Methuss

AMEX using "guilt by association" ratings

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I think I am in your boat too Deanna...I barely make 38 a year lOL...I have 3 kids too, :mrgreen:

I pull in about 33-34k depending on how my bonus is. With 2 kids, (and I do alot for my exstepdaughter so I guess you could say I had 3 :lol:), that's not alot at all. I get about $400 extra a month from exhubby right now too so that helps out.

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Okay so is this how we are defining wealthy these days? 10 million in networth? Dang I would think I "made it" if I could pull in just 100k a year! :lol:

Seriously, I'm not one of these high maintenance chicks who spends a grand a month on highlights and shoes. I could live a very comfortable lifestyle at even just 40k a year.

How about 33k

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Okay so is this how we are defining wealthy these days? 10 million in networth? Dang I would think I "made it" if I could pull in just 100k a year!

Ten million isn't out of reach of most people in this country - the biggest problem people have in acquiring that kind of wealth is themselves. There is no reason why anybody in this country of just average intelligence and education can’t retire as a multimillionaire (which most people do still consider wealthy).

If you make just $15/hour and work a forty-hour week, you bring home about $390/week after taxes (or about $1,690/month or $20,280/ year). If that person will invest just 15% of his pay every month (about $253/month) and he does that every month starting at age 18, by the time he has reached age 50, he will have $1,279,000 in wealth. If he waits just 12 more years (until age 62) to retire, he will have a nest egg of $5,439,000.

Most people could live pretty comfortably on $5M I think - you might want to notice that in my example above, I didn’t even give the guy a raise in 44 years on the job!

The biggest single reason people don’t have the money to save a lousy 15% of their pay is debt service (predominately car payments followed by CC payments). So, if American Express decided to never issue another credit card, I won’t shed any tears. :)

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Huh?
You said 40k iwas wondering if you live on 33k a year,granted not lot but thats my retirement for 50-70 hrs a week

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Ten million isn't out of reach of most people in this country - the biggest problem people have in acquiring that kind of wealth is themselves. There is no reason why anybody in this country of just average intelligence and education can’t retire as a multimillionaire (which most people do still consider wealthy).

If you make just $15/hour and work a forty-hour week, you bring home about $390/week after taxes (or about $1,690/month or $20,280/ year). If that person will invest just 15% of his pay every month (about $253/month) and he does that every month starting at age 18, by the time he has reached age 50, he will have $1,279,000 in wealth. If he waits just 12 more years (until age 62) to retire, he will have a nest egg of $5,439,000.

You might want to notice that in my example above, I didn’t even give the guy a raise in 44 years on the job!

The biggest single reason people don’t have the money to save a lousy 15% of their pay is debt service (predominately car payments followed by CC payments). So, if American Express decided to never issue another credit card, I won’t shed any tears. :)

If your an older worker you can retire at a pretty good income.You can still invest in short time investments,parttime work.My company still sends me little projects to repair.plus they still pay me a small fee for advice.

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Ten million isn't out of reach of most people in this country - the biggest problem people have in acquiring that kind of wealth is themselves. There is no reason why anybody in this country of just average intelligence and education can’t retire as a multimillionaire (which most people do still consider wealthy).

If you make just $15/hour and work a forty-hour week, you bring home about $390/week after taxes (or about $1,690/month or $20,280/ year). If that person will invest just 15% of his pay every month (about $253/month) and he does that every month starting at age 18, by the time he has reached age 50, he will have $1,279,000 in wealth. If he waits just 12 more years (until age 62) to retire, he will have a nest egg of $5,439,000.

You might want to notice that in my example above, I didn’t even give the guy a raise in 44 years on the job!

The biggest single reason people don’t have the money to save a lousy 15% of their pay is debt service (predominately car payments followed by CC payments). So, if American Express decided to never issue another credit card, I won’t shed any tears. :)

Have you been reading my favorite book again? :lol: (See the siggy....)

