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February 18, 2010

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Yep, you'd think in this day and ages (especially after "The Millionaire Next Door", people would have a clue regarding income vs wealth. But apparently not so.

I think that authors like that guy like to make unsubstantiated claims without really knowing the facts. He probably figures his claim will cover at least 99% of the population... but I wonder what the real statistics are? How many people that make 250,000+ have a networth of $2,000,000+?

Still, being who I am, I would be able to become rich on that kind of money. But it wouldn't be the money itself that would make me rich... it would be the way that I use/invest it.

Articles like this just make my blood boil. First of all, they put a picture of Bernie Madoff on the article so that there is also an underlying message that high income earners are also cheaters. Next, the article is basically saying that the high income earners can afford to pay more taxes (suggesting that they don't pay enough and that is way we have a financial crisis with government debt). The real problem is that our government has spent way to much.

Means even less to me and many others who don't make "$X per year". I made X last year, Y the year before it, Z the year before it, and X, Y, Z are all over the place. It'll be November before I have a good idea what I'll make this year and whether I'll be "rich" or not.

Guess we should start passing the collection plate around for the CEOs taking $1 salaries this year, because they would definitely be "poor".

I'm not surprised. Newsweek is a liberal-leaning magazine, so they're inciting the same class warfare as our current presidential administration. There are a number of liberals that believe that high incomes can only be earned through exploitation of workers and customers, and think it's inherently evil.

If magazines like this can succeed at demonizing the "rich" in the eyes of the populace, they can succeed in pushing a political agenda that includes massive taxes on the rich to pay for entitlement programs for the middle class and poor. Once a majority of the populace gets more than they pay for in taxes, they're indentured to the politicians that maintain control of their entitlements.

It's just lazy journalism, that's all. Journalistic quality has gone down incredibly in such a short period of time. Journalists these days don't even care to understand the semantics of "rich" versus "high earners." They just go for what is the most inciteful and will get them the most viewers, regardless of correctness.

is this journalism? its been brutal as of late, way to opinionated. I think thats a fine opinion to have but so is the opposite. Just be quiet about it, I don't want your opinion, just write the story. When both my wife and I have to work and the wifes income ends up being what is taken out in taxes and we have to have sitters for my kids. The system is broken. Govt's too big and spending way too much money.

Well, to me, the only type of articles that command any real authority are reputable academic white papers. And even then, sometimes, you still have to read them with a grain of salt as the quality can vary.

But many people don't read those things, and sometimes, they are overkill. You don't need to peruse the NBER site, for example, to find ways to save money on everyday purchases.

On the other hand, there are also plenty of financial sites that are just... terrible. Absolutely terrible. And the worst part is when people will take them seriously because it's in the financial sections, so therefore, it surely must carry some credibility.

Still, some are better than others, and I recommend people to stick with dedicated financial sites such as Bloomberg, Morningstar, and Kiplinger. PLEASE OH PLEASE do not go to something like Yahoo Finance.

I'm pretty sure it's meant to get attention and provoke commentary (which seems to have worked -- I'd have never read the article if you hadn't posted about it.)

On the nitpicky hand though, one of the definitions of rich is "abundantly supplied with resources, means, or funds". $250,000 in the US does meet that criteria. What people choose to do with those resources is another matter, and that's why you get people who make $250k and have a negative net worth, and people who don't even average $30k who have a $250k net worth.

I have to agree with Jackie above, you really missed this one.

The definition of rich covers supply, not what you do with supply. If we should choose to be pendantic, which is what you are doing here. if you make $250k a year, you are by any definition "rich".

The point you are trying to make is about wealth and net worth which is an entirely different concept.

The piece is about taxing riches - "taxing supply", not about who's wealthy and who's not.

You cannot tax net worth since this would effectively be a tax on principal - it would clearly be unfair to do so.

Putting it differently, the piece is about taxation of income and your focus is on managing income.

