The Millionaire Next Door and civil servants

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MnD
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Re: The Millionaire Next Door and civil servants

Post by MnD » Tue May 22, 2018 7:09 pm

randomguy wrote:
Tue May 22, 2018 7:00 pm
MnD wrote:
Tue May 22, 2018 6:26 pm
randomguy wrote:
Tue May 22, 2018 5:45 pm
djpeteski wrote:
Tue May 22, 2018 10:05 am

Some of the criticism that I read here, is decent, but it ignores the fundamental truths of these books. Namely: those that actually have money, tend not to look like they do; and, those that look rick are probably broke.
That isn't remotely a fundamental truth. It is a fairy tale that appeals to a lot of people.
I'm livin the fairy tale! Wear Kohl's shirts and Wrangler jeans to work and off-work clothes are in the same ballpark.
Owned/driven 3 compact/midsize pickups in my lifetime - 77 Datsun, 89 Mazda, 05 Toyota.
Mountain bike I ride ~250 days a year is 1993 I think. Still living in the 1951 starter home we bought in out late 20's almost 27 years ago for $100K. Decent SF and the lot size especially puts new homes to shame - so why move? Big spender items including buying my work lunch most days ($8-$10) and we have a fair number of streaming TV subscriptions that replaced cable. Multi-million financial net worth plus vested in a civil service pension with net present value around $1M. No debt of any kind.
Tell you what. We will survey the net worth of 10000 1989 mazda owners and the net worth of 10000 2018 911 owners. How much money would you bet on the 1989 Mazda owners having a higher average net worth? :) People that look rich tend to be rich. There are exceptions at both ends. But those are the exceptions not the rule.
Well in all fairness I did sell my 1989 Mazda pickup in 2005 when I bought the 05 Tacoma so we should probably survey 2005 Tacoma owners against 2018 911 owners. The guy paid cash for my 16-year old 1989 Mazda and totaled it 3 days later! :annoyed

frugalecon
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Re: The Millionaire Next Door and civil servants

Post by frugalecon » Tue May 22, 2018 7:09 pm

randomguy wrote:
Tue May 22, 2018 5:45 pm
djpeteski wrote:
Tue May 22, 2018 10:05 am

Some of the criticism that I read here, is decent, but it ignores the fundamental truths of these books. Namely: those that actually have money, tend not to look like they do; and, those that look rick are probably broke.
That isn't remotely a fundamental truth. It is a fairy tale that appeals to a lot of people.
I think it is fair to say that appearances can be deceiving, in both directions.

But there is some information in appearances. Most people who look broke probably are, and many people who look rich probably are.
Last edited by frugalecon on Tue May 22, 2018 8:04 pm, edited 1 time in total.

stuper1
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Re: The Millionaire Next Door and civil servants

Post by stuper1 » Tue May 22, 2018 7:15 pm

I'd say that the fundamental truth of the book is slightly weaker but still very significant:

Just because you look poor or rich doesn't mean that you are.

Also, if you were not born into money, you can still end up wealthy if you are wise.

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munemaker
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Re: The Millionaire Next Door and civil servants

Post by munemaker » Tue May 22, 2018 7:29 pm

randomguy wrote:
Tue May 22, 2018 7:00 pm
People that look rich tend to be rich.
Many are "All hat, no cattle." You can't tell someone's net worth by looking at their car, their house or their clothing.

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AstroJohn
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Re: The Millionaire Next Door and civil servants

Post by AstroJohn » Tue May 22, 2018 7:36 pm

Tell you what. We will survey the net worth of 10000 1989 mazda owners and the net worth of 10000 2018 911 owners. How much money would you bet on the 1989 Mazda owners having a higher average net worth? :) People that look rich tend to be rich. There are exceptions at both ends. But those are the exceptions not the rule.
"Millionaire" attorney around the corner from my modest house had it repossessed a few months ago. I'm not sure if he still has the 911. Don't know about 1989 Mazda owners, but would like to think 2006 Honda Civic owners like me are well up there. :D

Seriously, though, I firmly believe that most of us on this site are not about accumulating as much as we can. We are about having enough to live a comfortable life and perhaps pass some on to our children or a charity that we care deeply about.

randomguy
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Re: The Millionaire Next Door and civil servants

Post by randomguy » Tue May 22, 2018 7:58 pm

munemaker wrote:
Tue May 22, 2018 7:29 pm
randomguy wrote:
Tue May 22, 2018 7:00 pm
People that look rich tend to be rich.
Many are "All hat, no cattle." You can't tell someone's net worth by looking at their car, their house or their clothing.
I can't tell someones net worth by looking at a house, car, or clothing. I can however look at 10k people and their clothes, cars and housing and make a good estimates. The idea that people that look rich are likely broke is just wrong. If it was true, we would adapt.

As for if it is "many" or "very few", the evidence I have seen suggests it is very few. When you look at sales data for things like high end cars and the like, the expensive models that rich people buy are supported by income. The average 911 buyer for example makes something like 350k/year. It is the entry level models that have aspirational sales. People stretch to buy a 3 series a lot more than they do for an AMG GT.

And in the end a lot of the issues comes down to a misconception of what a millionaire and what rich is. If you think a millionaire is a guy driving an exotic, being a member of the country club, having live in help and so on, you might be surprised. If you think of the millionaire next door as the guy who worked job making 100k/year for 40 years, you aren't shocked when they are driving normal cars.

frugalecon
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Re: The Millionaire Next Door and civil servants

Post by frugalecon » Tue May 22, 2018 8:09 pm

randomguy wrote:
Tue May 22, 2018 7:58 pm
munemaker wrote:
Tue May 22, 2018 7:29 pm
randomguy wrote:
Tue May 22, 2018 7:00 pm
People that look rich tend to be rich.
Many are "All hat, no cattle." You can't tell someone's net worth by looking at their car, their house or their clothing.
I can't tell someones net worth by looking at a house, car, or clothing. I can however look at 10k people and their clothes, cars and housing and make a good estimates. The idea that people that look rich are likely broke is just wrong. If it was true, we would adapt.

As for if it is "many" or "very few", the evidence I have seen suggests it is very few. When you look at sales data for things like high end cars and the like, the expensive models that rich people buy are supported by income. The average 911 buyer for example makes something like 350k/year. It is the entry level models that have aspirational sales. People stretch to buy a 3 series a lot more than they do for an AMG GT.

And in the end a lot of the issues comes down to a misconception of what a millionaire and what rich is. If you think a millionaire is a guy driving an exotic, being a member of the country club, having live in help and so on, you might be surprised. If you think of the millionaire next door as the guy who worked job making 100k/year for 40 years, you aren't shocked when they are driving normal cars.
Indeed, a million ain’t what it used to be. I am a civil servant, married to another civil servant, making a decent combined household income, and a millionaire a couple of times over. But although we are comfortable, I hardly consider us rich in financial times, and we will need to work some more years to really be set. (That said, I consider my life to be rich in all of the non-pecuniary ways.)

GCD
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Re: The Millionaire Next Door and civil servants

Post by GCD » Tue May 22, 2018 8:19 pm

munemaker wrote:
Tue May 22, 2018 10:46 am
djpeteski wrote:
Tue May 22, 2018 10:05 am
Civil servants are like anyone else.
Not exactly. They have large defined benefit pensions that are becoming less and less common in the private sector.
The fed DB pensions are nice. But they are also getting whittled down as described by MnD. Most professional fed jobs are also underpaid. My personal experience as a ret Fed with a JD is that it has probably been a wash. It looks like I could have bought an annuity that pays what my pension does for $900,000. My class rank peers in private law (not big law) made 100K to 200K more than me annually for the last decade. Assuming no lifestyle creep, (and given my savings personality) it seems reasonable to say that, for me, civil service vs. private sector has been close to a wash. Still, getting a fed job is a life choice and some choices are better than others. Kind of like going into any other profession.

