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Comment by AlexC04 | Hacker News Reader

Perhaps it's because the definition of "rich" that they would need to feel is one where they'd never have to work again if they didn't want to.

The article points out an annual income of $172,000 as being rich, but by implication, these people still have to work for their money. Therefore probably don't feel "rich"

If they could maintain that income or even half that income in perpetuity without working. If they could spend their days doing just what they want and not what they have to then maybe that's what feels rich?

Maybe?

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"The article points out an annual income of $172,000 as being rich, but by implication, these people still have to work for their money."

I think the real issue is that someone making 300,000 probably doesn't have much more disposable income than someone making 80,000. Whatever extra money they have is likely just going to a slightly nicer house, their IRA, dental insurance, a slightly better preschool for their kids, etc. In other words, if you're making 300,000 per year then you probably can't afford to fly to Hawaii for the weekend on a whim any more than someone making 80,000 can.

You make a good point, I would just substitute "choose not to" for "probably can't." The person chose that nicer house and an expensive lifestyle. As a counterpoint, I went to Virginia Beach for a week on a whim at a time when I had no real income to speak of.

> "someone making 300,000 probably doesn't have much more disposable income than someone making 80,000"

I don't think that's borne out by the stats. As I recall fixed costs essentially flat-line as a percentage of income somewhere south of 200k, up until you reach the "don't look at prices anymore" brackets. Also, I note that it really doesn't take much more disposable income to add flashy consumption. Five thousand dollars is easily two annual trips to Hawaii, which -- while not remotely a trivial amount of money -- really isn't that hard to sock away at 300k vs 80k. And two additional annual vacations at 300k is certainly going to look like 'whimsical' to the guy making 80k who takes one real vacation a year.

So I'm wondering if we aren't having a disagreement on definitions. And when you say 'hawaii on whim', you're thinking about trips approaching the opulence of the "don't look at prices anymore" brackets?

"So I'm wondering if we aren't having a disagreement on definitions."

I think it mostly depends on whether or not you have kids. Kids can basically eat up an unlimited amount of money.

Absolutely.

When I made a third of my current salary range, I felt well off. Now I have kids and feel poor.

I don't even make 80K USD, but living in the UK and thus with more vacation time (25 days), even I take at least 3 holidays abroad every year.

I make 13K USD, and I took 2 holidays abroad :)

(where abroad is Brazil and Argentina, since I live in Uruguay)

I know that people in the US have half the holiday time that I have, but they should be able to have the money to enjoy what time they do have.

> Five thousand dollars is easily two annual trips to Hawaii

Have to nitpick here. $5k is one average Hawaii vacation for a couple. It costs almost $2k just to fly out there.

Right now it would cost me about $400 roundtrip to Hawaii. The flights are a lot cheaper than they used to be.

> I think the real issue is that someone making 300,000 probably doesn't have much more disposable income than someone making 80,000.

I think the term disposable income gets misused a lot. People don't see the money they spend on the BMWs, or the part-time nanny, or the private school, or any number of everyday luxuries as a use of disposable income. But they are every bit as much as those trips to Hawaii.

I think what people are really searching for is satisfaction.

If they define satisfaction as being top 5% in wealth, then they'll probably have a long road to satisfaction.

As for me, and I suspect others here, I'm satisfied when creating value. Dollars made is just a fallible measure of how much value has been created.

Anyone who defines satisfaction that way is fooling themselves; probably in more ways than one.

If I had one year of $172,000 income, I could bank it and live off the interest for the rest of my life. People who make that much and don't feel "rich" feel so because somehow they incur $172,000 in expenses every year. I'm a tutor and often work with kids of rich families, and it astounds me what their parents spend money on (think private jets and race cars).

Actually, I work with kids of poor families as well, and I could say the same, although the indulgences are more mundane (expensive cell phone plans and TV packages).

If I had one year of $172,000 income, I could bank it and live off the interest for the rest of my life.

Er, how? Assuming a very optimistic 4% return after inflation and taxes, that's only $7k/year.

Here in Uruguay, I'd buy 2 or 3 houses, which would give a return of about U$ 1000/month.

That's U$ 12k/year right there (and rent is inflation adjusted here).

Yes, we do have a housing boom here, why do you ask :) - it's far cheaper to own than to rent, but most people don't have the capital - I rent, as I make U$ 13k/year

Right now I live off of about $12k/year, and I'm paying about $4800/year in loans (which will be paid off soon enough). That works out to about $7k/year.

Unless your $7K expenditure calculation includes putting away quite a bit of savings (Which, unless there's a massive early repayment fine on your loans, it shouldn't), you'll also need to pretty much halve that optimistic 4% to ensure that your capital doesn't decline in real terms. That's assuming inflation remains as stable as it currently is.

I did some back-of-envelope calculations, a few years ago, based on the inflation common savings interest rates of the time, and median salaries where I lived. Basically, given £1M in a savings account and no other income, someone who lives as though earning the median salary (including reinvesting about 30% after tax), could expect to start eating into their capital (in real terms) within about 3 years. I can't remember how long it would take for their capital sum to actually drop below £1M, but I do remember it taking about 30 years to drop to 0.

Now, you're obviously a bit more frugal than the average bear, but you're talking about having a tenth of that capital, and a sixth of that expenditure, which already doesn't add up. Also, my calculations above were made when even a risk-free savings account would score you nearly 5% APR.

$7k a year would be impossible for me and most other people. My rent alone is $12k/year. But, say to be frugal, and this isn't my current situation be what I imagine would be the bare minimum: $400/mo rent, $100/mo car insurance, $30/week in groceries. I have other necessities but for bare minimum that's already well over $7k/year.

Rent is spot on. My car insurance is about $800/yr (although it seems MA is a particularly cheap state for insurance). I do not have an exact figure but I believe my weekly grocery bill to be less than that by about 1/3 (not eating meat helps). That brings the total to $6640/yr.

Not counting gas (which I mostly use for my hour-long commute), I further spend $20/mo on internet, and $60/mo on 3G service (which I consider a luxury). That brings the total to $7600/yr. So, I exaggerated slightly. I would need closer to a year and a month's worth of $172k income to meet this requirement.

Maybe, but probably not comfortably. After taxes, that 172K will be about 120K. Even if you were to somehow make 8% interest on your money for the rest of your life, that's still only $800 a month.

That's about what I make now, and I'm living pretty damn comfortably without racking up debt (Internet-enabled phone, car, eat organic food, have plenty of free time for recreation).

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