Acting Rich

[ProgressCity]

I saw this article on Yahoo today:

http://customsites.yahoo.com/financ...8-0-the-key-to-acting-like-the-rich-be-frugal

I love that someone took the time to write this! It's very enlightening and I think it's tremendously important. It's amazing how unwise people can be with their money. They see rich celebrities on TV living in huge homes, driving fancy cars, and having all the latest gadgets (many people don't realize that many celebrities don't pay for a lot of their high end clothes and gadgets, they're given them by designers hoping to get them pictured). When you look at what a celebrity pays for a home, yes it is a lot, but a lot of times it's less than what they make in a year! Imagine if you bought a house that cost less than you made in year.

It's really sad that people are being conned out of their money by this non-existent dream of luxury living. You don't get rich by accident and you don't get rich by burning through your money. If you live paycheck to paycheck at $30,000 a year you'll live paycheck to paycheck at $100,000 and $500,000 a year.

Anyway, just thought I'd share. This is one of my "soapbox" issues . It's sick how much things like houses and cars are "status" symbols. Better a car and house you own than a car and house the bank owns. I've had the good fortune of knowing several multi-millionaires in my life and none of them lived extravagantly. In fact, I've known people who make $250,000 a year that live more like millionaires than the actual millionaires I've known .

Don't get me wrong, if you have the money you can spend it on whatever you want. It's just sad to see the people who don't have the money fooling themselves into feeling rich by drowning themselves in debt and having paychecks spent before they get them. Then there's people who spend their money on things they couldn't care less about simply because it's a status symbol and they feel it's expected. The vast majority of truly wealthy people are actually incredibly frugal, they may splurge on some things that are important to them, but they have very wise money habits.

Food for thought. The best education anyone can get is a financial education IMHO.

 

[Keli]

I agree with much of what you've said. I think many of us live beyond our means and it ends up a struggle to buy gas for our huge, gas guzzling vehicles.
Having said that I believe that most folks living on 30,000 a yr will live paycheck to paycheck regardless of how they would live at even 40,000. There is a certain amount of income required to put a roof over your head, clothes on your body, and food on your table. Most folks struggle to cover even those basics on 30,000 unless they live in a low cost of living area or accept charity from the gov't.
But i think that principal kicks in immediately when you reach an income great enough to cover basic human needs and have a surplus, even a small one.

 

[C.Ann]

The vast majority of truly wealthy people are actually incredibly frugal, they may splurge on some things that are important to them, but they have very wise money habits..

So very true.. I know people like this and they simply don't throw their money around willy nilly.. For the most part - unless you have a very close relationship with them like I do - you would think they were among the "average" - at best..

 

[GoldieSaysMeep]

I get the point BUT at the same time, you have to realize that some people will always live paycheck to paycheck, no matter how good they are with money.

30K a year is literally poverty level for one person in Boston. Unless you are making around 100K (household) in Boston, you are living paycheck to paycheck. And unless you are making 150K+ (household) you're probably not in very good shape.

The average 2 bedroom "starter" house in MA costs over 250K. If you want a job you need to be close to the city though, so you're looking at a choice between a 4 hour commute (2 hrs each way), a very expensive train pass, or a house closer to $500K.

I'm looking at studio (as in no kitchen, no seperate bedroom) apartments for FI to move into when we get married. The average rent is between $800-$1200 a month depending on how close to Boston.

Until his worthless house sells, I have to support our rent alone. (His worthless house is worth $260K but worthless because of the loan being upside down and worthless because we can't live there together...he owns w/2 family members who have pets I am allergic to). I don't...can't...even consider his salary while looking for a place for us to live because his mortgage just went up. He makes less than I do.

A salary of 45K a year won't get you a one bedroom, utilities, food and a car in MA. So it's a studio or nothing.

And I'm better off than most of my peers because I don't waste $$ on partying, clothes or designer bags. I have debt but no where near as much as many of my friends.

 

[ogreenlee]

Google

30,000 millionaires dallas observer

 

[ProgressCity]

Google

30,000 millionaires dallas observer

Perfect!

 

[wdwfan16]

Perfect!

Me too!!

