The Discreet Millionaire


Who do you consider rich? At what income are you considered wealthy? For now, let's put aside the platitudes that say you are rich if you have your health, a happy caring family, close friends and many interests. Of course, these are the reasons why we live and money cannot buy these treasures. But as Spike Mulligan once said, "Money brings you a more pleasant form of misery."

These characteristics of the vast majority of millionaires in the United States may surprise you:

  • Live in a house under $ 400,000.
  • Most likely wearing a Timex watch.
  • Pay $ 15 or less for a bottle of wine.
  • Never paid more than $ 400 for a costume.
  • More likely to drive an Acura than a BMW.
  • Spend little on trendy brands and luxury items

Tax Policy Center figures indicate that if your annual household income is $ 107,628, you are in the top 20% of employees. If you exceed $ 148,687, you are in the top 10%. The richest 5% earn more than $ 208,810. And if your household income exceeds $ 521,411, congratulations. You are one of those "1% ers" and probably demonized by those who consider hard work and risk taking as a matter of luck or good genes. However, like a business, your personal balance sheet should be the determining factor. If you earn $ 200,000 a year, it is useless if you spend $ 210,000.

You can actually just appear rich instead of actually being rich.

Take for example the recent news on NBA legend Alan Iverson. Surprisingly, a man who, before the age of 35, had amassed a fortune more than the average person will see in his lifetime, had exploded everything. To quote the article: "Iverson blew up his money at an alarming rate on flashy jewelry, expensive cars and other frivolous purchases. In 2012, a Georgian judge seized his salary to satisfy a debt $ 859,896.46 to a jeweler. "

Huh? Almost a million dollars for a single jeweler! Here is a man who not only looked wealthy, but who was in fact wealthy. But because the desire to appear wealthy overwhelmed him, he now begs to change on the street. He hopes to get $ 30 million from a trust, but not before age 55. It will be interesting to see if he learns his lesson, if he can survive until then. I guess 30 million dollars will be gone before he reaches the "official" retirement age.

This is why net worth is a much better measure of real wealth than income. The Federal Reserve's consumer finance survey shows that a net worth of $ 415,700 puts you in the top 20% of households. You are in the top 10% if your net worth is $ 952,200. (Dr. Thomas J. Stanley – author of The millionaire next door – says that one in eight American households has a net worth of $ 1 million or more. It’s close) If your net worth is $ 1,863,800, you are in the top 5%. And if you have a household net worth of $ 6,816,200, your daa- you are in the top 1% … and may be frowned upon by redistributionists who don't appreciate people who live within their means, save regularly and manage their financial affairs with prudence.

Most millionaires are quite the opposite of being big spenders. They spend much less than what they can afford for all of the jointly owned assets. Desires for being, on the other hand, (people with average or above-average income but little net worth) are simply "ambitious". They buy expensive clothes, high-end wines, luxury cars and often more home than they can afford.

It is ironic that the same thing that makes them wealthy keeps them from getting rich.

How then to get rich if you are not currently? The basic formula is quite simple: maximize your income (by improving your studies or your professional skills). Minimize your responsibilities (by living within your means). Save the difference in an IRA or 401K (I know easier said than done.) And follow proven investment principles.

Of course, you have to learn to be thrifty. But ultimately, becoming financially free, being able to do and go where you want, not having to depend on the head of a boss or the federal government is what I consider rich. What a feeling.

Some people refuse to change, but the result is clear: if you want to be rich, you have to stop appearing like that and start living like the many real millionaires you won't see on TV.

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