No, all joking aside, I totally agree. That is actually my plan once I have my car paid off. That is $216 a month. Then, in three and a half more years, when my son starts kindergarten, I can put back his daycare costs, ($425 month) as well. I can apply that plus any addional income/raises I may have to my mortgage and get that paid off. Then once my mortgage, daycare, and car expenses are gone-that will free up around $1300 extra per month, plus whatever else I can save. I plan to accomplish this all in about 8 years. Sounds crazy huh? It's my goal though! :)

So if after the 8 years of paying off my debt has passed and I can begin to put around $1500 away in savings every month, (which is my goal), then even at just a 2% return rate, in 10 years I will have $2,412,626. :mrgreen:

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You said 40k iwas wondering if you live on 33k a year,granted not lot but thats my retirement for 50-70 hrs a week

Oh okay, don't mind me... I can be quite the dingbat! :lol:

Anyways, yes I actually could live on 33k, that's close to what I live on now. I'm not comfortable but I'm okay. We do okay. Now if I was old and retired with no debt or kids to support-wow-I could do GREAT on 33k!

So I just think it really depends on your living situation, debt situation, and how old your kids are. For example if you have younger children like me, you probably are suffering the cost of daycare. Just two months ago, I was paying $810 a month for two children. :shock::shock::shock::shock:

Now, thankfully my daughter has started pre-k, so it's cut down a little, but still....that's more than my mortgage!

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Whoa there. That is almost completely untrue.

If you read Forbes, or Money Magazine, or Smart Money when they interview people who have a net worth over $10MM, nine out of ten of the wealthiest people in the world say that the number one step to becoming and staying wealthy is to become and stay debt-free. Rich people that have stayed rich don't carry balances on credit. They understand early on that if your are not paying interest on money you are earning it.

I will definitely find the sources for that information, but I know that EARLY on, folks are going to leverage credit in the very beginning. How else are small businesses going to raise the capital they need if they don't have investors. And even if they do, they are going to get a small SB loan to get things started. Perhaps when they get that 10MM, they won't need credit anymore....

My whole point is that rich people use credit, and for that matter money, much differently than you or I would. I'm trying to aspire to that ideal but until I get rid of my debt, I won't see it.

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Oh okay, don't mind me... I can be quite the dingbat! :lol:

Anyways, yes I actually could live on 33k, that's close to what I live on now. I'm not comfortable but I'm okay. We do okay. Now if I was old and retired with no debt or kids to support-wow-I could do GREAT on 33k!

So I just think it really depends on your living situation, debt situation, and how old your kids are. For example if you have younger children like me, you probably are suffering the cost of daycare. Just two months ago, I was paying $810 a month for two children. :shock::shock::shock::shock:

Now, thankfully my daughter has started pre-k, so it's cut down a little, but still....that's more than my mortgage![/quoteou pay more on child care(good child care)sure you can get by cheaper but you couldn't leave your kids with just anyone.We moved to idaho for a cheaper standard of living,rent lights etc.However there's not much of a social life.Nearest neighbor is mile away.So they only interaction i have is with the cattle.Will move soon for my sanity.

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I will definitely find the sources for that information, but I know that EARLY on, folks are going to leverage credit in the very beginning. How else are small businesses going to raise the capital they need if they don't have investors. And even if they do, they are going to get a small SB loan to get things started. Perhaps when they get that 10MM, they won't need credit anymore....

My friend…that’s just restating the lie thrust upon us by those who lend that we “must” have credit to prosper…it’s a lie for individuals and it’s a lie for businesses.

Nobody must have credit to prosper…an individual with no debt and a well-funded emergency fund will ALWAYS prosper compared to one who doesn’t and a business built on MONEY instead of credit will ALWAYS, assuming their business plan/product is sound of course) prosper compared to those businesses who built their businesses on credit as economic downturns like we are in now prove over and over again..

