Category Archives: Wealth

The Cost Of Being A Top 1 Percent Earner?

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Lately, it seems like the media and world in general, are against the top 1 percent of income earners.

It’s presumed that the fortunate top 1 percent have it easy and they just go to work socialize.  Perhaps they go to the golf course and play 18 holes while the rest of the workers (those lowly 99% of income earners are such tools) slaves away making the money for the top 1%.

Actually perhaps there are a few like that, but they don’t last long and their numbers are very low.  Eventually someone a bit leaner and hungry knocks such slacker off of their perch.  So the image of a top 1 percent income earners does not reflect reality.

What makes me so sure?  I’ve seen the suffering of a friend that made it to the top 1%, here is his story…

Jon was a VP of finance when I knew him.  He was a very friendly guy to great, but behind closed doors, he was much, much more.  If you met Jon, you would think what a nice guy, a family man and overall a class act.  Jon really was a great guy but he was also a businessman with business drive.  He had so much drive that he would stay incredible late working with the then CEO of the company I worked at.  Once I was part of their discussions, and this wasn’t the Jon that the other employees knew.

I consider myself a keen observer, so in my mind I put a few things together and painted a crude picture in my mind what his personal life must be like, and it wasn’t pretty.  Mostly he held it together quite well, and stuck with his huckleberry routine, until one day when we had the classic moral building exercises that always happens at larger corporate businesses (or so it seems).

During this “feel-good” meeting, Jon got up to speak.  He was delivering an excellent speech on going a little bit further than the other guys.  After all, it doesn’t matter if you win the race by a nose or a mile, what counts is that you put the time in and win…

That’s when it happened, Jon started going on and on about the time commitments, when he deviated off course and started talking about not seeing his kids.  A red flag in my mind went off, thinking “Hey, this isn’t part of the speech, it doesn’t fit”.  At that point, Jon continued with his speech, but literally he started crying.  Being a pro, he continued with the speech after jumping back on track.  He used his charisma and polished looks to deliver a speech that appeared to most in the audience that the man just had incredible passion.  But, there are a few of us that knew what really happened.  It was an eye opening glimpse into his 1% life, and honestly since I have kids, I choose my kids.  Even if I had the potential to get into the 1, 5 or even 10% income classes, I wouldn’t want to sacrifice the time that I could have spent with my kids doing things (although blogging is really taking a big slice of that time!).

My friend has since moved on to head up another company as a CEO.  When I knew him, he had just crossed that threshold to the 1% club, but not he is firmly ingrained in the 1 percent group.  I don’t see him much anymore, but I’m sure if I did, he would still great me with his warm, but polished and rehearsed greeting.  I’m sure he still works long hours and cries (literally) about his kids growing up, being raised almost sole by his wife.

So before you think that the top 1 percent group has it so great, think of my friend.  If you do, you’ll see why I’m more than happy to live a more (money and time) balanced life, at least now.  I’ll probably regret it when my friend is vacationing in Europe (lol).  I’m pretty sure he has crossed the threshold to financial freedom already.  Still, unless you’re buffett, you can never have enough money…

I hope you found as much value as I did watching Jon’s story unfold when my old friend gave his speech.

Thanks,

MR

 

Update!  I just read that the top 1% earn 17% of the total income in the US, but pay 37% of all the tax revenue brought in!  Check out this Money.cnn.com article called:  Who are the 1%

Reader Thoughts – Response to Sacrifices Made On the Road To Become A Millionaire

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Today at Money Reasons, I’m introducing a feature called “Reader Thoughts“.

Within this new feature, I’m going to post emails and other forms of communication that I received or gather that explains a personal take or actual personal experience on a topic that I consider worth taking a look at, to gain insight into their thoughts and experiences.

Today, I’m going to post an email I received from “S”:

Money Reasons writer – your post on wealth and sacrifices really hit it home for me today.  My response may offend some of your readers but those are my genuine feelings, you asked to hear stories.  I am not sure what you consider wealthy – but I have been in the top tax bracket for the last few years.

I was nearing this bracket as an employed professional but I entered this bracket as an entrepreneur involved in several ventures, many that turned in losses which I talk about on my blog.  Entrepreneurship involves lots of sacrifice in many aspects of ones life, social, relationships family/friends, personal interests and hobbies taking a back seat, etc. 

 

I persevered through all over the years, starting profitable businesses that pay tax. so not only do I contribute the max amount from a tax perspective, most of my businesses do the same.  I own a brick and mortar business in my community through which I have employed local citizens. the business is heavily involved in the community, often sponsoring soup kitchens, charity galas, and fund raising initiatives.

 

I also own several rental properties, all of which provide quality housing to residents in need, many of who would be considered sub prime by other lending institutions. to sum it up, the road to self created wealth involves way more than what one who hasn’t traveled the road may think. moreover, each journey is very different / unique. personally, only I know the amount of sacrifices I have made over the years. sure I am reaping huge dividends today, but I am also contributing to the larger society / community in parallel.

 

“S” provides a  story that epitomizes the exact point I was trying to make with my post called:  Sacrifices Made On the Road To Become A Millionaire.
“S” points out that he has made sacrifices on this path to becoming wealthy, the path to his success also includes taking risks and encountering some failures along the way.

The common perception of “S” is that he must be taking advantage of everybody, we learn from his email that the opposite is taking place, in that he provides housing for those that have poor credit, contributes to his community, does charity work, and most importantly hires employees, giving them a job and a way to earn a living!