My wife is CSRS, I'm FERS. We continue to LBYM on our pensions and contribute to taxable accounts. After the kids are out of HS I may finally buy some big ticket items. In the meantime, our TSP accounts don't nearly tell the whole story.

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TimeRunner
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Re: The Millionaire Next Door and civil servants

Post by TimeRunner » Tue May 22, 2018 8:43 pm

One other point: I am proud of my federal work and the mission of my Agency. We did excellent work in public service. Whatever the delta was between private sector and public, I feel content in knowing that we made a positive difference. Sometimes it's not all about the money. :)
One cannot enlighten the unconscious. | "I like people - I just don't want to be around 'em." - Russell Gordy

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VictoriaF
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Re: The Millionaire Next Door and civil servants

Post by VictoriaF » Wed May 23, 2018 1:45 pm

TimeRunner wrote:
Tue May 22, 2018 8:43 pm
One other point: I am proud of my federal work and the mission of my Agency. We did excellent work in public service. Whatever the delta was between private sector and public, I feel content in knowing that we made a positive difference. Sometimes it's not all about the money. :)
I share your sentiment, TimeRunner!

Victoria
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willthrill81
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Re: The Millionaire Next Door and civil servants

Post by willthrill81 » Wed May 23, 2018 2:15 pm

munemaker wrote:
Tue May 22, 2018 7:29 pm
randomguy wrote:
Tue May 22, 2018 7:00 pm
People that look rich tend to be rich.
Many are "All hat, no cattle." You can't tell someone's net worth by looking at their car, their house or their clothing.
Queue the typical 35 year old M.D. who has a big home, multiple new vehicles, nice clothes, and takes exotic vacations, yet has a net worth in the negative six figures.

I believe that White Coat Investor says that around 20% of M.D.s at age 60 have a net worth under $300k, barely more than the median household net worth for 65-69 year olds in the U.S.

But I also see randomguy's point: there is clearly a correlation between a person's net worth and their visible possessions, though it is far from a perfect one.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

student
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Re: The Millionaire Next Door and civil servants

Post by student » Wed May 23, 2018 2:27 pm

willthrill81 wrote:
Wed May 23, 2018 2:15 pm
I believe that White Coat Investor says that around 20% of M.D.s at age 60 have a net worth under $300k, barely more than the median household net worth for 65-69 year olds in the U.S.
I found this surprising but after checking the data, it is not too far off, if any.
https://www.beckersasc.com/asc-turnarou ... y-age.html

Net worth 60 years to 64 years old

● Under $500,000: 12 percent
● $500,000 to $999,999: 16 percent
● $1 million to $1.9 million: 28 percent
● $2 million to $5 million: 32 percent
● More than $5 million: 11 percent

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willthrill81
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Re: The Millionaire Next Door and civil servants

Post by willthrill81 » Wed May 23, 2018 2:31 pm

student wrote:
Wed May 23, 2018 2:27 pm
willthrill81 wrote:
Wed May 23, 2018 2:15 pm
I believe that White Coat Investor says that around 20% of M.D.s at age 60 have a net worth under $300k, barely more than the median household net worth for 65-69 year olds in the U.S.
I found this surprising but after checking the data, it is not too far off, if any.
https://www.beckersasc.com/asc-turnarou ... y-age.html

Net worth 60 years to 64 years old

● Under $500,000: 12 percent
● $500,000 to $999,999: 16 percent
● $1 million to $1.9 million: 28 percent
● $2 million to $5 million: 32 percent
● More than $5 million: 11 percent
Over half of M.D.s having a net worth under $2 million at age 60-64 is amazing. A $2 million portfolio can be achieved with $2,500 investment monthly for 30 years at a 5% real return.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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munemaker
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Re: The Millionaire Next Door and civil servants

Post by munemaker » Wed May 23, 2018 6:05 pm

randomguy wrote:
Tue May 22, 2018 7:58 pm
When you look at sales data for things like high end cars and the like, the expensive models that rich people buy are supported by income. The average 911 buyer for example makes something like 350k/year. It is the entry level models that have aspirational sales. People stretch to buy a 3 series a lot more than they do for an AMG GT.
In the expression "All hat, no cattle," the cattle are assets, not income. Yes, lots of people have high income but are not wealthy.

Here are a few things you may notice about people who I would consider to be “All hat, no cattle”:
1. Good salaries
2. Little savings
3. Need validation
4. Own expensive things
5. Love to one-up others
6. Have to dress a specific way

reference: https://www.moneymozart.com/how-to-iden ... real-rich/

MnD
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Re: The Millionaire Next Door and civil servants

Post by MnD » Wed May 23, 2018 6:11 pm

Here's my co-workers back doctor although not anymore in light of her recent legal and financial problems.

http://www.dailycamera.com/news/boulder ... tcy-scheme
A Boulder spinal surgeon was arrested this week after being indicted by a federal grand jury on allegations she hid more than $200,000 in personal assets in a bankruptcy scheme. Cathleen Van Buskirk was indicted Dec. 4 on charges of bankruptcy fraud, concealment of bankruptcy assets, fraudulent transfer and concealment, and money laundering, according to court records. She was arrested Wednesday.

In a 2011 profile published by The Denver Post, Van Buskirk is described as living in Erie with a home that backed up the airport so she could fly her "gleaming Cirrus Turbo SR-22 single-engine airplane with advanced avionics." In that story, Van Buskirk also discussed owning a Porsche Boxster, a Range Rover and a Vespa scooter that she kept in the hangar at her house, which she called "Enticement Alley."

randomguy
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Re: The Millionaire Next Door and civil servants

Post by randomguy » Wed May 23, 2018 6:58 pm

munemaker wrote:
Wed May 23, 2018 6:05 pm
randomguy wrote:
Tue May 22, 2018 7:58 pm
When you look at sales data for things like high end cars and the like, the expensive models that rich people buy are supported by income. The average 911 buyer for example makes something like 350k/year. It is the entry level models that have aspirational sales. People stretch to buy a 3 series a lot more than they do for an AMG GT.
In the expression "All hat, no cattle," the cattle are assets, not income. Yes, lots of people have high income but are not wealthy.

Here are a few things you may notice about people who I would consider to be “All hat, no cattle”:
1. Good salaries
2. Little savings
3. Need validation
4. Own expensive things
5. Love to one-up others
6. Have to dress a specific way

reference: https://www.moneymozart.com/how-to-iden ... real-rich/
Unfortunately I have never seen a survey linking assets to car ownership. In general assets are a much harder number to lock down than income.

I don't disagree with your list or those type of people. The objection was the assertion that "those that look rick are probably broke. ". Take your list. Our current POTUS (famous person we all know. Not a political commentary) pretty much fulfills 5 out of 6. I would say he has a decent amount of cattle:).

randomguy
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Re: The Millionaire Next Door and civil servants

Post by randomguy » Wed May 23, 2018 7:15 pm

willthrill81 wrote:
Wed May 23, 2018 2:31 pm

Over half of M.D.s having a net worth under $2 million at age 60-64 is amazing. A $2 million portfolio can be achieved with $2,500 investment monthly for 30 years at a 5% real return.
Saving 30k/year when you are making <100k is a lot (i.e. starting doctors salaries 30 years ago). Even today there are tons of doctors in the 150-200k range (i.e. most GP, peds and the like). Through in a 100k or so of med school debt and not starting working til 30, and I am not horribly shocked. Now if you marry well, all bets are off:) And will half of them were under 2 million, 71% were millionaires. Compare that to the national average of ~15%.

