"Stealth Wealth: I’m Just an Ordinary Average Guy"

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Taylor Larimore
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"Stealth Wealth: I’m Just an Ordinary Average Guy"

Post by Taylor Larimore » Thu Nov 10, 2016 9:55 am

Bogleheads:

I spend much of my time on the Boglehead forum trying to help investors using "The Boglehead Philosophy":
Develop a workable plan
Invest early and often
Never bear too much or too little risk
Never try to time the market
Use index funds when possible
Keep costs low
Diversify
Minimize taxes
Keep it simple
Stay the course

Following this Philosophy, many Bogleheads now enjoy a substantial net-worth. Nevertheless, the way we spend our money can make a huge difference in our happiness and future wealth. This article from Physician On Fire offers food-for-thought:

Stealth Wealth

I look forward to reading about your personal life-style.

Thank you and best wishes.
Taylor
"Simplicity is the master key to financial success." -- Jack Bogle

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Re: "Stealth Wealth: I’m Just an Ordinary Average Guy"

Post by alpenglow » Thu Nov 10, 2016 10:19 am

Thanks for sharing the link. I certainly adhere to the idea of stealth wealth. My wife and I drive basic cars compared to most of our neighbors. We shop at thrift stores quite a bit (I'm amazed at the new with tags stuff we find!). I couldn't care less about impressing others. At the same time, we enjoy good food (mostly cooked at home) and some nice trips. We don't feel at all "deprived". Instead, thanks largely to Bogleheads and Taylor, our networth is about $1.1m, our house will be paid off in about a year, and my wife is able to stay at home with the kids. I find a lot of peace comes from knowing we're financially secure. FWIW, we're late 30s/early 40s and I'm a school teacher.

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Re: "Stealth Wealth: I’m Just an Ordinary Average Guy"

Post by Leif » Thu Nov 10, 2016 10:33 am

I don't fit well into the Stealth Wealth categories.

Driving a luxury automobile - YES, love it! But, also have an Accord (base model).
Wearing a ridiculously expensive watch or similar jewelry - My watch is a $11 Casio from Amazon. The battery is good for 7 years vs. 1 day for Apple watch!
Anything called a Kardashian - I don't understand that, but amusing.
McMansion with weekly visits from the gardener and “pool boy” - 3,200 sq ft. Does that qualify? Yes have gardener. No pool.
Facebook check-ins at The French Laundry - What is that?
Trump. Clinton. It’s election day, after all. - All done with that thank goodness.
Decadent Maui accommodations (unless reimbursed by employer) - No, but I do like Kauai. Sheraton is fine.
Last edited by Leif on Thu Nov 10, 2016 10:44 am, edited 1 time in total.
Investors should diversify across many asset-classes so that whatever happens, we will not have all our investments in underperforming asset classes and thereby fail to meet our goals-Taylor Larimore

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Re: "Stealth Wealth: I’m Just an Ordinary Average Guy"

Post by J0NATHAN » Thu Nov 10, 2016 10:44 am

Thanks for sharing. I really enjoy the concept of keeping "average friends", because it's much easier to keep up with the joneses when they're spending similarly to you.

I can also second the thrift store shopping. I have found some incredible deals there. My most recent score was a $200+ rain coat, looked brand new, that I purchased for just over $7.

That said, at my age (22), I wouldn't be able to make purchases like this without the thrift stores. So, for me, it's not so much "stealth wealth", because I dress much better than I could actually afford without these store types. Specifically when looking for dress slacks or collared shirts. Purchase them for <$5 each (name brands in great shape) and I have been learning how to custom tailor them myself.
“There is nothing noble in being superior to your fellow man; true nobility is being superior to your former self.” - Ernest Hemingway

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Re: "Stealth Wealth: I’m Just an Ordinary Average Guy"

Post by Hikes_With_Dogs » Thu Nov 10, 2016 10:53 am

My 11 year old Honda is quintessential stealth wealth IMO. Over 100k miles, still seems like a 'new' car to me compared to the car I had before it! :happy

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Re: "Stealth Wealth: I’m Just an Ordinary Average Guy"

Post by jazman12 » Thu Nov 10, 2016 11:00 am

Qualifications

still working when i can afford to retire.
drive 10+ yr old car
sold large home and downsized (cash) to 55+ community (more leisure time)
haven't bought cloths for two years as I prepare for retirement (except workout gear)
manage my own portfolio after numerous requests from financial advisors
I shop online and use ebay when it is cost effective
I rent other peoples timeshares for some vacations without commitments

I am borderline cheap or frugal however you want to look at it
but as a solid middle class earner raising a family and caring for eldery parents, I think I have done pretty well. Also, one more thing, I have invested in Vanguard for 20 years!

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Re: "Stealth Wealth: I’m Just an Ordinary Average Guy"

Post by KlangFool » Thu Nov 10, 2016 11:01 am

J0NATHAN wrote:
I can also second the thrift store shopping. I have found some incredible deals there. My most recent score was a $200+ rain coat, looked brand new, that I purchased for just over $7.



J0NATHAN,

I had bought 3 3-in-1 jackets over 20+ years.The first one was London fog at $300. The second one was Columbia Sportswear at $300. The last one was LL Bean at $99. Each one of them lasted me about 6 to 8 years. And, I only need one jacket for all occasions. And, they functioned as rain coat too. So, I do not understand why people spend money on many jackets when one is good enough.

http://www.llbean.com/llb/shop/88174?pa ... ns-regular

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Re: "Stealth Wealth: I’m Just an Ordinary Average Guy"

Post by Wagnerjb » Thu Nov 10, 2016 11:07 am

Taylor Larimore wrote:Following this Philosophy, many Bogleheads now enjoy a substantial net-worth. Nevertheless, the way we spend our money can make a huge difference in our happiness and future wealth. This article from Physician On Fire offers food-for-thought:

Stealth Wealth

I look forward to reading about your personal life-style.