There is a huge crisis in the automotive dealer segment right now because those dealers who floor-plan their inventory are finding it difficult and in some cases, impossible to get financing and they are going out of business in droves (Bill Herd; the largest GM dealership went out last week and estimates are that 700 dealerships will close their doors over the next year). The dealers still standing when the dust settles will be those who didn’t use floor-planning/debt (either at all or very little) to build their business in the first place and/or had enough liquid assets (i.e. and emergency fund) to handle the inevitable economic downturns).

Operating without debt is, of course, not the conventional wisdom we get from our broke friends and broke "financial professionals" who think we must use debt to be "sophisticated"...personally, I'll take money in the bank over sophisticated debt any day.

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Okay so is this how we are defining wealthy these days? 10 million in networth? Dang I would think I "made it" if I could pull in just 100k a year! :lol:

Seriously, I'm not one of these high maintenance chicks who spends a grand a month on highlights and shoes. I could live a very comfortable lifestyle at even just 40k a year.

$1 Million doesn't go very far these days. And a lot more people have hit that level than you may think. Remember that retirement accounts, your house and your car are assets too.

If you have no debt, $500 in checking, a house worth $150k that is half paid off, and two cars each with $5,000 equity, and $100k in a retirement account then you're already at a net worth of $185,500...one quarter of the way to being a millionaire. A lot of people are way beyond that and don't even realize it. You have to do a net-worth analysis to know for sure.

So yes, $10MM net worth is pretty much the "new" rich level these days.

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I will definitely find the sources for that information, but I know that EARLY on, folks are going to leverage credit in the very beginning. How else are small businesses going to raise the capital they need if they don't have investors. And even if they do, they are going to get a small SB loan to get things started. Perhaps when they get that 10MM, they won't need credit anymore....

My whole point is that rich people use credit, and for that matter money, much differently than you or I would. I'm trying to aspire to that ideal but until I get rid of my debt, I won't see it.

As Robert said, if you believe debt is a way of life you have been lied to and belived it. (Robert, you've been reading Dave Ramsey too, haven't you?)

Debt is a product sold by people who lend money. It is the most agressively marketed product the world has ever known and over the last 40 years it has been the goal of every lender to drill it into the general population's psyche that it's a "needed" service.

Bull-stones. The only ones who "need" debt are the lenders. You can do everything in life without debt. You just have to do more planning, be patient and stop walking through life like Gomer Pile on Vallium. Save for your vacations instead of putting it on a card. Pay cash for your car. Shop smarter. And when you're rich enough to afford to be impulsive, you'll have the money for it.

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The only ones who "need" debt are the lenders. You can do everything in life without debt.
Some industries are capital intensive. Is a builder of oil tankers going to foot the bill upfront? How about launching a satellite? What about building a hospital? Building a skyscraper? Some companies require debt. There is no way around it.

and if there is no debt, then there is no return on assets. No one would pay you for your money. No company would sell stock or bonds because that is capital they borrow from you that they use for expansion. Essentially they borrow the money and use it more efficiently than you can. They win and you win.

No debt? You're back to the Flinstone era.

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As Robert said, if you believe debt is a way of life you have been lied to and belived it. (Robert, you've been reading Dave Ramsey too, haven't you?)

Actually, I was lucky enough to get to know Dave just a few months before his radio show went national back in '95 (in fact, he was still doing his show as a team with another fellow)…he was just rolling-out “Financial Peace University” so that they could be conducted by someone other than he and his staff personally and I became an FPU Coordinator for several groups.

Now, I don’t mean to say he and I are friends…he might remember that he met me but I doubt he’d even remember that I was a FPU coordinator!

I’ve considered, from time to time, becoming an ELP but I really don’t have time to work with people individually (which is one of the reasons I spend time here).

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Okay AA if you're "lower middle class" then I am definitely "lower class." :lol:

I don't even pull in 36k a year for a household of 3.