- Steve

People who earn $250k per year in the private sector will likely lose their job if they stop performing. The people we should be outraged against are those with the fatcat pensions that retire at 50 making $100K guaranteed for life at taxpayer expense.

Oh but we can't talk about those people because unions are sacred to both parties... gotta love campaign contributions.

-Mike

I didn't care much for the article but I agree with Steve above that I think you're missing the point by conflating "rich" with "net worth." Using your definition someone making $1,000,000 a year could get a free pass because they waste it all every year.

I was going to review a book by a well known CNBC journalist.... but, as I started reading it, I realized there is a reason why he's a journalist and not an investor.

But, to your point, the same can go for personal finance bloggers spouting advice no? Maybe even worse for us! :)

The worst part is when people will take them seriously because it's in the financial sections, so therefore, it surely must carry some credibility.

I have a net worth sufficient that generates over $250K, and it's tax deferred and tax exempt but rather than the term "rich" I prefer the term "very happy", since that's what life is all about.
Definition
1) Are you in a happy relationship where you love and care for someone?
2) Does that person love and care for you?
3) Do you have a comfortable and secure lifestyle that you are content with?
4) Do you like where you live?
5) Do you have healthcare that you are happy with?
6) Are you free from money worries?
7) Can you afford nice vacations?
8) Do you have good relationships with all of your children?
9) Are you in good health and enjoying life?
10) Do you enjoy your work?
If you answered 'Yes' to all of the above, then you're in a very elite group, and happy, and that's what really matters.

@Steve: Who says you cannot tax principal because it is unfair? Many countries (India, Switzerland, Norway, Greece, France) Do exactly that. It is called a wealth tax, and is a percentage of assets over some amount.

And what about the US Estate Tax? Isn't that a tax on principal?

One more point - since provocation seems to be the order of the day: There is no poverty in the USA. Everyone here is wealthy. Of course this is a gross generalization, but even the worst-off American has more access to food, shelter and healthcare than 95% of the world's population. OK - fire away!

In this country, we have had a national savings rate of less then 5% for a long time. The last few years prior to the recession the savings rate was negative. A massive credit crunch has increased it to like 6% but it will soon drop back down to 2-3% when things ease up a bit.

So in this country, for almost everyone except a very few responsible people, rich or poor is based on what you make and what that lets you do for that time. And if you make 250K for a year and spend it all, you were rich for that year. That's all people really think about in this non sensical live for the moment society we are in. And the politicians and "journalists" think and live the same life so of course they will classify 250K as rich.

And I think there is such a thing as income rich versus wealth rich and most people who talk about rich talk about income rich (cause other than bill gates and warren buffet, then don't really know of anyone who is wealth rich).

But beyond on that, this article, while snarky and political, is unfortunately 100% accurate with respect to what is going to happen. Taxes are going up. I have been harping on this for about the last 3 years. There is no getting around it. We have lived irresponsibly as individuals and as a government for a long time now and this last recession has busted the damn. Bush's tax cuts are going to be rolled back at the top end. In addition watch out for the coming of the national sales tax sometime in the next 5-15 years. That will be the worst thing possible as once that is put in place they will be able to easily just adjust it upward little by little until they are taking 20% from our income and 20% from our consumption. I really hope it doesn't happen and I would definitely advocate for higher income taxes before adding a consumption tax to the current system but I fear we will end up with both taxes in the next couple decades.

These deficits we are running now are so monumental that if we continued to run them at this pace for 10 years or so we would probably be considered to be in one of the worst debt situations of almost any country in the world in relation to our GDP. What is worse is if we do not bring the deficits down soon, we are not only going to be in as deep a water as any other country but we are going to be sinking faster than any of those countries.

The economy is not recovering fast enough to generate the revenues to fix this. Drastic cuts are both unpopular and due to entitlements can't even have nearly big enough impact. Obama's proposed freeze on spending (which I don't believe will actually happen) but if it did, doesn't reduce the deficit by more than a few percent. When facing a 1.5 Trillion dollar deficit that is hardly worth even doing. Drastic cut backs would be needed and I don't believe even the freeze will occur so there is little reason to hold out any hope for any drastic cuts. That leaves increased taxes as about the only choice and sooner or later we are going to go there. There is no way around it.

