There is a lot of talk about socialism in the United States—much of it coming from people who are pretty well-off, relatively speaking.
Don’t you think that’s weird? Take a family led by two white-collar workers who make about $75,000 a year. With $150,000 in income, you still have to mind your Ps and Qs. You find ways to scrimp and save, you don’t travel that much, and maxing out your 401(k) contributions are just a fantasy, especially if you have kids. Life isn’t hard, but resources aren’t unlimited.
It doesn’t seem like $150,000 goes very far. But a household income of $150,000 puts you in the top 15 percent of all households in this country. And it varies by state—a lot. If you earned $150,000 in South Carolina, it would put you in the top 8 percent, which most people would call borderline rich.
But $150,000 doesn’t feel very rich. $150,000 a year feels resource-constrained, actually. There is probably a section of your town where people who earn more than $150,000 a year live. Houses are bigger, they’re on more land, and the cars in the driveway are nicer.
I’ll let you in on a little secret—there is a good chance that the people in those houses feel resource-constrained, too. They are probably comparing themselves against people who have even bigger houses, and even better cars.
This is totally normal economic behavior. Everyone is always sizing people up. You go to a dinner party, you walk out afterwards to the car with your spouse: “I wonder how much their house is worth?” Now we have Zillow for that.
Certain aspects of this behavior are healthy. Envy isn’t always bad. It can be a motivator. I talked about Instagram in my last podcast with Tony Greer. I love Instagram—cars, suits, watches, models—it keeps me going. I can’t imagine what it would be like to feel resentful every time I logged into Instagram.
Apparently, a lot of people do.
Be Like Mike
If you want more money (and most people do), a bad way to go about getting it is hating people who have it.
There is not a lot of introspection out there. Nobody likes to think of themselves as lazy, or lacking ambition, or incompetent. If you go up to a rich person and ask how they did it, you will probably be surprised at the amount of work that went into it. You might even question whether you are willing to make the same kinds of sacrifices.
Rich Dad Poor Dad, which I read last year when I was gearing up for the personal finance stuff, is an incredible book on two fronts. First of all, the passive income scheme Kiyosaki pushes on people is amazingly bad. But the first part of the book, where he talks about people’s attitudes towards money, and the psychological differences between his rich dad and poor dad, are absolutely brilliant.
Most people out there who are making high six figures and up are making a lot of sacrifices, or made sacrifices along the way. Money is a path that you can choose. Some people have different priorities.
These are not terribly politically correct things to say in 2019 America. You could say them in 1999, for sure, but not 2019.
One thing that gets on my nerves is that a lot of Fed critics (like myself, sometimes) like to say that quantitative easing and zero rates lifted financial asset prices, which helped a lot of rich people to get richer.
This is true, perhaps, but it’s not exactly like the Fed was writing checks. People had to be positively exposed to this phenomenon—they had to take the risk, and there was no guarantee that it would turn out. Plenty of rich people did not get any richer in the last decade because they were shy about taking risk (they were probably penalized for being too smart).
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It’s one way you can solve for x, where x is your financial success. The further we get along into this century, the further we get away from taking individual responsibility for one’s own actions. The Fed did it, the banks did it, Trump did it. How about: concentrating on yourself and ignoring all the noise. There is a much stronger correlation between your behavior and your bank account than anything anyone else does.
Mind Your Own Damn Business
People tell me that I am rich. I am not so sure. Like I said in the beginning of this piece, there is always someone with more.
I’ve never had someone come up to me and ask me what I did to get rich. You know what—I would be happy to tell them. I think most people would.
In the course of my business, I have met a lot of super-rich people. Most of them either managed money or started businesses or both. If I wanted to get super-rich like them, I know exactly what I would have to do. So far, I have been unwilling to do it. I have been unwilling to make the sacrifices or take the risk. That is a choice.
Some folks lately have been complaining about the perceived lack of class mobility. Especially with this college admissions scandal—super-rich jackasses are bribing their kids into college. What kind of chance does everyone else have?
You just have to work harder.
Having money confers advantages—that has always been true. But America is still the same country where you can work your way up from the mail room, metaphorically speaking.
I have a Horatio Alger story. I heard one better—a guy on Wall Street (someone who I actually disliked) honey badgered his way into Goldman Sachs from a non-target school and is now probably a centimillionaire after working on the buy side at a series of hedge funds. I have lots of stories like this.
I am the patron saint of the non-targets. There are politicians out there who will use words like “elite,” “billionaire,” and “rigged,” sometimes all in the same sentence. Tell your story walking. If I can do it, anyone can.