Can live off assets and don't need to work.
Can live off assets and don't need to work.
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that's the trick, we all can.
There's no shortage of resources on our little planet.
rich is a state of mind.
Basicaly the crux of it was up the value by adding a zero ( £10 , £100 , £1000 , £10,000 etc ) then answer who many '1' in timeline it would take to realise that amount or bow out gracefully.
As an example Q =£10. Answer = 1 min
Q= £1000. Answer = 1day .
Q = £100,000. Answer = 1 month.
Does it need to be in the form of folding, or can it be deposited into the referee's bank account?
And more importantly, does it need to be done with or without spousal approval?
"Sorry honey, can you move the car. Someone's coming to view the house today"
Corner cases
Well obviously the vast majority of people on 70k aren't struggling to pay bills. Did I ever suggest otherwise?
For the majority of minimum wage workers, to go to £70k would be life changing. If you can't see that you need to open your eyes
again, did I suggest otherwise?
other locations are available
There are many reasons for being poor, one of them is bad lifestyle choices. I'm not suggesting a whip round for then, but they still fall within my definition of 'poor', regardless of how they got there
Ok, I'll bite. Our household income is ~130k* and we're skint and have been for the last 4-5 years.
*would've been 90k at the start of this period)
We've got a large mortgage and an extra bit of mortgage and 30k of unsecured debt.
We've not got into this position through largest and excess, foolhardiness or stupidity but because we've made some choices that were intended to provide a secure and sustainable financial future. I drive an 11 plate mondeo the wife has 59 plate tiguan and we went on our first foreign holiday since 2018.
We're renovating an old farmhouse and have built an annexe for use as a holiday let. This has taken a lot longer and cost a lot more than we planned (covid, material cost increases, unforeseen structural works, legal disputes over water rights etc) and we still have a way to go with our bit of the house.
But in 18 months time we'll be sorted. Even so we'll still have spent 6-7 years living hand to mouth. Was it worth it? If all had gone go plan we'd have laughing but as it stands its 50/50 as to whether the benefit well redeem will have been worth the cost.
Edge case I grant you but still very possible to have a big income and **** all in your back pocket without being an idiot.
OK, I'll bite back.
You are not skint. And if I was you(which I nearly am) I'd not describe myself as such.
Having no cash in your back pocket does not make you skint when you are asset rich. As per my post above you had the 'luxury' only open to the well heeled of making an arguably risky move that may or may not work.
As it happens our personal circumstances are not too dissimilar - living in a big building project which is part holiday let with lots to do to get it finished. Only difference is our household income is only just over half yours and as the money is coming in very slowly it'll be another 5-6 year minimum of living like this. Like you I suspect we have to make choices about day to day stuff and like you most money left at the end of the month goes into the next building project phase. Eating out would mean another month without windows. But I'd never dream of calling myself skint. I did this to myself. I did it because I 'wanted' to spend my money in this way. I had a choice then and I could walk away now (I'd make a loss, but could walk away). But I choose not to. So I'm not skint.
Sometimes it's easy to feel sorry for yourself - not saying you do thestabaliser, but you might - and it's important you have a reality check every now and then. I don't have much disposable cash these days, certainly not like we used to. And I 'could' get into a good sulk about it - especially when we've got friends of about the same age retiring early and seemingly (if you believe social media) having a right old time. My reference point 'could' be very skewed, like a lot of people leading a middle class life. Fortunately Mrs C's job working for a charity has her going into the homes and the lives of people who properly have **** all. It's equal parts hollows you out that society has people in these situations and reminds you of what you have. We wind our necks in regularly after her latest road trip.
Having no cash in your back pocket does not make you skint when you are asset rich
But that come back to my op, your definition of what is rich (or poor). If you base your definition on assets, ie owning a big house, then he's by no means poor
If your definition is 'needs to count every penny in order to scrape by' then he probably sits in the 'poor' category
As I say, all comes down to your definition. No right or wrong answer.
If your definition is 'needs to count every penny in order to scrape by' then he probably sits in the 'poor' category
For me choice plays a huge part in this judgment. There is significant chasm between having to count every penny to scrape by because you have no choice and this is the best it's going to be and having to count every penny because you have accounted for a huge number of other pennies voluntarily to do something else with and left yourself a marginal buffer. Counting every penny because you are on job seekers allowance and putting in a hundred applications a month and nothing is working and counting every penny because you've (over)commited most of your income to a building project are just not the same thing.