 

[ProgressCity]

I get the point BUT at the same time, you have to realize that some people will always live paycheck to paycheck, no matter how good they are with money.

30K a year is literally poverty level for one person in Boston. Unless you are making around 100K (household) in Boston, you are living paycheck to paycheck. And unless you are making 150K+ (household) you're probably not in very good shape.

The average 2 bedroom "starter" house in MA costs over 250K. If you want a job you need to be close to the city though, so you're looking at a choice between a 4 hour commute (2 hrs each way), a very expensive train pass, or a house closer to $500K.

I'm looking at studio (as in no kitchen, no seperate bedroom) apartments for FI to move into when we get married. The average rent is between $800-$1200 a month depending on how close to Boston.

Until his worthless house sells, I have to support our rent alone. (His worthless house is worth $260K but worthless because of the loan being upside down and worthless because we can't live there together...he owns w/2 family members who have pets I am allergic to). I don't...can't...even consider his salary while looking for a place for us to live because his mortgage just went up. He makes less than I do.

A salary of 45K a year won't get you a one bedroom, utilities, food and a car in MA. So it's a studio or nothing.

And I'm better off than most of my peers because I don't waste $$ on partying, clothes or designer bags. I have debt but no where near as much as many of my friends.

Ok, I took this post as a challenge . DH and I sat down and decided that hypothetically we are moving to Boston and we have to live off of $30,000 take home pay a year which is $2,500 take home a month.

We had no problem finding cheap places to live via Craigslist and we also found some on other websites like apartments.com. We decided on a nice 1-bed second floor apartment for $695 a month plus utilities (however, hot water is included). It's less than 35 minutes to downtown Boston. (BTW we chose this one because it was really nice and pretty in a cute house that had been converted to apartments and is a 1-bed, if we were really going for the cheapest here we could have gone cheaper.) We figure $200 a month for utilities, $200 for gas, $400 for food, our car insurance is just shy of $34, and $80 for a T-Mobile unlimited family plan. That puts our total monthly bills at $1,609 which leaves $891 left over. That means we can invest or save $250 a month which is 10% of our pay and still have $641 left as a buffer for things like clothes, toiletries, etc. and to cover any underestimates in things like utilities or gas. In reality though we would most likely be saving or investing $500 a month since we are incredibly frugal.

Not only can you live and work in the Boston metropolis for $30,000 take home a year, it's actually easy if it's your first priority. The issue is that the line between needs and wants gets fuzzy at best and completely ignored at worst. You don't need to own a house and you don't need to live a stones throw away from work, those are luxuries for people who can afford them. I also included a family cell phone plan in my calculations, which is in reality a want, not a need. My SIL and BIL managed just fine without a cell phone the entire time they were raising 5 kids and my DH and I have lived without cell phones by choice many of the years we've been together, the world functioned quite well before people were leashed to them.

I also didn't include a car payment because it is quite honestly some of the worst debt to be in since a car immediately depreciates when you drive it off the lot and continues to depreciate. We've always paid cash for our cars. I found a few on the Boston Craigslist for less than $1000.

Needs are a roof over your head, utilities (electric, water, heat), food, and clothing. Everything else is a want. The problem is that most people choose wants over financial stability, which they are more than welcome to do by the way. However, the fact is it is possible to live on $30,000 a year with room to spare and even save, even if you don't want to. Most people will just choose instead to have as many wants as they can possibly cram into their paycheck - hence living paycheck to paycheck. My point is that if someone justifies cramming as many wants into their paycheck as possible at $30,000 a year they will do the same at $100,000 a year. I don't personally know anyone who makes $30,000 a year who doesn't have cable and they'll hold onto that cable bill with two hands even though cable is a completely unnecessary luxury.

If someone is good with money they will always be able to live below their means. My MIL raised 11 kids on $40,000 a year and never went into any kind of debt other than a mortgage. (My DH is telling me now to let you all know they always had everything they needed, every kid had braces, etc. and they were happy and always took a family vacation once a year, usually camping which they love .)

Oh, and BTW when I was 18 my DH and I were living together on less than $24,000 a year (this was 6 years ago now) and we were able to save enough money to put a down payment on a home, so I'm not just talking from the cheap seats here.

