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December 03, 2009


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Thankfully my wife is extremely busy, which limits her shopping time.

I've also noted this when I worked contstruction during college breaks. I'd work 70 hr weeks of manual labor. Coming home exhuasted, and went directly to couch or bed. I'd only spend money on food.

Once school resumed, the money quiclky dissapeared at the bar.

I tend to spend more when I get busy since I eat out more, use more gas, and pay for activities that I wouldn't at home like Bingo, White Elephant gifts, or extra donations to whatever charity I'm helping.

BUT I am happier and slim down faster when I actually have a life. To me, the trade off is worth the extra $50-$100 a month. I'm sure my husband appreciates having the house to himself once in a while as well...

Interesting point, I didn't realize that. It makes sense... isn't it better to live life by doing things than wasting it away watching TV or something else equally as mind numbing.

I don't know about his one. I think I'd have to see more details on what kind of data they saw. I'd wonder if they are seeing that rich people have more money and free time to pursue lots of activities? It seems to me that the more hobbies and interests you have then the more ways you might spend money on those interests and cut your time for wealth building.

Today Congress voted to restore the inheritance tax which was due to expire at the end of the year. The current law allows a married couple to exclude $3.5M each or, with the right legal trusts set up, to exclude $7M of their joint estate. When the surviving spouse dies, everything over $7M is taxed at 45%.

That doesn't give you a huge reason to go to great lengths and to take big risks to build an estate more than $7M, especially since the value of your real estate is included in the $7M.

It's sad to me that you pay taxes on the money you earn, you pay taxes on the interest and capital gains that it generates and then, on top of that they stick you with a 45% tax on whatever remains over $7M when the survivor of the marriage dies.

It would seem that working to become wealthy is still very worthwhile, but working to become super rich is hardly worth it unless you have ultra expensive tastes for things that you can't live without.

Interesting! But it makes sense, now that you've pointed it out. I do believe that a lot of bad habits, overspending included, arise out of boredom.

Seems kind of obvious to me too: More money means you can afford to do more. Duh! I have a wide variety of interests, but since I'm not wealthy I have to pick and choose. For instance, I'd love to pursue my interest in photography, but can't afford an SLR, nor can I afford a musical instrument. It will take me a while to save up for these items. Much easier to indulge an interest when you can walk out and get whatever you need, when you need it.

Wealth has a utility curve and it's different for everyone. As one acquires more wealth, one's priorities and values naturally shift along this utility curve. Thus, we could be confusing correlation for causation in this scenario. One way to test all of these interesting findings is to see if they were always this way/ were they this way before gaining any wealth.

FMF- this really ties into something you posted weeks ago that I think is even more important (soccer paying you to be a zebra)... wealthly people's hobbies tend to cost them nothing or make them money. One example might be collecting classic cars or creating a company around a hobby such as buying quilting machines etc. Even their charity work has aspects of making money such as helping in a 3rd world country while buying assets there.

Wealthy people probably don't work 9-5 jobs and therefore have the time to pursue various interests and activities. When you leave the house early in the morning, and come come in the evening, there is not alot of time left for various interests and activities. You may only have time to home cook your meal and clean up before you are tired and it is too late to do that activity. On the weekends, the laundry must be done, house cleaned, meal plans made and groceries bought, etc etc. I mean, everyone has to take care of these chores, but when you work 9-5 also, there is little time left for hobbies.

Kim --

"Wealthy people probably don't work 9-5 jobs."

Really? When do they work?

Well, I am maybe "guessing" that some wealthy people work from home, or are consultants that make their own hours? I do know some wealthy people that do work regular 9-5 jobs and make the commute - but they have a stay at home spouse that can take care of much of the cleaning, meal planning and cooking, thereby freeing up time so that both of them can have time for hobbies or other entertainment. (We have some family members that have this arrangement and they are very happy and fulfilled.) I do know that when my hubby and I both left early in the AM and came home in the PM and had young children - we had very little time to pursue hobbies! With kids nearly grown, and with the kids helping with much of the grocery shopping and chores, hubby and I are finding time and energy to develop some hobbies while still working 9-5 jobs! Yay! (All work and no play makes Jack a very dull boy!)

Kim --

Ok, I can buy it that "some" wealthy people work differently than 9 to 5. I just didn't get that from your original statement. I thought you meant all or most wealthy people work something other than traditional hours.

BTW, many wealthy people work way MORE than 9 to 5 each day!

FMF - Good point!!

I have a small problem with this obsession over the word "Wealthy". A much better term in my opinion is "Comfortably well off".

The wealthy people that I used to see every time I went down town when I was growing up in England would have their uniformed chauffeur drive them to the fanciest department store in town in their Rolls Royce, and then he would stand outside the car waiting to open the door and assist them with their packages when they emerged after making their purchases. At home, in addition to the chauffeur they would have, at the very least, a live-in cook & maid and handyman & gardener, often a married couple.
I have a net worth of about $8M but I don't have a Rolls Royce or a chauffeur, I cut my own grass, rake up my own leaves, wash my own cars, sometimes vacuum our own carpets, take out the garbage and do all the things that working class people have done for many decades. My wife and I certainly do not live a lifestyle of the truly Wealthy.

I think that there must be a lot of people that have an inflated opinion of their station in life than they really have. There was an often used term for such people in those days, it was the "nouveaux riche" and it wasn't complimentary. It meant that they were newly rich but had the manners and lifestyle of much less affluent people.