Higher taxes are coming and 20+ years from now drastically higher taxes are likely coming. Any steps you can take now to prepare for it will be very helpful.

401-k / IRA are questionable choices as they will save taxes now to pay higher taxes later.
Roth IRA is a great choice, probably the best choice (if they don't change the rules).

But eventually we will just have to pay a lot more taxes. Continuing to ignore that will lead to total financial meltdown sometime in the coming decades if we don't address our structural fiscal imbalances as they are ominous.

The only other choice is to let inflation run at very high rates (10%+) for a number of decades until it eats the debt away (along with all of our savings).

Embrace the tax increases folks. We either get tax increases or we get structural fiscal collapse.

I'm surprised this article bothered some people. I get what their saying. Maybe a few comments should have been reworded. But I believe the point of the article was more that if you make $250+, then you should indeed be rich. The fact that someone makes 250k a year and then decides to live in Manhattan and call themselves poor is ridiculous. If they really feel poor, move to another neighborhood. Remember Donald Trump filed for bankruptcy.... Would anyone ever call him poor. If your living in a big house and driving a fancy car and you have tons of toys that you spent your 250k on, then your rich. Even if your bank account is only a small amount.

I think you have to put it in perspective. The point is that 250k is alot of money. If you make that and you live in New York...your spending your money by enjoying your location. As for me living in SW Michigan. If I made 250k a year, I could easily work for just 10 years and then retire...RICH!

Aside from the issue being discussed, I believe there is serious theme of relativity at work(play) here. And on several levels. Ifind myself agreeing with even the conflicting posts.

First, it is helpful to remember that the people who post here have much in common. Even when we disagree, we tend to share the fundalmentals of FMF's view: spend less than you make; manage your career; invest wisely; and try to share. Those of us who have not already accumulated our wealth, are on the path.

Second, to a substantial portion of the population $250,000 is rich. (FMF you said as much I know). But here we know that can is misleading. You can make that much and be badly in debt. I'd call that person, as kindly as I can on this post, very, very foolish. But imagine being a hard working serious person with a family of 4 making 60k a year. $250,000 a year would be rich.

Third, it is a fact that approximately the highest 25% income earners pay about 70% of the income tax. Again, the actual percent is easily obtainable online. So what? Who's the bank robber, when asked, why rob banks? His answer was that's where the money is. But when it comes to cutting government spending(which on it's face is a good thing) which programs do you cut. Programs that are needless to me, are sacred cows to someone else. And conversely. Regretably there seems to be a zero sum game going on now. By that I mean if I win you lose, if you win I lose mentality in DC.

Fourth and lastly, leave it to old Limey to put in to context as to what is wealthy and it turns out not to be finance based at all.

@Mark

"Who says you cannot tax principal because it is unfair? Many countries (India, Switzerland, Norway, Greece, France) Do exactly that. It is called a wealth tax, and is a percentage of assets over some amount."

I did not say you cannot tax principal, governments clearly can and do. I said that it is unfair to tax principal.

And, remember, that is just my opinion. Its absolutely OK (and desirable) for you to have a different one.


- Steve

@Mark:

Just re-read my comments above and realized that I did say that you cannot tax principal. My apologies, you were right and I was wrong. I meant to talk to write that it is unfair to do so.

In my defense, I blame Senor. Gore and global warming and Hadron Collider .

I posted a link to this post on CostRefuge. Here's my own take:

I agree with the example but not the broader point. Yes, there's plenty of poor information coming from "mainstream" sources but I've also seen poor and/or erroneous information published on different financial blogs as well. Bad information is bad information regardless of the source. Getting to the heart of any matter (whether its financial or otherwise) requires the dilligence to vet out many different sources of information. -B

@BillV I like your sensible comment. It seems like sensibility is a rare commodity these days. Topics are very polarized. For example, (1) increasing taxes on people who make more than $250,000 and (2) 25% of top income earners paying 70% of the taxes. (1) 98% of people should not care about higher taxes for high income earners. Higher taxes do not affect them. Also, chances are that it will never affect at least 90% of all people ever in their entire lives. So, what is the big deal? (2) If I have the choice I am rather in the group of 25% of people who pay 70% of taxes than in the group of the 10% of people who need and receive food stamps.

