How to get over finance envy

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Re: How to get over finance envy

Postby Perpetual » Tue Jul 09, 2013 4:40 pm

swaption wrote:I didn't include it because it completely contradicts your prior statement. If you genuinely don't care then there is no need to make any inferences in the first place, particularly ones for which there is no apparent basis.


In this context, "not caring" means not basing your decisions on other people. You can still make any inferences you want.

swaption wrote:It's like telling someone they are fat, but that's ok because they are healthy. Context may not be particularly relevant to the response.


If they are a football player, then they will be healthy despite being fat. Context is always relevant.
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Re: How to get over finance envy

Postby Random Poster » Tue Jul 09, 2013 4:44 pm

EmergDoc wrote:22% for retirement while renting?

Why not cut back to 10% for a year or two and get that downpayment knocked out.


I'm not sure that I understand your post. In what way(s) should one's retirement saving rate be influenced or determined by whether they are renting their residence or owning it?
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Re: How to get over finance envy

Postby Easy Rhino » Tue Jul 09, 2013 5:11 pm

Hey, if it helps, I'm 37, and we're right in the middle of the process of buying our first house.
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Re: How to get over finance envy

Postby meowcat » Tue Jul 09, 2013 8:30 pm

freebeer wrote:
meowcat wrote:Unfortunately, statistics prove otherwise. Never confuse high income with wealth, they are not the same. Most high income earners, just like middle and low income earners, have little to no savings. Truly wealthy people that drive BMW's, live in mansions, and are members of the local country club are the exception, not the rule.


Got any actual statistics to "prove" that "Most high income earners, just like middle and low income earners, have little to no savings"? Because the information I can google up indicates that "people making more money save a bigger chunk of their paychecks", with saving rates increasing "sharply at higher income levels, with the saving rate estimated at 51 cents on the dollar for the top 1% of the income distribution and 37 cents on the dollar for the top 5%". (source: http://www.businessinsider.com/chart-sa ... vel-2013-3 ).

It's funny how the article you posted included only the small percentage of earners that actually do save. My statement was "most" high income earners. That means more than 50% of high income earners have little to no savings, just like lower/middle income earners.
Little to no savings means some workers have a zero savings balance and some have a balance much too small to even think about retiring without catastrophic consequences.
More people should learn to tell their dollars where to go instead of asking them where they went. | -Roger Babson
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Re: How to get over finance envy

Postby SDBoggled » Tue Jul 09, 2013 10:46 pm

I think Taylor's is by far the most important piece of advice... identify your values and live with integrity according to those values.

However, just one answer to your question, we did things in a different order. No debt after bachelors and bought house before 401k (no employer matching) and before graduate degree.

We still drive a 15 year old car, own home is still quite modest in all respects so by "looking" we still would not induce envy (just ask our kids) :-)
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Re: How to get over finance envy

Postby 5buffalo » Tue Jul 09, 2013 11:52 pm

Ironically, ever since I started reading Bogleheads I have been feeling finance envy more and more often... that "how old were you when you made your first 100k" thread from a while back really shook me up! So many people the same age as myself had so much more money saved up.

I just remind myself that I am actually saving a lot for my income level, and I purposely chose my low-paying (by Boglehead standards) field because I enjoy it. I also could have had a higher balance if I hadn't spent on things like travel that have given me memories I treasure, so no regrets there.

Maybe there's a way to look at the choices you've made and find value there in the same way, even if you feel "behind the crowd" in terms of money.
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Re: How to get over finance envy

Postby LFKB » Wed Jul 10, 2013 1:41 am

mlebuf wrote:Calling it "finance envy" is a misnomer because we usually don't know what other peoples' balance sheets looks like. The problem described seems more like spending envy.

Unless you are Bill Gates, somebody else on the playground will always have bigger toys. Welcome to the club.

One of life's biggest ongoing dilemmas is making the choice between consumption and saving. All of us, who aren't heirs to great wealth, achieved and maintain financial independence by doing one simple thing: We lived at a level less than our incomes.

According to Morgan Housel, a young and brilliant financial writer, "Wealth is what you don't see."
http://www.fool.com/investing/general/2 ... t-see.aspx


I worked my first internship with Morgan my junior year of college in 2007. Funny seeing his name on here. He's about 28 or 29 now.
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Re: How to get over finance envy

Postby IlliniDave » Wed Jul 10, 2013 6:33 am

5buffalo wrote:Ironically, ever since I started reading Bogleheads I have been feeling finance envy more and more often... that "how old were you when you made your first 100k" thread from a while back really shook me up! So many people the same age as myself had so much more money saved up.

I just remind myself that I am actually saving a lot for my income level, and I purposely chose my low-paying (by Boglehead standards) field because I enjoy it. I also could have had a higher balance if I hadn't spent on things like travel that have given me memories I treasure, so no regrets there.

Maybe there's a way to look at the choices you've made and find value there in the same way, even if you feel "behind the crowd" in terms of money.


This I can agree with! :D Truly impressive company we keep here.

I don't know where I fit in the Boglehead demographic income-wise, but I suspect relatively low (I'm below the OP and 20 years further in my career), and even lower in terms of net worth. My saving grace is a combination of knowing myself well and being able to focus myopically on my own plan which is written, measurable, and achievable. It's safe to say that 15 years ago I had neither the self-knowledge or focus I do now. Sitting down and making a detailed plan for the medium/long-term was what I needed to get all facets of life pulling in the same direction.
Don't do something. Just stand there!
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Re: Two kinds of people.

Postby exoilman » Wed Jul 10, 2013 7:07 am

Taylor Larimore wrote:Paddington:

At age 89, I have traveled a long road and observed a few things:

In general, there are two kinds of people:

"Outer-directed" who spend their lives trying to impress others.
"Inner-directed" who achieve peace of mind.

There will always be people with more then we have, and many people with less. Try to accept that fact and focus on being comfortable with who you are.

