Quote:
Originally Posted by Therian  Yes sir, but I would suggest that if someone doesn't feel rich making $250,000, they're doing something wrong.
I'm using the definition of rich that I posted above...
Of course it is all relative, but I have a hard time with someone asserting that you're not wealthy/rich if you're 'only' making $250,000 a year. |
If someone makes $250,000 as an individual and doesn’t feel prosperous, perhaps his/her expense ratio is weighted the wrong way.
If someone makes $250,000 as a business entity and doesn’t feel prosperous, perhaps his/her expense ratio is weighted the wrong way.
Reads the same.
Now, the difference (in many, many cases) is that someone running a business is likely going to have more expenses beyond their personal locus of control. Operations, shipping, payroll, facilities, equipment, insurance, taxes, etc are all variable and subject to change given market conditions. It’s easy to see how quickly a stream of incoming cash, even the amount of $250,000, can be saturated.
On the flip side, a person who has a family with a gratuitous amount of luxuries might also consume such a cash flow, but is there really a direct benefit to their consumptive pattern? Sure, they might “stimulate” the economy with excessive spending, but when everyone jumps on this bandwagon, we tend to end up where we are today. Read: overstepping your means. This type of individual could be seen as "rich", given the nature of
required variable expenses when compared to income.
Put it like this in direct contrast of two households: A quarter million annually for me would definitely put me in the realm of feeling “rich”. Heck, I feel extremely blessed now, and I’m nowhere near that mark. Conversely, a relative of mine, with two businesses (farming and real estate) sees a quarter million as not “rich”, but barely making it. Why? We have two totally different frames of reference with respect to expenditures.
Therefore, I don’t think we can safely apply a label of “rich” to an income stream of $250,000. Where does the threshold change? Hard to say, and it’s very relational to the situation of the individual/business/organization.