net worth? poll

[handmade34]

from toomuchonline

I'm in the lowest 20% only because of student loans ugh

[Coyote_Bandit]

1. Ummmm......

I, apparently, am unemployable based on the number of rejection letters I have collected. I figure that puts me in the lowest 20% irrespective of whatever assets I own. Everything I do just to exist is a liability that erodes what I do have.

Who is wealthier:
(1) The person with high earnings (x) and negative net worth (y) who consumes frivolously or
(2) The person with a net worth of x+y (as measured with respect to person 1 defined above) who has no earnings, no prospects of becoming employed and whose consumption is limited to modest provision of necessities.

No measure of wealth is accurate unless it accounts for both earnings and net worth - both current and prospective.

[handmade34]

5. "No measure of wealth is accurate..."

agree and there is not accounting for the fact that science tells us that happiness in relation to money reaches its peak at $75k

[JoePhilly]

10. That is a joke, right?

Money does not cause happiness, that is definitely true. But it does prevent lots of UNHAPPINESS.

As a simple example. Many years ago, my wife talked me (begrudgingly)into hiring a cleaning service. This seemed like a giant waste of money to me, but I was wrong, wrong, wrong.

See ... MY tolerance for crud was very high. And my wife's tolerance was much lower. And that meant, every weekend was spent cleaning and vacuuming, and dusting stuff. She hated losing her weekend to do it, and so did I.

And so, we hired a service to come. And it was, and remains, some of the best money I ever spent. After working all week, we actually get to do things with the kids on the weekend. And my wife is not spending Saturday going nuts.

Now ... take that story and apply it to the yard ... I have allergies and hate cutting the grass.

My point is that money let's you off load lots of crappy tasks that you hate doing.

And so, money does not make you happy, but it can help you dump lots of crabby jobs on some one else ... and the economy improves.

Insert American Flag here.

[handmade34]

12. Princeton study

http://www.philly.com/philly/health_and_science/20100907_Does_money_buy_happiness__New_research_says_yes__to_a_point.html

and it is all relative

:patriot: here's your American flag because your post is truly American

[JoePhilly]

17. Yes, it is all relative ... that study sounds fairly close ... however ...

First, after reading the article ... I wonder how high above 75k they looked. I also enjoyed that the 76 year old researcher, making over 75k, said he was "happy". In this analysis, age also matters. By 76, your kids are out of the house, and the number of your responsibilities tend to decrease. And that may be the most important factor. Do I have enough money to meet my responsibilities AND then do more?

If you have the money to pay for a kid's college, your stress goes down, if not, it goes up.

The other thing I notice is that they compared "the previous day" to income. While that is an interesting comparison, it ignores the fact that the stress any person feels is not equal. Or, it is "relative" as you suggest.

As a graduate student, I taught an intro psych class. And when we studied stress and reactions to it, I would draw a line on the board to represent "the full range of stress experience".

And then, I would call out stressful events and have the class tell me where on the continuum to mark those events.

What happened next always shocked the class. I would say things like "you just totaled dad's car", or "you just got an F on all of your finals" ... and so forth ... and we'd put marks on the line.

And then when the line had lots of marks on it, I'd throw in ... "Your parents and all your siblings have just died in a terrible car crash".

In every class where I did this, the students had not left enough room for such an event. The events that they had put as the "most stressful", were placed too high on the scale. And they often demanded that I expand the scale.

And I would say "no" ... the scale is the scale, so maybe you want to reposition some of the prior events and rethink them.

I find this an effective way to deal with many stressful events.

[handmade34]

18. to be fair new worth is much different than income...

your experiment with students is a good one... more opportunities to think broader and bigger


My life has always been high stress and I have learned to cope well... have been dirt poor and wealthy. I think it gives me a good place to assess from...

[JoePhilly]

19. Me too ... although ...

Growing up, I was slightly above poor. Put myself through college and grad school with many many loans, and now, do pretty well.

Although, I can't say "wealthy" ... I reserve that term for money that is PASSED from one generation to the next.

All of my grandparents are gone, and my total "inheritance" was about $3,000 from my one grandfather. Rather than use it to pay bills, we bought a beautiful Chinese rug, to put in a dinning room that had no furniture at the time. Our son thought we put it there for him to do somersaults.

It is probably the first thing that our family will "hand down", other than debt.

The other thing is that if your extended family has stress, it becomes yours as well. When a relative (or friend) calls and needs help, even if you have the money to help them, that is still stressful.

But ... having the money to help, helps reduce the stress because if you have the money, you can help ... if you don't, you feel powerless.

[Coyote_Bandit]

22. Ummmm......

Net worth will diminish and ultimately disappear if one does not have the income to sstain their lifestyle. Or no income at all. Wealth ought to be a measure that considers both elements.

[JoePhilly]

32. I would tend to say that the wealthy don't have to work at all.

The "wealth" is self sustaining and it earns interest or dividends that not only meet expenses, but also causes the "wealth" to continue to grow on its own.

And to that ... let's imagine that you make 100k a year moving furniture and I make 100k a year thanks to dividends on my wealth. First, I'll pay a lower tax rate than you will. Second, assuming we are the same age, the number of years in which you can work is likely going to be less then the number of years where I will collect those dividends.

And for the super wealthy, they don't want a salary at all. Lots of executives defer salary and get other perks like gym memberships, company cars and planes, high end health care benefits, so on, all to lower their salary.