Taylor: I disagree with the philosophy of stealth wealth. If you can afford the better things in life, then why deny yourself? If you can afford a Lexus (and want one), then why not? If you can afford to buy your wife that $10,000 diamond watch for your 30th wedding anniversary, then why not? If you can afford to stay at the Ritz Carlton in Maui to celebrate your retirement, then why not? If you can afford to relax and play golf or tennis on Saturday - while the yard service is mowing your lawn and the pool service is cleaning your pool - then why not?

You work hard all your life to be able to enjoy the fruits of your labor. Once you have "won the game", by all means enjoy it. Don't flaunt it in front of others who are not at your level, but by all means treat yourself. I just don't understand this self denial stuff.

If driving an old beat up Ford pickup truck is what makes you happy, by all means go for it. But don't belittle those enjoying the Mercedes they have always dreamed of being able to afford.

Best wishes.
Andy

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Re: "Stealth Wealth: I’m Just an Ordinary Average Guy"

Post by JimmyD » Thu Nov 10, 2016 11:14 am

I would say we generally live a little lower on the hog than we're able to, but we both drive newer, nicer cars and really enjoy them. We don't buy any luxuries, but we do go out to dinner every Saturday night as it helps break up the monotony of the work week and we try to keep it under $50 for our family of three. We take one domestic vacation each year and stay with family, so that cost is minimal, but we do travel internationally once a year as well to celebrate our anniversary...and again, to have something to look forward to each year.

We max out all available retirement accounts and have sufficient cash savings, so I feel good about where we are and where we're going.

None of what we do in life, from a consumption perspective at least, is influenced by others and I'm thankful for that. We do what is right for us.

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Re: "Stealth Wealth: I’m Just an Ordinary Average Guy"

Post by Morik » Thu Nov 10, 2016 11:23 am

So I don't quite qualify.

Things I do that aren't stealth wealth compatible:
- I drive a ~$45k car, my wife a $25k car (she could have gotten a more expensive one, but this one met all her needs and she didn't want a more expensive one).
- When visiting NYC for recreation, we usually stay in 5-star hotels for the fun factor
- I often indulge in my current hobby/hobbies and spend a good bit more than an average joe would on them. (Got into wet shaving, spent over $1k on stuff for it over the course of a year, got into martial arts & bought a (nice but expensive) heavy bag & a bunch of higher-end gear for classes (~$1k total). Etc.)
- Visit very expensive restaurants (similar to The French Laundry, though we haven't been there yet as we aren't on the west coast). This isn't too frequent though.

But:
- I wear jeans & a t-shirt most of the time. (Or shorts in the summer.)
- No expensive clothing nor expensive accessories (I don't wear a watch, etc)
- We have high-end smartphones, but we only update them infrequently (every 4-5 years) and often they are gifts from employer.
- We live in a nice house in a lower to middle class neighborhood (good mix). Its one of the nicer houses in the neighborhood but mostly because it is much newer than most of them. It's on-par size-wise with the rest of the neighborhood.

We do save ~33% of our income...

Re. what Wagnerjb said: I agree. My philosophy on money is basically:
- Save enough to meet needs & desires in the future.
- Save enough to deal with uncertainty/emergencies/etc.
- Spend the rest in a way that maximizes your utility. If you still have leftovers after spending in such a way, save them too and retire earlier or increase spending in the future.

Once I am financially independent (to a level that permits me to maintain my lifestyle), I will probably keep working anyway for something to do. I'm likely to have much more money than I need over the course of my lifetime (barring exigent circumstances). Basically I ratchet up my spending only when I think it is safe & sustainable to do so. If I wanted to I think I'd be able to save enough to spend 2-3x what we spend now, each year in retirement. Or I could retire pretty early, but I think I'd get bored.
My plan is to donate any leftovers to charity (with some bequeathed to relatives) when I die, and in the meantime spend as much as I need to (and can safely/sustainably spend) to maximize utility.

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Re: "Stealth Wealth: I’m Just an Ordinary Average Guy"

Post by Engineer250 » Thu Nov 10, 2016 11:33 am

J0NATHAN wrote:Thanks for sharing. I really enjoy the concept of keeping "average friends", because it's much easier to keep up with the joneses when they're spending similarly to you.


Agree with this and have talked about it before on these boards. I used to be in meetings with people higher ranking than me all the time. Their small talk might include discussing their rental properties or a spur of the moment vacation to a Mexican resort. It can for sure make you feel poor and like you are falling behind. Then I hang out with a group of friends on the weekends who probably make 1/3rd what I make. They all have zero chance of being able to afford a house in my city and are all struggling with rising rental rates. I'm not saying they don't occasionally make poor money decisions, but it impacts them a lot harder than the guys making a quarter of a million who could get away with a few money mistakes. It really puts things into perspective and helps me to feel thankful.

Wagnerjb wrote:
Taylor: I disagree with the philosophy of stealth wealth. If you can afford the better things in life, then why deny yourself? If you can afford a Lexus (and want one), then why not? If you can afford to buy your wife that $10,000 diamond watch for your 30th wedding anniversary, then why not? If you can afford to stay at the Ritz Carlton in Maui to celebrate your retirement, then why not? If you can afford to relax and play golf or tennis on Saturday - while the yard service is mowing your lawn and the pool service is cleaning your pool - then why not?

You work hard all your life to be able to enjoy the fruits of your labor. Once you have "won the game", by all means enjoy it. Don't flaunt it in front of others who are not at your level, but by all means treat yourself. I just don't understand this self denial stuff.

If driving an old beat up Ford pickup truck is what makes you happy, by all means go for it. But don't belittle those enjoying the Mercedes they have always dreamed of being able to afford.

Best wishes.


I agree with this. I think you should spend money on the things you enjoy. If you enjoy being frugal, more power to you. But it should never be a chore. I think a lifestyle of extreme frugalism can be just as bad as a "keeping up with the Jones" lifestyle. People can begin to compete in exactly how crazily frugal they can get. Nothing wrong with paying for things that make your life enjoyable. Early retirement is not everyone's dream. Some people like their jobs, and like driving a nice car to their jobs, etc.
Where the tides of fortune take us, no man can know.

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Re: "Stealth Wealth: I’m Just an Ordinary Average Guy"

Post by bigred77 » Thu Nov 10, 2016 11:49 am

I don't fit the criteria.