@ctreit
Thanks. Just to check my figures I went to the following web site. I was off a bit. top 10% pay 71% in 2007. I find it remarkable that an AGI of 113k put a person in the top 10%. I found this site (there are a bunch) by web searching "who pays taxes" (no quotation marks of course)

http://www.ntu.org/main/page.php?PageID=6

For what it's worth:

Percentiles Ranked by AGI
AGI Threshold on Percentiles
Percentage of Federal Personal Income Tax Paid

Top 1%
$410,096
40.42

Top 5%
$160,041
60.63

Top 10%
$113,018
71.22

Top 25%
$66,532
86.59

Top 50%
$32,879
97.11

Bottom 50%
<$32,879
2.89

Note: AGI is Adjusted Gross Income
Source: Internal Revenue Service

"unions are sacred to both parties"

Now that is rich.


If you make more than $250,000 a year, you are rich...maybe not wealthy, but rich. The quote does sound snarky so I won't read the article (don't want to be a visitor hit), but I think rich and wealthy can be referred to separately.

On the comments, I once again love reading the common sense from BillV. I sadly have to agree with Apex's views of our tax future. I love the fact I'm in the "happy elite" of Old Limey's post and completely agree that true life success is happiness and contentment.

Apex,

While I don't like increased taxes, I would be fine with a tax increase if there was some promise that they would not be coming back for more, would control expenses and run a budget without deficits. Unfortunately, I think tax increases will come along with spending increases and problme will just continue.

@JimL: Of course they will come back for more. There is no incentive whatsoever to shrink government - ever.

The 50% who provide 2.89% of the revenue provide 50% of the votes. Even the dumbest politician can probably understand that buying 50% of the votes is a smart move.

This can be accomplished by never cutting any government program, and by adding more programs as often as possible. If you could get that 2.89% down to zero (and the 50% up to 51%) via a couple of tax credits, you would have the perfect system - you just go back to your constituents and ask: What would you like me to buy you with your rich neighbors money this year?

And if the rich neighbor complains, let him vote - the 51% still decide the race. Of course your tax dollars are wasted, but why would I mind if they are spent on me!

@Mark
You can relax. For a variety of reasons and I suspect you know this already, the lower 50% don't vote in the same high numbers as the other 50%.

I would politely quibble with your second sentence, "Even the dumbest...is asmart move". If what you said were true, not only would a public option have passed but so would single payer health care. [Disclaimer: I make no comment here as to whether or not that would be good. this is a financial blog not a political one. I only use it as an example].
Our tax rates compared to other countries are very low. (I refer only to Fed income tax). With many exemptions/deductions. Perhaps the greatest is interest deduction on home owernship mortgage payment interest. I enjoy mine thank you very much.

I do share your concerns of your last sentence, though. Tax money spent on me is good; tax money spent on someone else is bad. I always ask my friends you bemoan the size of government at any level: "Okay, I agree. What programs shall we cut. What services would you see eliminated?"

No, I don't have any easy answers. Here, Apex is correct. There will be pain in the future. But it can and I believe will happen. Never sell this country short. And I do mean that as a financial comment too. >

ps. ThanksCrystal I always look forwar to yours as well.

Hmm, I obviously get the point FMF is making, and yet I also think it's pretty clear that someone earning $250,000 is rich in the sense of cashflow; if he spends it all then he's incompetent.

Also, as a very wordy and somewhat creative writer about personal finance, I'm sure I live in a glass house over at Monevator, so I'd better not throw stones!