But I have always thought of myself as "lower middle class," because I know alot of people who have it way worse than I do. Which is why I try not to complain too much. I'm actually pretty blessed. :)

I think I am in your boat too Deanna...I barely make 38 a year lOL...I have 3 kids too, :mrgreen:

AA KUDOS for sticking up for Blue collar workers LOL Thats what I will be till I die LOL Yeah this place is pretty diverse, I like that too. :-):mrgreen:

Deanna, Tommy, jjgross and anyone else,

Thing you have to keep in mind is that while my salary might be greater than yours, cost of living eats up at alot of my salary. If I took my salary and moved to where you live, Deanna, I'd really really be happy. I looked, I would only need $56k a year just to live how I live now. New Jersey (and really, it's the metro-NYC area) has the highest cost of living in the entire Union, followed by Connecticut. Texas cost of living is LOW....especially Austin, compared to New Jersey. Texas is also a highly developed state and is a technology mecca. I desire to move there because there is no state income tax...if I don't move there while I'm working I will definitely retire there.

Bottom line, NJ is a very expensive place to live in. Salary by itself isn't a good measure of how well someone is doing. Though, like you, I feel very blessed as well.

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Some industries are capital intensive. Is a builder of oil tankers going to foot the bill upfront? How about launching a satellite? What about building a hospital? Building a skyscraper? Some companies require debt. There is no way around it.

and if there is no debt, then there is no return on assets. No one would pay you for your money. No company would sell stock or bonds because that is capital they borrow from you that they use for expansion. Essentially they borrow the money and use it more efficiently than you can. They win and you win.

No debt? You're back to the Flinstone era.

I disagree (don’t fall over in surprise).

I work with a multi-billion dollar multi-national company which is very capital intensive (in fact, I’m in our capital group) and we have zero long-term debt and little short-term debt.

No one must have debt/credit…yes; borrowing to build a hospital, ship, etc. is “easier” but debt always, always, always entails risk (risk that those who use debt either fail to take into consideration or refuse to take into consideration).

A shipbuilder can build a new ship with cash if they wish to do so; they just don’t want to wait because their earnings this quarter/this year is often more important to them than the company’s long-term viability (probably because their bonuses are tide to “this year’s performance)!

By the way, debt isn't an asset; it's a liability and companies don't need to sell stock or bonds if they don't use debt.

And if we were in the Flintstone era we would not be having a credit meltdown and likely be living at a much higher standard of living than we not are...those who rent their lifestyle (be they individuals or companies) may "look" good but ultimately the smell from the garbage of debt overwhelms the "looks".

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Salary by itself isn't a good measure of how well someone is doing.

Agreed.

In Illinois I had to make over $80k just to keep a family of three afloat. I was paying over $7,000 a year in property tax on a house worth $280k plus had to deal with State income tax and some of the highest sales taxes in the country -- 9.75% when I left.

In Florida I can live by better standards than I did in Illinois on $40k. With the house and cars paid off (which they now are), I can live quite nicely here on $20k a year.

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Robert and Methuss,

I definitely want to unlearn the lie. I don't personally use my credit like it's extra cash and I actually regret using debt to get my car. I want wealth, really I do and I think I can get there if I continue to kill the debt that gets generated monthly by my car.

I also try to have a couple of hundred dollars in cash because I am so afraid I'll be like many of the CICers (and I'm talking about veterans) that will get into debt because of an unforseen emergency involving my parents or something else. As Robert as said, right now for me, it would just take that one thing for my plan to go off kilter and then I'm in CC-Debt land.

I do read and in more than principle agree with the both of you. You guys sound less nuts than Dave Ramsey, so it makes it easier for me to read what you guys say. 8-)

But credit, if used smart, can be a great financial tool.

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Agreed.

In Illinois I had to make over $80k just to keep a family of three afloat. I was paying over $7,000 a year in property tax on a house worth $280k plus had to deal with State income tax and some of the highest sales taxes in the country -- 9.75% when I left.