Read the referred to article and the average doctor is saving close to 20%. That is very high for a large population in the US. There is a subset saving <10%. And 60% of the doctors say they LBYM and people would be surprised at how much they are worth:).

With all stats like this it is hard to know how to interpert them. Knowing what the numbers look like for say engineers, accountants, lawyers, MBAs, oil workers and so on would provide a lot of context. I have a feeling that we would find that doctors fall pretty much in line with other professionals. Lots of winners and some incredible losers.

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willthrill81
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Re: The Millionaire Next Door and civil servants

Post by willthrill81 » Wed May 23, 2018 7:28 pm

randomguy wrote:
Wed May 23, 2018 7:15 pm
willthrill81 wrote:
Wed May 23, 2018 2:31 pm

Over half of M.D.s having a net worth under $2 million at age 60-64 is amazing. A $2 million portfolio can be achieved with $2,500 investment monthly for 30 years at a 5% real return.
Saving 30k/year when you are making <100k is a lot (i.e. starting doctors salaries 30 years ago). Even today there are tons of doctors in the 150-200k range (i.e. most GP, peds and the like). Through in a 100k or so of med school debt and not starting working til 30, and I am not horribly shocked. Now if you marry well, all bets are off:) And will half of them were under 2 million, 71% were millionaires. Compare that to the national average of ~15%.

Read the referred to article and the average doctor is saving close to 20%. That is very high for a large population in the US. There is a subset saving <10%. And 60% of the doctors say they LBYM and people would be surprised at how much they are worth:).

With all stats like this it is hard to know how to interpert them. Knowing what the numbers look like for say engineers, accountants, lawyers, MBAs, oil workers and so on would provide a lot of context. I have a feeling that we would find that doctors fall pretty much in line with other professionals. Lots of winners and some incredible losers.
I was thinking more in line with what would be possible in other professions, particularly where one isn't age 30 or beyond when you're just getting your career underway with the headwind of hundreds of thousands in student loans to repay. A family with $100k household income outside of the highest COL areas can definitely save $30k annually (though much of that may be tax-deferred, the point remains) if they really want to, and even if they don't start doing so until age 30, by age 60 they would be ahead of the majority of physicians; an earlier start will obviously put them even further ahead. If they wanted to do it hardcore-MMM style, a family making as little as the median household income of around $60k might be able save $30 annually, especially if they're in a LCOL area.

Having a very strong income certainly helps a lot when it comes to building assets, but it's far from requisite.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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munemaker
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Re: The Millionaire Next Door and civil servants

Post by munemaker » Wed May 23, 2018 8:33 pm

randomguy wrote:
Wed May 23, 2018 6:58 pm
munemaker wrote:
Wed May 23, 2018 6:05 pm
randomguy wrote:
Tue May 22, 2018 7:58 pm
When you look at sales data for things like high end cars and the like, the expensive models that rich people buy are supported by income. The average 911 buyer for example makes something like 350k/year. It is the entry level models that have aspirational sales. People stretch to buy a 3 series a lot more than they do for an AMG GT.
In the expression "All hat, no cattle," the cattle are assets, not income. Yes, lots of people have high income but are not wealthy.

Here are a few things you may notice about people who I would consider to be “All hat, no cattle”:
1. Good salaries
2. Little savings
3. Need validation
4. Own expensive things
5. Love to one-up others
6. Have to dress a specific way

reference: https://www.moneymozart.com/how-to-iden ... real-rich/
Unfortunately I have never seen a survey linking assets to car ownership. In general assets are a much harder number to lock down than income.

I don't disagree with your list or those type of people. The objection was the assertion that "those that look rick are probably broke. ". Take your list. Our current POTUS (famous person we all know. Not a political commentary) pretty much fulfills 5 out of 6. I would say he has a decent amount of cattle:).
I am thinking of numerous professional athletes that make very high salaries but spend it frivolously on cars, booze and women (and then waste the rest). Or perhaps that percentage of physicians in the above post who presumably earn high incomes but have relatively little later in life to show for it.

randomguy
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Re: The Millionaire Next Door and civil servants

Post by randomguy » Wed May 23, 2018 9:44 pm

munemaker wrote:
Wed May 23, 2018 8:33 pm
randomguy wrote:
Wed May 23, 2018 6:58 pm
munemaker wrote:
Wed May 23, 2018 6:05 pm
randomguy wrote:
Tue May 22, 2018 7:58 pm
When you look at sales data for things like high end cars and the like, the expensive models that rich people buy are supported by income. The average 911 buyer for example makes something like 350k/year. It is the entry level models that have aspirational sales. People stretch to buy a 3 series a lot more than they do for an AMG GT.
In the expression "All hat, no cattle," the cattle are assets, not income. Yes, lots of people have high income but are not wealthy.

Here are a few things you may notice about people who I would consider to be “All hat, no cattle”:
1. Good salaries
2. Little savings
3. Need validation
4. Own expensive things
5. Love to one-up others
6. Have to dress a specific way

reference: https://www.moneymozart.com/how-to-iden ... real-rich/
Unfortunately I have never seen a survey linking assets to car ownership. In general assets are a much harder number to lock down than income.

I don't disagree with your list or those type of people. The objection was the assertion that "those that look rick are probably broke. ". Take your list. Our current POTUS (famous person we all know. Not a political commentary) pretty much fulfills 5 out of 6. I would say he has a decent amount of cattle:).
I am thinking of numerous professional athletes that make very high salaries but spend it frivolously on cars, booze and women (and then waste the rest). Or perhaps that percentage of physicians in the above post who presumably earn high incomes but have relatively little later in life to show for it.

Sure but they are about like the bum that turns out to be worth 5 million dollars. They exist but they are the exception not the rule. If I see someone passed out in the street with torn clothes, going "hmm he must be rich since he is spending so little on clothes and housing" probably isn't the best assumption to make. You look at the average person buying these luxury items, they are not 20 year old ballers/youtube sensations. They are 40-60 year old high end professionals who have their who have their live in order and for whom buying them is still living below their means. Again there are some aspiration people that buy too much. But it isn't remotely at a high enough level that if you see someone driving a high end car that the odds favor them being broke.

EddyB
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Re: The Millionaire Next Door and civil servants

Post by EddyB » Wed May 23, 2018 10:42 pm

GCD wrote:
Tue May 22, 2018 8:19 pm
munemaker wrote:
Tue May 22, 2018 10:46 am
djpeteski wrote:
Tue May 22, 2018 10:05 am
Civil servants are like anyone else.
Not exactly. They have large defined benefit pensions that are becoming less and less common in the private sector.
The fed DB pensions are nice. But they are also getting whittled down as described by MnD. Most professional fed jobs are also underpaid. My personal experience as a ret Fed with a JD is that it has probably been a wash. It looks like I could have bought an annuity that pays what my pension does for $900,000. My class rank peers in private law (not big law) made 100K to 200K more than me annually for the last decade. Assuming no lifestyle creep, (and given my savings personality) it seems reasonable to say that, for me, civil service vs. private sector has been close to a wash. Still, getting a fed job is a life choice and some choices are better than others. Kind of like going into any other profession.
I don’t know anything about your salary, practice area or experience, but the various surveys I’ve come across put the median late-career attorney salary in the $140k-$180k range, with the 90th percentile for late-career attorneys at not quite $250k (according to payscale.com). So, I have to wonder whether you’re deceiving yourself about thinking that an extra $100k or $200k is a fair comparison, or is instead a comparison against people who have had more than typical success, in jobs that aren’t really comparable to yours. Most of the fed lawyers I know are in agencies that aren’t on the GS scale, and factoring locality pay, they’re making close the $250k. While many of them could leave for private practice to make more money, I have significant doubts that the majority of them could tolerate it for very long—and you have to make that extra money over a fairly long term to have it replace the pension, the medical benefit, etc. Not trying to derail the thread, your post just made me wonder how many fed lawyers would really make $100k to $200k more in private practice, for the long haul.

