Why So Many Rich People Don’t Feel Very Rich

Parent Cafe
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<p>“You’re assuming that people who buy luxury items buy them to impress others. I know people who truly enjoy certain luxury items and buy them for that reason alone.”</p>

<p>As do I. In fact, they make an effort to not even show these things to their friends. People should get what they want, and who cares what other people think. What’s the point of waiting until you’re 80 to get that sports car you always wanted? If you can afford it and would like it, get it. If people spend what they like and don’t live like a pauper and squirrel away every extra dollar they have, what business is it of mine? Get that nice house, car, jewelry or have a great vacation. Maybe I can’t afford the same, but I’m not going to be jealous, it’s great that you can enjoy it.</p>

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<p>It isn’t. But they should not expect a lot of sympathy when they come here and complain about how unaffordable their kids’ college is on their $200,000+ incomes.</p>

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<p>I still think you don’t get that paying 60K for college tuition on a 200K income, which is a lot less after taxes, IS unaffordable. You seem to think that people just have that amount in discretionary income, when the reality is, they may have expected their kids to go to local colleges, and really didn’t have an extra 60K/yr hanging around for each kid to use. Why it is fair that one kid may have to borrow 60K/year to go to the same college that another can get for free, because of financial aid, is beyond me. I would never have let my kids borrow a bunch of money (nor would we do so) for college.</p>

<p>Unless you have a very high income, or a large amount saved up, 250K for four years of college is A LOT of money. It is not easy to do. If you have a 200K plus income, you either have to suck it up, or tell your kid they can’t go to the college of their choice. But it’s not easy for most people. I don’t know why that is hard to understand. </p>

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<p>I don’t understand why people are upset when someone who makes 100k after taxes says 60k a year is a lot of money. It is. </p>

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<p>“You’re assuming that people who buy luxury items buy them to impress others. I know people who truly enjoy certain luxury items and buy them for that reason alone.”</p>

<p>I never said that. I have luxury items myself; I certainly don’t live a life of sackcloth and ashes. And I certainly enjoy some things that are well-made, investment pieces, and so forth. </p>

<p>But I don’t want to be living AT my means, because that’s a vulnerable place to be if there is a sudden change in plans (lost job, unexpected medical expenses, etc.). </p>

<p>I was married at 21; my husband was in medical school and had no income. We lived off my salary. But I still contributed the max to my 401k at the time. Then he became a resident. For those 4 years, we lived off my salary and essentially bsnked his. Then when he went into practice, we essentially lived off my salary and banked his. This is an oversimplification of how we ran it, but the point was - the moment we had a six figure income, we didn’t immediately lead a six figure life. When we went to buy a house, we didn’t look at our combined incomes and multiply it by 2.5 or whatever the multiplier was and live “up” to our income. We still live nicely and I’m not suffering by any stretch of the imagination. But this enabled us to pay for the kids’ education without blinking an eye. It enabled us to absorb an unexpected huge medical expense a few years ago, and it enables us to absorb some unexpected care for an elderly parent. If we had lived AT our means, and had the big house, fancy cars, etc. that many (most?) people at our income level have, we’d be much more vulnerable. </p>

<p>And that’s how people get into trouble. </p>

<p>We have a neighbor, same age as us, 50 or so, three small kids, nice house, always a BMW and a Hummer in the driveway. Guy dies of an unexpected, sudden heart attack. They don’t have enough in savings to keep the house; it went into foreclosure and the mother had to move her kids to California and live with her parents because she couldn’t afford to keep her house. How awful - the stress of losing your husband is bad enough, but then you have to uproot your grieving kids across the country? But … He clearly lived AT his means. His BMW and Hummer weren’t “outrageous” for his income - but he could have lived “below” with a Toyota Camry or Honda Accord and I bet that money could have been a nice cushion. </p>

<p>I’ve seen too many luxury homes in my area built and then not bought or abandoned or foreclosed on. Because people think that if they make a million dollars a year, they have to live like “people who make a million dollars a year.” </p>