Best wishes.
Taylor


:sharebeer At age 69 I have 20 years less on that road but could't agree more with Taylor.

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Re: How to get over finance envy

Postby matjen » Wed Jul 10, 2013 7:07 am

MathWizard wrote:...
Saving 22%, the bulk of your wealth accumulation in the first 8-14 years will be
linear, due mainly to your contributions, not earnings. After about 14-18 years,
the earnings start to be more than your contributions. That's when you see
the exponential nature of the compounding.

Also, remember that you are only 33. You haven't been earning "big bucks" for that long.
I did not own a house until I was 41. 14 years later, I could nearly pay it off with what I keep
in the bank, and my wife and I have taken two trips to Europe and taken family vacations
nearly every year. No inheritance was involved, just steady savings and no big lifestyle creep.

Those first dollars you put away will grow the most. You just have to have patience.


+1 This is very important to remember. Good advice.
A man is rich in proportion to the number of things he can afford to let alone.
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Re: How to get over finance envy

Postby Boglenaut » Wed Jul 10, 2013 7:52 am

IlliniDave wrote:
5buffalo wrote:Ironically, ever since I started reading Bogleheads I have been feeling finance envy more and more often... that "how old were you when you made your first 100k" thread from a while back really shook me up! So many people the same age as myself had so much more money saved up.


Keep in mind the crowd here isn't typical. The country would be over-run with doctors and engineers if it were!

But the beauty of the philosophy, tools and methodologies is that they work whether you save $5K a year or $100K a year.
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Re: Two kinds of people.

Postby stemikger » Wed Jul 10, 2013 8:07 am

Taylor Larimore wrote:Paddington:

At age 89, I have traveled a long road and observed a few things:

In general, there are two kinds of people:

"Outer-directed" who spend their lives trying to impress others.
"Inner-directed" who achieve peace of mind.

There will always be people with more then we have, and many people with less. Try to accept that fact and focus on being comfortable with who you are.

Best wishes.
Taylor


Taylor, I hope to be as wise as you one day. You are a true inspiration.
Stay the Course!
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Re: How to get over finance envy

Postby jay22 » Wed Jul 10, 2013 8:22 am

OP, I totally understand what you're saying. Till last year, I was doing OK - never used to feel an financial envy, maybe because I was earning close to six figures and was spending less than 35K a year, so had a good amount of savings. I was engaged to a beautiful woman and used to think that savings (and fun expenditure) are only going to go up after marriage since we'll have two incomes and no debt.

This year, I got married and my wife's career plans didn't really worked out as we had hoped. Now we are both living on one income and try to be as frugal as we can. Can't afford to go on the vacations that we see our DINK friends taking regularly and feel financial envy regularly. We find comfort our self thinking of all the stuff we would be able to do once my wife starts working again, we just don't know when that will we. But that's OK. No matter how much you plan, life will always throw you a curve ball, you just need to learn to deal with it.
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Re: How to get over finance envy

Postby fulltilt » Wed Jul 10, 2013 10:06 am

5buffalo wrote:Ironically, ever since I started reading Bogleheads I have been feeling finance envy more and more often... that "how old were you when you made your first 100k" thread from a while back really shook me up! So many people the same age as myself had so much more money saved up.


I totally agree...

I was much happier about my financial situation before i found the bogleheads site.
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Re: How to get over finance envy

Postby Kulak » Wed Jul 10, 2013 10:14 am

Posters "Cash" and "auntJovie" have the correct advice: Move to a cheaper area where you're the top dog. But being a human being, that's the one thing you absolutely won't do.
Depriving ourselves to boost our 40-year success probability much beyond 80% is a fool’s errand, since all you are doing is increasing the probability of failure for [non-financial] reasons. --wbern
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Re: How to get over finance envy

Postby Rodc » Wed Jul 10, 2013 10:27 am

Perhaps doing some community service in a soup kitchen or similar would do the trick.

I just avoid comparing my situation to the top 1% and if inclined to think about it, compare to the median or something similar. As others have noted, you can always find someone to compare to that will make feel behind, so why go there?
We live a world with knowledge of the future markets has less than one significant figure. And people will still and always demand answers to three significant digits.
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Re: How to get over finance envy

Postby MnD » Wed Jul 10, 2013 10:27 am

I can see why a person at age 33 looks at the world around them and it seems like things aren't adding up.

In my peer group the tables didn't turn for spenders versus savers until we hit out late 40's early 50's which also coincided with the great recession.
Before then the spenders typically had kids in good public k-12 (no cost), typically two incomes and big mortgage on fancy house, leased or heavily financed cars, high-end vacations and other large purchases on credit cards which they would periodically pay off with home equity withdrawal. No money going into savings meant a great deal of money that could go into consumptive spending.

In the great recession we all experienced some pain, but it was an absolute cash flow disaster for our highly leveraged peers. Income reduction resulted in no free cash flow due to all the debt and no savings to fall back on. Home price reductions shut off the option to treat their home equity as a 24-hour ATM. On top of that, their kids went from going to school for "free" to needing 25K to 60K per year per child as "high profile" households aren't going to consider having their college kids live at home and/or go to community college. I wouldn't be surprised if some of our friends went from "breaking even" to having a $75K/yr or higher cash flow deficit almost overnight with very few options to make up or even reduce that burn rate. With still relatively high income the FAFSA is expecting a significant EFC from the parents for college costs. A lot of them took out ParentPlus loans at very high fixed rate interest and/or tapped 401-K's, both moves which will likely bury them as far as retirement plans. From "on top of the world" to pretty much financial game over in about 5 years. :shock:
Last edited by MnD on Wed Jul 10, 2013 10:40 am, edited 1 time in total.
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Re: How to get over finance envy

Postby erikill » Wed Jul 10, 2013 10:38 am

I figure I would add in to the conversation as well as someone who just entered their 30's. I have seen also first hand many of my friends become the 30k millionaires and live way beyond their means - get married, wives want to live lavishly and within 2 to 3 years end up house poor and burning up any savings to keep their heads above water.