 

Unlike the typical inaccurate representation of the rich where everybody thinks they are crooks or like Scrooge, people like “S” should be applauded and appreciated for the great ways they are benefiting the world!

 

Thanks “S”, for providing your personal story and hopefully bringing a better understanding of the sacrifices and hurdles that you’ve had to overcome on your road to success.

 

Big Kudos to “S” for writing such a great response,

 

MR

What Skills Are Keeping You From Becoming Financially Independent?

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I have a strong sense of logic.  I like to crunch numbers and playing mind and logic games. I consider this a great skill, but logic/analytical skills in themselves won’t help me to become financially independent!

Having Great Ideas that Didn’t Take

I come up with what I consider great ideas, but I don’t communicate those ideas very well.  Often, I’ll bring an idea up to a manager or friend and they won’t get it, then later someone else will think of my idea but they are able to create some buzz around it, thus enabling the newly re-discovered idea to be applauded and implemented (and yes, I hate that this happens to me).

So based on a long history of these kind of experiences, I’ve come to the conclusion that my weakness is my communication and marketing skills.  Since I now know the enemy, I decided to use blogging as the weapon of choice for combating my weakness. In fact, trying to defeat this weakness is my third main reason that I blog, and blog often.  My 1st and 2nd reasons are to play with the technology and to help others recognize a path for a middle-income member (like myself) to become financially independent.

Why I Blog Almost Every Day

Since I’ve uncovered my weakness through analyzing my past, The simplest and most entertaining way to combat my communication weakness is by blogging.

After almost two years of blogging, I’ve notice that my communication and marketing skills have increased in the following ways:

  • I think of words faster during a conversation with others.  I use to stumble for the correct words when speaking to other, but now those words just slip off of my tongue like a bicycle slipping on ice.
  • Both my email and IM communications are easier and more clear for the recipients to read.
  • I have confidence in my words.  I’m a blogger and this is now what I do, so words and I are finally friends.
  • I’ve learned to think outside of the box.  New ideas come to me all the time at work.
  • I believe that in some ways I’ve become smarter, and think that writing has kept me sharper than if I didn’t write.

With My New Skill, Will I Become Financially Independent?

With my new skills, I find it easier to talk to strangers.  Talking to others creates and enables opportunities that would not exist for you if were just kept to yourself.  So just in this small side effect from blogging, my odds of financial independence has greatly increased.

Since I have increased my weaknesses, now I can focus on my strengths while maintaining my new skills.  I’m hoping that with my strengths and enhanced weaknesses, I’m a more marketable individual.

Getting Help if You Have Weaknesses

What if you are the opposite of me?  Let’s say you have great communication skills, but horrible math/logical/analytical skills?  What can you do?

First, starting with the basics, try learning your skill weakness again.  Sometimes when you are younger, too many other distractions exist to focus on something that requires a lot of focus (like math, logic, etc).  You may find that you now have the patience and attitude for learning in your area of weakness.

Second, if find that you still don’t like your area of weakness, bring in others!  Friends, family, paid contractors… whatever it takes!  Keep an open mind during your encounters with your weaknesses can go a long way to fix those problems!

Readers, do you have any weaknesses that you care to share?

Thanks for helping me on my path to become financial independent.

MR

 

 

Progress on Achieving Financial Independence – Swimming To Shore

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After I paid off my house a few years ago, I wrote about the experience (via the post:  Stop Drowning in Debt, Start Swimming To Shore) using a swimming analogy.  In the swimming analogy, I compared “being in debt” as being similar to being underwater and swimming straight up to get desperately needed air.

In the under water analogy, there were no complex choices, you had to swim straight up on the quickest and shortest path to get the prized air.  Instinct practically took over so there was no thinking, just a constant and quick paddling to get to the surface.  Much like debt, it makes the decision very easy because every movement up was a direct contribution to your end goal which was to breathe or reduce your debt.

Once surfacing (or getting out of debt):

  • at first you catch your breath,
  • rest a bit,
  • then start looking where to go from there!

In a later post called (Getting Wealthy By Swimming to Shore), I wrote that I plotted a basic course to follow and that I started implementing my loose plan.

I’ve discovered that following that plan is hard because of so many other options that are out there once you get out of debt.  I’m constantly wondering about the direction that I should be swimming and if current path is the best…  I miss the days when every payment on debt was instant feedback on how my financial position has improved.  The wealth producing opportunities are not anywhere near as predictable making debt payments.

The feedback can be false depending on how you act on your investments.  For instance, 3 years ago I would have never guessed that gold would be as high as it is today.  In a unsure economic climate and the increased consumption from developing markets on a scarce resource, it makes sense that gold would rise as it has but it’s hard to see this sometimes because of all the variables involve.  To bad I didn’t buy any back then!

Interestingly (and not really related to the point of my article), I recently saw on TV that we can make gold out of lead.  The process requires massive amounts of energy that make it too expensive, but it is possible.

Achieving financial independence and my swimming analogy:

So I’ve plotted a course to follow that I will try to achieve financial independence, but it’s a tough course and I’m constantly making small adjustments.  I think as long as I don’t swim in circles or suddenly decide to swim the opposite way, I’ll be okay.  I have learned that my journey won’t be a straight path as it was with getting out of debt.

There will be times when I go backwards because of the currents or I’ll have to swim around obstacles (like stinging jellyfish).  I think the important point is to keep swimming, because after you stop swimming for too long, eventually you sink.

So in conclusion, it looks like I’m in for a long, hard swim until I develop a pace to swim/invest by…

MR