A cast member makes $7.25 an hour, which assuming they work 40 hours a week 52 weeks a year and keep all of it (very unrealistic since taxes are always taken out) they're taking home $15,080 a year or a household $30,160 a year. I know many people that are able to live below their means as cast members and not go into debt. It's all about priorities and realizing that all these things we've been programmed to believe we need are not in fact needs at all, if someone stripped them all away tomorrow you'd still be alive.

GoldieSaysMeep - I hope you aren't taking this as attacking you because I'm not, I'm just using your post as an example to point out certain facts about what is possible. I'm not saying you're irresponsible with money or anything like that. Congrats on your upcoming marriage and good luck with the whole transition, it's an exciting and sometimes stressful time !

 

[BillSears]

Life should NOT be a journey to the grave with the intention of arriving safely in an attractive and well preserved body, but rather to skid in sideways - Chardonnay in one hand - chocolate in the other - body thoroughly used up, totally worn out and screaming "WOO HOO! What a Ride"

I'm happy to spend a bit and enjoy life. I'd be happiest if my money ran out the day I died.

Now I'm not saying don't budget for things, don't plan for retirement, don't think about the future. But I do feel that I'd rather spend the money now then leave a huge inheritance for my daughter.

 

[ProgressCity]

I'm happy to spend a bit and enjoy life. I'd be happiest if my money ran out the day I died.

Now I'm not saying don't budget for things, don't plan for retirement, don't think about the future. But I do feel that I'd rather spend the money now then leave a huge inheritance for my daughter.

No argument here! I love that quote, BTW. In the words of Tim Ferriss, I'm not going to advise you to stop having a glass of wine every night so you can retire with a million dollars, I'd rather have the glass of wine now. But I will advise you to forgo the glass of wine if you have to put it on credit and pay 20% interest on it. My point is, budget for what you want and pay for it using cash, not a credit card so that you end up paying 3x the price for it.

There's a difference between all your money being gone when you die and dieing owing massive amounts of debt that will leave your kids having to sell your assets to pay.

There's no way people with maxed out credit cards living paycheck to paycheck are not stressed. Most divorces in this country are caused by financial issues. Financial problems = stress. Financial stability = being able to do what you want when you want and not having to worry. If you make $500,000 a year and you want to slap down $60,000 of it on a car, God bless you! Get 3 of them! Get one for everyday of the week! But if you're making $30,000 a year it's simply unwise to act like you can afford a brand new car.

The point is to live within your means, not outside of them. In the article it even talks about how the extravagantly wealthy spend accordingly, but it also notes that these extravagantly wealthy are spending a relatively small percentage of their income on luxury items. You see a wealthy person driving around in a nice care that costs 10% of their annual income and then people try to copy that by getting the same car even though it's 100%, 150% or even 200% of their annual income. What people don't realize is that if that wealthy person had less money, they would still only be driving a car that is 10% of their annual income. If your means can't support the lifestyle you want, focus on changing your means, not using other people's mean (creditors).

Credit is a relatively new concept. In a few short generations people have gone from living within their means because there was no such thing as credit, to it being incredibly rare to find someone who doesn't use credit and those that don't often get looked down on for not jumping on the max out your credit bandwagon.

Hope this clarifies my point a little . The people I've known that are living paycheck to paycheck aren't saying "WOO HOO! What a Ride" they're more like, "Life sucks, I'll never get ahead, I'll always be strapped" and there's no need for it. If you're wise with your money you can create the money you need to do the things you want. It's fun going on vacation, but it's not fun paying off the credit card bill that results. I'm saying you can have your cake and eat it too, you can have the vacation without the credit card bill after. It just involves being wise with where your money goes. I've never met someone who lived within their means that was bummed out about not being stressed about money .

 

[dicar123]

I had this discussion with a cousin not long ago. She is single, living in Indianapolis and makes $30k per year. Those making her salary and under got a COLA raise this year. People making over that salary were complaining because they did not get a COLA.