WanderingDoc
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Re: The Millionaire Next Door and civil servants

Post by WanderingDoc » Wed May 23, 2018 10:59 pm

My impression is, that civilian doctors (I guess they use FERS) vs. military doctors, both working in a military hospital. The former are much better off in terms of the TSP/401k. A civilian doctor may get payed $400K in the military setting, lets say they max their 401k contribution and get the 5% match, which would be an additional $18.5K in matching contributions!! The active duty physician only gets a 5% match of their base pay, which may only be $4K in matching contributions.

I had always thought this is unfair, since the military physician is getting payed less even adjusting for a the lower tax liability, AND has the potential of being deployed in harms way. Both do the same exact same work at the hospital.
Nestegg_User wrote:
Sun May 20, 2018 7:11 pm
....but today’s FERS employees (those recently hired) are paying almost 5%/yr of salary to get a pension of 1%*(high three)*yrs of service to get it {so they are paying a significant amount towards it} (that has an effect on ability to save additional outside of 401k/Thrift, ie fewer are fully matching much less saving significant amounts in taxable unless they are higher grades or have spouse working a good job as well)

[that and most “professional” series are significantly (20-25%) underpaid relative to private sector; so some of the matching could be considered to be trying to offset that.
(lower series are more equivalent (and a few are higher))]

note that in the past, some professional series in the private sector ALSO got pensions (wholly paid by employer), such as engineers, scientists, etc ; this is quite rare today
Rent where you live, buy where others pay your mortgage for you. | I'm not looking to get rich quick, I'm not looking to get rich slow, I'm looking to get rich.. for sure.

WanderingDoc
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Re: The Millionaire Next Door and civil servants

Post by WanderingDoc » Wed May 23, 2018 11:12 pm

nova1968 wrote:
Tue May 22, 2018 7:31 am
There actually are several thousand millionaires that are civil Servants.

https://federalnewsradio.com/mike-cause ... tion-boom/


So where do you stand in the race to a million dollar-plus nest egg? At the end of last year, 2.8 million TSP participants had $50,000 or less in their accounts.
•1,458,820 had accounts valued at between $50,000 and $249,000
•453,353 had accounts ranging between $250,000 and $499,000
•148,271 had between $500,000 and $749,000
•54,735 had accounts worth between $750,000 and $999,000
•23,962 had $1 million or more
I'm assuming this includes all TSP participants, active duty and civilian?
Rent where you live, buy where others pay your mortgage for you. | I'm not looking to get rich quick, I'm not looking to get rich slow, I'm looking to get rich.. for sure.

WanderingDoc
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Re: The Millionaire Next Door and civil servants

Post by WanderingDoc » Wed May 23, 2018 11:20 pm

randomguy wrote:
Tue May 22, 2018 7:00 pm
MnD wrote:
Tue May 22, 2018 6:26 pm
randomguy wrote:
Tue May 22, 2018 5:45 pm
djpeteski wrote:
Tue May 22, 2018 10:05 am

Some of the criticism that I read here, is decent, but it ignores the fundamental truths of these books. Namely: those that actually have money, tend not to look like they do; and, those that look rick are probably broke.
That isn't remotely a fundamental truth. It is a fairy tale that appeals to a lot of people.
I'm livin the fairy tale! Wear Kohl's shirts and Wrangler jeans to work and off-work clothes are in the same ballpark.
Owned/driven 3 compact/midsize pickups in my lifetime - 77 Datsun, 89 Mazda, 05 Toyota.
Mountain bike I ride ~250 days a year is 1993 I think. Still living in the 1951 starter home we bought in out late 20's almost 27 years ago for $100K. Decent SF and the lot size especially puts new homes to shame - so why move? Big spender items including buying my work lunch most days ($8-$10) and we have a fair number of streaming TV subscriptions that replaced cable. Multi-million financial net worth plus vested in a civil service pension with net present value around $1M. No debt of any kind.
Tell you what. We will survey the net worth of 10000 1989 mazda owners and the net worth of 10000 2018 911 owners. How much money would you bet on the 1989 Mazda owners having a higher average net worth? :) People that look rich tend to be rich. There are exceptions at both ends. But those are the exceptions not the rule.

I was also a bit skeptical of this after reading the book. Take a 22 year single mother in Camden, NJ on food stamps, and take the Beverly Hills commercial real estate broker, tell me, who "looks richer" do you think? 8-) I think people enjoy Cinderella stories so they love to believe that was MND said was true.
Rent where you live, buy where others pay your mortgage for you. | I'm not looking to get rich quick, I'm not looking to get rich slow, I'm looking to get rich.. for sure.

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Re: The Millionaire Next Door and civil servants

Post by texasdiver » Wed May 23, 2018 11:56 pm

Former Fed here.

I worked for the Federal Government for 10 years between 1994 and 2003 and maxed out my TSP during that time. After that I spent some time doing private consulting and then went into teaching. I'm still 10 years from retirement but I already know the following:

1. My TSP balance from my Fed days is just about to cross the $500,000 threshold. I did a few IRA rollovers into it over the years but mostly it is my Federal earnings that I've just let ride over the years. With any luck it will hit 7 figures by the time I retire in 10 years.

2. My COLA'd federal pension from my 1994-2003 work history will start at almost exactly $5000/year in 10 years when I turn 65. Using the 4% rule, that's the equivalent of having saved $125,000.

When I left Federal service back in 2003 I would never had guessed that my TSP balance was potentially going to be 10x the value of my pension from 10 years of employment. But that will very possibly be the case.

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Re: The Millionaire Next Door and civil servants

Post by golfCaddy » Thu May 24, 2018 12:51 am

randomguy wrote:
Tue May 22, 2018 7:58 pm
munemaker wrote:
Tue May 22, 2018 7:29 pm
randomguy wrote:
Tue May 22, 2018 7:00 pm
People that look rich tend to be rich.
Many are "All hat, no cattle." You can't tell someone's net worth by looking at their car, their house or their clothing.
I can't tell someones net worth by looking at a house, car, or clothing. I can however look at 10k people and their clothes, cars and housing and make a good estimates. The idea that people that look rich are likely broke is just wrong. If it was true, we would adapt.

As for if it is "many" or "very few", the evidence I have seen suggests it is very few. When you look at sales data for things like high end cars and the like, the expensive models that rich people buy are supported by income. The average 911 buyer for example makes something like 350k/year. It is the entry level models that have aspirational sales. People stretch to buy a 3 series a lot more than they do for an AMG GT.

And in the end a lot of the issues comes down to a misconception of what a millionaire and what rich is. If you think a millionaire is a guy driving an exotic, being a member of the country club, having live in help and so on, you might be surprised. If you think of the millionaire next door as the guy who worked job making 100k/year for 40 years, you aren't shocked when they are driving normal cars.
Part of this depends on definitions. I would define anyone who makes $350k/year as rich, even if they have a negative net worth. A lot of the people on this board would define rich as only based on net worth instead of income. You could make $350k/year and still spend close to all your income, or be a young, highly compensated lawyer or doctor still paying off student loans. Even if we assume the average 911 buyer is rich, by either income or net worth, the reverse is not necessarily true. It doesn't follow the average rich person buys an exotic car. If you look at one of the more recent Stanley books, Stop Acting Rich, even most decamillionaires don't drive exotics.