My car is turning 8 years old at this point and when I ride with them in their leased cars, I think the same thing wouldn't it be nice to have a new car...then I remember that I pay basically 800/year for my car for insurance and registration and that might be one month payment for them :-)

As other folks have stated it really is just thinking long term and trying to help build up the savings and then splurge on a nice vacay once in a while or on a nice present to yourself (just did Napa Valley for my 30th bday). That fine line in the middle is key.

Just my .02
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Re: How to get over finance envy

Postby freebeer » Wed Jul 10, 2013 10:46 am

meowcat wrote:
freebeer wrote:
meowcat wrote:Unfortunately, statistics prove otherwise. Never confuse high income with wealth, they are not the same. Most high income earners, just like middle and low income earners, have little to no savings. Truly wealthy people that drive BMW's, live in mansions, and are members of the local country club are the exception, not the rule.


Got any actual statistics to "prove" that "Most high income earners, just like middle and low income earners, have little to no savings"? Because the information I can google up indicates that "people making more money save a bigger chunk of their paychecks", with saving rates increasing "sharply at higher income levels, with the saving rate estimated at 51 cents on the dollar for the top 1% of the income distribution and 37 cents on the dollar for the top 5%". (source: http://www.businessinsider.com/chart-sa ... vel-2013-3 ).

It's funny how the article you posted included only the small percentage of earners that actually do save. My statement was "most" high income earners. That means more than 50% of high income earners have little to no savings, just like lower/middle income earners.
Little to no savings means some workers have a zero savings balance and some have a balance much too small to even think about retiring without catastrophic consequences.


Where does it say that it's limited to "the small percentage of earners that actually do save"? The full article that the graph was based on is here: https://www.dartmouth.edu/~jskinner/doc ... heRich.pdf . I only skimmed it but I cannot find a caveat that it excludes zero-saver households in calculating average savings rates by income level.

Again if you have "statistics" that "prove" that "more than 50% of high income earners have little to no savings, just like lower/middle income earners" please provide some reference. Absent data, I take it as a comforting fallacy. Even if what you're trying to say is that you only were talking about savings rates for above-average earners not actual high-income earners (the cited study covered top 1% and top 5% income levels) I'd love to see the data. And the reality for the OP is that if they live in a very affluent area they may in fact be surrounded by top 5% or even top 1% earners who would - again according to the study - also be heavy savers as well as BMW-drivers. Sometimes that's just the way it is.
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Re: How to get over finance envy

Postby bungalow10 » Wed Jul 10, 2013 11:29 am

investingdad wrote:
Investing is boring wrote:I am 34, and my wife is 32. Combined we make between $300k - $400k per year (have for past 3 years and should continue) and live in a HCOL area. We have numerous friends who combined make less than $150k, and yet have bigger homes & better cars. They don't know what I make, but it is clear they assume I am far worse off then they are. I am fine with this. I offer opinions on finance when asked. When I talk about index investing, I get looks like my head isn't on straight. I send people to the bogleheads wiki if they want to debate any details. One friend (the "richest appearing one") asked me to review his mortgage offer. When I did, I saw $10k total in retirement savings and every other penny in the down payment to meet FHA standards. When I compare that with the $500k in savings that I will be at by end of this year, and think of how I haven't missed out on anything in life getting there, i feel very fortunate. That feeling now trumps envy whenever I see bling.


Just keep in mind that your friend may not be showing every asset he's got. When we did our Refi, the mortgage broker told us exactly how much we should show in assets. His goal was to MINIMIZE what was shown to reduce the amount of paperwork and filings while still getting the rate and terms w/o any issues.


Ours was the same. We included just one retirement account on ours because that was sufficient to qualify. The only checking/savings account included was the one we were paying the fees out of.
An elephant for a dime is only a good deal if you need an elephant and have a dime.
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Re: How to get over finance envy

Postby Meg77 » Wed Jul 10, 2013 11:34 am

I agree with posters who state that living in a HCOL area is the primary cause of your envy. Many studies have shown that people's contentment is based largely on how they compare to those around them (family members, neighbors, coworkers). I am too lazy to find links to verify this, but some google searching on the topic may be enlightening. I specifically have used this information to influence decisions such as what neighborhoods I choose to live in. You - and your kids - will be happier in areas and schools where you are in the top third rather than the bottom third (this applies to many areas such as looks, smarts, physical ability, income, and material demonstrations of wealth such as house size/condition and car, etc.).

Sure you can convince yourself that none of the material demonstrations of wealth really matter, or you can reflect more on the 90% below you than the 10% above you, and those are all good - and real - truths to remember. But don't try to avoid the fact that daily interactions and conversations about things like where you went on spring break, how much you have saved, what school or activity or camp you are sending your kids to and other social norms in your group do have a real impact on your feelings of either inadequacy, fitting in or success. It's in that way that these forums can hurt as much as they help, BTW. But you can and should manage your position on the "totum pole" so to speak by picking a pole where you are not at the bottom (i.e. don't stretch to move to a neighborhood where you'll be in the shabbiest/smallest house or in a school district where your kids will not have access to the same activities or possessions or clothes as their peers).