Being comfortably well off means that you pay all your bills on time, have no other debt than maybe a mortgage or car payment, take nice vacations, have a very healthy diet, dress nicely, live in a very nice home in a nice part of town, can afford to buy pretty much anything you want within reason, your well mannered kids go to nice schools, and often on to college, you keep your home up very well, and are a good citizen and a good neighbor.

Old Limey --

That's true, "wealthy" has a lot of different meanings. Some may think it's the "live in a castle and travel all the time" lifestyle. The book calls these people the "glittering rich." They make millions a year and have net worths in the $20 million range.

The book calls the "wealthy" what you refer to as "comfortably well off" -- people with high net worths compared to the pack (the book uses a net worth of $1 million) but not so stinking rich that they're using money to wipe their noses and light their fireplaces.

I'm not a millionaire, but I definitely value my time more than money. I know that money can be made, given enough time. But once certain segments of my time is gone, it's gone for good.

Like many of you, I too spend much my time over money matters, but I've never forgotten which is the more important of the two.

You're right! There's a world of difference between a person that was raised in a working class family, ended up with a good college education and a good job, and became gradually wealthy over a period of many years, than with people that were born into a wealthy family, i.e. "old money". One phrase, that has a nice ring, that I like very much, is "a self made man", and I believe there are many of those among your readers, as well as I hasten to add, a few self made women.

I doubt if we have many people on this blog that were born into families with "old money", such as the Kennedy's and Rockefeller's, or even famous wives such as Cindy McCain and Teresa Kerry. They are in the group you call "glittering rich", they are joined by a group I like to call "nouveau riche" - a group these days largely consisting of actors, rock stars, and great athletes.

I'm a Kennedy, well my mother is, my father is a Rockefeller- so I guess I am just a Rockefeller. I am young so does that make me old money or new money? Hard to keep track of all my titles.

Tyler, are you serious? Are you really a Rockerfeller/Kennedy?

If so, I'd love to read a blog entry on your thoughts into this subject matter.

No I was kidding (I thought I was being mildly entertaining). I spent the first part of my childhood in a below middle class family then my life changed and I moved into an older money/glittering rich world.

Old Limey -

In the United States, at least some part of a wealthy person's estate is often not taxed.

For example, if you buy and hold appreciating assets (e.g. real estate, stocks, bonds) and you die still holding them, the capital gains on those assets were never taxed during your lifetime, and your heir(s) inherit(s) the assets with a "stepped-up basis" for tax purposes.

e.g. buy a $50K property, hold for decades, it's worth $1M when you die, the entire capital gain is untaxed and your heir holds an asset valued at $1M for tax purposes.

Now if I toil all year at a minimum wage job and earn $15K, I am subject to income tax. But if you inherit $1M, your windfall is untaxed.

I think you are quite correct about the capital gains on real estate which is why we are leaving our home to one child and our condo to another. Our trust account will have no such favorable treatment but our IRAs will be shared between two of the children, and being so much younger than us, will have many more years to take the minimum required distributions. Thus our estate should not have to pay very much at all when the time comes. I think the super wealthy tend to form charitable foundations and put a major portion of their huge wealth into those. For example, if you watch PBS as much as we do you would see the credits to large charitable foundations listed at the start of many of the programs such as Nova, Nature, and American Experience.

I believe you mentioned in a prior post how little you made which makes me curious that a person with your knowledge and writing ability is toiling all year for so little, surely even the illegals that buss tables or mow lawns make more than that, and their money is usually paid under the table.

Old Limey -

Your estate plan is excellent and your children are (and will continue to be) blessed. You have it all figured out, which of course puts you WAY ahead of most of the citizens on this side of the pond.

I am fascinated with Thomas J. Stanley's books, but I have not yet read or seen this new book - only great reviews like the one here.

Now I think my problem is that I'm a generalist who is unfocused. At any given time, I usually have several projects in mind with roughly equal passion - and not enough passion (or in some cases money) to complete any of them.

I graduated at the bottom of a previous recession in the Rust Belt with a liberal arts degree - the worst time, worst degree, and worst place to look for a job. So I took a dead-end job to keep a roof over my head and after about five years in that position, my resume became perceived by employers as worthless. Now my age has joined my resume as reasons I'm not a hot job prospect.

Now I have some ideas for earning more money, but for those I need home internet and for that I need a PC running Windows. I do have intermittent access but none at home.

There are places where you can take your laptop and use the Internet, such as coffee shops. The problem is that earning money on the Internet requires spending a lot of time on it.

One daughter makes about $1,500/month selling books on, however she uses a system that requires some investment to get started, it requires a bar code scanner and a subscription to a service whereby you download the prices of all Amazon's used books from them about once/week. This way she doesn't waste her time buying and carrying home books that aren't even worth the mailing cost. You also need to find good sources of very cheap used books, such as libraries, junior colleges, thrift stores and estate sales. This daughter is pretty wealthy, as the result of a divorce settlement and only wants income that is not taxable because her high alimony already puts her in the top tax bracket. She also used online dating to hook up with a real nice guy that is recently divorced and makes $140K/year as a department manager for a very well known software company.

The other daughter has an eBay store and sells used apparel of all kinds that she buys at Thrift stores, she makes about $2,000/month and takes care of her two recently adopted babies at the same time. She also uses her computer, the Internet and a FAX machine, with some software that I wrote for her, to do her ex employer's billing statements even though she lives 250 miles away from him. For this she earns about $30K/year plus health benefits and he also makes her SEP-IRA contributions. She is the breadwinner now because her husband who is a great home builder is not building anything at this time.

On the other hand there are no doubt Internet work from home schemes that are trying to make money from people like yourself, so you have to be very careful.

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