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Re: The Millionaire Next Door and civil servants

Post by GCD » Thu May 24, 2018 6:05 am

EddyB wrote:
Wed May 23, 2018 10:42 pm
GCD wrote:
Tue May 22, 2018 8:19 pm
munemaker wrote:
Tue May 22, 2018 10:46 am
djpeteski wrote:
Tue May 22, 2018 10:05 am
Civil servants are like anyone else.
Not exactly. They have large defined benefit pensions that are becoming less and less common in the private sector.
The fed DB pensions are nice. But they are also getting whittled down as described by MnD. Most professional fed jobs are also underpaid. My personal experience as a ret Fed with a JD is that it has probably been a wash. It looks like I could have bought an annuity that pays what my pension does for $900,000. My class rank peers in private law (not big law) made 100K to 200K more than me annually for the last decade. Assuming no lifestyle creep, (and given my savings personality) it seems reasonable to say that, for me, civil service vs. private sector has been close to a wash. Still, getting a fed job is a life choice and some choices are better than others. Kind of like going into any other profession.
I don’t know anything about your salary, practice area or experience, but the various surveys I’ve come across put the median late-career attorney salary in the $140k-$180k range, with the 90th percentile for late-career attorneys at not quite $250k (according to payscale.com). So, I have to wonder whether you’re deceiving yourself about thinking that an extra $100k or $200k is a fair comparison, or is instead a comparison against people who have had more than typical success, in jobs that aren’t really comparable to yours. Most of the fed lawyers I know are in agencies that aren’t on the GS scale, and factoring locality pay, they’re making close the $250k. While many of them could leave for private practice to make more money, I have significant doubts that the majority of them could tolerate it for very long—and you have to make that extra money over a fairly long term to have it replace the pension, the medical benefit, etc. Not trying to derail the thread, your post just made me wonder how many fed lawyers would really make $100k to $200k more in private practice, for the long haul.
You make good points. That's why I tried to narrow the statement a bit by comparing myself to my class rank peers from the same law school. One of my roommates in law school who was brighter and harder working than me has done considerably better, to the tune of $1M+ a year for the last decade or so. Clearly he is not a fair comparison. There were also a few drunks and others that went off the rails. I was trying to use guys that I knew were about the same class rank, work ethic, etc. Parsing these nuances of woulda/coulda/shoulda is clearly not going to be definitive.

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Re: The Millionaire Next Door and civil servants

Post by munemaker » Thu May 24, 2018 6:52 am

golfCaddy wrote:
Thu May 24, 2018 12:51 am
I would define anyone who makes $350k/year as rich, even if they have a negative net worth.
I wouldn't, but if you do, then that changes everything. Certainly people are not driving around in expensive cars, living in mansions or wearing designer clothes if they do not have either high income or high net worth. You have to qualify for the loan and make the monthly payment.

High income don't impress me much. Net worth that is real wealth.

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Re: The Millionaire Next Door and civil servants

Post by ncbill » Thu May 24, 2018 9:14 am

WanderingDoc wrote:
Wed May 23, 2018 10:59 pm
My impression is, that civilian doctors (I guess they use FERS) vs. military doctors, both working in a military hospital. The former are much better off in terms of the TSP/401k. A civilian doctor may get payed $400K in the military setting, lets say they max their 401k contribution and get the 5% match, which would be an additional $18.5K in matching contributions!! The active duty physician only gets a 5% match of their base pay, which may only be $4K in matching contributions.

I had always thought this is unfair, since the military physician is getting payed less even adjusting for a the lower tax liability, AND has the potential of being deployed in harms way. Both do the same exact same work at the hospital.
But how many of those military doctors are still stuck, serving out their ADSO?

My kid already owes 5 years after undergraduate, and is now applying to med school.

Assuming their service branch agrees, that will be another 4 years minimum, after residency, assuming they do no fellowships (more time if they do)

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Re: The Millionaire Next Door and civil servants

Post by VictoriaF » Thu May 24, 2018 10:46 am

munemaker wrote:
Wed May 23, 2018 6:05 pm
randomguy wrote:
Tue May 22, 2018 7:58 pm
When you look at sales data for things like high end cars and the like, the expensive models that rich people buy are supported by income. The average 911 buyer for example makes something like 350k/year. It is the entry level models that have aspirational sales. People stretch to buy a 3 series a lot more than they do for an AMG GT.
In the expression "All hat, no cattle," the cattle are assets, not income. Yes, lots of people have high income but are not wealthy.

Here are a few things you may notice about people who I would consider to be “All hat, no cattle”:
1. Good salaries
2. Little savings
3. Need validation
4. Own expensive things
5. Love to one-up others
6. Have to dress a specific way

reference: https://www.moneymozart.com/how-to-iden ... real-rich/
Your mind is tuned to notice incongruities:
- You notice people with high salaries and low assets; you don't notice people with high salaries and high assets, even as they are the majority.
- You notice people who own expensive things but have negative assets; you don't notice people who own expensive things and have positive assets.
- Likewise, you notice the incongruity of a scruffy laundromat owner who is a millionaire. And you don't notice failed small business owners who have not just become bankrupt but also drained their families' assets.

Victoria
WINNER of the 2015 Boglehead Contest. | Every joke has a bit of a joke. ... The rest is the truth. (Marat F)

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Re: The Millionaire Next Door and civil servants

Post by willthrill81 » Thu May 24, 2018 12:17 pm

golfCaddy wrote:
Thu May 24, 2018 12:51 am
I would define anyone who makes $350k/year as rich, even if they have a negative net worth.
'Rich' is a subjective word, but most people do not define it as having a relatively high income. Most view wealth in terms of assets. I do not view a person making $350k annually but with little net worth to be wealthy, for instance.

If we define rich in terms of income, then if someone loses their job for six months and then gets an equivalent one, they went from rich to dirt poor back to rich? That makes no sense at all.

Keep in mind that income is very context-specific. The median household income is over $80,000 in many U.S. cities, especially on the coasts. Someone making $100k in Manhattan is not likely to be nearly as well off as someone making $60k in a small Midwestern town.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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Re: The Millionaire Next Door and civil servants

Post by Reappraiser104 » Thu May 24, 2018 12:25 pm

I think it should be clarified that Thomas Stanley was a college professor that was on the faculty of several state colleges. He himself was likely the beneficiary of government pensions. The notion that he had a negative view on civil servants or pensions misrepresents the book and the man.

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Re: The Millionaire Next Door and civil servants

Post by munemaker » Thu May 24, 2018 12:41 pm

VictoriaF wrote:
Thu May 24, 2018 10:46 am
munemaker wrote:
Wed May 23, 2018 6:05 pm
randomguy wrote:
Tue May 22, 2018 7:58 pm
When you look at sales data for things like high end cars and the like, the expensive models that rich people buy are supported by income. The average 911 buyer for example makes something like 350k/year. It is the entry level models that have aspirational sales. People stretch to buy a 3 series a lot more than they do for an AMG GT.
In the expression "All hat, no cattle," the cattle are assets, not income. Yes, lots of people have high income but are not wealthy.

Here are a few things you may notice about people who I would consider to be “All hat, no cattle”:
1. Good salaries
2. Little savings
3. Need validation
4. Own expensive things
5. Love to one-up others
6. Have to dress a specific way

reference: https://www.moneymozart.com/how-to-iden ... real-rich/
Your mind is tuned to notice incongruities:
- You notice people with high salaries and low assets; you don't notice people with high salaries and high assets, even as they are the majority.
- You notice people who own expensive things but have negative assets; you don't notice people who own expensive things and have positive assets.
- Likewise, you notice the incongruity of a scruffy laundromat owner who is a millionaire. And you don't notice failed small business owners who have not just become bankrupt but also drained their families' assets.