I save 1/4 to 1/3 of my income every year and try to spend the rest as "efficiently" as possible on whatever makes me the happiest. I'm not wired the same way as people who say "If I had 10 million dollars, my lifestyle/spending wouldn't change". There's a lot of things I'd like to buy/experience/enjoy but I don't because I can't afford them without jeopardizing my savings goals.

If I could afford a Porsche, I'd buy one tomorrow. If I could afford a giant house in the most exclusive neighborhoods (and the ongoing costs that would come with that), I'd buy it tomorrow.

I also don't understand surrounding yourself with less "financially successful" people or consciously seeking out an environment where you have more means than everyone else. I like the notion of "You're likely to end up around the average of the 3-5 people you spend the most time around" a heck of a lot better.

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Re: "Stealth Wealth: I’m Just an Ordinary Average Guy"

Post by Mav » Thu Nov 10, 2016 12:41 pm

KlangFool, that jacket is now $129, when was it $99?

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Re: "Stealth Wealth: I’m Just an Ordinary Average Guy"

Post by Meg77 » Thu Nov 10, 2016 12:46 pm

I'm stealthily wealthy in that I spend less than my peers and no one would suspect that our net worth is as high as it is. But we are far from actually being frugal and obviously enjoy a nice income to the casual observer - nice town home in a trendy area, some designer accessories, plenty of Facebook check ins at nice restaurants and fun travel destinations. Our peers probably just assume we spend everything we make like most of them do, when in reality we save about 40% of our income. Those savings come from the fact that we don't have kids, don't shop much, don't eat out as much as most people in our area, and have only one car payment which we keep because it costs less than the inflation rate, rather than lots of debts sucking up our income each month in the form of required minimum payments.

I'm torn on this subject because most of my family members are stealthily wealthy, and I grew up in a fairly rural area where rich folks and poor folks all pretty much looked the same (went to the same school, church and grocery store, etc.). There wasn't a luxury car dealer or designer clothing store within a 2.5 hour drive. But I've been in a city for well over a decade now, and it is really a different thing when you have access to ways to spend your money and are actually making enough to enjoy luxuries while keeping a high savings rate. Sure we could retire now and live off $50K a year pretty indefinitely based on our $1.5M net worth. But we are in our early 30s and don't hate our jobs enough to give up the fun vacations and rooftop deck we get to enjoy by working a few extra years to pay for it.
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Re: "Stealth Wealth: I’m Just an Ordinary Average Guy"

Post by KlangFool » Thu Nov 10, 2016 12:51 pm

Mav wrote:KlangFool, that jacket is now $129, when was it $99?


Mav,

I bought it at 11/2011. But, it is still a good deal at $129. Or, wait until it is on sale. This jacket will last me another 3 to 4 years.

KlangFool

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Re: "Stealth Wealth: I’m Just an Ordinary Average Guy"

Post by Mav » Thu Nov 10, 2016 12:55 pm

KlangFool wrote:
Mav wrote:KlangFool, that jacket is now $129, when was it $99?


Mav,

I bought it at 11/2011. But, it is still a good deal at $129. Or, wait until it is on sale. This jacket will last me another 3 to 4 years.

KlangFool


yes, good tip, probably close to the end of Nov

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Re: "Stealth Wealth: I’m Just an Ordinary Average Guy"

Post by Raybo » Thu Nov 10, 2016 1:09 pm

Wagnerjb wrote:Taylor: I disagree with the philosophy of stealth wealth. If you can afford the better things in life, then why deny yourself? If you can afford a Lexus (and want one), then why not? If you can afford to buy your wife that $10,000 diamond watch for your 30th wedding anniversary, then why not? If you can afford to stay at the Ritz Carlton in Maui to celebrate your retirement, then why not? If you can afford to relax and play golf or tennis on Saturday - while the yard service is mowing your lawn and the pool service is cleaning your pool - then why not?

You work hard all your life to be able to enjoy the fruits of your labor. Once you have "won the game", by all means enjoy it. Don't flaunt it in front of others who are not at your level, but by all means treat yourself. I just don't understand this self denial stuff.

If driving an old beat up Ford pickup truck is what makes you happy, by all means go for it. But don't belittle those enjoying the Mercedes they have always dreamed of being able to afford.

Best wishes.


I agree completely.

I have no children and have no desire to leave a legacy, except for my wife to live well should I die first. For me, leaving a lot of money on the table when I croak would a much larger waste than driving a fancy car (riding a fancy bicycle?), eating out at expensive restaurants, staying at pricey hotels, or any other ways to spend money. That said, due to personal preference, I do none of these things (OK, I do have an expensive bicycle).
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Re: "Stealth Wealth: I’m Just an Ordinary Average Guy"

Post by bhsince87 » Thu Nov 10, 2016 1:11 pm

This pretty much describes me to a "T". But I'm sort of struggling with trying to get out of that mode at this point in my life.

We had about $220k in after-tax income last year, and spent about $60k. Plus our investments increased by about $200k. And we pretty much have enough to quit our jobs tomorrow if we wanted to (around $3million) at age 50 and 52.

My 13 year old truck needs to be replaced. I've waited until the incentives on the 2016 models came out, and they're here now. But I've been twiddling for the past few weeks over whether I should spend $30k on a mid-range package, or splurge and pay $40k for one with all the bells and whistles (which are done electronically these days :) ) I can't think of hardly any rational reason not to go for the high end one, other than principle. But it's still really hard for me to do.
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Re: "Stealth Wealth: I’m Just an Ordinary Average Guy"

Post by HomerJ » Thu Nov 10, 2016 1:24 pm

Wagnerjb wrote:
Taylor Larimore wrote:Following this Philosophy, many Bogleheads now enjoy a substantial net-worth. Nevertheless, the way we spend our money can make a huge difference in our happiness and future wealth. This article from Physician On Fire offers food-for-thought:

Stealth Wealth

I look forward to reading about your personal life-style.