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<p>“People should get what they want, and who cares what other people think. What’s the point of waiting until you’re 80 to get that sports car you always wanted? If you can afford it and would like it, get it. If people spend what they like and don’t live like a pauper and squirrel away every extra dollar they have, what business is it of mine? Get that nice house, car, jewelry or have a great vacation. Maybe I can’t afford the same, but I’m not going to be jealous, it’s great that you can enjoy it.”</p>

<p>Sure. But don’t buy a big house, your dream sports car, lots of jewelry, go to Europe several times a year, etc, and then complain that you can’t spend $60k on your kids’ education. You made choices to consume vs save; own them. </p>

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<p>I am currently picking up the pieces for a relative who (unknown to us all) lived not just AT her income level, but above. No sense of delayed gratification. No sense of fiscal discipline. No sense of “I can afford luxury item A or B, but not both.” No sense of “not everything I own needs to be top of the line; Suave shampoo won’t kill me.” No sense of - a daily latte in itself is no big deal but little things like that do add up over time. No restraint. It is beyond frustrating to me, after I’ve worked so hard to be where I’m at, to be able to retire early, and then have the freedom to do what I want now that my kids’ education is paid for, that my money is now going to subsidize this. </p>

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<p>Here’s an example of living below means. </p>

<p>My D, like lots of other college students, did an internship in NYC last summer. She lived in NYU housing and took the subway to work. Her internship was great and she had fun living in the city. A very typical experience. </p>

<p>She paid for her room (something I agonized over on this board, but ultimately decided she needed to learn how to budget when not at the bank of Mom and Dad - and she accepted willingly). She worked up a budget and tracked it on mint.com. She packed a lunch and took it to work everyday. On weekends, she made dinners so that she could have something to eat quickly when she got home. Of course I had her bake in going out with friends for ice cream and drinks and the like, because no one said she had to be monastic. </p>

<p>She was really amazed and commented how none of her roommates ever made / brought a lunch or prepared dinner. It was all going outline. Now, I’m not saying any of them were extravagant, far from it; they were buying at typical places, not going to the Plaza. But D was very able to recognize that these things add up. That the $10 lunch every day is $50/week and a couple hundred dollars over the summer. And these were kids who needed this money - to pay on student loans that D is fortunate enough not to have.</p>

<p>Knowing what’s worth economizing on and what’s worth spending on is a useful life skill, IMO. I wasn’t really taught it since I grew up in a house with little fiscal restraint, and I’m glad that my H taught me along the way. </p>

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<p>Kids can’t borrow $60K a year. Private colleges can offer aid to whomever they want, and often do in the interest of diversifying their student bodies along socioeconomic lines. </p>

<p>Anyway, who says expensive private colleges are a “right”? Plenty of great schools cost a lot less than that.</p>

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I don’t get families who have high incomes but have seemingly thought not at all about what it will take to fund their kids’ educations. Those of us trying to save for our kids on a lot less have, in many cases, been “sucking it up” for years. And no, our kids don’t always get to go to the “college of their choice” if it’s not affordable. </p>

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<p>^That’s how it “should” be that you don’t go if you can’t afford to. But there are resentments that your kid can’t go because of something small like money.</p>

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<p>You’re making a lot of assumptions with that statement, pizzagirl. It is not universally true.</p>

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<p>But that’s the part I don’t get. The people who are most resentful are generally not those of modest or limited means–they already know they can’t have everything they want. At least where I live, it’s those who are social strivers–paying a premium to live in the “right” neighborhoods, redoing their kitchens for solely cosmetic reasons, bragging about their expensive vacations, etc.–who then come up short (and complain about it) when the college years hit. It is hard to have sympathy for them.</p>

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<p>"Unless you have a very high income, or a large amount saved up, 250K for four years of college is A LOT of money. It is not easy to do. If you have a 200K plus income, you either have to suck it up, or tell your kid they can’t go to the college of their choice. But it’s not easy for most people. "</p>