Victoria
Victoria,

No, I do notice that most people with high income eventually have high assets, and that people who dress shabbily are usually poor. Just saying that the exceptions are significant enough that you really can't draw conclusions about wealth based on appearances.

In our area, the newspaper publishes property owners who are seriously delinquent on their taxes. Some of our friends commented that there must be a business strategy to pay your property taxes late because these people obviously have money. No, there isn't. They just present the illusion of having money.

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Re: The Millionaire Next Door and civil servants

Post by willthrill81 » Thu May 24, 2018 2:54 pm

Reappraiser104 wrote:
Thu May 24, 2018 12:25 pm
I think it should be clarified that Thomas Stanley was a college professor that was on the faculty of several state colleges. He himself was likely the beneficiary of government pensions. The notion that he had a negative view on civil servants or pensions misrepresents the book and the man.
At least today, most universities have moved away from defined benefit plans to defined contribution plans. Few offer pensions anymore.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

Reappraiser104
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Re: The Millionaire Next Door and civil servants

Post by Reappraiser104 » Thu May 24, 2018 3:56 pm

willthrill81 wrote:
Thu May 24, 2018 2:54 pm
Reappraiser104 wrote:
Thu May 24, 2018 12:25 pm
I think it should be clarified that Thomas Stanley was a college professor that was on the faculty of several state colleges. He himself was likely the beneficiary of government pensions. The notion that he had a negative view on civil servants or pensions misrepresents the book and the man.
At least today, most universities have moved away from defined benefit plans to defined contribution plans. Few offer pensions anymore.
You do realize that this book was published over 20 years ago right? He was 52 when the original book was published, after a career in academia (some would call that civil service). I would say the odds are close to 100% that he had a pension. I also think the fact that his book is still being discussed on this forum 20+ years after publication is a testament its quality. Some people will miss the forest through the trees.

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Re: The Millionaire Next Door and civil servants

Post by midareff » Thu May 24, 2018 4:15 pm

"P. 192

Very few millionaires are civil servants, and they have a completely different orientation. They want to be compensated on the basis of performance. "

Twenty-nine years and four months as a a civil servant, and all I wanted to is .. ." be compensated on the basis of performance". Eight promotions and multiple professional certifications later, not to mention being nationally published 7 times, I got my two comma club membership before retirement.

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VictoriaF
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Re: The Millionaire Next Door and civil servants

Post by VictoriaF » Thu May 24, 2018 4:30 pm

munemaker wrote:
Thu May 24, 2018 12:41 pm
VictoriaF wrote:
Thu May 24, 2018 10:46 am
munemaker wrote:
Wed May 23, 2018 6:05 pm
randomguy wrote:
Tue May 22, 2018 7:58 pm
When you look at sales data for things like high end cars and the like, the expensive models that rich people buy are supported by income. The average 911 buyer for example makes something like 350k/year. It is the entry level models that have aspirational sales. People stretch to buy a 3 series a lot more than they do for an AMG GT.
In the expression "All hat, no cattle," the cattle are assets, not income. Yes, lots of people have high income but are not wealthy.

Here are a few things you may notice about people who I would consider to be “All hat, no cattle”:
1. Good salaries
2. Little savings
3. Need validation
4. Own expensive things
5. Love to one-up others
6. Have to dress a specific way

reference: https://www.moneymozart.com/how-to-iden ... real-rich/
Your mind is tuned to notice incongruities:
- You notice people with high salaries and low assets; you don't notice people with high salaries and high assets, even as they are the majority.
- You notice people who own expensive things but have negative assets; you don't notice people who own expensive things and have positive assets.
- Likewise, you notice the incongruity of a scruffy laundromat owner who is a millionaire. And you don't notice failed small business owners who have not just become bankrupt but also drained their families' assets.

Victoria
Victoria,

No, I do notice that most people with high income eventually have high assets, and that people who dress shabbily are usually poor. Just saying that the exceptions are significant enough that you really can't draw conclusions about wealth based on appearances.

In our area, the newspaper publishes property owners who are seriously delinquent on their taxes. Some of our friends commented that there must be a business strategy to pay your property taxes late because these people obviously have money. No, there isn't. They just present the illusion of having money.
munemaker,

When I wrote "you," I did not mean you, munemaker. I was referring to a generic "you," which includes myself. I used to refer to "one" but then decided that it was too formal and started switching to "you," when I remember it.

Noticing incongruities is a common phenomenon identified by psychologists and behavioral economists. Related phenomena are the availability bias when you consider more recent and more vivid events as more likely; and the fallacy of silent evidence when you are not actively seeking contradictory evidence.

As for people creating an illusion of having money, there could be two reasons for that: intentional and unintentional. Some people are just disorganized. They pay bills late, incur various fees, waste money in numerous ways, and unintentionally send a signal that they have so much that don't care. But there is also intentional signaling when you use your clothes, cars, degrees, name dropping, and trophy wives to get respect, business opportunities, and other advantages. It is quite rational for a new college graduate to spend hundreds of dollars on an interview suit and for a new real estate agent to drive a luxury car.

Cheers,
Victoria
WINNER of the 2015 Boglehead Contest. | Every joke has a bit of a joke. ... The rest is the truth. (Marat F)

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Re: The Millionaire Next Door and civil servants

Post by willthrill81 » Thu May 24, 2018 4:50 pm

Reappraiser104 wrote:
Thu May 24, 2018 3:56 pm
willthrill81 wrote:
Thu May 24, 2018 2:54 pm
Reappraiser104 wrote:
Thu May 24, 2018 12:25 pm
I think it should be clarified that Thomas Stanley was a college professor that was on the faculty of several state colleges. He himself was likely the beneficiary of government pensions. The notion that he had a negative view on civil servants or pensions misrepresents the book and the man.
At least today, most universities have moved away from defined benefit plans to defined contribution plans. Few offer pensions anymore.
You do realize that this book was published over 20 years ago right? He was 52 when the original book was published, after a career in academia (some would call that civil service). I would say the odds are close to 100% that he had a pension. I also think the fact that his book is still being discussed on this forum 20+ years after publication is a testament its quality. Some people will miss the forest through the trees.
That's why I said "at least today." I'm fully aware of when the book was published and the author's tenure with universities. Many are under the mistaken belief that defined benefit plans are still the norm in higher education today.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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Re: The Millionaire Next Door and civil servants

Post by golfCaddy » Thu May 24, 2018 5:30 pm

willthrill81 wrote:
Thu May 24, 2018 12:17 pm
golfCaddy wrote:
Thu May 24, 2018 12:51 am
I would define anyone who makes $350k/year as rich, even if they have a negative net worth.
'Rich' is a subjective word, but most people do not define it as having a relatively high income. Most view wealth in terms of assets. I do not view a person making $350k annually but with little net worth to be wealthy, for instance.
You can't claim most people define rich your way without a source. It took me all of 10 seconds to find this press article, which defines rich in terms of income:
About 20% of Americans are upper income, according to Pew Research Center. You might call them "rich."
http://www.businessinsider.com/upper-in ... ate-2017-9

That's why it's best to use unambiguous language: net worth, if that's what you are referring to.

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Re: The Millionaire Next Door and civil servants

Post by BobStrauss » Thu May 24, 2018 5:34 pm

djpeteski wrote:
Tue May 22, 2018 10:05 am
It really doesn't take much to generate wealth in this country, so yea civil servants can do so. Heck investing the average cost of a pack of cigs per day from 18 to 65 will get you about 2 million if that is the only investing you did. Do the same thing for an average car payment and you end up with like 12 million.
I don’t think the numbers are right here. A $5 pack a day habit, over the course of 47 years, is $1825 annually. Invested with a real return of let’s say 3% and you’re at $189k. At 5% real it’s $341k. The average car payment these days is about $500 per month or $6000 annually. At 3% over 47 years that’s $620k, or $1.12 million at 5%.