In Florida I can live by better standards than I did in Illinois on $40k. With the house and cars paid off (which they now are), I can live quite nicely here on $20k a year.

Thats why i left San Diego i was the operations manager for 2 branches one in San Diego one in l.a. spent most my time on the road plus i was the lead trouble shooter 70 hrs a week was it worth it not really but i never got bored and i seen alot of really stupid people driving.

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In Florida I can live by better standards than I did in Illinois on $40k. With the house and cars paid off (which they now are), I can live quite nicely here on $20k a year.

Oh yeah, totally. The reasons you are in Florida are the same reasons I like Texas. What differentiates Florida from Texas for me though is that jobs tend to be scarce, and if they're not, they tend to be on the lower side. Mind you, that's not always the case, but in general, Florida is best for retirement. Texas on the other hand has a lot of tech jobs that I found have paid the same or higher than jobs in the NYC area. That always bugs me out because cost of living is still relatively low for such developed areas as Austin, Houston, Dallas. Mind you the last two have areas that rival Harlem, but when I visited Austin a couple of years ago, I really fell in love.

I was in Chicago 11 years ago. I was amazed that it was more expensive for food than in NYC....and for the life of me, I couldn't understand why other than that really high sales tax.

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A shipbuilder can build a new ship with cash if they wish to do so; they just don’t want to wait because their earnings this quarter/this year is often more important to them than the company’s long-term viability (probably because their bonuses are tide to “this year’s performance)!
How would the shipbuilder do this? They'd need to borrow the materials then. That's credit. They are starting with nothing. And even after they buiild a dozen ships, they may not have enough accrued cash to cover future building expenses!

You are a new company. Your new business plan (a good one) requires you launch a satellite or build a factory. You have $50,000 in the bank. Either you roundfile your new idea and we don't get to push business forward & evolve or you must take on debt.

...By the way, debt isn't an asset; it's a liability and companies don't need to sell stock or bonds if they don't use debt.
Yes, I am aware. But let's say you have $1,000,000. Since there are no stocks, bonds, or any other debt instruments, where do you park your money? There would be no such thing as return on investment. Gold is an instrument to preserve wealth not create it.
And if we were in the Flintstone era we would not be having a credit meltdown and likely be living at a much higher standard of living than we not are...those who rent their lifestyle (be they individuals or companies) may "look" good but ultimately the smell from the garbage of debt overwhelms the "looks".

Debt is a way to efficiently allocate finite resources. You get resources from those that have them to those that need them and can use them more efficiently for the benefit of everyone ultimately. The fee for the rental of these resources is INTEREST. The interest charged should encompass a rate of return to cover a profit for the owner of those resources plus a margin to cover inevitable losses. Without debt, wealth sits idle while those that need those resources are starved. This is a HUGE problem!!!! We'll contract our standard of living- not because there is a shell game being played (I agree there is some of this), but because efficiency is what ultimately drives growth. And contracting credit is quite the opposite. Sure, it makes a good soundbite if there were no debt anywhere, but this would be an enormous step back!

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No debt? You're back to the Flinstone era.

Don't confuse borrowing with stock ownership. Stock is buying some ownership in a company, not a company borrowing from an individual. Most companies issue stock to generate additional capital and that just isn't the same as taking out a loan.

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You are a new company. Your new business plan (a good one) requires you launch a satellite or build a factory. You have $50,000 in the bank. Either you roundfile your new idea and we don't get to push business forward & evolve or you must take on debt.

Even during the lending craze you couldn't get that kind of funding. Maybe you should take a look at what a small business startup process costs for a franchise? Lemme help:

Big Apple Bagels requires you to have a net worth of $300,000 before they will even consider your application.

ColdStone Creamery requires a net worth of $450,000.

Want to open a McDonald's? Better have a net worth of $1,500,000 before you apply.

