keeping "down" with the jones'

[aussierogue]

Cloudy day

You will be happy to know that recently i officialy became a millionaire. For the last 5 years i have had a salary over 200k not including bonus's. I have been on 100k plus for 15 years.

We live however like we earn 85k and save/invest the rest.(since 2000 anyway before that we spent everything - ive been to 40 countires and lived well)

(if i leveraged more and took more risks I would probably be worth much much more) But that is ok i am very happy with my families position. A millionaire in 9 years is ok with me.

I walk and ride because it keeps me fit and I dont like driving in peak traffic and part of me enjoys the fact that it is a green thing to do.

I think the choices I make are logical.

Read 'the millionaire next door' - then you might get it.

Cheers
Aussie

 

[skater]

Maybe you represent the poor rich? The ones that have 10 properties, drive an old car, hit70-80, pass away and then leave all their assets to their children who spend it all up.

Please help me out here. Just what is your definition of the "poor rich?"

Is there such a thing (to you anyway) as the "rich rich?"

If you're a millionaire and you take the train daily or ride your bike around the city, I gotta say that's pretty good. I don't know many millionaires who ride their bike to work daily to save a few bucks. Say a millionaire works and earns $500k/year, he works 7 hours a day. It means his hourly worth is (7 hrs x 5 days week = 35hrs x 50 weeks = 1750hrs/year). 500k salary divide 1750 hrs year = $285 an hour. If you were earning this much would it be smarter paying $15 for a parking ticket or waste time ...Waiting for a train, getting on the train, getting off a train stop, then walk possibily hundreds of metres (10-15mins) from train stop to his office? hrmmm

I know many millionaires. Not one of them earn an income of over $500k. Becoming wealthy has nothing to do with how much you earn, but rather what you do with it.

Read 'the millionaire next door' - then you might get it.

Absolutely! Read the book. Judging by your comments it will surprise you.

 

[kero]

thats strange, a few friends who are doctors say they are busy as ever... with stress levels up, people are getting sick easily.

Well, if all else fail, ask your neighbour to bulk bill. always work

 

[pieman]

- http://www.somersoft.com/forums/showthread.php?p=603147#post603147

EDIT: So it looks like your daily transport is walking or riding your bike. Thought so Do you ride the bike or take the train to help the environment and save on parking fees? If you're a millionaire and you take the train daily or ride your bike around the city, I gotta say that's pretty good. I don't know many millionaires who ride their bike to work daily to save a few bucks. Say a millionaire works and earns $500k/year, he works 7 hours a day. It means his hourly worth is (7 hrs x 5 days week = 35hrs x 50 weeks = 1750hrs/year). 500k salary divide 1750 hrs year = $285 an hour. If you were earning this much would it be smarter paying $15 for a parking ticket or waste time ...Waiting for a train, getting on the train, getting off a train stop, then walk possibily hundreds of metres (10-15mins) from train stop to his office? hrmmm

Im a millionaire and happily catch the train to work everyday. Would never pi%% up my $$ on parking or could ever bare the carpark of cars inching along.

 

[HiEquity]

EDIT: So it looks like your daily transport is walking or riding your bike. Thought so Do you ride the bike or take the train to help the environment and save on parking fees? If you're a millionaire and you take the train daily or ride your bike around the city, I gotta say that's pretty good.

Chalk up another person who knows plenty of millionaires who cycle to work. I understand it has something to do with personal wealth being irrelevant in the face of poor health brought on by a sedentary lifestyle...

Back on topic, I have seen conspicuous consumption go a little bit out of fashion compared with how it used to be. I reckon it's a good thing to see given the balance was very heavily weighted the other way not that long ago. Just do whatever floats your boat - plenty of people get no satisfaction from consumption and plenty of other people do. It's all good...

 

[aussierogue]

Its funny - maybe the issue with conspicous consumption is that some people (youngster mostly - ha) THINK rich people act a certain way and drive certain cars and live in certain houses and listen to certain music etc etc when the truth is sometime very different. So the perception is wrong and they wrongly go out and try and live like what they think rich people live like....if that makes sense.