Perhaps there is a third category - the voluntarily poor.
Ok, I'll bite. Our household income is ~130k* and we're skint and have been for the last 4-5 years.
*would've been 90k at the start of this period)
We've got a large mortgage and an extra bit of mortgage and 30k of unsecured debt.
We've not got into this position through largest and excess, foolhardiness or stupidity but because we've made some choices that were intended to provide a secure and sustainable financial future. I drive an 11 plate mondeo the wife has 59 plate tiguan and we went on our first foreign holiday since 2018.
We're renovating an old farmhouse and have built an annexe for use as a holiday let. This has taken a lot longer and cost a lot more than we planned (covid, material cost increases, unforeseen structural works, legal disputes over water rights etc) and we still have a way to go with our bit of the house.
But in 18 months time we'll be sorted. Even so we'll still have spent 6-7 years living hand to mouth. Was it worth it? If all had gone go plan we'd have laughing but as it stands its 50/50 as to whether the benefit well redeem will have been worth the cost.
Edge case I grant you but still very possible to have a big income and **** all in your back pocket without being an idiot.
I think we have found our definition of rich, massive income, living in a farm house, with a annexe and yet still pissing and moaning about not having enough...
According to MS Copilot, the median income in the UK is approximately £36,036 before tax, and around £29,500 after tax. That's at the 95th percentile worldwide.
£130,000 is at the 99.8th percentile worldwide.
Obviously, there are purchasing power differences, the UK is much more expensive to live in than most places, but an average person in the UK is quite well-off compared to the global average. Problem is, we compare ourselves to the people we meet everyday so we assume that spending £500 on a phone and £2,000 on a bicycle is normal.
But that come back to my op, your definition of what is rich (or poor). If you base your definition on assets, ie owning a big house, then he's by no means poor
If your definition is 'needs to count every penny in order to scrape by' then he probably sits in the 'poor' category
I think thestabiliser (and others) are making a distinction between 'rich' and 'wealthy', based on how liquid their assets are or aren't.
By this logic, you could take two people of identical net worth: one with £2 million tied up in a mansion and a yacht, but no cash on hand (not rich) and one who owns nothing but has £2m in the bank (rich). Both are equally wealthy but only one is rich.
I'm not sure i agree. But there's a certain logic to it, i guess based on opportunity cost?
I think we have found our definition of rich, massive income, living in a farm house, with a annexe and yet still pissing and moaning about not having
Not pissing and moaning just providing an example of how a relatively large income doesn't necessarily translate as rich, by a given definition, or at a particular point in time. Never professed to be poor but providing a counterpoint to the 70k=rich.
Come back in 5 years time and yeah I'll hopefully be very well off but still wouldn't meet the definition of rich enough not to to work.
@doris5000 if I had the assets to liquidate I would (and will when we downsize, once the holiday let is too much to manage)
The point was more you might have significant income but you might also have significant liabilities and obligations.
Right now I've got liabilities, in 5 years time I'll have assets in ~15 years time I'll be looking to cash in part of those assets to fund my later life. Which us a good plan, it's just taken 3 or 4 more years to get to this part of the plan than it should, largely due to factors outside my control.
The point was more you might have significant income but you might also have significant liabilities and obligations.
You only have those liabilities because you are rich 😄😄😄. It's hilarious you think you are not.
I'm not rich as I can't afford to turn on the arga in my farmhouse 😆😆😆😆
We dont use (either of the) the agas, as it happens, you're right there.
But also, if i quit work tomorrow, we'd be ****ed. Forever. The genuinely rich dont have that problem.
Something like £2m net assets not including primary residence. But that's scraping the barrel slightly.
As far as i am concerned you are rich if you have everything you need and can when all thats paid have something you would like.
I am rich but i have no wealth.
Rich appears to be how people categorise the person who should shoulder the tax burden instead of them.
Unsure on the accuracy but over £72k would put you into the top 10% of earners in the UK
https://www.statista.com/statistics/416102/average-annual-gross-pay-percentiles-united-kingdom/
That's easy - for me, being rich would be able to walk out of my job with zero impact on my lifestyle.