To answer the wider point, journalism doesn't pay spectacularly well as far as I know. Maybe well enough for financial journalists to have some idea about road taxes or shopping coupons or basic retirement investing, but not enough to have any personal experience of the managing a $250,000 year income.

I'm not saying it's an excuse... it might be a reason?

Apex is right. We have the most serious financial problems ever right now and our government is paralyzed because each party hates the other party. The sand is running out of the egg timer pretty fast these days and with the unfunded liabilities of Medicare and Social Security increasing rapidly as well as an aging population, a rapidly growing national debt, exploding budgets and two wars, I am unable to see how we get out of this mess. If we had two parties that had the best interests of the whole country at heart and were willing to come together as a country it isn't too late. However that doesn't appear to be a possibility at present.
Thus the divide between the Haves and the Have Nots will just get wider and wider as it in recent years.
In California the state budget will continue to be balanced on the backs of the young, the poor and the disadvantaged who have little say in what happens.

I agree with Jackie, at least on the semantics. To be "rich" is "to be abundantly supplied with resources", regardless of how you spend them. I have this actually really rich uncle (ex casino manager) who likes to go off on those tirades about "liberals" who "think anybody who makes more than $70K is "rich" and they think they should take your money'.

I usually respond with a certain catchphrase made popular by the closing credits of the Dave Chappelle Show, just to tick him off. But I'm actually glad the the figures used by actual liberal media elites is much higher. :-)

To give my uncle credit he is equally distrustful of Republicans, or any politicians in general, at least where his pocketbook is concerned. But aren't that "highest percentile of earners who pay most of the taxes", as the "rich" so nobly do, still paying taxes at historically low rates? Even after the Bush tax cuts expire and they go back to Clinton(?) era levels aren't they still so much lower than the historical average?

Hey, I'd love to see the IRS replaced with a flat tax, the budget balanced and all that (really, or see consumption taxed instead to encourage saving) but it doesn't seem like the sky is really falling on the rich folk yet. I have a high confidence in their resiliency.

Someone who makes $250,000/yr sure seems rich to me, even after taxes eat away at half of that. They may be stupid with their money and fritter it away, but they start each new paycheck out with quite a bit of money.

But then again, "rich" and "poor" are all relative. The person making $50,000/yr seems "rich" to me, since I'm barely scraping by at poverty level. But, I'm in America, and in America, our "poverty level" is untold riches to someone at poverty level in certain Third World Countries. Just the fact I have indoor plumbing and potable water is "rich" to some folks.

So yeah, it's all relative.

I don't mind paying more tax if it went to creating a surplus and paying off the debt. There is talk about how $250k per year defines if someone is rich or not. Of course it's all about net worth with the idea that you save and invest money to create enough Net worth to live off. So you need to make more to create the net worth and when taxes go up (even above 250K per year) it becomes that much harder to do that.

Today the best interest rates on non CD accounts is about 1.5%, other models look at a 4% per year pull down on a nest egg as something that is sustainable.

So let's get to pensions and specifically public jobs at the local, state and federal level where people can pull down a percentage of their salary for life, retiring at age 50.

Many people would consider having $1 million to be wealthy- well a $40k a year pension is equivalent to having $1 million in the bank, but even better as it protected by taxpayers with no risk of loss. So people pulling $100k+ pensions per year would be like having $2.5 million in the bank (or $8 million in the bank with today's interest rates!)

How can everybody in the gov't be pulling down this fat package? Because the lawmakers are also in on the deal so they don't have any incentive to reform this! Also they get free healthcare often with no co-pay.

Don't tell me these benefits are to be preserved at all costs while raising taxes on the people that form the productive part of the economy. I say this because very few would claim the gov't is the productive part of the economy. If it were we could kill of private industry and just go communist where the gov't plans and distributes anything....

There should be no tax increases on the table until the pensions are cut and gov't salaries are inline with that in the private market. Why should a paper pusher working 9-5 be making $90K a year with a pension of $75k when no job exists like this in the private sector? And why should my taxes go up to pay for this excessiveness?