Taylor: I disagree with the philosophy of stealth wealth. If you can afford the better things in life, then why deny yourself? If you can afford a Lexus (and want one), then why not? If you can afford to buy your wife that $10,000 diamond watch for your 30th wedding anniversary, then why not? If you can afford to stay at the Ritz Carlton in Maui to celebrate your retirement, then why not? If you can afford to relax and play golf or tennis on Saturday - while the yard service is mowing your lawn and the pool service is cleaning your pool - then why not?


What does it mean to be able to "afford" something?

Too many people think they can swing the $300/month payment, therefore it's "affordable".

You work hard all your life to be able to enjoy the fruits of your labor. Once you have "won the game", by all means enjoy it.


Sure, once you have "won the game". But when does that happen? In the middle years, it's tough to tell.. If you've got $3 million at 55, and your expenses are $60k a year, you've won the game... But what if you've got $1 million at 45 with $60k expenses? You've pretty close to winning the game. Maybe you could afford that new car.

But you need to be careful. Once you start spending more, you will need more and it will take longer to "win the game".

Look, many of us here are rich enough by our 40s to afford a nice car, nice vacations, and still be on track to retire at 55. But very few are that lucky in the real world. No one is telling you that you're wrong to buy a nice car if you can "afford" it. It's just that many people don't really understand what "affordable" means. Better to be an "ordinary average guy" with an ordinary average house and car, until you've saved a lot.

What's interesting, is after 20 years of living the "ordinary average life", you may realize you don't really need much more to be happy.
Last edited by HomerJ on Thu Nov 10, 2016 1:36 pm, edited 2 times in total.

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Re: "Stealth Wealth: I’m Just an Ordinary Average Guy"

Post by bigred77 » Thu Nov 10, 2016 1:26 pm

bhsince87 wrote:This pretty much describes me to a "T". But I'm sort of struggling with trying to get out of that mode at this point in my life.

We had about $220k in after-tax income last year, and spent about $60k. Plus our investments increased by about $200k. And we pretty much have enough to quit our jobs tomorrow if we wanted to (around $3million) at age 50 and 52.

My 13 year old truck needs to be replaced. I've waited until the incentives on the 2016 models came out, and they're here now. But I've been twiddling for the past few weeks over whether I should spend $30k on a mid-range package, or splurge and pay $40k for one with all the bells and whistles (which are done electronically these days :) ) I can't think of hardly any rational reason not to go for the high end one, other than principle. But it's still really hard for me to do.


"We had about $220k in after-tax income last year, and spent about $60k. Plus our investments increased by about $200k. And we have more than enough to quit our jobs tomorrow if we wanted to (around $3million) at age 50 and 52."

I fixed the bolded part for you. Buy the nicer truck :mrgreen:

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Re: "Stealth Wealth: I’m Just an Ordinary Average Guy"

Post by RadAudit » Thu Nov 10, 2016 1:57 pm

HomerJ wrote:What's interesting, is after 20 years of living the "ordinary average life", you may realize you don't really need much more to be happy.


+1

If you need an expensive new car, expensive new watch, expensive large home in an up-scale neighborhood, .... etc. to be happy, you might want to consider why you need those things.
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Re: "Stealth Wealth: I’m Just an Ordinary Average Guy"

Post by HomerJ » Thu Nov 10, 2016 2:14 pm

RadAudit wrote:
HomerJ wrote:What's interesting, is after 20 years of living the "ordinary average life", you may realize you don't really need much more to be happy.


+1

If you need an expensive new car, expensive new watch, expensive large home in an up-scale neighborhood, .... etc. to be happy, you might want to consider why you need those things.


That sounds more negative than I meant... Look, I've spent money on luxuries. I bought a boat and a jetski that I certainly don't need. But they do make me happier. I love our family weekends at the lake.

But for 15 years, we didn't have a boat and a jetski, and we had pretty good weekends with the family anyway.

It's not about denying yourself forever, but an "average Joe" life in America is a pretty good life. Start with that for at least 5,10,15 years, save what's left over, and then see where you are.

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Re: "Stealth Wealth: I’m Just an Ordinary Average Guy"

Post by Levett » Thu Nov 10, 2016 2:20 pm

I would suggest the first rule of stealth wealth is not to talk about it. :happy

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Re: "Stealth Wealth: I’m Just an Ordinary Average Guy"

Post by cusetownusa » Thu Nov 10, 2016 2:27 pm

bhsince87 wrote:This pretty much describes me to a "T". But I'm sort of struggling with trying to get out of that mode at this point in my life.

We had about $220k in after-tax income last year, and spent about $60k. Plus our investments increased by about $200k. And we pretty much have enough to quit our jobs tomorrow if we wanted to (around $3million) at age 50 and 52.

My 13 year old truck needs to be replaced. I've waited until the incentives on the 2016 models came out, and they're here now. But I've been twiddling for the past few weeks over whether I should spend $30k on a mid-range package, or splurge and pay $40k for one with all the bells and whistles (which are done electronically these days :) ) I can't think of hardly any rational reason not to go for the high end one, other than principle. But it's still really hard for me to do.


Go for the bells and whistles...you can thank me later imo

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Re: "Stealth Wealth: I’m Just an Ordinary Average Guy"

Post by Morik » Thu Nov 10, 2016 2:52 pm

HomerJ wrote:What's interesting, is after 20 years of living the "ordinary average life", you may realize you don't really need much more to be happy.


IIRC, research has shown that each individual has a "baseline happiness" that they stabilize to when in stable conditions.
Their actual happiness fluctuates for a time after conditions change, but then re-stabilizes to their baseline happiness.

What do I mean by this?

For instance, after being in prison 6 months, inmates were found to have returned to their baseline happiness. (Prior to the 6 months of adjustment, their happiness levels were much lower than their baseline.)

The same occurs when you add a new activity you like. E.g., lets say you try surfing for the first time and love it, and start doing it a few times a week. You will temporarily boost your happiness, but after a while you get used to this new situation and your overall happiness returns to baseline.
If you were then forced to stop surfing, your happiness would drop from baseline for a while, then after you get used to not surfing it will level back out to your baseline.