Her point to me was, but they don't NEED it. She NEEDS it, because she is poor! Well, yes, they probably do need it, just as she thinks she needs it. Most people, as their income increases, increase their bills as well (just as she has done to this point). So, you move into a little big bigger apartment or buy a home, or undertake a car loan when you haven't before, because now you can afford it. Unless you are pretty careful, it is VERY easy to live right up to your income and then some.

I refrained from explaining to her that 11 years ago, dh was supporting a family of 4 on her income with rent at $800 per month and no car payment (her rent is $600 and she also has no car payment). Other than health insurance, the cost of the basics hasn't changed THAT much. She's not nearly as poor as she thinks she is.

 

[ProgressCity]

Exactly, you can always live within your means. If you choose not to at $30,000 a year you'll choose not to at $35,000 on up to however much you make.

 

[Rafiki31]

Ok, I took this post as a challenge . DH and I sat down and decided that hypothetically we are moving to Boston and we have to live off of $30,000 take home pay a year which is $2,500 take home a month.

We had no problem finding cheap places to live via Craigslist and we also found some on other websites like apartments.com. We decided on a nice 1-bed second floor apartment for $695 a month plus utilities (however, hot water is included). It's less than 35 minutes to downtown Boston. (BTW we chose this one because it was really nice and pretty in a cute house that had been converted to apartments and is a 1-bed, if we were really going for the cheapest here we could have gone cheaper.) We figure $200 a month for utilities, $200 for gas, $400 for food, our car insurance is just shy of $34, and $80 for a T-Mobile unlimited family plan. That puts our total monthly bills at $1,609 which leaves $891 left over. That means we can invest or save $250 a month which is 10% of our pay and still have $641 left as a buffer for things like clothes, toiletries, etc. and to cover any underestimates in things like utilities or gas. In reality though we would most likely be saving or investing $500 a month since we are incredibly frugal.

Not only can you live and work in the Boston metropolis for $30,000 take home a year, it's actually easy if it's your first priority. The issue is that the line between needs and wants gets fuzzy at best and completely ignored at worst. You don't need to own a house and you don't need to live a stones throw away from work, those are luxuries for people who can afford them. I also included a family cell phone plan in my calculations, which is in reality a want, not a need. My SIL and BIL managed just fine without a cell phone the entire time they were raising 5 kids and my DH and I have lived without cell phones by choice many of the years we've been together, the world functioned quite well before people were leashed to them.

I also didn't include a car payment because it is quite honestly some of the worst debt to be in since a car immediately depreciates when you drive it off the lot and continues to depreciate. We've always paid cash for our cars. I found a few on the Boston Craigslist for less than $1000.

Needs are a roof over your head, utilities (electric, water, heat), food, and clothing. Everything else is a want. The problem is that most people choose wants over financial stability, which they are more than welcome to do by the way. However, the fact is it is possible to live on $30,000 a year with room to spare and even save, even if you don't want to. Most people will just choose instead to have as many wants as they can possibly cram into their paycheck - hence living paycheck to paycheck. My point is that if someone justifies cramming as many wants into their paycheck as possible at $30,000 a year they will do the same at $100,000 a year. I don't personally know anyone who makes $30,000 a year who doesn't have cable and they'll hold onto that cable bill with two hands even though cable is a completely unnecessary luxury.

If someone is good with money they will always be able to live below their means. My MIL raised 11 kids on $40,000 a year and never went into any kind of debt other than a mortgage. (My DH is telling me now to let you all know they always had everything they needed, every kid had braces, etc. and they were happy and always took a family vacation once a year, usually camping which they love .)

Oh, and BTW when I was 18 my DH and I were living together on less than $24,000 a year (this was 6 years ago now) and we were able to save enough money to put a down payment on a home, so I'm not just talking from the cheap seats here.

A cast member makes $7.25 an hour, which assuming they work 40 hours a week 52 weeks a year and keep all of it (very unrealistic since taxes are always taken out) they're taking home $15,080 a year or a household $30,160 a year. I know many people that are able to live below their means as cast members and not go into debt. It's all about priorities and realizing that all these things we've been programmed to believe we need are not in fact needs at all, if someone stripped them all away tomorrow you'd still be alive.