Still a lot of money, but once you’re 65, you don’t have too many years left to blow it on cars and cigarettes!

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Re: The Millionaire Next Door and civil servants

Post by munemaker » Thu May 24, 2018 6:12 pm

VictoriaF wrote:
Thu May 24, 2018 4:30 pm
munemaker wrote:
Thu May 24, 2018 12:41 pm
VictoriaF wrote:
Thu May 24, 2018 10:46 am
munemaker wrote:
Wed May 23, 2018 6:05 pm
randomguy wrote:
Tue May 22, 2018 7:58 pm
When you look at sales data for things like high end cars and the like, the expensive models that rich people buy are supported by income. The average 911 buyer for example makes something like 350k/year. It is the entry level models that have aspirational sales. People stretch to buy a 3 series a lot more than they do for an AMG GT.
In the expression "All hat, no cattle," the cattle are assets, not income. Yes, lots of people have high income but are not wealthy.

Here are a few things you may notice about people who I would consider to be “All hat, no cattle”:
1. Good salaries
2. Little savings
3. Need validation
4. Own expensive things
5. Love to one-up others
6. Have to dress a specific way

reference: https://www.moneymozart.com/how-to-iden ... real-rich/
Your mind is tuned to notice incongruities:
- You notice people with high salaries and low assets; you don't notice people with high salaries and high assets, even as they are the majority.
- You notice people who own expensive things but have negative assets; you don't notice people who own expensive things and have positive assets.
- Likewise, you notice the incongruity of a scruffy laundromat owner who is a millionaire. And you don't notice failed small business owners who have not just become bankrupt but also drained their families' assets.

Victoria
Victoria,

No, I do notice that most people with high income eventually have high assets, and that people who dress shabbily are usually poor. Just saying that the exceptions are significant enough that you really can't draw conclusions about wealth based on appearances.

In our area, the newspaper publishes property owners who are seriously delinquent on their taxes. Some of our friends commented that there must be a business strategy to pay your property taxes late because these people obviously have money. No, there isn't. They just present the illusion of having money.
munemaker,

When I wrote "you," I did not mean you, munemaker. I was referring to a generic "you," which includes myself. I used to refer to "one" but then decided that it was too formal and started switching to "you," when I remember it.

Noticing incongruities is a common phenomenon identified by psychologists and behavioral economists. Related phenomena are the availability bias when you consider more recent and more vivid events as more likely; and the fallacy of silent evidence when you are not actively seeking contradictory evidence.

As for people creating an illusion of having money, there could be two reasons for that: intentional and unintentional. Some people are just disorganized. They pay bills late, incur various fees, waste money in numerous ways, and unintentionally send a signal that they have so much that don't care. But there is also intentional signaling when you use your clothes, cars, degrees, name dropping, and trophy wives to get respect, business opportunities, and other advantages. It is quite rational for a new college graduate to spend hundreds of dollars on an interview suit and for a new real estate agent to drive a luxury car.

Cheers,
Victoria
Victoria,

Thanks for clarifying. I agree completely.

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Re: The Millionaire Next Door and civil servants

Post by White Coat Investor » Thu May 24, 2018 7:23 pm

willthrill81 wrote:
Wed May 23, 2018 2:15 pm
I believe that White Coat Investor says that around 20% of M.D.s at age 60 have a net worth under $300k, barely more than the median household net worth for 65-69 year olds in the U.S.
Last survey I looked at showed 24% of physicians over 65 have a net worth under $1M. There was one two years ago that showed 11% of docs in their 60s had a net worth under $500K. Not quite as bad as you make it out to be, but still, this is net worth not investable assets or nest egg. Although I've definitely run into at least one doc personally with a net worth of $300K at age 60.
1) Invest you must 2) Time is your friend 3) Impulse is your enemy | 4) Basic arithmetic works 5) Stick to simplicity 6) Stay the course

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Re: The Millionaire Next Door and civil servants

Post by student » Thu May 24, 2018 7:57 pm

willthrill81 wrote:
Thu May 24, 2018 4:50 pm
Reappraiser104 wrote:
Thu May 24, 2018 3:56 pm
willthrill81 wrote:
Thu May 24, 2018 2:54 pm
Reappraiser104 wrote:
Thu May 24, 2018 12:25 pm
I think it should be clarified that Thomas Stanley was a college professor that was on the faculty of several state colleges. He himself was likely the beneficiary of government pensions. The notion that he had a negative view on civil servants or pensions misrepresents the book and the man.
At least today, most universities have moved away from defined benefit plans to defined contribution plans. Few offer pensions anymore.
You do realize that this book was published over 20 years ago right? He was 52 when the original book was published, after a career in academia (some would call that civil service). I would say the odds are close to 100% that he had a pension. I also think the fact that his book is still being discussed on this forum 20+ years after publication is a testament its quality. Some people will miss the forest through the trees.
That's why I said "at least today." I'm fully aware of when the book was published and the author's tenure with universities. Many are under the mistaken belief that defined benefit plans are still the norm in higher education today.
Just a data point. My university does not have a pension plan but it does give a relatively generous contribution to our 403b plan. Given the status of some pension plans, I actually prefer 403b. Unfortunately, it does not provide health care benefits for employees after separation, so all my retired colleagues rely on medicare.
Last edited by student on Thu May 24, 2018 8:03 pm, edited 2 times in total.

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willthrill81
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Re: The Millionaire Next Door and civil servants

Post by willthrill81 » Thu May 24, 2018 7:58 pm

White Coat Investor wrote:
Thu May 24, 2018 7:23 pm
willthrill81 wrote:
Wed May 23, 2018 2:15 pm
I believe that White Coat Investor says that around 20% of M.D.s at age 60 have a net worth under $300k, barely more than the median household net worth for 65-69 year olds in the U.S.
Last survey I looked at showed 24% of physicians over 65 have a net worth under $1M. There was one two years ago that showed 11% of docs in their 60s had a net worth under $500K. Not quite as bad as you make it out to be, but still, this is net worth not investable assets or nest egg. Although I've definitely run into at least one doc personally with a net worth of $300K at age 60.
Thanks for the clarification. That fits well with the statistics cited above.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

randomguy
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Re: The Millionaire Next Door and civil servants

Post by randomguy » Thu May 24, 2018 10:57 pm

White Coat Investor wrote:
Thu May 24, 2018 7:23 pm
willthrill81 wrote:
Wed May 23, 2018 2:15 pm
I believe that White Coat Investor says that around 20% of M.D.s at age 60 have a net worth under $300k, barely more than the median household net worth for 65-69 year olds in the U.S.
Last survey I looked at showed 24% of physicians over 65 have a net worth under $1M. There was one two years ago that showed 11% of docs in their 60s had a net worth under $500K. Not quite as bad as you make it out to be, but still, this is net worth not investable assets or nest egg. Although I've definitely run into at least one doc personally with a net worth of $300K at age 60.
That matches the numbers in the previous link. It might be interesting to look at the population being surveyed. For example if I worked 30 years, have a net worth of 10 million, and have retired, do I still get counted? What about if I spend the last 30 years working missions overseas? Of the doctors in the under 2 million group, wonder how many paid out 500k+ divorce settlements (i.e. a good chunk of the money they saved isn't being accounted for here)?:) I also am not shocked to learn 10% of any group sucks at either saving money or making it.:) Or to be more charitable maybe they had life interfere (i.e. had cancer and took a couple years to recover. Have a disable child that sucked up a million bucks. And so on.)

