I have a very good friend, the kind of friend I have known for a little under 20 years and I am only 27, who owns a really nice boat. Well, this past Sunday he took me, and another buddy out on it. He launches his boat from Oyster Bay, Long Island.
If you ever been to Oyster Bay, Cold Spring Harbor, Centre Island or ever watched certain E! shows you may understand the kind of wealth that is concentrated in North Shore Nassau County. It is the kind of concentration of wealth where the main purpose of my job is to create estate plans with the objective to lower the estate tax which only affects the top 2 to 3% of the entire country.
Well, as we are speeding around Centre Island and Cold Spring Harbor we are dwarfed by the $500,000 yachts, and openly gawking at the water front mansions.
One example is Billy Joel’s old “get away”:
In between water ski runs we were staring at these houses when one of my buddy’s said something which arose two instant reactions within me. He said, “I thought I was doing well, and then I see these things and I just feel poor.”
I immediately responded:
- This is an extreme of keeping “up with the Jones.”
- Frugality will never bring you to this level of wealth.
While Frugality is Something to Achieve, it will Never make you this Rich
The first reaction is obvious, and we didn’t spend much time on it. Especially since we were on a $60,000 boat ourselves, we couldn’t complain too much.
The second reaction took a little bit more time in my mind. If your income is $100,000 you will never achieve this kind of wealth. Hell, your property taxes are probably close to $75,000!
I think this is why I am really into one of my Fav Blogs – 7 million 7 Years. The main point to AJC’s site is simple and can be found in his post, “Save your way to Wealth?”
…you CAN’T save your way to wealth
While him and I may have a different definition of wealth (his is clearly defined as his number, and he encourages you to share Your Number with him) we both agree, that you can’t save yourself to extreme wealth.
Can you be comfortable? Absolutely, but the goal should be to increase your income streams if you want to reach extreme Wealth. The 2008 Income Source Statistics by Age and Income proves my point further. Lets just take a look at the last couple columns:
| Total Income | Wages | Taxable Interest | Capital Dividends | Business Income |
| 1.5-2m | 35.13% | 4.55% | 32.03% | 24.85% |
| 2-5m | 31.75% | 4.80% | 37.24% | 23.08% |
| 5-10m | 26.75% | 5.23% | 46.37% | 18.98% |
| 10m+ | 16.02% | 6.47% | 62.33% | 12.57% |
The numbers speak for them self. Look at the lines between $1 to $5 million they are almost carved out thirds.
Do I practice what I preach, No…and put simply that is my bad, but I am going to start!
“[AJC] and I may have a different definition of wealth”
Thanks for the mention! But, I am curious: what IS your definition of wealth?
ajc @ 7million7years´s last blog ..The Myth of the IPO
I shouldn’t have said Definition of wealth, but I feel like my number is much lower than yours. I think that is more accurate statement. But if I got to the $4mil range maybe I’d up my number!
Anyone reading this post and comment – you have to check out AJC’s site is very different than most PF blogs out there trying to save you $40 bucks over the entire year.
I couldn’t agree with you more. Frugality is a good thing to achieve, but it really can’t make someone rich (or at least that rich). But wow, $500,000 yachts…Hopefully we can all make it there someday
The Gooroo @ iBlogPlanet.com´s last blog ..CommentLuv Coming To iBlogPlanet Soon!
I had very little clue what boats even cost until I started asking questions. Which is when I found out the boat I was on cost $60K new, and even that made me say wow.
Yeah, I didn’t think they were that expensive either. More expensive than a lot of peoples house.
The Gooroo @ iBlogPlanet.com´s last blog ..CommentLuv Coming To iBlogPlanet Soon!
I’m going to have to disagree with my husband on one point. I think, for a person to be very wealthy they must also be frugal in some way. The richest people in the world hold on to their money because they are frugal in some way. I’m not saying they shop at the dollar store, or clip coupons…but they may think twice about buying a 2nd car…or that extra piece of jewelry. They hold on tight to their money..and this is why they are able to keep their houses.
The Wife´s last blog ..Murphy’s Law
I agree in a sense, but we need to realize that there is a difference between “wealthy” and “rich”. Although many people consider them the same, they aren’t.
The Gooroo @ iBlogPlanet.com´s last blog ..CommentLuv Coming To iBlogPlanet Soon!
Thanks for the clarification: yes, I agree the Number will be different for everybody.
BTW my Number NEVER changed … I ended up exceeding it, but that was plain, dumb luck
Once you reach your Number – unless you Life’s True Purpose has REALLY changed – stop chasing more money!
Also, I agree with Somebody Else’s Wife – I never agree with mine
– in my experience multi-millionaires do exhibit restraint … what I once thought was delayed gratification, but which I now understand to be more fundamental: Respect For Money.
Sounds dumb, but isn’t: http://7million7years.com/2009/06/24/finally-revealed-the-most-important-making-money-101-lesson-of-them-all/
ajc @ 7million7years´s last blog ..The Myth of the IPO
[...] This post was Twitted by wealthonline23 [...]
[...] My Journey to Millions explains why multiple income streams are the ONLY way to achieve extreme wealth. [...]
[...] Multiple Income Streams is the ONLY way to Achieve Extreme Wealth | My Journey to Millions http://www.myjourneytomillions.com/articles/multiple-income-streams-is-the-only-way-to-achieve-extreme-wealth – view page – cached Discussion of Extreme Wealth can only be acheived by diversifying your income streams — From the page [...]
I think the only way to really achieve wealth is to create it yourself. You can’t be frugal during the process. Also, be sure to help others on your way up and they will help you to achieve your goal.
[...] Streams of Income Throughout the life of this blog I have talked about my desire to create multiple streams of income. While I have been trying to do more side legal work in addition to my day job and I have my [...]