Most old rich are frugal and only buy big expensive cars because they are seriously rich. Otherwise they live and shop quite frugally.

 

[sue78]

aussierogue - haha think also mid-life crisis. My bro went through a boat and porsche. It's funny coz it was a right mess and had a babyseat in the back....he's so not snobby and I didn't even feel any diff sitting in a Porsche, infact it's not even comfy. He also got a landcruiser to tow the boat but then gave up and docked it in St Kilda. My poor sister in law.

Now that he's over it, he has downsized to a practical family car, 7 series BMW. But wow, how much money did he lose...but I guess if u can afford it and it's only money etc especially when some ppl don't cope with mid-life crisis well.

 

[aussierogue]

Hi Sue - yep.

A mid life crisis is a damm good reason. But as you pointed out that also ran its course. I have toyed with various midlife crisis ideas - motorbike, yute, mustang....it will happen too - unfortunatley for my wife...

cheers

 

[cloudyday]

I know many millionaires. Not one of them earn an income of over $500k. Becoming wealthy has nothing to do with how much you earn, but rather what you do with it.

Absolutely! Read the book. Judging by your comments it will surprise you.

I guess you have a different definition of wealth. I would rate $500k/year salary as a base/standard salary if you want to be classified as a true rich millionaire.

I've read The Millionaire Next Door and The Millionaire Mind years ago, both are excellent books and goes into detail about what who your "average" millionaire is. Most have high paying jobs (e.g. law, doctor), but even more own their own small business. The book also talks about the frugal spending on the rich, which I do admire and agree that the rich are extremely frugal, but their frugal is more akin to, paying for a high price quality item and expecting it to last a long time.

I think Ausprop has picked out a few cases of extravagant spending and assumed things to uplift himself. E.g. remarks on young people driving expensive cars are drug dealers and the only people he sees at auctions are rich snobs.

You will be happy to know that recently i officialy became a millionaire. For the last 5 years i have had a salary over 200k not including bonus's. I have been on 100k plus for 15 years.

We live however like we earn 85k and save/invest the rest.(since 2000 anyway before that we spent everything - ive been to 40 countires and lived well)

That's great, but 5yrs x 200k before tax is not a millionaire, most of that money would also be consumed up in mortgages, rents, food and tax!

Saving is a great thing and being frugal is as well, but don't get jealous of those driving around in their expensive cars, which they've probably worked very hard to own one. Your comment about under 40yr olds driving around in their expensive cars are most likely drug dealers is insulting to hand working individuals who spend countless hours a week working away, foregoing holidays when everyone else is out at a pub/club partying away on their weekends. These same bludgers then see these individuals with expensive cars and assume they're just drug dealers or lotto winners, because their assumption is.. "If I work and still can't afford one of these toys, how does this loser afford it.... I guess he won the lotto or deals in drugs" Got Tall poppy Syndrome?

 

[cloudyday]

Please help me out here. Just what is your definition of the "poor rich?" Is there such a thing (to you anyway) as the "rich rich?"

Yep, I've seen both. Poor rich. Extremely frugal with their money, because they have to. They may have various properties, e.g. 5-10 properties but they are highly dependent on ensuring they live a frugal lifestyle to meet with those mortgage repayments. Any excess spending will wreck havoc on their financial future. These are your typical mum and dads each earning $100k/year ($200k combined) driving around in their Camry's and working hard to maintain their IPs.


Rich rich. CEOs, high paying jobs. This is your $500k/year salary MINIMIAL earners. They have a couple of properties and live frugal, but spend wisely, e.g. they will buy expensive things but expect them to last a long time. These are the ones driving around in the Mercs, Porsche, Lambos and have a lot of money to toss around. They can "afford" to live like this because of their salary, they don't need to be extremely frugal with trying to live absolutely cheap because unlike the "poor rich" they don't need to.

