keeping "down" with the jones'
- Thread starter lizzie
- Start date
Read that book ages ago. I read all of these financial books when I was poorYou should see my bookcase.
As I said earlier, my path to financial freedom was by creating a business, which grew in revenue, which gave me a good salary, which allowed me to fund more businesses and then acquire more properties. Now I understand this is a property forum and many people here would be doing it the other way. E.g. buy a house, borrow against it to buy more homes, repeat a few more times, hold it, wait for CG to increase their wealth. Does that make sense to you?
Sorry can't buy the concept that you own business's.
You are still tied up to talking about income as salary and from your previous posts drawing/sourcing salary as an indicator of wealth. If you were running successful business's then you would have learnt to limit personal income and keep as much excess cashflow in tax effective structures.
I suspect that in fact you are either a salary earner (work for a wage - no control on what you do) or may be involved in a penny and dime business that simply provides enough income for you to survive.
Its good that you are thinking about what to do with the 'super' cashflow when you crack it but in the meantime you might want to read through the forums a bit more before starting to brick bats around.
Cheers
I like nice things.
Noticed I've said "funding" and starting businesses throughout these posts, I have never once said I "buy" businesses, once again you just have to stuff words in my mouth to feel better about yourself. Throughout this thread I've never attacked you but maybe you have a problem with successful people? In one of the threads on this forum you discuss how your business suffered and went down the toilet, maybe you have anger against successful people? who knows, but I do know that funding and starting a business is entirely different to "buying" a business.
Regarding second post, if you bother to actually read the entire post, someone said they used $1million to borrow another $5 million from a bank. Thus my post was "how do you borrow another $5mill from $1mill?".. Hardly trivial.
It's funny how your end statements have to resort to calling me a brown sh*t, tall poppy still going strong. Maybe it was this way of thinking that resulted in your business failure?
Hey, let me pull one on you now:
So you pulled equity from your house to invest in your business and that still failed? Interesting. I noticed you also used the word "fund". So did you draw down equity to "buy" this business or to "fund" it's daily running costs, etc?
True, but this book is talking about your average millionaire. The book would of been great 10-15 years ago. A millionaire today is not the same as it was 20 years ago? What the author represents in this book is the "upper middle class". Here, I'll take a snippet from MJ, this guy is a multi-millionaire and knows what he's on about.
MJ: (regarding the author Stanley author of books such as Millionaire Next Door) ... "They want you to settle for mediocre ... you have no chance of wealth and you have no chance of that dream lifestyle. If your dream is a Lamborghini, forget it, if your dream is a beach house, forget it, if your dream needs any assemblance of money, forget it. Give up and settle, work the 9-5 for 40 years, save 10%, behold faith to the stock market and its hopeful annual 8%, and your day of "retirement" will soon come ... with such a impotent, dull strategy, its no wonder most people fail this plan; how can anyone get excited over it?"
"None of that data surprises me because Stanley describes the upper-middle-class ... sorry to be so depressing but a "millionaire" is just that.
Now, if we ascribe real millionaire status to what it was 20 years ago, we are talking about penta and deca millionaires.
Under that classification, you'll find few of these professions up there. You'll find business owners, authors, inventors, franchisors ... if your interested in Stanley's upper middle-class, I'm sure his book is a fabulous read.
In 10 years, we can add "cocktail waitresses" and "gas station attendants" to this list too because the dollar will be so devalued. At that point, the new millionaire will be $50 MILLION. See my point?"
- http://www.thefastlanetomillions.co...-rich-start-acting-like-real-millionaire.html
- His story: http://www.thefastlanetomillions.com/articles/2008/10/my-fastlane-story/
I've read this guys story years ago (posted on RichDad) and have ever since tried to follow in his footsteps (start businesses, not sit on property).
Here's another good point about books like The Millionaire Next Door which surveyed millionaires to get their data.
"..the book suffers from a double survivorship bias. "Survivoship bias" is what happens when one only pays attention to those who survive a certain activity, peril, or risk, and makes ungounded conclusions about cause and effect from that. One famous example is Neitzsche's famous saying, "what doesn't kill me makes me stronger". It is based on the survivorship bias that those who survive terrible calamities tend to be stronger than other people. But it doesn't mean the calamity MADE them stronger - it might mean simply that only those who were strong to begin with survived the calamity.
What survivorship bias do we see here? First, it interviews ONLY millionaires. It doesn't interview ALL of those who are frugal, hard-working, and concerned about education - it only interviews those of them WHO BECAME MILLIONAIRES. It could very will be (it probably is) that 99% of those who are hard-working, frugal, and concerned about education still fail to become millionaires. "
---
Unfortunately, this represents a lot of people I know who are still working 9-5pm every day, they are quite frugal, but because of their income, most of it is spent on just basic essentials and little left over for savings.
