Monday, October 18, 2010

Are You Rich?

"Being rich is having money; being wealthy is having time"
-Margaret Bonnano

During the .COM bubble I recall a young .COM startup entrepreneur lamenting that although he was rich, he was not super rich. What's the difference asked a reporter? The rich, the young man replied, can afford to fly on private jets, the super rich can buy private jets.

I was reminded of this while reading a follow-up story on theAtlantic.com called Now, More Criticism of the Self-Pitying Wealthy Poor. It began with the "Whiny Law Professor" whose family makes more than $250,000 a year and was worried how he will make ends meets if Obama raises taxes for the "wealthy". $250,000 can quickly disappear when paying for private schools, elite private universities, multiple mortgages for large homes, several expensive cars, and loans for graduate schools.

Whether you are rich or poor can depend on your point of view. I loved this comment on theAtlantic story,
My mom insisted "we weren't rich". I've been in the financial business for 30 years and I have learned a few things about where, exactly, someone making a quarter of a million dollars a year actually fits in the economic pecking order. So I laughed and said, "mom, seriously, dad was a physician. That had to put us in the top 5% of all families in the country, and the top 1% for downriver Detroit! Why do you think you're not wealthy?"

The answer was perfect. According to my mom, all of her friends, the women she played bridge and golfed with, were married to specialists. My dad was a GP. And their husbands all made a lot more money than, in my father's famous phrase, a "dumb GP". They were the rich. We were not. Like the professor, it's all about your frame of reference.
Bottom Line

Wealth is a state of mind. You can be unhappy and feel poor with piles of money or richly blessed with a loving family living on a shoestring budget.

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