I Made $570K Last Year, But I Don’t Feel Rich (In Fact, I Feel Worried)

[Hotdoger]

I have no idea if he's upside down. We already heard how high his expenses Are though, and he said he has several years saved. Let's say he spends $130k/year. We'll give him $260k rainy day fund. Mortgage is $720k or so. Student loan debt $90k. His investment makes him $200k/year. Could probably sell that for around $2,000,000 or more.

I'd say he is quite safely positive in his net worth.

You really see has "investment' as debtless? They way he has lived he is no doubt deep in debt on the investment. No way his story could leave any reasonable person to not think otherwise.

I got $90,000 school debt, $800,000 mortgage and on an investment with positive cash flow of $200,000 he owes 2 mill.
I don't doubt he left many other debts out too.

 

[hoosierdoc]

I missed where he owes $2 mil for an investment. I thought It said he invested in many small companies and one was successful. He said his mortgage was low $700s. Either way, doesn't really matter.

Looking back on life I wish we had bought a $130k house and stayed there from the time i started my job until we had our second kid. If we had lived in the same city as I did residency I'm sure we would have stayed in our smaller house. Would have been a better idea to kick sallie Mae out first. Life lessons I guess.

 

[Hotdoger]

I missed where he owes $2 mil for an investment. I thought It said he invested in many small companies and one was successful. He said his mortgage was low $700s. Either way, doesn't really matter.

Looking back on life I wish we had bought a $130k house and stayed there from the time i started my job until we had our second kid. If we had lived in the same city as I did residency I'm sure we would have stayed in our smaller house. Would have been a better idea to kick sallie Mae out first. Life lessons I guess.

His story didn't cover all his debts. I was making an assumption on the "investment" debt . I think many parts were left out.

 

[Hotdoger]

The cost over on his mortgage over 30 years will dwarf anything he makes on 529s.

 

[smokingman]

I have no idea if he's upside down. We already heard how high his expenses Are though, and he said he has several years saved. Let's say he spends $130k/year. We'll give him $260k rainy day fund. Mortgage is $720k or so. Student loan debt $90k. His investment makes him $200k/year. Could probably sell that for around $2,000,000 or more.

I'd say he is quite safely positive in his net worth.

"Rich" is an attribute given to someone based on their perceived lifestyle. There is no absolute definition and it's entirely based on where you are standing currently.

If he has a positive net worth why on earth would he need to take out a loan on a mini van and himself be driving a 6 year old very high mileage car?How about credit card debt?His business loans?Why on earth if he has 260k in a rainy day fund is he going to "work harder this year to pay off his student loan"?
I am guessing his rainy day fund is much less than 260k and his investment that earns a good portion of his income also carries a loan(ie he borrowed the money to start the investment).He spends 52k on house payments+ insurance(?) and 21k(3%)on property taxes.I am sure his medical practice has expenses(such as insurance)as well.Do not forget the 15k per year Chef.Mini van payment(lol).I am also sure his wife spends some money.
His rental probably still has a loan on it as well.

He was living paycheck to paycheck only a few years ago(does not say how many).I do not think he has a positive net worth.No way.He is to clueless about money.

 

[Hotdoger]

If he has a positive net worth why on earth would he need to take out a loan on a mini van and himself be driving a 6 year old very high mileage car?How about credit card debt?His business loans?Why on earth if he has 260k in a rainy day fund is he going to "work harder this year to pay off his student loan"?
I am guessing his rainy day fund is much less than 260k and his investment that earns a good portion of his income also carries a loan(ie he borrowed the money to start the investment).He spends 52k on house payments+ insurance(?) and 21k(3%)on property taxes.I am sure his medical practice has expenses(such as insurance)as well.Do not forget the 15k per year Chef.Mini van payment(lol).I am also sure his wife spends some money.
His rental probably still has a loan on it as well.

He was living paycheck to paycheck only a few years ago(does not say how many).I do not think he has a positive net worth.No way.He is to clueless about money.

+1
Your assessment is far more believable given his story.

 

[hoosierdoc]

I have a positive net worth and have student loans and drive a high mileage used car that is eight years old, 170,000 miles approx. I am working overtime to pay off loans. What's your point?

 

[Hotdoger]

I have a positive net worth and have student loans and drive a high mileage used car that is eight years old, 170,000 miles approx. I am working overtime to pay off loans. What's your point?

What is the chef cooking tonight?

 

[hoosierdoc]

What is the chef cooking tonight?

