cash.

If a person pays attention to net worth and income vs. expense too instead of just focusing on cash flow, the chances of running out of cash go way down.

[gatorfast]

Originally Posted by P1

Gotta love the predictable humble brag responses these types of threads bring.

lol yup. Those that only pay cash and have no debt. Those that don't consider $150k a lot for a car. No shortage of advice or opinions on the internet! Everyone is rich and fancy here.

[dinonz]

Originally Posted by sygazelle

Net worth, income vs. expenses, and cash flow are all interrelated.

You are correct that cash flow can drive lifestyle, but only in the short term. That term ends when you run out of cash.

If a person pays attention to net worth and income vs. expense too instead of just focusing on cash flow, the chances of running out of cash go way down.

I personally focus on cash flow quite a bit - in fact I have a spreadsheet with my project cashflow for the next 2 years plotted out. It's a brilliant tool for me for the "what if" scenarios - "what if I have an unexpected car bill of $x next month" and I can see that I'll run out of cash on hand by a given time. Has been useful when friends have asked to borrow not inconsequential sums for a period, or when I said I would pay for my friends rehab from brain tumor surgery - I could just plug the numbers in, see where everything fell with the home and everything else I have going on, so now when I close on the house I know how much to draw down from investments etc.

I think good cashflow forecasting is valuable, and something lacking in a lot of the online tools like Mint (I stopped using it and developed the spreadsheet for that reason). Mint is great for tracking "this month" although with credit cards often not being aligned a calendar month, they can be a pain in the ass too.

[erickonphoenix]

In my zip code, it seems that around 70k will make most necessities relatively attainable. After that it's just better versions of the same things, house, car, food, etc. I've got a college buddy that's a multi millionaire and by comparison we have much of the same things only his are either bigger or better quality.

At my salary I should probably be in a Buick Regal TourX but I prefer the general fit and finish of a German wagon. Since I used to work on them so I can do my own maintenance so it helps offset the risk of buying used. But I don't think any of that really matters anymore. BMW is not really the prestige brand it once was. Every other vehicle on the road around here seems to be an X1, X3 or X5.

My buddy that's the millionaire? He drives a Ford F250 that I think clocked in around 50k. His wife drives a Jeep Grand Cherokee. His kids Uber everywhere.

[garyfried]

Originally Posted by kscarrol

Might as well ask how big is your pecker... everything is bigger on the internet!

I love this comment. My answer is almost huge and we know almost means not.

[racerbruce]

We are abundantly rich.

We have shelter from the elements.
We have enough food to survive.
We have health.

[tcphoto]

There are three things you never ask a man, how much do you make, can I borrow your wife and can I drive your car, motorcycle or boat.

[zx10guy]

Originally Posted by Sara504

I see your daughter, three motorcycles, and sailboat and raise you private school tuition, 4 hermit crabs, and botox and lip filler addictions on a single income with no child support.. #wonderwoman

LOL. Paying for private school for my daughter, 529B, and child support. Not to mention the financial hole that the divorce caused on me as the financial distribution was all one sided in the ex's favor.

In all seriousness, I get you and everyone has their struggles. My comment is more tongue in cheek.

[zx10guy]

Originally Posted by racerbruce

We are abundantly rich.

We have shelter from the elements.
We have enough food to survive.
We have health.

That right there is a priceless asset that most people take for granted. When you suffer from a serious illness, you realize how important health is as all the wealth in the world means nothing if you're not around to enjoy it.

[sygazelle]

Originally Posted by dinonz

I personally focus on cash flow quite a bit - in fact I have a spreadsheet with my project cashflow for the next 2 years plotted out. It's a brilliant tool for me for the "what if" scenarios - "what if I have an unexpected car bill of $x next month" and I can see that I'll run out of cash on hand by a given time. Has been useful when friends have asked to borrow not inconsequential sums for a period, or when I said I would pay for my friends rehab from brain tumor surgery - I could just plug the numbers in, see where everything fell with the home and everything else I have going on, so now when I close on the house I know how much to draw down from investments etc.

I think good cashflow forecasting is valuable, and something lacking in a lot of the online tools like Mint (I stopped using it and developed the spreadsheet for that reason). Mint is great for tracking "this month" although with credit cards often not being aligned a calendar month, they can be a pain in the ass too.

Of course, cash flow is important. Good for you for taking charge and not running blind. Excel is perfect for this (when you have the right skills).

All I'm saying is there are three legs to the stool:

Cash flow
Net worth
Income vs. Expenses.

If you actively plan to increase your net worth over time as opposed to just making sure you have enough cash, your financial well-being will be better off in the long term.