<p>Who said it was going to be easy? It’s not always easy to save money either and engage in delayed gratification. You don’t think there were things I would have liked to have bought or had over the years? </p>

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<p>I was shocked by how much drinks at a bar cost now. I don’t drink, but we were out with friends the other night, and I was reading the bar menu and I could not BELIEVE how much people are paying for a martini or whatnot. It was shocking. </p>

<p>I think sometimes people just can’t believe how much something costs now. The sticker shock on college is very big for those who haven’t been keeping tabs. I feel for people who just didn’t realize how much it was going to cost and I can give them space to complain a little bit.</p>

<p>I don’t love it on here when people get into the “Well you have lots of money to pay.” “Well you are getting lots of financial aid” spats. I think each lacks a willingness to understand that the situation is difficult for everyone. Colleges price themselves as luxury goods, even state schools in some states, and yet they are seen by most of us as essential goods. </p>

<p>It’s okay to be upset about it for a while, I think.</p>

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<p>It goes beyond being a bit upset. I get the feeling they also expect the situation be remedied by passing a legistration to accommodate their need or some relatives/ generous soul to step in. I resent that. </p>

<p>Not knowing how much private colleges cost is a bit beyond me tho. You have a kid and you plan for college by 529 or something else. How could you not know how much it costs unless you weren’t planning?</p>

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<p>poetgrl, I understand what you are saying, but there’s a difference. You don’t drink, so it is no matter to you what drinks cost. The $200K income people who are suffering sticker shock should know better. Most of the time these are people who have invested tons of effort preparing their kids for college since they were very young. They know how much tutoring costs, or private tennis lessons, or summer enrichment programs. They have only themselves to blame if they don’t know what the college financial landscape looks like as well.</p>

<p>Those of us who have HAD to plan for college expenses have studied up on the costs, watch them rise over the years, and found ways to save even a modest amount–all while exploring a range of schools that will get our kids the education we want them to have. </p>

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<p>“I was shocked by how much drinks at a bar cost now. I don’t drink, but we were out with friends the other night, and I was reading the bar menu and I could not BELIEVE how much people are paying for a martini or whatnot. It was shocking.”</p>

<p>And it’s precisely the people who DO go and have a $13 drink with every restaurant meal, or go out for drinks, order expensive wines, etc. who it’s hard to have sympathy for when they complain. Things add up. </p>

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<p>I think that’s very true thus this thread. It’s $200/yr types who’s most vocal. $200/yr puts them top 5%, I’d think.</p>

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<p>We are full pay. No complaints but we are.</p>

<p>But I admit to being really shocked when we started to look at colleges by how expensive it had become. I wasn’t on CC then, didn’t even know about it, actually, but I could see myself coming on here just stunned by how much tuition is now.</p>

<p>I don’t resent being full pay. I’m lucky I am, and we had saved a great deal of money over the years, though not nearly enough. It wasn’t a hardship to pay, isn’t a hardship to pay.</p>

<p>But, I can see the shock on certain threads. Then, it wears off and people start to figure it out. </p>

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<p>My wife has some employees who live near us, many of whom are in single-earner households. They are well-paid, and my wife knows what they make (assuming no inheritance or trusts). Sometimes we will happen to drive by their home and see a renovation in progress, new cars in the driveway, my wife will hear of vacation plans, knows that their kids will be heading to college soon, etc., and she asks me, “how in the world can they manage that?”</p>

<p>The answer for some of them is that they can’t. A few times she has had to lay off (or fire) some of them. They have no cushion. When the severance runs out, unless they get a new job quickly, you see their house on the market. We now (callously, but semi-accurately) refer to the lifestyle as “two checks from homeless.”</p>

<p>We are lucky enough to be able to pay for college and a cushy life. We know that we’re lucky, and luck can change. An emergency fund was a necessity long before the cushy purchases. I know it’s judgmental, but I have disdain for those who, with high incomes, put nothing aside for their children’s education. How can that matter less to them than a new Mercedes? </p>