Again, I don't mind to pay more but the benefit should be shared - meaning paying down the debt, building a strong, stable currency so that money saved can last a lifetime without being eaten by growing debt and inflation.

I'm surprised there isn't more outrage on these comments as I do think the FMF readership is comprised of some good critical thinkers.

-Mike

Most mainstream financial journalists have no idea what they are talking about.

yearly income is also 1 year. making zero for 5 years then making 250k sure doesnt make you rich. Even if you make 250k every year, you're not living the high life on that. That's less than 30 hours on the G5!

Mike Hunt-

Great points!

The one thing about the pensions however- they end once the people die. There is no wealth transfer. Not a big deal I know.

@Mike Hunt
Mike,regarding public sector pensions, a portion of what you say is true and I have to agree with. But a goodly portion is not--at least from my knowledge and experience.

Can public sector pensions be good for the individual? Yes. And not that long ago, private sector jobs had defined benefit plans too. do changes need to be made? Yes. But before bashing unions, remember that management agreed to those plans. Too often negotiations are influenced by politicians and not the professionals. Of course the private sector is not immune,e.g. GM Ford and the steel companies just to name a few.

I know of very few situations where someone can retire at 50 and earn 100k. In fact none. You statements above assume every gov't worker makes that much, and that simply is not true. They also contribute to their plans, it is not free. And many retirees contribute to health care. ( I pay 50% of the employer cost. Yes that is still a good deal, but it is not free).

Going back to that age 50 burr. My experience is that that applies to Police and fire personnel. The several jurisdictions I am aware of requires an employee to work 34 or more years to collect a full pension and an age of 55. I'm speaking broadly here.

I'd like to leave on a positive note with you Mike. Again, I agree with you that while these may nice, they are out of date and have to be addressed and modified. Believe it or not, Mike, the tide is flowing in the way you want

By the way, Both parties R/D's catered to the public sector unions where I live.

When I lived in DC, I rented the basement in a Georgetown house from a guy who worked for HUD... started working there at 18, they paid for all of his schooling (masters), and at 49 he retired at 80% of his last 3 year average which he told me was over 100k per year. He sold Real estate and played a lot of tennis in 'retirement'.

Average Federal compensation in 2008(wages and benefits) is $119,982.

This is all off topic for this post however so I will try to stop.

Tyler,
Not to far off topic, as as you know as a regular poster here, this one is almost done anyway.

Let's look at your friend. He worked at HUD for 31 years. Some pension is due. Tuition reimbursement is (or was) not uncommon for large corporations so nothing unusual there. (At least he got his schooling and stayed with HUD so they hopefully got their money's worth. ;-)

I ask about the average compensation figure quoted. $119,892 is for wages and benefits according to your post. Benefits are usually worth about 45% of salary
so the average salary is about 80k. Still not too shabby. However it works out to about 64kannually as a pension or 5333 a month and does still pay taxes. This may be comfortable depending on where this person lives and whom he has to support. But this is not the 'high life'.

Three last points,
1. Your friend seems to have managed his career well according FMF but he is not rich.

2. I hope you don't begrudge your friend what he worked for and earned based on the rules of the game at the time.

3. In the past gov't workers were paid less than privates, so fringes and step increases, and pension calculations were better in order to retain people. that is no longer true. So fringes and pension calculations need adjusting to fit the times.
Hope to hear from you or anyone on this. Unless FMF says no.

BillV, Tyler, and others --

Feel free to discuss what you like. I find the conversation interesting.

Those making $250k sure have it rough.

BillV,

Sorry if I generalized too much. You are correct, most of the plans where people retire early are in the police, fire department and military. Public unions exert a very strong political influence but in and out of the US. However when governments around the world are too far into debt something has to give. I guess it will take some time for this to play out.

For the HUD employee with a six figure pension, I'd consider him to be rich as he has enought money coming in to do whatever he likes. If this individual chose to work there would be no reduction of the pension so it's literally like having between $4 Million - $10 million in the bank. That really is rich by any standard.