If you have seen any other surveys of american networth(or 401(k)/ira balances), it is always amazing how low they are. The average 65 year old has something like 50k of networth outside of their house. Doctors look pretty good (even as percentage of income) compared to that:)

Reappraiser104
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Re: The Millionaire Next Door and civil servants

Post by Reappraiser104 » Fri May 25, 2018 7:05 am

midareff wrote:
Thu May 24, 2018 4:15 pm
"P. 192

Very few millionaires are civil servants, and they have a completely different orientation. They want to be compensated on the basis of performance. "

Twenty-nine years and four months as a a civil servant, and all I wanted to is .. ." be compensated on the basis of performance". Eight promotions and multiple professional certifications later, not to mention being nationally published 7 times, I got my two comma club membership before retirement.
First, congrats! It sounds like to me that you fall right in line with his studies " (2010) the typical millionaire is in his/her late 50s. In fact, in my most recent national survey, the typical millionaire was 57. If 2/3 of the people he studied were somewhat self employed. 33% weren't. Live below your means, value the right things, try and differentiate yourself seem to be the most prevalent messages I took away.

Reappraiser104
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Re: The Millionaire Next Door and civil servants

Post by Reappraiser104 » Fri May 25, 2018 7:34 am

White Coat Investor wrote:
Thu May 24, 2018 7:23 pm
willthrill81 wrote:
Wed May 23, 2018 2:15 pm
I believe that White Coat Investor says that around 20% of M.D.s at age 60 have a net worth under $300k, barely more than the median household net worth for 65-69 year olds in the U.S.
Last survey I looked at showed 24% of physicians over 65 have a net worth under $1M. There was one two years ago that showed 11% of docs in their 60s had a net worth under $500K. Not quite as bad as you make it out to be, but still, this is net worth not investable assets or nest egg. Although I've definitely run into at least one doc personally with a net worth of $300K at age 60.
Interesting. Any statistics that the highest net worth docs were the ones that were able to become self employed, find a niche, or both? I would think that any industry the people that differentiate themselves, live below their means, and concentrate on building their net worth would have the highest balances sheets. It just seems like simple math to me. That was my takeaway from the book.

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midareff
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Re: The Millionaire Next Door and civil servants

Post by midareff » Fri May 25, 2018 7:35 am

Reappraiser104 wrote:
Fri May 25, 2018 7:05 am
midareff wrote:
Thu May 24, 2018 4:15 pm
"P. 192

Very few millionaires are civil servants, and they have a completely different orientation. They want to be compensated on the basis of performance. "

Twenty-nine years and four months as a a civil servant, and all I wanted to is .. ." be compensated on the basis of performance". Eight promotions and multiple professional certifications later, not to mention being nationally published 7 times, I got my two comma club membership before retirement.
First, congrats! It sounds like to me that you fall right in line with his studies " (2010) the typical millionaire is in his/her late 50s. In fact, in my most recent national survey, the typical millionaire was 57. If 2/3 of the people he studied were somewhat self employed. 33% weren't. Live below your means, value the right things, try and differentiate yourself seem to be the most prevalent messages I took away.
LOL, I had made it for the 1998/1999 tech wreck and didn't get back until 2012. By 2012 then I was 64 so maybe not so much typical. FWIW, I always saved a meaningful portion of income and always lived below my means. Now at 70 and starting my 7th year retired it's less difficult to spend but old ways are hard to move from.

staythecourse
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Re: The Millionaire Next Door and civil servants

Post by staythecourse » Fri May 25, 2018 11:39 am

Reappraiser104 wrote:
Fri May 25, 2018 7:34 am
White Coat Investor wrote:
Thu May 24, 2018 7:23 pm
willthrill81 wrote:
Wed May 23, 2018 2:15 pm
I believe that White Coat Investor says that around 20% of M.D.s at age 60 have a net worth under $300k, barely more than the median household net worth for 65-69 year olds in the U.S.
Last survey I looked at showed 24% of physicians over 65 have a net worth under $1M. There was one two years ago that showed 11% of docs in their 60s had a net worth under $500K. Not quite as bad as you make it out to be, but still, this is net worth not investable assets or nest egg. Although I've definitely run into at least one doc personally with a net worth of $300K at age 60.
Interesting. Any statistics that the highest net worth docs were the ones that were able to become self employed, find a niche, or both? I would think that any industry the people that differentiate themselves, live below their means, and concentrate on building their net worth would have the highest balances sheets. It just seems like simple math to me. That was my takeaway from the book.
The important question is to ask of those high net worth doctor folks what is the most REPEATABLE. A doc. who inherits 5 million from his doctor parents or one that is worth 10 million because he invested in a startup biotech is not easily repeatable with a high probability of success. This is why if you want to be rich the easiest is to be a boglehead whose approach is inherently repeatable and scale it larger with a higher paycheck to get from 1-2 million to 5-10 million.

My wife and I have passed the million mark several times already and am only early 40's. It really was NOT difficult. Looking back having a hight income and boglehead approach was the most useful for us OUTSIDE of the huge headstart we had not having debt as our parents paid for our education (would be naive to discount that).

Best piece of advice is to aim at hitting 7 digits as fast as possible then let compounding do its job.

Good luck.
"The stock market [fluctuation], therefore, is noise. A giant distraction from the business of investing.” | -Jack Bogle

texasdiver
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Re: The Millionaire Next Door and civil servants

Post by texasdiver » Fri May 25, 2018 11:52 am

staythecourse wrote:
Fri May 25, 2018 11:39 am
Reappraiser104 wrote:
Fri May 25, 2018 7:34 am
White Coat Investor wrote:
Thu May 24, 2018 7:23 pm
willthrill81 wrote:
Wed May 23, 2018 2:15 pm
I believe that White Coat Investor says that around 20% of M.D.s at age 60 have a net worth under $300k, barely more than the median household net worth for 65-69 year olds in the U.S.
Last survey I looked at showed 24% of physicians over 65 have a net worth under $1M. There was one two years ago that showed 11% of docs in their 60s had a net worth under $500K. Not quite as bad as you make it out to be, but still, this is net worth not investable assets or nest egg. Although I've definitely run into at least one doc personally with a net worth of $300K at age 60.
Interesting. Any statistics that the highest net worth docs were the ones that were able to become self employed, find a niche, or both? I would think that any industry the people that differentiate themselves, live below their means, and concentrate on building their net worth would have the highest balances sheets. It just seems like simple math to me. That was my takeaway from the book.
The important question is to ask of those high net worth doctor folks what is the most REPEATABLE. A doc. who inherits 5 million from his doctor parents or one that is worth 10 million because he invested in a startup biotech is not easily repeatable with a high probability of success. This is why if you want to be rich the easiest is to be a boglehead whose approach is inherently repeatable and scale it larger with a higher paycheck to get from 1-2 million to 5-10 million.

My wife and I have passed the million mark several times already and am only early 40's. It really was NOT difficult. Looking back having a hight income and boglehead approach was the most useful for us OUTSIDE of the huge headstart we had not having debt as our parents paid for our education (would be naive to discount that).

Best piece of advice is to aim at hitting 7 digits as fast as possible then let compounding do its job.

Good luck.
Very important point. My wife is a physician and I know many of her co-workers. A not insignificant percentage of them have some level of family wealth to start with. Parents who were also doctors or equivalent upper-middle class professionals. When one looks at the wealth of physicians at age 65, one can't assume it is all self-made wealth. Especially the current cohort of physicians who are at retirement age. Fifty years ago, law school or med school were the two main tracks for children of the wealthy. These days the Ivys seem to be pumping out a lot more grads into finance and business consulting. But that wasn't always the case and wasn't the case for wealthy kids who entered medicine 40-50 years ago.

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