PS - you don't need to save 20% for a home. My fiance and I are getting a regular 80% mortgage at the best rates to avoid PMI, but we're also getting a 10% second mortgage (15 years fixed at only a slightly higher rate) so that we only have to put 10% down (plus closing costs). This enables us to put excess cash toward higher rate student and non deductible loan debt and also enables us to get into a house sooner - before rates and prices rise even further. There's nothing wrong with this method or with yours, but it's just an idea if owning a home is a real goal for you. Rents are likely rising in your area too, I'd imagine.
"An investment in knowledge pays the best interest." - Benjamin Franklin
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Re: How to get over finance envy

Postby meowcat » Wed Jul 10, 2013 2:25 pm

freebeer wrote:
meowcat wrote:
freebeer wrote:
meowcat wrote:Unfortunately, statistics prove otherwise. Never confuse high income with wealth, they are not the same. Most high income earners, just like middle and low income earners, have little to no savings. Truly wealthy people that drive BMW's, live in mansions, and are members of the local country club are the exception, not the rule.


Got any actual statistics to "prove" that "Most high income earners, just like middle and low income earners, have little to no savings"? Because the information I can google up indicates that "people making more money save a bigger chunk of their paychecks", with saving rates increasing "sharply at higher income levels, with the saving rate estimated at 51 cents on the dollar for the top 1% of the income distribution and 37 cents on the dollar for the top 5%". (source: http://www.businessinsider.com/chart-sa ... vel-2013-3 ).

It's funny how the article you posted included only the small percentage of earners that actually do save. My statement was "most" high income earners. That means more than 50% of high income earners have little to no savings, just like lower/middle income earners.
Little to no savings means some workers have a zero savings balance and some have a balance much too small to even think about retiring without catastrophic consequences.


Where does it say that it's limited to "the small percentage of earners that actually do save"? The full article that the graph was based on is here: https://www.dartmouth.edu/~jskinner/doc ... heRich.pdf . I only skimmed it but I cannot find a caveat that it excludes zero-saver households in calculating average savings rates by income level.

Again if you have "statistics" that "prove" that "more than 50% of high income earners have little to no savings, just like lower/middle income earners" please provide some reference. Absent data, I take it as a comforting fallacy. Even if what you're trying to say is that you only were talking about savings rates for above-average earners not actual high-income earners (the cited study covered top 1% and top 5% income levels) I'd love to see the data. And the reality for the OP is that if they live in a very affluent area they may in fact be surrounded by top 5% or even top 1% earners who would - again according to the study - also be heavy savers as well as BMW-drivers. Sometimes that's just the way it is.

Fair enough. Let's just say that 66% of all workers (including high income) don't have, or are not saving enough for retirement. That statistic can be found anywhere. The high income, big saver, BMW driver is certainly the exception, not the rule.
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Re: How to get over finance envy

Postby Ted Valentine » Wed Jul 10, 2013 2:59 pm

Can someone help me with my finance envy over the OP that makes 2x what I do and is younger? :wink:
Although our intellect always longs for clarity and certainty, our nature often finds uncertainty fascinating.
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Re: How to get over finance envy

Postby investingdad » Wed Jul 10, 2013 3:13 pm

Here's how I observed the timeline progression of the "fruits" of my investment dollars:

- Age 22 to 25. Felt like being on a hamster wheel. I was making sacrifices to save and invest and it felt pretty futile. Makes sense when starting from zero.
- Age 26 to 29. Married and pooled our investments. Around 29 I noticed that the bottom line balance was starting to add up just a little bit.
- Age 30 to 32. Year end Dividends started to show up as more than $50 per fund. Big market swings starting to register as more than just few hundred dolar blips.
- Age 33 to 35: This was a transitionary period. Bottom line was putting on some actual weight though still not big dollars.
- Age 36 to 38: Investment Dollars actually working for us. Their contribution in year end dividends was equivalent to a Minimum Wage employee sending us full time paychecks.
- Right Now: I feel like we are now 'on the curve'. In other words, the gains are on par or outpacing the contributions of fresh dollars.

So, in summary I found that it took about 18 years to reach an inflection point. The fruits are moving from linear to compounding.
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Re: How to get over finance envy

Postby swaption » Wed Jul 10, 2013 3:40 pm

freebeer wrote:
meowcat wrote:
freebeer wrote:
meowcat wrote:Unfortunately, statistics prove otherwise. Never confuse high income with wealth, they are not the same. Most high income earners, just like middle and low income earners, have little to no savings. Truly wealthy people that drive BMW's, live in mansions, and are members of the local country club are the exception, not the rule.


Got any actual statistics to "prove" that "Most high income earners, just like middle and low income earners, have little to no savings"? Because the information I can google up indicates that "people making more money save a bigger chunk of their paychecks", with saving rates increasing "sharply at higher income levels, with the saving rate estimated at 51 cents on the dollar for the top 1% of the income distribution and 37 cents on the dollar for the top 5%". (source: http://www.businessinsider.com/chart-sa ... vel-2013-3 ).

It's funny how the article you posted included only the small percentage of earners that actually do save. My statement was "most" high income earners. That means more than 50% of high income earners have little to no savings, just like lower/middle income earners.
Little to no savings means some workers have a zero savings balance and some have a balance much too small to even think about retiring without catastrophic consequences.


Where does it say that it's limited to "the small percentage of earners that actually do save"? The full article that the graph was based on is here: https://www.dartmouth.edu/~jskinner/doc ... heRich.pdf . I only skimmed it but I cannot find a caveat that it excludes zero-saver households in calculating average savings rates by income level.

Again if you have "statistics" that "prove" that "more than 50% of high income earners have little to no savings, just like lower/middle income earners" please provide some reference. Absent data, I take it as a comforting fallacy. Even if what you're trying to say is that you only were talking about savings rates for above-average earners not actual high-income earners (the cited study covered top 1% and top 5% income levels) I'd love to see the data. And the reality for the OP is that if they live in a very affluent area they may in fact be surrounded by top 5% or even top 1% earners who would - again according to the study - also be heavy savers as well as BMW-drivers. Sometimes that's just the way it is.


