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!
…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|
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, but others do like this blogger who sells used books for cash…and put simply that is my bad, but I am going to start!