Its been a while (at least a few years) since I read this research, and I don't have time to go digging for sources unfortunately.

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Re: "Stealth Wealth: I’m Just an Ordinary Average Guy"

Post by RadAudit » Thu Nov 10, 2016 3:01 pm

HomerJ wrote:RadAudit wrote:
HomerJ wrote:
What's interesting, is after 20 years of living the "ordinary average life", you may realize you don't really need much more to be happy.


+1

If you need an expensive new car, expensive new watch, expensive large home in an up-scale neighborhood, .... etc. to be happy, you might want to consider why you need those thin
That sounds more negative than I meant.


You didn't sound negative to me. And, I'm sure a number of us have at least a few expensive purchases hanging around the house. I took your post to mean that you probably don't need the trappings of wealth to be happy. And,you surely don't need them if you risk your financial well being to get them.

I only added that if you feel you must sacrifice the possibility of your future well being to obtain something you don't need so you can be happy now, you might want to rethink your decision.
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Re: "Stealth Wealth: I’m Just an Ordinary Average Guy"

Post by PhysicianOnFIRE » Thu Nov 10, 2016 3:22 pm

Wagnerjb wrote:
Taylor Larimore wrote:Following this Philosophy, many Bogleheads now enjoy a substantial net-worth. Nevertheless, the way we spend our money can make a huge difference in our happiness and future wealth. This article from Physician On Fire offers food-for-thought:

Stealth Wealth

I look forward to reading about your personal life-style.



Taylor: I disagree with the philosophy of stealth wealth. If you can afford the better things in life, then why deny yourself? If you can afford a Lexus (and want one), then why not? If you can afford to buy your wife that $10,000 diamond watch for your 30th wedding anniversary, then why not? If you can afford to stay at the Ritz Carlton in Maui to celebrate your retirement, then why not? If you can afford to relax and play golf or tennis on Saturday - while the yard service is mowing your lawn and the pool service is cleaning your pool - then why not?

You work hard all your life to be able to enjoy the fruits of your labor. Once you have "won the game", by all means enjoy it. Don't flaunt it in front of others who are not at your level, but by all means treat yourself. I just don't understand this self denial stuff.

If driving an old beat up Ford pickup truck is what makes you happy, by all means go for it. But don't belittle those enjoying the Mercedes they have always dreamed of being able to afford.

Best wishes.


Taylor, Thank you for sharing!

Andy,

I agree with you. Money is a tool to be used, not hoarded.

The tricky part is finding the best balance between saving and spending, and understanding what it means to you to be able to afford something. For example, I could afford to buy a $50,000 car. My portfolio would shrink by about 2%, which is something it does some days when I buy nothing. I choose not to buy the nice car because I don't really want one. For me -- and this is highly individualized -- I wouldn't expect to enjoy the $50,000 car much more than the $5,000 car that I drive. I like how this radiologist looks at the marginal utility of money.

The other expenses you've mentioned won't set the typical millionaire back enough to make much of a difference unless you find a $5,000 or $10,000 splurge to make 5 to 10 times a year. I'm not saying you shouldn't, but if you want to spend an additional $50,000 a year, you'll want to have an extra $1.25 million to cover it if we're using the 4% SWR as a guide. Since I'm in the early retirement camp, and I've got a nice salary and a high savings rate, I'd be looking at five more years of work to build up another $1.25 million.

I'm currently looking at 2019 as a tentative retirement date. I'll be 43 and my boys will have fewer than 10 years left before they leave our nest. To me, it's not worth trading 5 years of that time working a job with long, unpredictable hours that limits our freedom to travel and go on some amazing family adventures that we have planned. I'd rather have the freedom than the money. I'm working towards financial freedom, which I've defined as having enough to double the discretionary spending that you had when you reached financial independence, while being able to maintain a safe withdrawal rate.

I don't mean to belittle anyone for their choices. I think it can be helpful to illustrate how choices can have consequences, particularly for the "all hat, no cattle" crowd. It sounds like you've got the hat and the cattle. Enjoy!

Best,
-Physician on FIRE

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Re: "Stealth Wealth: I’m Just an Ordinary Average Guy"

Post by ruralavalon » Thu Nov 10, 2016 3:32 pm

This is an interesting discussion.

After living frugally for so long when (if ever) do we switch to more comfort or more luxury? Do we want to switch? Why or why not?
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Re: "Stealth Wealth: I’m Just an Ordinary Average Guy"

Post by carguyny » Thu Nov 10, 2016 3:34 pm

The one thing I spend money on is cars - both family cars and my sports/race cars. To me, safety is one area where I won't skimp on - yes my son's nanny drives an expensive car, as does my wife but both have the latest and greatest safety features. I would never forgive myself of trying to save money if there was a serious accident and injury that could have been avoided.

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Re: "Stealth Wealth: I’m Just an Ordinary Average Guy"

Post by Abe » Thu Nov 10, 2016 3:40 pm

Our car is a 2000 Toyota Camry with 170K miles. There is nothing wrong with it, but my wife has been wanting a new car for some time now. I have been putting it off, but the other day I stopped at a Honda place. The salesman said he had just the car for us. The list price was about $35k, and he said we would love it. I told him I don't fall in love with cars, but I was going to buy a Toyota, a Honda or maybe a Nissan, which ever one was the cheapest. He sort of frowned and said he would be back with the keys. I waited a pretty good while, but he never came back. I guess he figured he couldn't make any money off of me. I left there and went to a Toyota place. We found just what my wife wanted and the list price was $24,500. We negotiated a little bit and I wrote him a check for $20k. I guess I could afford to buy a lot more expensive car with all the bells and whistles, but I just can't bring myself to do it. Someone will probably be real happy when I die, but I just can't bring myself to spend the money. I'm not saying others shouldn't spend more money if it makes them happy and they can afford it. Different strokes for different folks.
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Re: "Stealth Wealth: I’m Just an Ordinary Average Guy"

Post by PhysicianOnFIRE » Thu Nov 10, 2016 3:49 pm

Levett wrote:I would suggest the first rule of stealth wealth is not to talk about it. :happy

Lev


The first rule of Fight Club is: you do not talk about Fight Club. The second rule of Fight Club is: you do not talk about Fight Club!