Interesting stuff, actually. A quick look at the paper indicates that the levels shown are actually median levels. So in fact have a pretty good idea what the less frugal 50% of high earneres are doing, and I concur that in the case of the top 5%, saving less than 37 cents on the dollar hardly consitutes evidence of "little or no savings".
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Re: How to get over finance envy

Postby mojave » Wed Jul 10, 2013 3:41 pm

Growing up we had elderly neighbors that were a riot. Really funny and fun. Their dog always snuck into our yard and ours always snuck into theirs. Anyway they had matching gold Mercedes and went to Florida every winter, other than that they owned an average house, 2000 sq ft or so. I eventually found out they were multi millionaires - they started their own business that is huge today. No clue!
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Re: How to get over finance envy

Postby Mill » Wed Jul 10, 2013 4:04 pm

How to get over finance envy?

Ive found that reading alot of Bogleheads.org is very helpful with this. Eventually you become numb to the feeling.
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Re: How to get over finance envy

Postby DiscoBunny1979 » Wed Jul 10, 2013 4:06 pm

stemikger wrote:
Taylor Larimore wrote:Paddington:

At age 89, I have traveled a long road and observed a few things:

In general, there are two kinds of people:

"Outer-directed" who spend their lives trying to impress others.
"Inner-directed" who achieve peace of mind.

There will always be people with more then we have, and many people with less. Try to accept that fact and focus on being comfortable with who you are.

Best wishes.
Taylor


Taylor, I hope to be as wise as you one day. You are a true inspiration.


------------------------

Yes, but Taylor misses the mark by not going to level 3 or level 4. What do I mean by that?

First of all, while there might be outer-directed or inner-directed people, the best is to be both, whereas one can enjoy the material things that life has to offer, but be able to let them go because of having such inner peace in death (or just life situations in general) requires nothing but a happiness to surrender to it, leaving all behind, whereas giving everything away has more meaning than selling for personal gain.

Also, Taylor misses the mark by not addressing the reason for the outer-directed or inner-directed. Mainly, if one has had the opportunity to read any book by Joseph Campbell (such as Oriental Mythology), one would understand that the Western view of things, especially Western Religion, requires one to seek God from outside [religious references removed by admin LadyGeek] The "outer-directed" with material wants is nothing more than trying to fill a void of misplaced spirit and therefore to try to fill one's heart from external things, trying to make one happy doesn't work because More is Never Enough. [religious references removed by admin LadyGeek]
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Re: How to get over finance envy

Postby TRC » Wed Jul 10, 2013 5:37 pm

Don't be mislead by material possessions as a measure of wealth.
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Re: How to get over finance envy

Postby scubadiver » Wed Jul 10, 2013 8:10 pm

Envy is such a funny emotion b/c it's totally relative to your immediate surroundings. Imagine learning that you're the Google / Amazon / Microsoft employee who made the least amount of money at the company's IPO.

I live in a very high cost of living area (Northern VA, just oustide DC). My DW is a stay at home mom. I'm fortunate and make a pretty good salary, say ~130K this year, but that is not a particularly eye catching income in this area and many families make that times two. Needless to say, it seems that everyone around here as a new BMW / Mercedes / Audi /.... Maybe they can afford it, maybe they can't. If they can, well good for them. And if they can't, then eventually their poor financial habits will catch up with them. Either way, my happiness is not dependent upon the happiness or sadness of people I don't know. We have a financial plan and we're following it.
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Re: How to get over finance envy

Postby sschullo » Wed Jul 10, 2013 8:35 pm

ER2023 wrote:
linguini wrote:I think it is perfectly natural to feel envy of other people's possessions, especially when you interact very frequently with those who own more than you, whether they can afford it or not. Don't feel ashamed of your envy, but do try your hardest not to let it dictate how you live your life. The easiest way to remind yourself that you are actually very well off is to force yourself to think of and even interact with those who are far less fortunate than yourself. If I ever feel envious, I try to reflect on how there are others who are truly needy and cannot afford proper medicine, clothes, nutrition, education, or shelter. It helps to do a day of volunteer work or make an unscheduled donation to a charity for the needy every once in a while. It keeps you thinking about people who are worse off than you rather than people who seem better off than you, and it also helps put into perspective how much it means to be able to afford antibiotics and fresh water for your child and how little it means to be able to upgrade your Camry for a Lexus.



+1

Yea, when I start feeling sorry for myself, I go as a visitor to a AA speaker meeting with my husband who has been sober for 46 years. That life perspective hits me right in the gut. I am soooo lucky in so many ways!
Use the talents you possess, for the woods would be a very silent place if no birds sang except the best. -Henry van Dyke, poet (1852-1933)
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Re: How to get over finance envy

Postby AndrewJackson » Wed Jul 10, 2013 8:39 pm

Lots of good stuff in this thread. When I first saw the title, I thought the op was going to talk about envy of other bogelheads on this site. It is truly amazing what some of you guys are saving as a % of gross salary. This and other net worth stats are what I have envy over.
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Re: How to get over finance envy

Postby DJB » Wed Jul 10, 2013 9:37 pm

Any time I start to feel this envy, I think back to my public health days working in rural Kenya. $0.50 for a piece of chicken is out of reach for so many people. The personal stories and experiences mean the most, but this global income calculator can help put things into perspective:

http://www.globalrichlist.com/
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Re: How to get over finance envy

Postby LowER » Wed Jul 10, 2013 10:06 pm

......
Last edited by LowER on Sat Oct 25, 2014 11:07 pm, edited 1 time in total.
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Re: How to get over finance envy

Postby Grt2bOutdoors » Wed Jul 10, 2013 10:13 pm

Don't keep up with the Jones, but don't look down on the Smith's either. Live your own life, don't regale in others misfortunes, time is short, invest it in things that matter and count.
"Luck is not a strategy" Asking Portfolio Questions
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Re: How to get over finance envy

Postby LH » Wed Jul 10, 2013 10:40 pm

The millionaire next door book directly addresses your question well.
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Re: How to get over finance envy

Postby LowER » Wed Jul 10, 2013 10:54 pm

My wording could have been better; I am asking you to rejoice in your current situation knowing that many brilliant and "successful" people have not come close to your financial adroitness, and if you keep up your pace, never will. Please pat yourselves on the back for your awareness and frugality and professional success. I would never ask someone to look down on others, except for me when I make fun of myself, usually in a semi-self deprecating manner, mostly without expectation of reassurance; oxymoron comes to mind.