There are HEAPS and HEAPS of poor rich around. Have you seen the estimated number of real estate investors in Australia that have over 5 ips? There's hundreds of thousands of them, and there are many many more on $250k combined salaries.

The 250k/year salary family with 5 IPs these days are dime-a-dozen. They are not what I consider a real millionaire because they're still struggling. Say if they paid off all those houses and they were cashflow positive and they were earning income (e.g. $150k/year) doing nothing, I guess that would classify them as a true lifestyle millionaire.

Becoming wealthy has nothing to do with how much you earn, but rather what you do with it.

"Has nothing to do with how much you earn" ??? Really? Try saying that to a chef earning $45k a year for his entire life vs a CEO who earns a few hundred Ks a year. I've heard this from a lot of self-help books and to be honest it's getting lame. These books try convincing you it's not the salary that's important but the way to wealth is just by saving money. How many millions of Australia/Americans earn average salaries? in the $60-70k/year range? I'd say most are in this range. How many are still struggling with bills and payments? I'd say a good chunk of them.

Saving is an important thing and there is huge evidence to suggest the wealthy are FAR better at saving their high incomes than the average income earners. The statement "Becoming wealthy has nothing todo with how much you earn" is false because in this day and age just basic essentials (rent, mortgage, food, insurance etc) for most people is their entire salary. What is left to save? Impossible unless you have high income.

 

[skater]

Yep, I've seen both. Poor rich. Extremely frugal with their money, because they have to. They may have various properties, e.g. 5-10 properties but they are highly dependent on ensuring they live a frugal lifestyle to meet with those mortgage repayments. Any excess spending will wreck havoc on their financial future. These are your typical mum and dads each earning $100k/year ($200k combined) driving around in their Camry's and working hard to maintain their IPs.

There are HEAPS and HEAPS of poor rich around. Have you seen the estimated number of real estate investors in Australia that have over 5 ips? There's hundreds of thousands of them, and there are many many more on $250k combined salaries.

The 250k/year salary family with 5 IPs these days are dime-a-dozen. They are not what I consider a real millionaire because they're still struggling. Say if they paid off all those houses and they were cashflow positive and they were earning income (e.g. $150k/year) doing nothing, I guess that would classify them as a true lifestyle millionaire.

I am realy at a loss to work out what you are trying to say here. I don't have the time to look up the stats, but you will find that the percentage of investors that have 5 or more is very low. Much less than than 10% of ALL property investors. The only place you will find those with 5 or more IP's en mass is in places like this, on a Property Investing Forum. You will also find that they all have varying incomes too and that many of them have never earnt a salary of $250k.

Of those that you would call struggling, I would presume most of them do this in order to accumulate more wealth, to enable them to retire early and keep a reasonable income level, much like your cashflow positive example, only the $$ required will be different depending on each individuals wants/needs.

Rich rich. CEOs, high paying jobs. This is your $500k/year salary MINIMIAL earners. They have a couple of properties and live frugal, but spend wisely, e.g. they will buy expensive things but expect them to last a long time. These are the ones driving around in the Mercs, Porsche, Lambos and have a lot of money to toss around. They can "afford" to live like this because of their salary, they don't need to be extremely frugal with trying to live absolutely cheap because unlike the "poor rich" they don't need to..

Live frugal/spend wisely. Get real! Can you explain to me how living frugally and driving a Lambo can be put in the same sentance together. You will find that a lot of people on very large salaries like your example are still struggling. This is because they spend to equal their salary. Yes, they might buy the expensive car, the $12m mansion, the many expensive overseas holidays. But at the end of the day, they are tied to their job in the same way that someone on a base wage is. That is because the money gets spent as fast as it's earnt.

"Has nothing to do with how much you earn" ??? Really? Try saying that to a chef earning $45k a year for his entire life vs a CEO who earns a few hundred Ks a year. I've heard this from a lot of self-help books and to be honest it's getting lame. These books try convincing you it's not the salary that's important but the way to wealth is just by saving money. How many millions of Australia/Americans earn average salaries? in the $60-70k/year range? I'd say most are in this range. How many are still struggling with bills and payments? I'd say a good chunk of them.

