Comment by Robin_Message | Hacker News Reader

Comment by Robin_Message | Hacker News Reader

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I don't think they are "tricks"; they're sensible money management strategies that enable them to be rich and missing them causes other people to be poor whilst still having a larger income.

(1) I think this is a basic terms/mindset issue. Income is not wealth. Most things you own are liabities (costing you to keep them), instead of assets (earning you money by keeping them.) The point is, they aren't and never were near poverty. But now they invested enough of their income so that they don't need to work to live comfortably, they are pretty much rich. For example, they purchased their house. They actually own it, so they are never going to get kicked out of it, even if they never work again. What proportion of people you know with >$20-30K incomes own their home outright? Still sure your measure of poverty is correct?

(2) The return on doing those kinds of things is great, and as MMM says, you learn useful skills, get fit, and most people find the activities enjoyable. You can always subcontract some of it without really changing the thesis, just not all of it [1].

On the ice cream, I got the impression she was anxious because it was super weird to waste all that money on extremely fleeting and pointless pleasures, but I'll give you that attitude might be unpleasant and socially awkward. Still don't think I'd call it poverty though; more like extreme thrift/being a tight bastard.

$400k - so? What relevance does its market value have? I think it makes much more sense to see a house as a useful liability (everyone's got to live somewhere, and you've got to pay taxes and upkeep even when you own it, so its costing you, not making you money), instead of pretending it's an asset (and it's a shitty one due to lack of diversification even if you were happy to sell it tomorrow and live under a bridge).

Genuine point: do you really think this? What's your financial education/understanding like? MMM being rich just seemed obvious to me, which is why I'm arguing so hard. Thanks for joining in!

[1] http://www.ribbonfarm.com/2011/12/08/acting-dead-trading-up-... for an interesting take on the collapse of the middle class and trick of mixing fancy with not.

> MMM being rich just seemed obvious to me,

Do you actually believe he is rich or are you just saying this to be contradictory?

You make a big deal of owning his home outright, but it's actually not that much money when you think about it. A $320k mortgage for a $400k home is $1,200 in interest a month at 4.5%. That's an extra $15k a year and that's not nothing, but even adding that to his $27k puts him below the U.S. median family income. And that's why things like ice cream freak them out. $27k/year, even with a paid for home, is not a lot of money.

Another way to think about this is seniors. Social security isn't too far off his income level. A lot seniors own their home outright. If that's your only source of income then sure you can live a simple life in Florida, but no one would call this "rich".

We're running into sociological class issues WRT definitions. These are generalizations, but pretty accurate:

Lower class people in the USA think being rich is high spending.

Middle class people in the USA (a shrinking breed...) think being rich is having a high income.

Upper class people in the USA think being rich is owning nice assets.

Its funny how if you look at an economics equation like "assets" = "sum of income" - "sum of spending" each social class thinks success for everyone (although actually only valid within their own class) is maxing out a different variable.

Its no great surprise they're confused as heck when they talk to and with each other.

For example this is the legendary tightwad rich dude trope. Poor dude doesn't understand why rich dude doesn't spend constantly like a drunken sailor because thats how he defines success. On the other hand, rich dude doesn't care about spending, it doesn't show up on his cultural radar, all that matters to him is nice assets. And thats why all of us have to sit thru the tiring stereotype whenever hollywood wants. Boring!

Look at attitudes toward higher ed. Lower class doesn't see poor starving students spending bling, therefore its a negative to be avoided. Middle class fixates in it as a high income jobs program, all that matters is getting the credential for the job. Upper class sees an education as a lifetime asset, gives you something to think about for the rest of your life, if you do it right. The three usually don't understand each other or their desires at all.

If you have enough money to do what you want for the rest of your life, I'd call that "rich" by your own personal value function.

For me, that number is amassed wealth sufficient to provide income nearly an order of magnitude north of $27K/year, but that still means that when I'm halfway to my personal goal, I'll have 5x what MMM has and he'll be rich and I won't.

He's rich because he lives simply. I have more than he does, and I'm not rich because I have expensive hobbies (and a desire to fully pay for top tier undergrad college for both of my young kids).

And that's OK.

As VLM pointed out, our definitions of rich appear not match at all, hence my question earlier in the thread "do you really think this?" and your "are you just saying this to be contradictory?"

So, my definition: being rich is having enough assets that I can comfortably provide for myself and my family without needing to work ever again. To me, being rich is about freedom, not about having lots of expensive toys or habits.

In my definition, income level is entirely irrelevant, which is why we are talking past each other, because that appears to be the focus of your definition.

As to seniors: exactly – don't most people look forward to retirement? Except he's getting to do it with his children as well as grandchildren, with his youthful health, 30 years earlier and for 330%† more of his life (never mind that he also manages his money a lot better than the average person so it provides more than a simple life in Florida.)

† Life expectancy (LE): 78 years. Retirement age (RA): 65. MMM retirement age (MA): 35. (LE-MA) / (LE-RA) = 43 / 13 ≈ 3.3 = 330%

> our definitions of rich appear not match at all

This is why discussions regarding MMM are unnecessarily controversial. While I can sympathize with and appreciate your view of "rich," I don't think that the typical usage of the word is in agreement with you. You're waxing philosophical here, and even if I might agree with you on this definition (I do) this just doesn't chime with the everyday usage of "rich."

I think an article like this much more closely captures what is normally meant by a word like rich, at least in the US: http://en.wikipedia.org/wiki/American_upper_class

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