You have to have cash or assets of some kind to back your business plan. If you don't you're not even going to get it off the ground.

SBA doesn't give out loans like lollipops either. They expect the business owner to take on some of the risk. A $100,000 SBA loan during the lending heydey still required the business owner to fund 30% of it...you got $70k out of it.

Not to mention the fact that one thing every business plan has is a 3-year and a 5-year profitability projection. Thos projections have to show a positive ROI. That means the startup costs have to be paid off before you get a return.

Sure, it makes a good soundbite if there were no debt anywhere, but this would be an enormous step back!

Never said that. There will always be people who don't get the point that debt is not a way to success. If no one took on any debt then no one could turn a retirement account. There would be no interest earned on savings. So someone has to borrow. What we are saying is that smart people don't borrow. When I deposit my money in the bank and they pay me interest, I am lending my money to the bank. When the bank lends that money out again they collect more interest than they pay me. The STUPID person lends their money to the bank at 3% and then borrows the same money back from the bank at 18% with a net loss of 12% annual.

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How would the shipbuilder do this? They'd need to borrow the materials then. That's credit. They are starting with nothing. And even after they buiild a dozen ships, they may not have enough accrued cash to cover future building expenses!

You are a new company. Your new business plan (a good one) requires you launch a satellite or build a factory. You have $50,000 in the bank. Either you roundfile your new idea and we don't get to push business forward & evolve or you must take on debt.

The shipbuilder does it not by borrowing money but buy using cash - why do you think that’s so impossible? If they are small and haven’t grown enough yet to have that kind of cash then they keep building their business slowly until they do have the cash...maybe they need to build a couple dozen more ships. Or, if they keep building ships and not making enough profit to fund their growth then maybe they have other problems (which debt will not only not solve but ultimately make worse).

The business plan isn’t a good one if it requires you to do things you don’t have the money to do. If you don’t have the capital to do what you want to do then you either don’t do it or you sell stock (which is not debt) to raise the capital you need.

Your example sounds a bit like the 21 year old newly married couple who think they should have the same lifestyle level their parents live at now (forgetting that their parents took decades to get where they are)...rather than starting where they are and building a future, they simply go out an rent one.

Yes, I am aware. But let's say you have $1,000,000. Since there are no stocks, bonds, or any other debt instruments, where do you park your money? There would be no such thing as return on investment. Gold is an instrument to preserve wealth not create it.

As I mentioned above, stock isn’t a debt instrument and of course, only stock that the company holds and is now selling bring money into the corporation; all trading after that is between individual stockholders and there is absolutely an ROI (at least one hopes there is)…you certainly don’t need debt to have an ROI; in fact, debt service is what brings most business’ ROI’s down.

Debt is a way to efficiently allocate finite resources. You get resources from those that have them to those that need them and can use them more efficiently for the benefit of everyone ultimately. The fee for the rental of these resources is INTEREST. The interest charged should encompass a rate of return to cover a profit for the owner of those resources plus a margin to cover inevitable losses. Without debt, wealth sits idle while those that need those resources are starved. This is a HUGE problem!!!! We'll contract our standard of living- not because there is a shell game being played (I agree there is some of this), but because efficiency is what ultimately drives growth. And contracting credit is quite the opposite. Sure, it makes a good soundbite if there were no debt anywhere, but this would be an enormous step back!

The only thing debt is efficient at is making money for those who sell it and a tool by which companies short-circuit sound business practice and grow their business on a foundation of sand (hoping the tide doesn’t come in and wash them away before they’ve taken their profits and gotten out).

The wealthiest man I know personally (in fact we are close friends), built a business from nothing, save for his own checking account balance; into a business that by the time he sold it for several million, employed 300 people – he never borrowed a single penny to do it. Certainly he could have borrowed money from his bank and perhaps built his business faster but during the years he was in operation; many competitors came into and went out of business because they couldn’t handle the debt service they had obligated themselves to in an effort to “grow” fast.

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