Saving is an important thing and there is huge evidence to suggest the wealthy are FAR better at saving their high incomes than the average income earners. The statement "Becoming wealthy has nothing todo with how much you earn" is false because in this day and age just basic essentials (rent, mortgage, food, insurance etc) for most people is their entire salary. What is left to save? Impossible unless you have high income.

There is a huge difference between saving and investing. You don't need to be on a huge salary. It is all about choices.

Do yourself a favour. Do a search for Brenda Irwin. She is an old time poster who built up a large portfolio of properties on a minimum wage. Then retired. I am betting that she does not live in a million dollar mansion or drive around in a Porche, but she is indapendantly wealthy.

Her family earnt enough for them to live a comfortable lifestyle. It is not extravagant in any way, but they are free to do what they want. If they choose to work, they can, but they don't HAVE to work. They can also invest further, if they want to.

Another inspirational lady is Katrina. She still sometimes contributes. I am sure that she started with a higher income than Brenda, but again has built up a huge portfolio. I believe Katrina is still working on her portfolio and has a great deal more than her previous posts, but there is a very good thread about her many properties that she bought in Geraldton.

 

[evand]

If what your saying is true, there wouldn't be a huge luxury goods industry. It takes a lot of money to support this industry of expensive suits, cars, perfumes etc..

Its not just the seriously rich. I cant see the problem with buying expensive stuff. Cheap stuff is usually false economy and doesn't last.

Its funny - maybe the issue with conspicous consumption is that some people (youngster mostly - ha) THINK rich people act a certain way and drive certain cars and live in certain houses and listen to certain music etc etc when the truth is sometime very different. So the perception is wrong and they wrongly go out and try and live like what they think rich people live like....if that makes sense.

Most old rich are frugal and only buy big expensive cars because they are seriously rich. Otherwise they live and shop quite frugally.

 

[cloudyday]

Live frugal/spend wisely. Get real! Can you explain to me how living frugally and driving a Lambo can be put in the same sentance together. You will find that a lot of people on very large salaries like your example are still struggling. This is because they spend to equal their salary. Yes, they might buy the expensive car, the $12m mansion, the many expensive overseas holidays. But at the end of the day, they are tied to their job in the same way that someone on a base wage is. That is because the money gets spent as fast as it's earnt.

What you fail to understand, and it's understandably as you probably never earnt a high income is that someone on $500k/year income spending $150k on a car (30% of income) is equivalent to a poor rich individual who is on $70k income a year who purchases a Corolla ($21k), the only difference is the guy who purchased his Merc/BMW for $150k is going to end up with a better depreciating car that he can sell later on whilst the guy who owns the Corolla ends up offloading his car at the flea market (go check on Redbook and you'll see the rate typical cars depreciate vs luxury cars). Furthermore the guy on $500k/year has $350,000 a year (before tax) to spend on food, rent, mortgage, etc. Whereas the poor rich individual on $70k has $49k and I bet that will barely cover his rents, mortgages and food. So your logic that SAVING is the path to being wealthy is flawed. It takes BOTH saving and high income. I reckon you'd make a good motivational speaker to all the struggling part time hairdressers, chefs and cleaners around the country. Nothing against them, because I know how hard they work, but to give them FALSE hope is just cruel.

 

[lizzie]

cloudyday ... i would suggest you pull you head in a little. you are coming across as rather arrogant know it all for someone who has only 23 posts on this forum, no background that we are aware of and no kudo squares (except the 1 we are all issued with) and hence little credibility - quit trying to quote and dictate to those who have been around the traps a heck of a long time.

some have done it the hard way, some have done it easier, but all know a heck of a lot about being rich, being poor, living frugally, living well, aspiration and plain hard work.

skater is right - there are people on $1mil a year struggling to pay the bills under stress and those on $50k who are living the life of their dreams.