By the majority definition up there, last month I was rich. This month I am not. Ergo, I wasn’t rich at all.
Having no cash in your back pocket does not make you skint when you are asset rich
But that come back to my op, your definition of what is rich (or poor). If you base your definition on assets, ie owning a big house, then he's by no means poor
If your definition is 'needs to count every penny in order to scrape by' then he probably sits in the 'poor' category
As I say, all comes down to your definition. No right or wrong answer.
Being asset rich and cash poor is a lifestyle choice. Downsizing to a less valuable house and releasing cash doesn’t change their total wealth but moves them into your rich category. If you base your definition of rich on cash the Elon musk is poor as he has no cash and huge debts as a tax avoidance strategy
That's easy - for me, being rich would be able to walk out of my job with zero impact on my lifestyle.
Freedom is having "**** you money" - the ability to walk away from what you're doing if the enjoyment/reward to annoyance/frustration/irritation balance gets to out of kilter.
If you base your definition of rich on cash the Elon musk is poor as he has no cash
mmm. By all accounts Elon Musk has only a very small proportion of his wealth in cash/liquid assets. but that's still equates to billions of dollars.
You're still exchanging labour for cash, because you dont have enough to capital not to, even if you are one of those perverted sickos that like it
going way back up thread. Now Elon Musk is most definitely a perverted sicko, but I know people who are don't need to work but get paid to teach or guide mountain bike rides, or teach kids Bikeability. There definitely *can* be a satisfaction from work you get paid for and theres pretty good evidence that really extreme wealth does you no good at all mentally.
"Being a billionaire must be insane. You can buy new teeth, new skin. All your chairs cost 20,000 dollars and weigh 2,000 pounds. Your life is just a series of your own preferences. In terms of cognitive impairment it's probably like being kicked in the head by a horse every day" (from twitter)
I met someone who was a super yacht captain (actually he was the captain of one of the tenders for the main yacht, but his boat alone had a crew of 25!). With nothing else to worry about the main man sounded completely paranoid about his health - he could buy his way out of every other problem but not accidents or illness, so full time medics on the staff. But regularly flew in helicopters, which by all accounts is just about the most dangerous way it's possible to travel.
By many, and my definition, I am rich.
Don't need to work too sustain my lifestyle. Have time and the freedom to do what I want when I want without worrying about my bank balance. When I work it's because I want to and not because I need to. I'm not part of the rat race.
On the other hand, I live in a van and all that I own is inside that van. Many might look at my choice and think "f-that" or look upon my situation with sympathy. I, on the other hand, love it and have no intention of settling down just yet.
Our monthly costs are considerably less than they were when we were living in town and having to work to maintain our lifestyle.
Good friends, good times and love. Everything else counts for sod all when you're on your death bed.
Rich = Having everything you need and most of what you want.
We're rich. We make £50k between us with 3 kids.
But i could go out now and pay cash for anything i want.
I just dont have anything on my Christmas list.
Why would anyone want a yacht? or a private Jet. all that extra admin.
No car on Tick is the obvious one for me. The amount of money people spend on car finance is mad to me, to sit in the same traffic with everyone else.
Good friends, good times and love. Everything else counts for sod all when you're on your death bed.
Yeah but a decent wedge is pretty useful whilst you're still living.
Out of interest, how much do you have to earn before you're not a net drain on the state? I.e. You earn enough that you pay tax to cover your birth, education, healthcare, use of roads, public transport, public services and state pension? (Assume any children related costs are placed on the child and averaged over their life)
Why would anyone want a yacht? or a private Jet. all that extra admin.
You pay someone else to do the admin - you just turn up! 😀
Out of interest, how much do you have to earn before you're not a net drain on the state? I.e. You earn enough that you pay tax to cover your birth, education, healthcare, use of roads, public transport, public services and state pension? (Assume any children related costs are placed on the child and averaged over their life)
Well that, too, would need to be averaged over your life.
How many years will you be earning this salary? The longer you live, the higher it needs to be, to cover the extra years of state pension, non NI payment, etc. But also, the more people earn, the more tax shenanigans they usually have going on...
Why would anyone want a yacht?