I think public sector plans should be defined contribution, not defined benefit. Especially since taxpayers are on the hook for this.

About 20 years ago it was true that gov't jobs paid less than private employers, presumably this was in exchange for more job security and easier hours. I almost worked for a semi-public sector (Naval Surface Warfare center) after graduating but the environment seemed to be really demotivating- pay was set by tenure and not performance for the first 10 years and as a young man I wasn't interested in that environment. They offered my $37K per year but in the private industry I started at $42k per year, this was as a Masters in Mechanical & Aerospace Engineering.

The problem is that with the rising market, benefits and salaries (all fixed costs) rose in proportion to the housing bubble. Now the bubble popped and everybody wants to keep their overinflated benefits. It's going to be a fight to get the fixed costs trimmed down.

I hope people try and reach out and take care of each other when times get rough.

-Mike

Mike,
There is nothing you say here that I disagree with, especally your last comment.

At first I thought this post was injected with pure sarcasm. Then I realized it wasn't... at all.

Sorry, but someone is way out of touch... and it ain't me.

I'll write more later but wanted (addicted?) to quickly respond. I take zero issue with people doing the best they can and maxamizing their returns. Good for the HUD guy I know- he fell into some great choices. I find his s
career story very interesting.

We can debate whether different incomes are a lot all day long and get no where. Is 250k a lot? Sure but it's all relative.

http://en.wikipedia.org/wiki/Household_income_in_the_United_States

Really?

205k$ a year must be a tough life to live. I can't even fathom.

Seriously, a few of you need to get a grip.

Even being deployed to Iraq and not being taxed, I didn't come anywhere close to raking in 250k$. And this guy gripes about it? Really? Who's snarky? It ain't me.

Really? Really? Get a grip. Wake up and smell the coffee. Sorry to come off like this but someone has to say something and I guess it'll be me.

Brian,
An intersting comment on your part. I don't think anyone was griping though. Just that 250k is not necessarily the same as rich. Others in this thread have mirrored your comment, you aren't the first.

PS thanks for the Iraq deployment.

Brian

I cant find anyone who is griping about an income of 250k. Unfortunately, your ad hominem post weakens the validity of any points you might have had.

I don’t think anyone would argue that 250k isn’t a great yearly revenue, but as this site has stated over and over again, it’s not what you make, but what you save that develops net worth. Furthermore, I would argue that 250k, although in the top 2% of households, is far from my definition of rich.

In non financial terms, what is rich to you? To me it’s an ability to avoid daily inconveniences- traveling on my own jet, cleaning staff, assistants, etc. It’s having access- from personal experience, access to the Oval Office, and every political position there after, comes with wealth (Foreign gov’ts are even easier to access with wealth.). It’s the knowledge that I can buy anything I want- If I want to collect pre WW II French automobiles? Done. It’s trading money for time.

Let me assure you, none of these things are possible with an income of $250k. It doesn’t even get you close. So to me, $250k doesn’t get one into the rich category- 10mm of net worth doesn’t even get me there.

Most people who make over that amount could fathom it before they were there. Imagining it, and believing its possible, might be a good first step.

Billv-

Federal Incomes:
Looking at averages is always dangerous. What is the context of the 119k avg federal income with benefits? What's the median and the standard deviation? (The 119k number comes from a govt report and includes benefits.)

Most Fed. employees live in expensive cities. Most are highly educated. Comparing this average to the average private sector income is likely incorrect.

I wasnt trying to make any argument for or against federal employee incomes. Merely providing a story. I found the situation interesting- zero judgment, just interesting.

If I had to make an argument it would likely be: federal employees are properly paid, but there are way too many of them and it's too difficult to get rid of them for poor performance.


Agree on the defined contributions vs benefits.

Tyler,
Won't disagree with anything you said above (Ok, so I might quibble with: 'most are highly educated.' ;-) )

Yes, I did think you were complaining about Fed employees. I'm not one btw. Sorry about that chief.

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