No one is denying that saving is bad and being frugal is bad, I think everything requires balance. Being too frugal if you have a lot of money is stupid - you work so hard, have so much money in the bank but don't end up enjoying the fruits of your labor. Then there are the heavy spenders who waste all their money and borrow more. In this day and age, this probably represents a lot of Y-gens. Just falls down to a balancing act.
lol - http://www.thefastlanetomillions.com/articles/2008/11/the-lie-youve-been-sold/
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I have never made any secret of the fact that I had a failed Business. My husband & I had a very successful business (started from scratch) that was only getting more successful each year. Then we decided to start another from scratch. The second one needed a large injection of Capital and since it focussed on our sport, it was a pet love of ours. We neglected the first business and the second one took the whole lot out. Bad things happen, you learn and you grow.
Many successful people have had failures. If you learn from your mistakes, then failures can actually be a blessing in disguise. If our Business had not gone bad, and we had not had to start again, then who knows what else would be different.
Eight years ago we started again. Today, we are much better off than we were before we started the second Business. More than 10 times better off to be precise.
Yay. You have a guru.
It has been several hours since I started reading this thread. With a large gap in between. Within that gap was beer. Now all in all this was a reasonably good gap apart from the fact there was lots I wanted to comment on early in the thread which I can no longer remember and be damned if I can get the multi-quoting thingy to work properly, so I am going to start here, work backwards, go off on a tangent within a sentence or two, become deliberately obtuse and selectively respond to only parts of any given post.
However - any day in which you learn something new isn't a wasted day, and now I know how kudos works, which is something new, so today wasn't a wasted day. Although today is now tomorrow, in which case it was yesterday that wasn't wasted. And I gave aussierogue kudos because
- he asked first
- I had just figured out how to do it, and
- I felt he had been particularly selectively misinterpretted
http://www.somersoft.com/forums/showpost.php?p=613408&postcount=85
Basically free through company tax depreciation? Make a grandiose statement like that and you lose credibility in my view. Plus some of the other stuff too.
Nonetheless - there is a local bakery that make pies/etc that I really like. All different types, some quite exotic - well, exotic for a pie, anyway. But I am sufficiently frugal that I can't justify paying $3-$4 for what is essentially still just a pie. But last year I discovered on some days if you get there early enough they have the the pies that didn't sell the previous day in the discount tray, in bags of 6 or 7, for about $5. Now I don't know if survivor bias applies here, because although these pies (and sometimes pasties and sausage rolls too, but for the sake of the exercise lets just refer to them all as pies) survived consumption the previous day, they most certainly wont now.
So what conclusions that we draw from this?
- I am a tightarse pie-lover. Although despite stockpiling them, I only have them occasionally.
- I am certain to suffer from some sort of food poisoning because these are yesterdays pies, now at room temp, in a non-refrigerated display case, having been there for who knows how long...and given I then freeze them I am probably breaking some rule/urban myth about re-freezing something or other. But combined with the nuking they get before consumption, and my cast-iron constitution (carefully cultivated by a flagrant disregard for the terms "use by" and "best before" and "where did that ham go oh my god did you eat that it was off and I was going to throw it out two days ago") this one is somewhat uncertain.
- Sometimes you can have your cake AND eat it - as long as by cake you mean pie (although sometimes you can also get cake heavily discounted, in which case the allegory actually becomes literal - but I'm more of a savoury type-of-guy).
[check=post resembles that outlined in paragraph early in reply]Tick [/check]
Although I reckon if someone mentions carbon footprint to me one more time I may snap. I wonder if I could argue provocation as a defence?
That is all.
Hey apocolypso
Im a bloke dude....although these threads force me to get in touch with my femine side. You right winging spenders (yes im profiling again) out there should try it (geez thats a whole new post).
Then again I am a cafe latte, inner city, chardonnay drinking, sofa socialist.
Thanks for the kudos and for appreciating the fact I have been misrepresented
AND I HAVE NOW GOT 3 GREEN THINGOS! WHAHOOO
Im a bloke dude....although these threads force me to get in touch with my femine side. You right winging spenders (yes im profiling again) out there should try it (geez thats a whole new post).
Then again I am a cafe latte, inner city, chardonnay drinking, sofa socialist.
Thanks for the kudos and for appreciating the fact I have been misrepresented
AND I HAVE NOW GOT 3 GREEN THINGOS! WHAHOOO
Cloudy day
Heres a huge secret for you to do with what you want.
Thre are only 2 ways to get mega rich 20 mill plus.
1. To take HUGE risk with your own money
and
2. To convinve other people to fund your huge risks...
It has nothing to do with working hard.
I do one trade a year and make millions for my company - and alot for myself.
Most of the mega rich people I know dont work that hard - they know the sytems. They know how to raise other peoples money and then they bet it on Black.