I know a guy with a couple of yachts, one in UK and one in Spain. He doesn’t do admin he has staff for that and he just sails when he wants too. He is very, very rich but life seems to give him the same issues most other people experience - except for living in Monaco for a few years to save six or seven million in tax.
Mrs Kilo worked with a lot of people who would be, by most nor standards, rich. Some were normal and some were cocks - much like in every other workplace.
Having an employer that allows you to work from home & having space in your home to do so.
, the more people earn, the more tax shenanigans they usually have going on...
Yep. It's not total earnings that's relevant here, it's total taxes paid.
Good friends, good times and love. Everything else counts for sod all when you're on your death bed.
Yeah but a decent wedge is pretty useful whilst you're still living.
Of course it is, it just depends what you spend your wedge on and how thick you need it to be to have a life your happy with.
I think if you have to look at the price you're not rich, some will choose to look at the price because they are frugle (tight...) but they don't need to. Also if you don't need to work, you are rich, but that gets skewed by those who need to work to maintain a rich lifestyle....
I agree with convert though, if you have freedom of choice, then you are definitely wealthy, even if not rich.
I think if you have to look at the price you're not rich,
Price of what? for me, pint o milk: no, house: yes
im always tempted with the idea of a simple life living in van, the no posessions etc I can deal with. It's what happens when you are too old for it? What do you fall back on?
A guy i went to school with? He invented something as a 17 year old school dropout that is still used today to stitch bits of the core of the internet together. The patent was licenced to IBM and then licensed on further to god knows who else at huge cost. He then did it again, 10 years later.Why would anyone want a yacht?
Now lives in Hamilton, or on his yacht, or his apartment in Manhattan.
Still works, technically (for IBM) but it seems to consist of about 1 day a month. (Him and his son are currently touring Europe, as far as i can tell they've been at it since August.)
im always tempted with the idea of a simple life living in van, the no posessions etc I can deal with. It's what happens when you are too old for it? What do you fall back on?
By the time we're old enough to have to settle down we'll easily be able to afford a place I want to live in thanks to the thousands of €€ I've saved in rent and bills over the years.
We both work party time/occasionally. Her 3/4 days a week and me a few months every year or so.
Saw a place online recently in Italy. 50K for a 70m² house in southern Tuscany with 2 hectares of woodland. Don't fancy a place north of the Alps. The winters are too long.
Out of interest, how much do you have to earn before you're not a net drain on the state? I.e. You earn enough that you pay tax to cover your birth, education, healthcare, use of roads, public transport, public services and state pension? (Assume any children related costs are placed on the child and averaged over their life)
think we had this a few years ago, 37k made you a net contributor for a given year. Ie you covered your equal share of school, pension, nhs cost for the country.
So if you plan to spend half your life in employment (live to 90, work from 21 to 66?) I guess you would need to average over your career be paying twice as much tax as 37k salary makes you…
then adjust for inflation…
then try to work out how vat/sales tax figures in that…
and if you have kids who wind up being net contributors, can you count that?
and most importantly remember that lots of essential jobs will pay less than that figure - so contributing to society in ways other than driving a spreadsheet and paying tax is probably more useful
Its a pretty small % of the populstion...less than 5. 37K is nowhere near, esp if you've been, are expensive
2 months ago myself and my OH got married (it took us 30 years together to get to that point), we had a party at our local pub and 200 people turned up to join us for a few beers and songs. I wasn't rich, I was bloody loaded. Thats how I measured my wealth that day, the shear number of people who gave their time to celebrate with us made me feel very rich.
Out of interest, how much do you have to earn before you're not a net drain on the state? I.e. You earn enough that you pay tax to cover your birth, education, healthcare, use of roads, public transport, public services and state pension? (Assume any children related costs are placed on the child and averaged over their life)
think we had this a few years ago, 37k made you a net contributor for a given year. Ie you covered your equal share of school, pension, nhs cost for the country.
So if you plan to spend half your life in employment (live to 90, work from 21 to 66?) I guess you would need to average over your career be paying twice as much tax as 37k salary makes you…
then adjust for inflation…
then try to work out how vat/sales tax figures in that…
and if you have kids who wind up being net contributors, can you count that?
and most importantly remember that lots of essential jobs will pay less than that figure - so contributing to society in ways other than driving a spreadsheet and paying tax is probably more useful
I don’t think it works like that. You don’t just pay tax and get it back in services. You contribute a whole lot more than tax. And that is important because, as far as I understand it, spending comes from the government. Tax does not fund spending — its purpose is to free up capacity and reduce unproductive private activity when needed to prevent inflation and to shape policy and behaviour.