We should all be extra kind always, because we don't know what battles others are fighting....and in my line of work, it's usually about as bad as it can get, more than a dozen times a day.

We never know what's around the next corner. The more sure I am, the more deep and meaningful my life's next lesson becomes.

In summary, don't be like me - DON'T BE A HENRY!!!!
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Re: How to get over finance envy

Postby reason-logic » Thu Jul 11, 2013 12:27 am

Time is always more important than money.

If you work hard, invest and live right, you can retire at 50 while all those high egos that need the approval of strangers and spend money on fancy cars, expensive clothes and a HCOL lifestyle will work until they are 75.

Would you rather have 25 more years during which you control all of your time or impress total strangers and let others (employers, customers or banks) control your destiny?
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Re: How to get over finance envy

Postby bungalow10 » Thu Jul 11, 2013 5:40 am

Don't assume people haven't received some sort of inheritance or help.

We have groups of friends our age (early-to-mid 30s) in two different cities, my hometown and the city we live in now.

Good friends from my hometown inherited a couple hundred thousand dollars a year or so before they were married. They are very money smart and have held on to most of it, but used some of it recently to buy a very nice house. Not outrageous, but very, very nice. Of course, two of our other friends in that area have now bought homes in the same neighborhood... I know at least one is struggling to make the payments.

Two friends in the are we live in now have inherited or been given moderately large sums of money. Both built new homes with it, and one bought an expensive car. They probably aren't so smart with money, but since they received inheritances they probably aren't in trouble. However, now all our friends want to build new houses, or move up in house... that's where the trouble starts.
An elephant for a dime is only a good deal if you need an elephant and have a dime.
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Re: How to get over finance envy

Postby IlliniDave » Thu Jul 11, 2013 5:57 am

LowER wrote:I'm a HENRY (high earning not rich yet). DON'T be a HENRY! Always thought I was frugal but had no idea how stupid I was, and probably still am, paying cash for everything, rationalizing big purchases because of my income. Stupid is as stupid does. Everyone will pay for their excesses at some point or another, always. I am paying for mine - no trips other than car rides, haircuts at home, Goodwill has been very good to me, never eat out, never buy things that aren't at least 80% off retail, no new clothes in 5 years, except for a few dress shirts, 9 year old vehicle, mow myself and also do it for the HOA land for a pittance; basic cable, no new electronics, and the list goes on, and I make in the mid 6 figures. STUPID STUPID STUPID!!!!!! And I'm just getting re-started with 529s and retirement, and I'm almost 50. Divorce derailed many years of faithful 401k and IRA maximizing, but I should have been better prepared, as I lost everything, and never thought I would be a divorcee. Now, the pressure is on to save everything, and I feel so far behind.

When I see a 20 year old rust bucket in the parking lot at work, I am jealous, and my mind immediately wanders to that person's retirement accounts being so much more adequate than mine. I can't wait for the day when I can drive up in a rust bucket, grinning ear to ear, because my retirement account is bursting at the seams. I'm 5 years off and counting the days, hours, minutes until I am driving that rust bucket that will help me catapult into retirement. It's all about perspective and relativity. You are in great shape. That FI (financial independence) permagrin is not that far off and it's worth far more than the few trinkets that you could buy, and become enslaved to, will ever be worth.

So smile the next time you see the next high-dollar car in the parking lot (and have empathy for the fool who bought it), and know those folks are enslaved for that much longer. Rejoice in your situation, regale in your rust bucket, and laugh at the fools like me who learned too late.


Hang in there LowER,

Other than the fact my income is probably not quite as high as yours and I only lost somewhat more than half in my divorce we have a lot of parallels. I salute you for the level of frugality you've managed to immerse yourself in, you've probably outdone me there as well. The great thing is besides financial efficiency you also know that you don't need a 6-figure retirement income (although there's nothing wrong with having one or planning for one). I'm also 5 +/- years away. It's tempting to look back and beat myself up for all the stupid things I did financially, but fortunately life sent me a couple of timely gut-punches and I wised-up. Hopefully the OP stays the course, I wouldn't recommend anyone do what I did for the first 23 years of my working life (and I wasn't nearly as outrageous in my consumption as many of my contemporaries).
Don't do something. Just stand there!
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Re: How to get over finance envy

Postby freebeer » Thu Jul 11, 2013 8:14 am

meowcat wrote:...Most high income earners, just like middle and low income earners, have little to no savings

... more than 50% of high income earners have little to no savings, just like lower/middle income earners.

... Let's just say that 66% of all workers (including high income) don't have, or are not saving enough for retirement. That statistic can be found anywhere.


meowcat can that latest in your progression of claims supported by any data (as being applicable to high income workers)?

Again what I can find indicates that for highest 5% earners, median savings is 37 cents on the dollar. Whether that's "enough for retirement" is perhaps debatable... depending on how big they intend their future beach house to be... but this is certainly a lot more than average so directly contrary to your "all workers" claim. And, with respect to OP's concerns re: prevalence of fancy cars in a HCOL area such as where a lot of the 5% reside, it also directly contradicts the comforting Bogleheads conventional wisdom that those showing flash are probably lacking in cash.
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Re: How to get over finance envy

Postby Perpetual » Thu Jul 11, 2013 9:23 am

freebeer wrote:
meowcat wrote:...Most high income earners, just like middle and low income earners, have little to no savings

... more than 50% of high income earners have little to no savings, just like lower/middle income earners.