I did consider the obvious hypocrisy when I decided to write about my "stealth wealth" in a very public way, so I made the following disclaimer:

[It’s tough to be completely stealthy when you’re building a blog, and writing about financial independence, investing, and wealth creation. For what it’s worth, I’m anonymous to almost all of you, but I can’t very well establish myself as a writer worth reading in the personal finance arena without establishing some credibility as a physician who has achieved financial independence and some level of wealth.]

My parents have a pretty good idea of our net worth, and my brother knows I can afford to retire, because we sometimes drink together and share things we might not otherwise share with one another. Other than that, I don't think anyone that knows me in real life would suspect I'm in a position to retire soon with a six-figure annual spend indefinitely.

:beer
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Re: "Stealth Wealth: I’m Just an Ordinary Average Guy"

Post by stemikger » Thu Nov 10, 2016 3:58 pm

Thanks Taylor I enjoyed reading this.

Me and my 2009 Nissan Versa and paid off townhome agree.
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Re: "Stealth Wealth: I’m Just an Ordinary Average Guy"

Post by Elsebet » Thu Nov 10, 2016 4:10 pm

I keep my cars 15+ years but when I do buy one, I spend enough to buy a brand new one I will truly enjoy driving for 15+ years.
All of my clothes are from thrift stores, I work in IT and no one cares what I look like. I repair/hem/alter those thrift store clothes with a sewing machine.
Limit eating out and enjoy cooking at home.
We truly enjoy doing our own yard/garden maintenance and as much home maintenance as possible. No problems hiring that out when needed.
Grow my own food and share it with co-workers/neighbors.
My friend and I exchange homemade gifts often.

I liken it to living like a small farmer. :)

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Re: "Stealth Wealth: I’m Just an Ordinary Average Guy"

Post by bhsince87 » Thu Nov 10, 2016 4:22 pm

ruralavalon wrote:This is an interesting discussion.

After living frugally for so long when (if ever) do we switch to more comfort or more luxury? Do we want to switch? Why or why not?


Yes, this is exactly what I am struggling with.

Just like Physician On FIRE, I started out spending quite a bit. I always saved and invested, but I also bought BMWs (used at first, then new), bought more house than I should have, some fancy computer and camera stuff. But In my early 30's, I dialed it way back, and found I was just as happy.

My salary increased quite a bit over time, but I avoided the dreaded "lifestyle inflation". Well, except for a little dalliance about 8 years ago, when I had a health scare. That's when I bought MY Mustang convertible! (which I still own, BTW).

And then the proverbial power of compounding kicked in, my salary kept increasing, and all of a sudden it's like, wow, I think I can afford some of this stuff now. But old habits die hard.

I've successfully made the transition from do-it-yourselfer to payer-of-someone-else-to-do-it. I can justify that as buying free time.

I buy higher quality food and beverages, and eat out twice a month (up from near zero). We splurge on a week of vacation each year, and I force myself to spend freely then, with zero guilt.

But these big ticket items are still a hurdle for me. I sometimes wonder if it's a psychological problem, or maybe an innate instinct that I should be thankful for, or something in between. Maybe I'm just overthinking things and need to start yelling YOLO!!
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Re: "Stealth Wealth: I’m Just an Ordinary Average Guy"

Post by Engineer250 » Thu Nov 10, 2016 4:24 pm

RadAudit wrote:
HomerJ wrote:What's interesting, is after 20 years of living the "ordinary average life", you may realize you don't really need much more to be happy.


+1

If you need an expensive new car, expensive new watch, expensive large home in an up-scale neighborhood, .... etc. to be happy, you might want to consider why you need those things.


I know what you are trying to say, and agree that objects usually don't make one happy, but I feel like we all have opinions about what money should be spent on and there is too much judging about what is wasteful and what isn't. Also feel like this "stop wasting your money on X" advice tends to come from people making 4x the US median income. I could easily see how someone unable to afford a lot of comforts others take for granted might really enjoy a really pricey item that other people might see as wasteful. Just a different perspective.

PhysicianOnFIRE wrote:Other than that, I don't think anyone that knows me in real life would suspect I'm in a position to retire soon with a six-figure annual spend indefinitely.


I know a lot of highly paid people living very modestly. I assume they're all making better progress towards retirement than I am. Even the ones with fancier/newer cars but who might eat out less or seem to have greater control over their spending. Maybe people who know you in real life just don't care to be honest. :wink:
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Re: "Stealth Wealth: I’m Just an Ordinary Average Guy"

Post by boglephreak » Thu Nov 10, 2016 4:27 pm

i dont splurge on much. but i do spend that extra dime on international vacations. these are places i will only be visiting once in my life (most likely), and i want to see and experience as much as possible. sometimes that is doable with budget travel, but not always. plus, its vacation, i want to relax and enjoy myself, not fret about maps and bus schedules. so, i agree with all of the points, but i am not "stealth wealth" because i do and will continue to splurge on vacations. other than that, i fit all of the other categories (except possibly a house that is too big, but is well below my means).

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Re: "Stealth Wealth: I’m Just an Ordinary Average Guy"

Post by soboggled » Thu Nov 10, 2016 4:30 pm

So the joker who wrote this article pretends that people don't know he has money?
Pardon me, if you have enough to get through medical school and have been practicing as a private practice physician in this country any length of time, I know darn well you have money, no matter what kind of car you drive and no, you are not just an "ordinary guy".

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Re: "Stealth Wealth: I’m Just an Ordinary Average Guy"

Post by livesoft » Thu Nov 10, 2016 4:31 pm

I wanted to mention something about the car thing. Our Lexus cost much less than the new Hondas, Toyotas, and Chryslers that some of the neighbors drive. Our other car is a Ford, but not for long.

And the house thing: Our McMansion cost less that $200K. Yep, less than $65 per sq. ft. It's so well built, that utilities are a pittance, too.