GoldieSaysMeep - I hope you aren't taking this as attacking you because I'm not, I'm just using your post as an example to point out certain facts about what is possible. I'm not saying you're irresponsible with money or anything like that. Congrats on your upcoming marriage and good luck with the whole transition, it's an exciting and sometimes stressful time !

Your imaginary situation is really just that. Not reality here in Mass sorry to burst your bubble.

If you were able to find an apt in the Boston area for 700 per month (which is highly unlikely and prob just a scam on CL) I would hate to see where it is actually located. And a $1000 car (if it runs at all) is prob taking a risk on a 35 minute commute in an area with New England weather. And prob is not 4wd, so your 35 minute commute in the snow/ice is going to take well over an hour, which ups your gas consumption well above 200 per month. Oh, and you also neglected to budget for Boston area parking, which is going to be almost equal to your rent. You would NEVER have car insurance that low in the area you are probably living in, nor the Boston area, or area near the T since these are "high theft" areas according to my insurance company.

In theory these numbers look nice on paper, in reality, you would be broken down on the side of the road in the snow, at least 25 minutes away from work and in a pretty dangerous neighborhood.

BTW I am also quite frugal these days, I am a student and just barely scraping by. I have an older car, and although it is payment free, the repairs are killing me.

 

[mrsklamc]

OK though- assuming you live in Boston and make 30k, then it's your responsibility (long term) to either move or make more money. I realize not everyone can do that right away, but it's your job to come up with a plan a d not sit around your entire life thinking 'i'll never get anywhere, might as well buy myself something on credit.'

 

[BillSears]

...My point is, budget for what you want and pay for it using cash, not a credit card so that you end up paying 3x the price for it...

Absolutely!!!

I'm not worried about being a millionaire but I'm also certain I don't want to be in debt. I just prefer the middle ground of saving money for a rainy day but not saving it and never spending.

 

[Rafiki31]

OK though- assuming you live in Boston and make 30k, then it's your responsibility (long term) to either move or make more money. I realize not everyone can do that right away, but it's your job to come up with a plan a d not sit around your entire life thinking 'i'll never get anywhere, might as well buy myself something on credit.'

In school! One semester left.......ahhhhhhhh

 

[golfgal]

Ok, I took this post as a challenge . DH and I sat down and decided that hypothetically we are moving to Boston and we have to live off of $30,000 take home pay a year which is $2,500 take home a month.

We had no problem finding cheap places to live via Craigslist and we also found some on other websites like apartments.com. We decided on a nice 1-bed second floor apartment for $695 a month plus utilities (however, hot water is included). It's less than 35 minutes to downtown Boston. (BTW we chose this one because it was really nice and pretty in a cute house that had been converted to apartments and is a 1-bed, if we were really going for the cheapest here we could have gone cheaper.) We figure $200 a month for utilities, $200 for gas, $400 for food, our car insurance is just shy of $34, and $80 for a T-Mobile unlimited family plan. That puts our total monthly bills at $1,609 which leaves $891 left over. That means we can invest or save $250 a month which is 10% of our pay and still have $641 left as a buffer for things like clothes, toiletries, etc. and to cover any underestimates in things like utilities or gas. In reality though we would most likely be saving or investing $500 a month since we are incredibly frugal.

Not only can you live and work in the Boston metropolis for $30,000 take home a year, it's actually easy if it's your first priority. The issue is that the line between needs and wants gets fuzzy at best and completely ignored at worst. You don't need to own a house and you don't need to live a stones throw away from work, those are luxuries for people who can afford them. I also included a family cell phone plan in my calculations, which is in reality a want, not a need. My SIL and BIL managed just fine without a cell phone the entire time they were raising 5 kids and my DH and I have lived without cell phones by choice many of the years we've been together, the world functioned quite well before people were leashed to them.

I also didn't include a car payment because it is quite honestly some of the worst debt to be in since a car immediately depreciates when you drive it off the lot and continues to depreciate. We've always paid cash for our cars. I found a few on the Boston Craigslist for less than $1000.