2 months ago myself and my OH got married (it took us 30 years together to get to that point), we had a party at our local pub and 200 people turned up to join us for a few beers and songs. I wasn't rich, I was bloody loaded. Thats how I measured my wealth that day, the shear number of people who gave their time to celebrate with us made me feel very rich.
I was thinking similar, but of sitting in front of a fire with my Dad having a few Dalwhinnie Golds.
No point worrying about having loads of money now I've seen how much happier my partner is for not working a stress loaded corporate job.
and most importantly remember that lots of essential jobs will pay less than that figure - so contributing to society in ways other than driving a spreadsheet and paying tax is probably more useful
It’s not that simple, given that we’re running a deficit, the whole country can’t balance its books.
not that a deficit is *automatically* a bad thing, just pointing out its future taxation deferred.
I agree with the point that there’s more ways to contribute than just with tax
How much over a lifetime is quite interesting. Seems to be a couple of ways of accounting - either you add up all the bits, or you just take state spending in a given year and divide it by the population, then multiple by life expectancy and assume it'll all work out. They actually give roughly the same number which is about 1.3m / 17k ish per year (in todays pounds) - probably means it's a reasonable estimate.
I gave gemini a bunch of stats about my employment history, houses i've bought etc, apparently i'm a bit over half way paid back at age 44 for my total cost, though currently a net contributor. Your payback is obviously back weighted, as your first 18 years you're not really paying much back. If you assume a working life of say 40 years (20-60) then you're looking at an average income of about 45k if you make some sensible assumptions about spending (for VAT etc) and factor in employer NI contributions etc it seems.
I think most people here are richer than they think.
You could define rich as being able to afford debt.
Edge case I grant you but still very possible to have a big income and **** all in your back pocket without being an idiot.
So to summarise:
You earn £130k/year (that's roughly 4x average incomes, i.e. double if you assumed the average household was 2x average incomes)
You leveraged that financial position to take out further loans
You used that to purchase a mix of assets which with either act as wealth stores or generate an income.
You had/still have to work.
That does not make you 'poor', at best you're incredibly asset rich / cash poor.
I think if you have to look at the price you're not rich,
Price of what? for me, pint o milk: no, house: yes
My benchmark at the moment, after a conversation with my wife last week, is the price of a hotdog and beer at the local Bavarian Xmas bar. I can't bring myself to spend £9 on the hotdog and £7.50 on the beer despite being easily able to afford it. (Ditto £4.50 for a chunk of bread and butter pudding at a craft market.) We were wondering how much we'd need to earn before I stopped resenting throwing money away on stuff like that.
So to summarise:
You earn £130k/year (that's roughly 4x average incomes, i.e. double if you assumed the average household was 2x average incomes)
This year, the first year at this level
You leveraged that financial position to take out further loans
No, we took the loans out on pre business income
You used that to purchase a mix of assets which with either act as wealth stores or generate an income.
No, one asset a house. Which is still in liability mode as it's got a sizeable mortgage
You had/still have to work.
That does not make you 'poor', at best you're incredibly asset rich / cash poor.
Never said I was poor, I said I was skint, I.e no cash but my point was I'm not rich. I will be one day, just not now.
If you took a person with a business start up that was costing them money but had good prospects you wouldn't call them rich until the prospects were realised
I think most people here are richer than they think.
You could define rich as being able to afford debt.
I think this is very true. And we have discussed and suggested this many times on many threads.
And STW is a wealthy bubble of people.
And STW is a wealthy bubble of people.
Wealthy yes, but rich? I think the dividing line is probably when you start to employ full-time staff - like housekeepers, estate workers, chauffeurs, yacht crews.
Never said I was poor, I said I was skint, I.e no cash but my point was I'm not rich. I will be one day, just not now.
If you took a person with a business start up that was costing them money but had good prospects you wouldn't call them rich until the prospects were realised
This is giving the same vibe as Donald Trump pointing to a homeless man and pointing out how much more money he has than him.
https://www.psychologytoday.com/us/blog/brainstorm/200905/donald-trump-failure
You could define rich as being able to afford debt.