And the eating out thing: We eat out a lot because it's so cheap around here to find great healthy food in our local restaurants. Sure, we cook at home often enough (I cooked blackened red snapper for lunch today, free fresh filets from the neighbor), but we don't hesitate to eat out at places where the wait staff know us very well.
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Re: "Stealth Wealth: I’m Just an Ordinary Average Guy"

Post by HomerJ » Thu Nov 10, 2016 4:37 pm

soboggled wrote:no, you are not just an "ordinary guy".


He sounds like an "ordinary guy" to me.

It’s jeans and a tee shirt. It’s watching football with a cold one. It’s mowing your lawn with a cold one. It’s tent camping. Yes, with a cold one, but around a warm fire. It’s basically a country & western song.


I like his style! :sharebeer

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Re: "Stealth Wealth: I’m Just an Ordinary Average Guy"

Post by Grt2bOutdoors » Thu Nov 10, 2016 4:48 pm

Levett wrote:I would suggest the first rule of stealth wealth is not to talk about it. :happy

Lev


+1 I'd take being stealth health any day over stealth wealth. You have your health, you have everything. Stealth wealth does not do much when you are sickly. The best compliment ever said to me "were you in such and such store on this day? why yes, I was. Response from questioner: I would have never recognized you from your appearance" - that is the true mark of being an ordinary guy, blending with the crowd, eating the same good for you food, drinking the same, conversing with the same. And I like it that way. It's the showman that becomes the mark. Don't be the mark. :)
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Re: "Stealth Wealth: I’m Just an Ordinary Average Guy"

Post by PhysicianOnFIRE » Thu Nov 10, 2016 5:15 pm

soboggled wrote:So the joker who wrote this article pretends that people don't know he has money?
Pardon me, if you have enough to get through medical school and have been practicing as a private practice physician in this country any length of time, I know darn well you have money, no matter what kind of car you drive and no, you are not just an "ordinary guy".


True, you know it, but plenty of people are not as well informed.

A lot of people don't know that an anesthesiologist is a medical school grad. Sad, but true. Also, at age 40, I've been out of residency 10 years, but I've got friends my age with the same job with a negative net worth. In some cases, it's lifestyle, but for most, it's a later start and a heavier student loan burden based on the later start and more expensive schools.

I also think there's a cognitive bias that's hard to escape. Ask most acquaintances who's better off - the 43-year old surgeon with the big house on the lake and kids in private school, or the 40-year joker who puts the surgeon's patients to sleep, who has the older house on the river and kids in public school. The former looks richer, but the latter in this case most likely has more wealth.

When I first graduated from residency, I spent a couple years with my fiance / wife traveling and doing locum tenens (temporary) work. More distant family and friends thought I was still doing some kind of "internship" when I was actually working 50 or 60 hours a week at $150 to $200 an hour. I didn't spend in a way that suggested I was making big money, so people assumed I must not be.

If anything gives me away, it's probably the vacations we take. My facebook feed has us in the Galapagos Islands, Hawaii, the Caribbean, and this spring we're taking our boys to Paris and Reykjavik (@ $417 per round trip ticket!). Travel is our biggest splurge, but we find ways to travel without breaking the bank.

:beer
-PoF

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Re: "Stealth Wealth: I’m Just an Ordinary Average Guy"

Post by Toons » Thu Nov 10, 2016 5:59 pm

Wagnerjb wrote:
Taylor Larimore wrote:Following this Philosophy, many Bogleheads now enjoy a substantial net-worth. Nevertheless, the way we spend our money can make a huge difference in our happiness and future wealth. This article from Physician On Fire offers food-for-thought:

Stealth Wealth

I look forward to reading about your personal life-style.



Taylor: I disagree with the philosophy of stealth wealth. If you can afford the better things in life, then why deny yourself? If you can afford a Lexus (and want one), then why not? If you can afford to buy your wife that $10,000 diamond watch for your 30th wedding anniversary, then why not? If you can afford to stay at the Ritz Carlton in Maui to celebrate your retirement, then why not? If you can afford to relax and play golf or tennis on Saturday - while the yard service is mowing your lawn and the pool service is cleaning your pool - then why not?

You work hard all your life to be able to enjoy the fruits of your labor. Once you have "won the game", by all means enjoy it. Don't flaunt it in front of others who are not at your level, but by all means treat yourself. I just don't understand this self denial stuff.

If driving an old beat up Ford pickup truck is what makes you happy, by all means go for it. But don't belittle those enjoying the Mercedes they have always dreamed of being able to afford.

Best wishes.


+1
:sharebeer
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Re: "Stealth Wealth: I’m Just an Ordinary Average Guy"

Post by ausgenf » Thu Nov 10, 2016 6:15 pm

I have ordinary average guy's tastes, so it is no sacrifice to remain stealth.

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Re: "Stealth Wealth: I’m Just an Ordinary Average Guy"

Post by Johnnie » Thu Nov 10, 2016 6:59 pm

The habits described are my habits of a lifetime, partly out of necessity and uncertainty, and partly out of just not caring about expensive lifestyles and stuff (which are not unknown to me). The challenge I'm hopefully on track to facing in a few years is breaking those habits.

Spending money, that is. Indulging in some luxury. Until new habits are in place this will require regularly reminding myself that you can't take it with you.

I would like to give the heirs a nice lift but feel no duty to change their lives.

ETA. I'm sure I'll always prefer the diners where the waitresses calls you "Hon" and a good cheeseburger and fries costs less than $10.
Last edited by Johnnie on Thu Nov 10, 2016 7:11 pm, edited 1 time in total.
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Re: "Stealth Wealth: I’m Just an Ordinary Average Guy"

Post by randomguy » Thu Nov 10, 2016 7:09 pm

PhysicianOnFIRE wrote:
soboggled wrote:So the joker who wrote this article pretends that people don't know he has money?
Pardon me, if you have enough to get through medical school and have been practicing as a private practice physician in this country any length of time, I know darn well you have money, no matter what kind of car you drive and no, you are not just an "ordinary guy".


True, you know it, but plenty of people are not as well informed.