Needs are a roof over your head, utilities (electric, water, heat), food, and clothing. Everything else is a want. The problem is that most people choose wants over financial stability, which they are more than welcome to do by the way. However, the fact is it is possible to live on $30,000 a year with room to spare and even save, even if you don't want to. Most people will just choose instead to have as many wants as they can possibly cram into their paycheck - hence living paycheck to paycheck. My point is that if someone justifies cramming as many wants into their paycheck as possible at $30,000 a year they will do the same at $100,000 a year. I don't personally know anyone who makes $30,000 a year who doesn't have cable and they'll hold onto that cable bill with two hands even though cable is a completely unnecessary luxury.

If someone is good with money they will always be able to live below their means. My MIL raised 11 kids on $40,000 a year and never went into any kind of debt other than a mortgage. (My DH is telling me now to let you all know they always had everything they needed, every kid had braces, etc. and they were happy and always took a family vacation once a year, usually camping which they love .)

Oh, and BTW when I was 18 my DH and I were living together on less than $24,000 a year (this was 6 years ago now) and we were able to save enough money to put a down payment on a home, so I'm not just talking from the cheap seats here.

A cast member makes $7.25 an hour, which assuming they work 40 hours a week 52 weeks a year and keep all of it (very unrealistic since taxes are always taken out) they're taking home $15,080 a year or a household $30,160 a year. I know many people that are able to live below their means as cast members and not go into debt. It's all about priorities and realizing that all these things we've been programmed to believe we need are not in fact needs at all, if someone stripped them all away tomorrow you'd still be alive.

GoldieSaysMeep - I hope you aren't taking this as attacking you because I'm not, I'm just using your post as an example to point out certain facts about what is possible. I'm not saying you're irresponsible with money or anything like that. Congrats on your upcoming marriage and good luck with the whole transition, it's an exciting and sometimes stressful time !

There is a HUGE difference between MAKING $30,000 and BRINGING HOME $30,000.

There is also a HUGE cost of living difference between Florida and Boston, MA as well as no state income tax in FL. When DH and I first got married we lived very nicely on the $24,000 we made-not take home, MADE, but we had a beautiful apartment in a renovated Victorian home, we paid $30/month for utilites --gas, electric, AND water, our rent was $200/month, our car payment was $215/month .

There is also the fact that many of us can live within our means and not have to choose to live like bums too. We pay cash for our cars now, but we buy cars that are a couple years old, not trash heaps that will break down every few miles. Add a baby or two into your situation above and you won't be able to pay your bills. Your example is very unrealistic.

 

[mrsklamc]

Add a baby or two into your situation above and you won't be able to pay your bills. Your example is very unrealistic.

I don't know enough about COL in Boston to comment on the hypothetical situation she gave, but - barring an unplanned pregnancy, which does happen- a baby or two shouldn't be brought into the situation anyway.

 

[AshleyW]

So, just for kicks in regards to the PP's, I pulled up a cost of living calculator for Boston.

Right now, in Iowa, I actually do make 30k per year. Granted, I live with DFi so we have a duel income - but I could pay all our bills on just my income if we ever HAD to, and we'd just squeak by. We have a 2br condo, a 2003 focus, no kids, don't pay for cable.. just the bare essentials for bills, which is like the scenario a PP mentioned.

According to a cost of living calculator, to just squeak by in Boston like I would on 30k in Iowa by myself, I'd need to make $46,848.

http://www.bestplaces.net/col/?salary=30000&city1=51912000&city2=52507000

Interesting sidenote that I found on that website.. 50.27% of people in Boston have never been married, compared to the 24.39% national average. I don't know why that is, I just thought it was interesting.

 

[ziggystardust]

So, just for kicks in regards to the PP's, I pulled up a cost of living calculator for Boston.

Right now, in Iowa, I actually do make 30k per year. Granted, I live with DFi so we have a duel income - but I could pay all our bills on just my income if we ever HAD to, and we'd just squeak by. We have a 2br condo, a 2003 focus, no kids, don't pay for cable.. just the bare essentials for bills, which is like the scenario a PP mentioned.

According to a cost of living calculator, to just squeak by in Boston like I would on 30k in Iowa by myself, I'd need to make $46,848.

I just put in your town and mine (with a 30k income) and you'd need to make, $59,763. Now I live in NY but I'm about an 1/2 away from the city, technically in the burbs.

I need to move!