I'd agree, on the basis that the poorest don't have access to debt. But being poor and in debt is definitely also possible.
I would say I felt financially "rich" when I had both significant savings (i.e. I could realistically buy a car, kitchen etc, not inaccessible stuff like my pension) as well as debt. OTOH one car in our house is 20 years old and was delivered back to the house one a tow truck this afternoon after breaking down, the other is even older and didn't start at all 😂. So I'm probably not rich, I just have my car sat in my ISA rather than my driveway.
and most importantly remember that lots of essential jobs will pay less than that figure - so contributing to society in ways other than driving a spreadsheet and paying tax is probably more useful
This is the critical bit of that point though. Even if you're lucky enough to be in that top ~25% that actually get to be a net financial contributor, your ability to do that job and even your entire existence is reliant on the entire economic pyramid supporting you, both public and private. I'm imagining it like a bow tie, on the one side you've got all the things I rely on to get me to work so I can actually do my job and pay taxes, everything from public healthcare, education, transport to the builder who built my house and the factory worker that made my bike. Then on the other side there's all the people that give my work value turning all my drawings and calculations into something that actually has some value. Without that entire system around me my work has no value and why capitalism and the free market is an awful way to determine the value of labour.
And that is TINAS guide to Das Kapital Chapter I.
I have a weak/average credit rating at present. Why? I only have a mortgage (small), I have no debt on credit card and do not 'utilise' my credit enough, I have no overdraft, I have no odd credit accounts with stores, I have paid off any loan on the car and so appear to be a 'poor' credit customer as I have a lack of credit debt and appetite for debt.
Between mrs_oab and I we nearly own an expensive house, we have significant savings, we have no issues with cashflow or significant financial worries. I earn a metric shed-load more than the average person, and have no dependents.
IMO, credit ratings are purely a marketing tool to sell you debt.
TBH, anyone that is 'rich', just want's to get 'richer'.
I can pay the bills, I am looking at retirement, MrsF isn't working/early retirement.. That will do me. I have me van.
Hmmm TINAS, maybe you're right, instead of doing all this holiday let shit, I should just leverage the billions of dollars woth of New York real estate I haven't inherited.
@ley_line - I explained my wealth earlier in the thread. I'm bike and boat rich. 😎
🤣 Would have thought the context would have made it clear that he's a long way from South Lanarkshire. Not least of which, i doubt anyone would be able to live on a yacht anywhere round there... Though on the plus side, there would be bugger all risk of him coming unstuck in the Bermuda Triangle...Now lives in Hamilton, or on his yacht, or his apartment in Manhattan.To be fair, South Lanarkshire has a lot to offer...
Sure, but your humble brag is my definition of rich. Basically never having to worry about money or utilising credit of any kind. Sounds like you also have all the toys to go along with it.
I think it's pretty ignorant to claim a person with a big wage and big mortgage is not rich. 1) They've made that choice themselves, other choices are available. 2) At some point that mortgage is going to be paid off and they will have an enormous asset.
That is wildly different to a person on a lower wage, less outgoings but the same spare cash each month as the high earner - they have no assets in the long run, and they have no choice to take on a huge mortgage to get those assets.
If you asked me if I'm rich, I'm not sure I'd just purely relate that question to how much money I have. I know people with lots of money, who I wouldn't think of as having rich fulfilling lives. Being happy, healthy, surrounded by family and having easy access to to greenery and fresh air, never wanting for food or warmth is what I relate being rich to. Money can help with this, but then I could earn a lot more money if I had moved to London early in my career, but I'd be a lot poorer as a result of my own values of what rich is.
2) At some point that mortgage is going to be paid off and they will have an enormous asset.
and if they fall on hard times before the mortgage is paid, they'll be able to sell that asset, likely for much more than they paid for it
Paying off your student loan in full before the age of thirty! Not waiting until you reach 65 and it gets written off.
Paying off your student loan in full before the age of thirty!
That, given the current average student debt of £53k and the current interest rate of 6.2%, would require you to earn an average of around £110,000 between the ages of 21 and 30.
EDIT - that was under the old scheme. On the new plan 5, interest rates are capped at RPI so it would be more like an average of £100k. So you don't have to be quite as rich...