Hah! I considered hiring a chef for one meal on our honeymoon. I saw the quote and never considered it again. Tonight is Moe's southwest grille catering my daughter's baptism reception if you must know

 

[perry]

I think the article can be summed up as, "Mo money, mo problems." To hire the personal chef or not? To get an $80k Range Rover or not? That darn $700k mortgage is a real drag... really eats in to the $200k/year I make on my equity investment.

Think about that. He could pay that mortgage off in under 10 years on that investment income (figure taxes take a chunk), fund his kid's college & his own student loans with the rental income, and live off his $320k or whatever salary.

 

[mbills2223]

Sounds to me like this guy just wanted to brag about his income...

 

[Prometheus]

Think about that. He could pay that mortgage off in under 10 years on that investment income (figure taxes take a chunk), fund his kid's college & his own student loans with the rental income, and live off his $320k or whatever salary.

You have no idea.

Seriously you have no idea what you are talking about.

 

[BehindBlueI's]

I read the link and it doesn't seem like he has a lot of toys. He made some bad investments and has been doing better with that. He said his wife drives a Toyota minivan and they have a Subaru and a low end Lexus.

Sure. 3 cars for 2 drivers seems somewhat "toyish" to me. A brand new van and a Lexus? Toys. Besides, cars aren't the only toys a man can have. I doubt a guy with a $700k mortgage has a 32" flat screen and watches antenna TV while sitting on the IKEA furniture in his living room. I doubt a guy with a $300/wk chef coming to his house has budget kitchen appliances or shops at Aldi's.

My point, however, wasn't how many toys he has now. My point was that despite his higher income, his higher standard of living will probably keep him working at an older age than I will retire at. He's got to dig out from under his debt, and he's got to bank a lot more money to keep himself as he's accustomed to.

Maybe he's learned to invest better, maybe he hasn't. Personally, I let a professional manage what I have. I took accounting in college, up to 300 level, and understand a bit about investing and how to read a company's books. I also know I don't have the time or desire to really stay up on individual investments, so I buy funds and a very rare individual stock. It takes a lot of time to really evaluate an investment, and simply understanding the basics isn't a guarantee of anything.

 

[lpinchin]

I have a problem with wealth envy, but I have everything I need.

 

[churchmouse]

Sure. 3 cars for 2 drivers seems somewhat "toyish" to me. A brand new van and a Lexus? Toys. Besides, cars aren't the only toys a man can have. I doubt a guy with a $700k mortgage has a 32" flat screen and watches antenna TV while sitting on the IKEA furniture in his living room. I doubt a guy with a $300/wk chef coming to his house has budget kitchen appliances or shops at Aldi's.

My point, however, wasn't how many toys he has now. My point was that despite his higher income, his higher standard of living will probably keep him working at an older age than I will retire at. He's got to dig out from under his debt, and he's got to bank a lot more money to keep himself as he's accustomed to.

Maybe he's learned to invest better, maybe he hasn't. Personally, I let a professional manage what I have. I took accounting in college, up to 300 level, and understand a bit about investing and how to read a company's books. I also know I don't have the time or desire to really stay up on individual investments, so I buy funds and a very rare individual stock. It takes a lot of time to really evaluate an investment, and simply understanding the basics isn't a guarantee of anything.

A lot of people (myself included) lost their butts in 06/08 when the economy tanked. Our 401-k's and annuity's hit the crapper along with the rest of our investments. We did manage to un-load all the rental property before the market went totally south but only broke even and was lucky in that. The wifes 6 figure job went away when they sold the company. I let others handle our investments for me and I paid dearly for my lack of attention in this area. This is why I am still working at 63 instead of annoying my wife full time in retirement. Well, there is that pesky gun addiction but that is another story.

My point, I would love to have all that to do over again but that will not happen. We are fine but all the toys had to go. All the fat was trimmed from the budget. Life styles were drastically changed. Sacrifices have to be made to survive.

 

[hoosierdoc]

Stocks are higher now than during the crash. If you sold at the bottom, oops. Are you saying the crash just stalled retirement or killed it?

 

[RLC]

The guy obviously skipped all the business classes in college. My problem is with the amount of tax you pay on that income. 80 + hours a week, high blood pressure, marriage going south and then give 50% in taxes between the IRS and state of CA. F that. My answer was to sell the business and move to Southern Indiana. Making less dough but happier than ever! Oh yea and for Hoosierdoc. Stocks may be up but if your tied into mutual funds you may never see the increase reflected in the DOW. I didn't sell mine and they're finally just back to break even. Probably need to sell now!

 

[Spike_351]

I have a problem with wealth envy, but I have everything I need.

^^^ this, envying someone else's wealth is useless, I only make 30-50k a year depending on overtime, have no major debts and have what I need. I'm not poor, I'm not rich, I'm just doing ok and I'm happy with that.