... Let's just say that 66% of all workers (including high income) don't have, or are not saving enough for retirement. That statistic can be found anywhere.


meowcat can that latest in your progression of claims supported by any data (as being applicable to high income workers)?

Again what I can find indicates that for highest 5% earners, median savings is 37 cents on the dollar. Whether that's "enough for retirement" is perhaps debatable... depending on how big they intend their future beach house to be... but this is certainly a lot more than average so directly contrary to your "all workers" claim. And, with respect to OP's concerns re: prevalence of fancy cars in a HCOL area such as where a lot of the 5% reside, it also directly contradicts the comforting Bogleheads conventional wisdom that those showing flash are probably lacking in cash.


When you hear the phase "enough for retirement" within the context of statistics (there is that word again...), what it means is "enough to maintain their current spending levels and standard of living."

So yes, there are probably many high earners for whom saving even 37 cents per dollar won't be enough because they are spending so much right now. They will have to downgrade their lives significantly when their work income stops.
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Re: How to get over finance envy

Postby mojave » Thu Jul 11, 2013 9:32 am

AndrewJackson wrote:Lots of good stuff in this thread. When I first saw the title, I thought the op was going to talk about envy of other bogelheads on this site. It is truly amazing what some of you guys are saving as a % of gross salary. This and other net worth stats are what I have envy over.



I did too! I thankfully am over the envy of material possessions thanks mostly to this place, but also the economy really knocked some sense into me. I do sometimes admire the luxury cars that surround me but I immediately think about how much that monthly payment would be and I get over it real quick. I will readily admit that I am envious of those of you in a better financial position than I but I don't see why I can't get there eventually :)
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Re: How to get over finance envy

Postby volleyballfwtx » Thu Jul 11, 2013 11:15 am

The power of marketing.

People don't really want to listen to Dave Ramsey about budgeting. Spending money is fun, no one one wants to live below their means. It's all about instant gratification, (YOLO) you live only once. :)

My older sister drives a Mercedes, I have driven it before and I don't feel right in it, uneasy, I like the car, I guess I don't want to be recognized. The guy she is with drives a Lamborghini Murcielago, it's paid off, he told me he always wanted one, I'm a car guy too but it's too expensive for my taste. Both of them make good money and work really hard, I remembered he had two full time jobs once. She has a house, it's about 3 years now, she's been aggressive on paying it off, paid off more than half on it now and has no other debt.

My younger sister drives a big truck, Toyota Tundra, it's shiny and new. Doesn't really need it, I hope she gets rid of it. I mean I like it too but she hasn't towed anything with it before. She works at Mercedes and can lease a car from them for about two/three hundred dollars a month. She still has some student loans. I visit her maybe once a month, while I was sorting through the mail I saw a mail from a credit card company that she had opened, I thought it was junk mail, usually I look through it before I tear it up. As I was reading it, the mail stated "request for increase of line of credit - DENIED", she had a credit score of 580, from a scale of 150-990. I put the mail back down and realized some one is living beyond her means.

As for myself, I'm boring, all I do is save and invest. I drive an old car, I remember I parked my car in the driveway at friend's house in The Woodlands(Houston area), it seemed all the cars there were shiny and new except mine :mrgreen: . Also, I don't get hit up by people wanting to borrow money from me which is a relief. I don't worry about this stuff and my health would probably show it, I'd still get people asking for my ID everywhere I go (I'm 31), even at the movie theater, lack of stress and worry. I hope you stop caring about other people's "wealth", it's good for your health. Interesting thread.
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Re: How to get over finance envy

Postby meowcat » Thu Jul 11, 2013 11:26 am

freebeer wrote:
meowcat wrote:...Most high income earners, just like middle and low income earners, have little to no savings

... more than 50% of high income earners have little to no savings, just like lower/middle income earners.

... Let's just say that 66% of all workers (including high income) don't have, or are not saving enough for retirement. That statistic can be found anywhere.


meowcat can that latest in your progression of claims supported by any data (as being applicable to high income workers)?

Again what I can find indicates that for highest 5% earners, median savings is 37 cents on the dollar. Whether that's "enough for retirement" is perhaps debatable... depending on how big they intend their future beach house to be... but this is certainly a lot more than average so directly contrary to your "all workers" claim. And, with respect to OP's concerns re: prevalence of fancy cars in a HCOL area such as where a lot of the 5% reside, it also directly contradicts the comforting Bogleheads conventional wisdom that those showing flash are probably lacking in cash.

freebeer, I really hate taking this thread off topic. I see your point but apparently, I fail to drive home mine.
I have a difficult time finding statistics because "rich" and "high income" have absolutely nothing to do with each other. Of course all rich folks save, and save big, which is the context of the article you posted. According to The Millionaire Next Door, most high income earners are nowhere near rich. They wear their income out in the open for all to see and save very little. They are hyper consumers. This is more common than you seem to believe.
This chart includes all workers at all income levels. Take note that at age 65, only 4% of all workers, from all income levels, have saved enough to retire.
The statistics and percentages are spelled out pretty clearly in the Millionaire Next Door. And yes, they do say that "most" high income earners save little.
http://www.statisticbrain.com/retirement-statistics/
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Re: How to get over finance envy

Postby freebeer » Fri Jul 12, 2013 6:44 am

meowcat wrote:
freebeer wrote:
meowcat wrote:...Most high income earners, just like middle and low income earners, have little to no savings

... more than 50% of high income earners have little to no savings, just like lower/middle income earners.

... Let's just say that 66% of all workers (including high income) don't have, or are not saving enough for retirement. That statistic can be found anywhere.


meowcat can that latest in your progression of claims supported by any data (as being applicable to high income workers)?