Then, when you die, you pass all your deferred money to your heirs, and if you are lucky, the GOP has removed the estate tax so lots of your money never gets taxed at all, it just builds on itself.

[drmeow]

20. At least $120,000

Kahneman, D and Deaton, A (2010). High income improves evaluation of life but not emotional well-being, PNAS, 107 (38), 16489-16493

http://www.pnas.org/content/107/38/16489.full?sid=9e270a48-c93b-4bef-89c7-e4ed4cd2ad21

Gallop data - unclear what top income bracket was.

[CTyankee]

26. some great examples in your post!

The answer to so many of money anxieties is "learn to solve your own problems." I know that sounds a little flippant, but once you realize you have to do this, it becomes something doable. I know, I've been there, done that...at long last after being miserable about my "situation."

[CTyankee]

29. One thing I learned in a grad econ course is "opportunity cost."

Your examples are of that theory.

I am retired and have found it more and more difficult to do a lot of cleaning of my house. I have a cleaning lady who helps me once a month with the heavy stuff (my vacuum cleaner weighs too much for me to take it up and down stairs, but I can do other chores). Hubby and I change sheets in between and I do all the laundry. But I do have the time and that's a mercy.

I spend a LOT of time figures out strategies to save money, but it's a good use of my time, IMO...

[Curmudgeoness]

28. You ask you is wealthier. I ask,

who has the most promising chance of getting their situation in order? High earnings will have the ability to dig themselves out in a short time if they make the attempt to change. No earnings/prospects has no chance of getting out of a hole, no matter what they do.

But then again, I don't believe in "no" prospects. I wish you luck in the future.

[old mark]

2. Next 10%.....still not quite sure how this happened, though...

pretty much of a fluke.


mark

[SteveG]

3. probably the same way as I did

My home value soared after I purchased it in 1987 and even though it's lost about 30% from it's peak 3 years ago, it is still worth 4 times what I spent on it, and except for a fairly small equity line it's paid off. And I have been paying into a 403B for 30 years, where my employer kicks in 11% of my annual income yearly, again, even though I took a bad hit in the crash, it has almost recovered (I have it conservatively invested)to it's june 2008 level.

[handmade34]

6. real estate was certainly

a boon for many...

[Raine]

24. Real estate will really

boost one's net worth.

[handmade34]

4. me too

my situation is a total fluke... have worked hard for 60 years! :-) OH.. the joys of skewed capitalism

[old mark]

13. Yeah-got my first job at 14, while in high school, then got work with a band...

doing all 3 at age 15.



mark

[handmade34]

14. ah, the joys of a band

my brother almost lost his soul with the band...

I had to take about 6 years off to take care of my husband... that did me in

[old mark]

30. Yeah...I will have 23 years without a drink very soon, if that tells you anything...

and as far as I know, I am the only member of that band who is still alive.

It's a hard business.

mark

[JoePhilly]

9. Was a poor kid, got good grades, loans for undergraduate and graduate degrees ...

invested fully in 401k from day one (had my wife do the same), other than a manageable mortgage, very little other debt.

Having said this, my situation is also a "fluke" of sorts. Of the 14 or so guys I grew up with, only one or two others are close to this level ...

But ... only about 2-4 of that 14 are now below where their parents were. The rest are doing better. For our old group, its roughly a bell curve.

[Blue_In_AK]

16. I think we're probably in that range, too.

Again, the real estate is probably the deciding factor. I bought this duplex in 1990 when the real estate market was depressed here and the value has increased 150-200 percent. My guess is I could sell it for quite a bit more than I owe (assuming it could pass inspections). Also we have IRAs and my husband has a good pension.

We lucked out.

[Johonny]

7. kick for later

so far the poll has an interesting bimodal distribution. Interested in how it works out.

[Capitalocracy]

8. I'm at 0

don't own anything, don't owe anything

[hfojvt]

11. not really right to use averages

for example, I might be in the top 40%. Their average net worth is $208,000, but what is the cut-off to be in that group? Does that group go from $150,000 - $300,000 or does it go from $100,000 to $350,000?

Another part is practical matters. Supposedly my house is worth $45,000. That is the appraisal, but even if I got $45,000 for it in a sale I might be lucky to clear $41,000 by the time I paid fees and realtor commissions.

Another part is retirement funds. I have something like $40,000 in my IRA and maybe another $10,000 in my pension at work, but I cannot get at that money until I am at least 60 for the IRA and 65 for the pension.

Then there's FICA. As of 2008, the money I paid in with 3% return is $38,752.75. Not part of my net worth, but I figure it is owed to me.

[AlabamaLibrul]

15. next 20/middle 20 - and it's much, much closer to $5,000 than $65,000, believe you me.

[MilesColtrane]

21. My net worth is about 30K.

Most of that is in the form of my IRA...the rest is tied up in music gear.

I do not own a house and I have no health insurance.

[handmade34]

23. there is satisfaction and comfort

in having the 'tools'...

health insurance is not net worth, but without it, net worth disappears very quickly... my only health insurance is eating right and exercising!

[Mike 03]

25. There is a huge gap between two million and thirteen million NT

[stuntcat]

27. Next 20% :hi:

:hi: just glad I'm not in dept is all

[taught_me_patience]

31. Upper 20

It's amazing how much we've saved, considering our HUGE debt burden. We've got over 600k in debt from mortgages and student loans. Early thirties and net worth is climbing fast, though...