it doesn't take a high income to become wealthy - it takes hard work, a passion, an ability, skill and desire ... jan and ian somers (whose forum this is) are a perfect example. both teachers, not a high income, now extremely wealthy. another example is john ilham, son of immigrant parents who started as a telephone salesman (okay, so he died, but didn't he do well without a high income). also mr bouris (from the apprentice), built up wizard finance from nothing, sold it for $14mil, and is now working on his next project.

what comes first? the high income or the passion, drive and investment? hey - how about dazzling (or whatever he calls himself now ) from this forum, worked on the oil rigs and is now a multi multimillionaire from buying dirty, rubbish filled industrial complexes and cleaning them up for rental. even tho he would have been on good money, i doubt it was $500k when he started investing.

anyhow - this is getting off topic. i'm pretty happy that i also am a millionaire despite being a stay at home mum who invests and renovates in my spare time. i also drive a 11yr old corolla - thru choice. can easily afford a new car. could easily afford a bmw or merc if i really really wanted, but i don't want. i see it as a waste of money personally as my corolla won't depreciate any further in value, runs well, costs very little to maintain and i live in the inner ring 5mins from everything so barely use it.

 

[cloudyday]

Its funny - maybe the issue with conspicous consumption is that some people (youngster mostly - ha) THINK rich people act a certain way and drive certain cars and live in certain houses and listen to certain music etc etc when the truth is sometime very different. So the perception is wrong and they wrongly go out and try and live like what they think rich people live like....if that makes sense.

It seems there's quite a lot of average working families now who have a few properties under their belt, live frugally, drive old cars and now pat themselves on the back claiming they're the new generation of millionaires. The truth is, most of these are just your higher class suburbian families and NOT your real millionaires. The real millionaires are the ones who can fork out a $10,000 gift without pondering about it for weeks, they can go in and pickup a $5million house as their HOLIDAY home. They are what Hollywood and the mainstream media STRIVE to reach. Ask yourself if you had UNLIMITED money (e.g. $40million dollars a year in income) would you still drive a $10k car, would you still live in a 2bedroom house with a leaking toilet? What I'm failing to understand is why many onthis forum strive for such average goals and pat themselves on the back all the time? (e.g. live frugally, drive old cars, buy a few properties and then if my houses double I end up with a nice nestegg) Then pat themselves on the back thinking they're the real millionaires.

But at the end of the day, all wealth is relative. A guy once told me he regarded himself as super wealthy (he's on social security). When I questioned him more his response was, the amount of money he gets on the dole makes him amongst the top 10% richest group of people in the world. I checked this website he gave me and shockingly he is absolutely right. Go enter your salary here and find out how "rich" you really are. http://www.globalrichlist.com/

So your definition of rich is really all relative to where you live.

 

[cloudyday]

it doesn't take a high income to become wealthy - it takes hard work, a passion, an ability, skill and desire ... another example is john ilham, son of immigrant parents who started as a telephone salesman (okay, so he died, but didn't he do well without a high income). also mr bouris (from the apprentice), built up wizard finance from nothing, sold it for $14mil, and is now working on his next project.

So where did John Ilhan get his millions to buy his Lambo and his multimillion dollar houses? I guess he was a faker as Ausprop would say since he was young and driving Lambos around.

Mark Bouris offloaded Wizard for $500 million, not $14mill. Where did you get that figure from?

i would suggest you pull you head in a little. you are coming across as rather arrogant know it all for someone who has only 23 posts on this forum, no background that we are aware of and no kudo squares (except the 1 we are all issued with) and hence little credibility - quit trying to quote and dictate to those who have been around the traps a heck of a long time.

I know there are a lot of highly skilled and smart individuals on this forum. I posted in this thread because I was getting sick and tired of these wannabe/frugal millionaires who despise and mock those who drive expensive cars or own expensive homes because they make false assumptions about them to PLEASE themselves "e.g. He must be a drug dealer to afford that, gee I guess I was smart sticking to this Corolla, because I'm not as stupid as these big spenders". At the end of the day who ends up being more of an arrogant person?? the rich guy carrying on with his life or the frugal guy driving his/her rust bucket making assumptions about someone who might genuinely be rich just to satisfy his grand financial plan. "Hey if I just live like a cheap bum I will eventually get there! These fakers driving around in their Lambos with their million dollar holiday homes and fleet of cars are just fake posers who will end up with nothing"....