Again what I can find indicates that for highest 5% earners, median savings is 37 cents on the dollar. Whether that's "enough for retirement" is perhaps debatable... depending on how big they intend their future beach house to be... but this is certainly a lot more than average so directly contrary to your "all workers" claim. And, with respect to OP's concerns re: prevalence of fancy cars in a HCOL area such as where a lot of the 5% reside, it also directly contradicts the comforting Bogleheads conventional wisdom that those showing flash are probably lacking in cash.

freebeer, I really hate taking this thread off topic. I see your point but apparently, I fail to drive home mine.
I have a difficult time finding statistics because "rich" and "high income" have absolutely nothing to do with each other. Of course all rich folks save, and save big, which is the context of the article you posted. According to The Millionaire Next Door, most high income earners are nowhere near rich. They wear their income out in the open for all to see and save very little. They are hyper consumers. This is more common than you seem to believe.
This chart includes all workers at all income levels. Take note that at age 65, only 4% of all workers, from all income levels, have saved enough to retire.
The statistics and percentages are spelled out pretty clearly in the Millionaire Next Door. And yes, they do say that "most" high income earners save little.
http://www.statisticbrain.com/retirement-statistics/


meowcat, you are not taking the thread off topic b/c the OP's question was how to deal with envy and the standard response including yours has been not to envy b/c those who appear rich most probably aren't. It seems this is just wrong vis-a-vis high income earners (top 5% and up) which sounds like what the OP is surrounded by. I.e. "hyper consumers" are far less common - among high income earners - than Bogleheads conventional wisdom. I do think it's a relevant point and that many of us can probably benefit from having a bit of air let out of our bubbles of Toyota-driving over-saving self-satisfaction... I have no axe to grind about it as I over-save and drive a Toyota too! ;-)

I only picked on you among that chorus because you threw out very specific "statistics" without any backup, statistics that appear to be at odds with available data. I do get cranky when folks toss out very strong claims like "statistics prove otherwise..." but actually don't have any supporting evidence at all much less proof. It's not about what you or I "believe", it's about the data. "According to (my vague memory of) the Millionaire Next Door..." is not supporting evidence, and the retirement statistics page you linked to says absolutely nothing about savings rates by income level. And you seem to be trying to draw some distinction between high income earners and "rich folks" where you are sticking to a notion that the former don't save: but the study I cited was about savings by income levels not savings by wealth so, with respect, unless there's contrary data your argument has no legs.

BTW I'm not attacking the thesis of the "Millionaire Next Door". There are a clearly a lot of under-saving over-consumers out there. But I think we can appreciate the benefits of saving and simplicity without propagating myths.
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Re: How to get over finance envy

Postby BW1985 » Fri Jul 12, 2013 7:49 am

Personally I"m enjoying the side bar conversation between you two and can see where each is coming from.
"I'd recommend going for happiness and fulfillment over money. Money is easy, and wealthy people spend all their money chasing happiness and fulfillment" -longview
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Re: How to get over finance envy

Postby Dulocracy » Fri Jul 12, 2013 7:59 am

As others have suggested, read The Millionaire Next Door, as it is life changing.

If you are looking for a blog to keep you on track, read www.mrmoneymustache.com

Most importantly, keep coming to this site. It has helped me and many others stay on track. As someone who got a house too soon, I will tell you that I was paying 9.5% interest on my second mortgage. When I realized how bad that was, I aggressively paid it off. 7 years of that interest is what it took to learn a valuable lesson. The people that you are watching are making similar mistakes to that one. Get your down payment. Live frugally. In the end, you and your family will be much better off.
I'm not a financial professional. Post is info only & not legal advice. No attorney-client relationship exists with reader. Scrutinize my ideas as if you spoke with a guy at a bar. I may be wrong.
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Re: How to get over finance envy

Postby meowcat » Fri Jul 12, 2013 8:13 am

BW1985 wrote:Personally I"m enjoying the side bar conversation between you two and can see where each is coming from.

Thanks, BW1985. I too enjoy an intelligent conversation with differing points of view.
Just a couple of quotes from "Millionaire"

"Most people have it all wrong about wealth in America"

"Wealth is not the same as High income"

"Most households with 6 figure incomes are not rich. They believe in spending tomorrows cash today"

Whatever the statistics, it's clear that high income doesn't always equate to high savings rates.
I guess I'm passionate about this phenomenon because I'm very close with a family member that clearly falls into the "big hat, no cattle" category.
My little sister and her husband, at one point, were making upwards of $300K. They lived in a $950K house, he drove a new Chevy truck and a new Corvette, she drove a brand new Lincoln Navigator. He wore a Rolex watch. They ate out constantly and spent any amount on whatever they wanted. I remember one year, they went to buy fireworks for the 4th of July and spent a grand without blinking an eye.
Today, they are virtually penniless. They've been through 2 foreclosures, 1 bankruptcy, and are now renting a 3 BR house in LV. They are near fifty, and they have not a single penny saved for their future. I feel bad for them but they are, in fact, part of that dire statistic.
More people should learn to tell their dollars where to go instead of asking them where they went. | -Roger Babson
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Re: How to get over finance envy

Postby menlo » Fri Jul 12, 2013 10:09 am

I don't particularly envy others' lavish spending or fancy baubles, probably because of a somewhat frugal inclination (although I like a nice sports car as much as the next guy). But I do feel a reasonable amount of status/wealth envy because of where I live and the extraordinary success people my age have had. I have many former classmates and acquaintances who are extremely wealthy from tech shares -- many multi-millionaires and one honest-to-goodness billionaire. On top of this wealth, these people have high profile jobs -- founders, CEOs, CTOs of now-major companies; venture capitalists; angel investors; etc. And all in their early 30s. These are all self-made people and many of them live reasonably frugally. But being that wealthy and successful obviously brings a lot of freedom, social capital, and connections, which is something I can't help but envy a bit.

What this really drives home for me is the human inclination to measure oneself against peers and acquaintances rather than objective measures of well being or the broader standards of society as a whole. It's really not a good impulse, but I guess it's human nature.
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