If they fail they rise again with others peoples money (if they have connections and talk the talk) and then bet it on black again.
Now when I say bet it on black - i am not being literal.
They buy and sell realestate, mining tennaments, businesses etc etc
But that in a nutshell is how you get mega rish - by taking mega RISK.
10 percent will win that game. But thats your risk. At some point other things take over - like being a good bloke, looking after youre family, realising life isnt just about accruing wealth and driving a Ferrari.
Some dont and they look like Georfrey Eddlestone - nice role model.
The pictures you describe above of wealthy dudes telling you how to drive a lamborghini and live in a mansion etc are 1980's throwbacks. Hopefully the world has moved on.
Cheers
Aussie
Heres a huge secret for you to do with what you want.
Thre are only 2 ways to get mega rich 20 mill plus.
1. To take HUGE risk with your own money
and
2. To convinve other people to fund your huge risks...
It has nothing to do with working hard.
I do one trade a year and make millions for my company - and alot for myself.
Most of the mega rich people I know dont work that hard - they know the sytems. They know how to raise other peoples money and then they bet it on Black.
If they fail they rise again with others peoples money (if they have connections and talk the talk) and then bet it on black again.
Now when I say bet it on black - i am not being literal.
They buy and sell realestate, mining tennaments, businesses etc etc
But that in a nutshell is how you get mega rish - by taking mega RISK.
10 percent will win that game. But thats your risk. At some point other things take over - like being a good bloke, looking after youre family, realising life isnt just about accruing wealth and driving a Ferrari.
Some dont and they look like Georfrey Eddlestone - nice role model.
The pictures you describe above of wealthy dudes telling you how to drive a lamborghini and live in a mansion etc are 1980's throwbacks. Hopefully the world has moved on.
Cheers
Aussie
Gee, maybe this guy is just not that experienced (we all start somewhere) but the amount of times and different people i hear saying this... there's a lot of people without credibility out there.
And I'm always happy to discuss the BS statements made by book writers & seminar speakers who market themselves as "experts" saying the same type of stuff. Which then leads to others quoting them on forums.
Happens here often, so lets go to the source.
Waddent me...I'm being niceI can't believe the crap and venom in this thread. And they moderate ME if I ruffle a pet bird's feathers.
It's not really ''free''... but it can be cash flow positive for close to 5 years with the 50% investment allowance!
http://www.somersoft.com/forums/showthread.php?t=54788&highlight=cars
(I haven't seen this in a book/seminar yet, though I did see a FP write a news article on it recently.)
Regardless, it's still a depreciating asset, and there is an opportunity cost for lashing out on an expensive car, eg. 100k on a car vs. 100k leveraged to buy a $1MM RIP... if you're that way inclined.
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Don't let it get to your head aussie. This is your ego talking, and no different to ''keeping up with the joneses''! Green dots don't make the man.
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Thanks for the heads up JIT - time to do some charity work just top get my karma back on track.
Im trying to work out which thread is more amusing - this one or the one on IPs in Werribee
Unless the income level is distressingly low, the average person can always find ways to free up more money; but some of the things take harsher sacrifice, which many people are not willing to to do.
So they take a compromise between living frugally, but still keeping a bit of the lifestyle - "you're only here once", "you can't take it with you" and so on.
They have escape hatches, and end up not really being able to free up much money to save for investing.
I think point to be focusing on in this instance is that you must do something with the money you accumulate through your frugality.
The problem is, most people who are frugal are by nature very averse to risk and taking a chance.
The most dangerous thing they would probably do is stick the money in a Term Deposit, or maybe a mutual fund of some sort. A very slow way to get anywhere financially.
The trick is to take the saved money through the frugal lifestyle and invest it into better yielding investment vehicles.
Most of these take a lot more financial education, require a lot more dedication and sacrifice and work.
Even the simple task of buying an IP is, for most people, a trauma they are unwilling to partake in.
So they don't; favouring the Bank instead.
I've read Stanley and Dankos' "The Millionaire Next Door" a few times, and from my memory most of the millionaires were proactive not only in living frugally to aqcuire more funds, but they were proactive in putting the money to work very well.
Anyone who can't buy an IP on a $250k combined income needs a kick up the arrzze. That's like shooting fish in a barrel.
I think you'll find the figures on who has how many IP's are something like this:
First, let's use the percentage of 30% of all property ownership is investors. Apparently this is about right, and most of the time - goes slightly up and down depending on the news headlines and interest rates of the day.
Now, out of that 30% here's the approx breakdown from memory (Marg Lomas quotes them accurately in her books) -
1 x IP = about 80% (most of these would be holiday homes).
2 x IP's = about 10%
3 x IP's = about 5%
4 x IP's = about %
5 x IP's = about 2%; could be as low as 1%.
more than 5 x IP's = 1% or less.