 

[pieman]

Cloudy, out of interest, would you mind sharing with the forum some of your personal investment experiences.
As I've learnt heaps from this forum over the years and I see you're a recent arrival I'm keen to see how you have invested.
cheers
pieman

 

[Perp]

I think Ausprop has picked out a few cases of extravagant spending and assumed things to uplift himself. E.g. remarks on young people driving expensive cars are drug dealers and the only people he sees at auctions are rich snobs. ... That's great, but 5yrs x 200k before tax is not a millionaire, most of that money would also be consumed up in mortgages, rents, food and tax!

Those quotes weren't Ausprop, they were aussierogue.

At the end of the day who ends up being more of an arrogant person?? the rich guy carrying on with his life or the frugal guy driving his/her rust bucket making assumptions about someone who might genuinely be rich just to satisfy his grand financial plan. "Hey if I just live like a cheap bum I will eventually get there! These fakers driving around in their Lambos with their million dollar holiday homes and fleet of cars are just fake posers who will end up with nothing"....

As always, the truth is somewhere between the extremes. I think cloudyday makes a valid point in highlighting that there certainly is a tendency amongst some forumites to assume: 1) frugality and wise investments are the path to wealth, and 2) people with expensive cars etc probably aren't truly wealthy.

Whilst it is possible to become wealthy by living frugally and making wise investments, and possible that some people drive cars that they can't really afford, it's also possible to live frugally and remain poor, and to be wealthy enough to spend conspicuously and have plenty left over.

I think cloudyday's posts have served the purpose of highlighting the error of black-and-white thinking.

 

[evand]

With the low yields available in Australian property investing. I'd say 99% of property investors need to live a frugal life to accumulate property.
They have no choice but to be frugal to support limited cashflow on average wages..

And that includes the generous tax incentives attached to property investing.

 

[rugrat]

Cloudy, out of interest, would you mind sharing with the forum some of your personal investment experiences.
As I've learnt heaps from this forum over the years and I see you're a recent arrival I'm keen to see how you have invested.
cheers
pieman

Me too

Just curious....
I would like an idea of who you are so I can put your statements in context. How old are you? What is your story?

I can see where you are coming from. Personally I feel you are a little wide of the mark in what you are saying - but then I think so are some of the other post's as well.

As for me, I have an aunty and uncle who are Extremely well off (some might say 'rich' ). They own a chain of farms, both here and overseas. They would (in my estimation) be worth $millions after debts and expenses. They are a mixture of frugal and ostentatious. For any outsider to look at them they would simply think that they are of 'average wealth' - no flash cars (well not flasher then a brand new Comodore or such) and they 'look' like 'normal people'. But if unless you knew them well, you would never know about the 2 different holiday houses they own (in prime realestate areas), Nor would you know that they gave each of their children a house each when they married, nor would you know that they give away tens of thousands of $ each year to their church and various charities and fly overseas at least a couple of times a year for holidays. But you would never know any of this if your weren't privy to family knowledge. They could easily flash their money around, but don't feel the need of see the point, particularly in the regional community of which they are apart of. They are not ashamed of their money, but see no need to advertise the fact either. I am sure some might consider them to be "living down with the jones", but if you know them you would know that this isn't the whole story - they are simply happy with their lifes and don't feel the need to change. My Aunty likes to do the housework, and doesn't feel the need to hire someone to do it for her. And my Uncle will always work on his farm and at his business (and be known by his employees as mr tightwad), because he wouldn't know what to do with himself if he didn't.

But I do know alot of people both 'rich' and of more ordinary wealth who like some nice flash ostentatious items as well. My parents are NOT rich, but my dad enjoys his Alfa and his cruiser, and he can afford it, so why not?