A lot of people don't know that an anesthesiologist is a medical school grad. Sad, but true. Also, at age 40, I've been out of residency 10 years, but I've got friends my age with the same job with a negative net worth. In some cases, it's lifestyle, but for most, it's a later start and a heavier student loan burden based on the later start and more expensive schools.

I also think there's a cognitive bias that's hard to escape. Ask most acquaintances who's better off - the 43-year old surgeon with the big house on the lake and kids in private school, or the 40-year joker who puts the surgeon's patients to sleep, who has the older house on the river and kids in public school. The former looks richer, but the latter in this case most likely has more wealth.

When I first graduated from residency, I spent a couple years with my fiance / wife traveling and doing locum tenens (temporary) work. More distant family and friends thought I was still doing some kind of "internship" when I was actually working 50 or 60 hours a week at $150 to $200 an hour. I didn't spend in a way that suggested I was making big money, so people assumed I must not be.

If anything gives me away, it's probably the vacations we take. My facebook feed has us in the Galapagos Islands, Hawaii, the Caribbean, and this spring we're taking our boys to Paris and Reykjavik (@ $417 per round trip ticket!). Travel is our biggest splurge, but we find ways to travel without breaking the bank.

:beer
-PoF


I always like when people in the top 2% or so of income think of themselves as ordinary:) I might share that delusion but I am regularly reminded about how far off I am when talking to people only in the top 25% or so of income.. I think you will find most people overestimate Doctors income rather than the other way. In my experience they all seem to think that family practice doctors for example are making anesthesiologist salary's and none of them think about med school debt. Yes casusal people (i.e. people you meet walking down the street) might have no clue of your wealth. But pretty much all of the people that know your career have to figure you are either rich or incompent. Your bias is showing when you compare yourself to some surgeon while the average person is going to be comparing you to their 50k salary. Heck I bet your impression of what an average joe is is probably off by quite a bit. You could google what the average income is for your metro area and ask yourself what percentages of your "Friends" are 30k+ above that number and are probably upper middle class more than middle class.

This baseline changes everything. Show up just about anywhere in the silicon valley with a BMW 3 series, and zero people are going to notice/think your rich. Do that in Clarks, LA (Median household income of 14k), and yeah a lot of people are going to think your rich. Actually most just don't care. Only a small subset of people (and the people that don't buy it seem to be over represented in this group) care what other people do. Most are far more focused on their own lives to care about what you do with your money.

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Re: "Stealth Wealth: I’m Just an Ordinary Average Guy"

Post by Slacker » Thu Nov 10, 2016 8:14 pm

We lived in an upper middle class neighborhood. There was quite a bit of displays of spending - I didn't enjoy that aspect of the neighborhood.

We turned the house into a rental property (who would have thought a half-million dollar house could turn into a profitable rental property? Guess it helps that there are plenty of 3/4 million dollar homes in the neighborhood too.)

Now we live in a neighborhood where most everything is "ordinary". The homes cost around $140K to $180K. There are no extravagant displays of trying to outspend eachother. I also find that all of the neighbors are just as friendly as the neighbors in the expensive neighborhood and it is as quiet and safe feeling as the more expensive neighborhood. Are we more well off than our neighbors? Perhaps, but maybe others in the neighborhood are in our same situation and would rather downplay their incomes because gratuitous spending just doesn't do it for us.

We have 4x the US median household income.
We own one 5 year old compact car.
We do enjoy eating out, but nothing fancy (prefer local mom and pop type places).
I don't really do jeans and a t-shirt at this time, living in the Phoenix area it is more like shorts, flip flops and a tank-top.
Watch / Jewelry? I have no use for either, but I'd likely buy a Casio or Timex if I did need a watch. My Cellphone works fine as a watch. Our wedding bands were each less than $200. Not really a fan of diamonds - way over blown price that you can never get back and murky ethics involved in diamonds.
McMansion story is told above. Now we live in still a large home, but cost effective (and it is helping to slowly help us realize we can be just fine in an even smaller place - started at 3800sq ft, now in 2800sq ft and hoping to be in 2000 to 2200 sq ft after the current lease is up).

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Re: "Stealth Wealth: I’m Just an Ordinary Average Guy"

Post by IlliniDave » Thu Nov 10, 2016 8:24 pm

I admit I didn't read the article, but I'm probably in the stealth wealth category, at least stealth moderate wealth. It's not something I do on purpose to disguise things, it's just that my tastes have always been relatively simple and I don't have a huge urge to spend money just because I can. I've opted to pursue the early retirement route and enjoy my humble lifestyle with a lot of freedom.
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Re: "Stealth Wealth: I’m Just an Ordinary Average Guy"

Post by HIinvestor » Thu Nov 10, 2016 8:33 pm

Yes, we and many of the people I know have stealth wealth. Looking at them and talking to them, you'd never guess that they have 6 figures of income per year and a net worth of 7 or more figures. They drive regular, reliable cars until they decide it's time to swap them for a newer used car or even a new car. Mostly, they aren't about bling, flash and dash. They do travel, especially to see family and loved ones, but otherwise appear quite "low key," and "down to earth."

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Re: "Stealth Wealth: I’m Just an Ordinary Average Guy"

Post by TRC » Thu Nov 10, 2016 8:40 pm

I like fancy cars and expensive things, but I pay cash. To each his/her own! Life is too short to die with a gigantic pile of cash and never enjoy what you work for.

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Re: "Stealth Wealth: I’m Just an Ordinary Average Guy"

Post by AllieTB1323 » Thu Nov 10, 2016 9:05 pm

HIinvestor wrote:Yes, we and many of the people I know have stealth wealth. Looking at them and talking to them, you'd never guess that they have 6 figures of income per year and a net worth of 7 or more figures. They drive regular, reliable cars until they decide it's time to swap them for a newer used car or even a new car. Mostly, they aren't about bling, flash and dash. They do travel, especially to see family and loved ones, but otherwise appear quite "low key," and "down to earth."


+1

Retired, we like to travel but don't spend much on bling; there isn't much reason to try to impress anyone. We live in the home purchased in 1988, drive a 2008 Accord, 2009 Chex pickup and sometimes an old 1994 Corvette.

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