How do you define the 1%?

[hal2kilo]

About 80% of millionaires are first time affluent

Also - their savings rate pre-millionaire status is typically 2x the average American savings rate (hmm...maybe saving money has something to do with being affluent?)

Really, you think that they are wealthy because their saving rate is 2x the average American's and it's not that their savings rate is x2 the average because they are wealthy?

Gee if I had an extra hundred thousand coming in, even after some whores and blow, I'm sure I would probably quadruple my savings rate.

 

[soulcougher73]

Sorry for attacking a figure that you posted that is off by a factor of 100. Perhaps I didn't understand how difficult it is for you to type a '.' or for you to get anywhere near the figure you were actually referring to. Heaven forbid you spend a fraction of a second to be accurate in your descriptions.

I also very clearly stated that I am attacking the use of 1% instead of .1% because I think that doing so is a barrier to getting the change we need.

Since you seem kind of slow I will put this a different way - I was trying to make it easier to tax the super wealthy more! (Yet somehow this + stating on the forum that capital gains tax should increase + my pro-chocie, pro-gay, pro-stemcell research, anti-teaching evolution, moderate stance on unions etc puts me into the GOP party in your handbook? )



Then why all the complaining in America about wealth? I mean you are still better off than ~98% of the rest of the world. Everyone in American complaining about American 1%ers must be delusional to not realize how well off their are.

But im fine taxing the actual 1% more as well as the .1% id tax the .1% even more then the 1% if it were up to me.

And comparing us to the rest of the world is never a good idea. Its all relative.

I'm perfectly fine using .1% if that helps you. But when someone says the 1% i also realize they are actually talking about the .1% in reality. Typically at least. They are usually talking about the 5million+ crowd. Not the 300k crowd for example.

 

[Exterous]

There's some low hanging fruit right there. I bolded the second statement because it is delicious.

Damnit

 

[soulcougher73]

There's some low hanging fruit right there. I bolded the second statement because it is delicious.

Ok lets not pick apart 1 word. You know what he meant. We should all start acting more civilized when debating instead of attacking little mistakes like that when its obvious what was meant to be said.

Cant we all just :wub:

 

[dank69]

Ok lets not pick apart 1 word. You know what he meant. We should all start acting more civilized when debating instead of attacking little mistakes like that when its obvious what was meant to be said.

Cant we all just :wub:

I 100% agree and the only reason I nitpicked him is because he was nitpicking in the first place.

 

[PJABBER]

About 80% of millionaires are first time affluent

Also - their savings rate pre-millionaire status is typically 2x the average American savings rate (hmm...maybe saving money has something to do with being affluent?)

You are completely correct. Among the keys to wealth are frugality and conservation.

Thomas J. Stanley did a study some years back on millionaires and how they got there. The book, The Millionaire Next Door, and others that followed, pointed out a few less than well known facts -

1. They live well below their means.
2. They allocate their time, energy and money efficiently, in ways conducive to building wealth.
3. They believe that financial independence is more important than displaying high social status.
4. Their parents did not provide them economic outpatient care.
5. Their adult children are economically self-sufficient.
6. They are proficient in identifying market opportunities.
7. They chose the right occupation.

Stanley found that building wealth took discipline, sacrifice and hard work.

Now we have the Occupy crowd that doesn't fall into the above categories and do not want to do any of the above that are required to become wealthy, well-off or even self-sufficient, but they do want to take away the wealth from those that did.

All in the name of some artificial interpretation of "fairness."

Perhaps their parents only read them stories about unicorns and wealthy princes that just showed up and showered them with unearned bounty.

Perhaps they should have read tales like "The Ant and the Grasshopper," instead -

Once there lived an ant and a grasshopper in a grassy meadow.

All day long the ant would work hard, collecting grains of wheat from the farmer's field far away. She would hurry to the field every morning, as soon as it was light enough to see by, and toil back with a heavy grain of wheat balanced on her head. She would put the grain of wheat carefully away in her larder, and then hurry back to the field for another one. All day long she would work, without stop or rest, scurrying back and forth from the field, collecting the grains of wheat and storing them carefully in her larder.

The grasshopper would look at her and laugh. 'Why do you work so hard, dear ant?' he would say. 'Come, rest awhile, listen to my song. Summer is here, the days are long and bright. Why waste the sunshine in labour and toil?'

The ant would ignore him, and head bent, would just hurry to the field a little faster. This would make the grasshopper laugh even louder. 'What a silly little ant you are!' he would call after her. 'Come, come and dance with me! Forget about work! Enjoy the summer! Live a little!' And the grasshopper would hop away across the meadow, singing and dancing merrily.

Summer faded into autumn, and autumn turned into winter. The sun was hardly seen, and the days were short and grey, the nights long and dark. It became freezing cold, and snow began to fall.

The grasshopper didn't feel like singing any more. He was cold and hungry. He had nowhere to shelter from the snow, and nothing to eat. The meadow and the farmer's field were covered in snow, and there was no food to be had. 'Oh what shall I do? Where shall I go?' wailed the grasshopper. Suddenly he remembered the ant. 'Ah - I shall go to the ant and ask her for food and shelter!' declared the grasshopper, perking up. So off he went to the ant's house and knocked at her door. 'Hello ant!' he cried cheerfully. 'Here I am, to sing for you, as I warm myself by your fire, while you get me some food from that larder of yours!'

The ant looked at the grasshopper and said, 'All summer long I worked hard while you made fun of me, and sang and danced. You should have thought of winter then! Find somewhere else to sing, grasshopper! There is no warmth or food for you here!' And the ant shut the door in the grasshopper's face.

It is wise to worry about tomorrow today.

 

[Exterous]

Really, you think that they are wealthy because their saving rate is 2x the average American's and it's not that their savings rate is x2 the average because they are wealthy?

Why can't it be both? You may say 'Man it sure would be easier to save if I made more because I sure can't afford it now!' but lets take a quick look at how American's spend money. Americans spend about ~28% of their income on housing. (29% for poor, 27% middle class, 27.5% rich). Yet somewhere along the line we decided that we needed we needed more than twice the house size we needed in 1950 even though our family size was less. Clearly our parents survived in a smaller house that cost less. If saving was really important it would seem to figure that we could also survive in a smaller cheaper house. Now - assuming a house 25% smaller costs just 18% less and they saved the difference they just effectively doubled their savings rate by going with a smaller house! (Does the average home size in America really need to be over 2300sq ft? Really? That's almost 1000 sq ft a person!)

But im fine taxing the actual 1% more as well as the .1% id tax the .1% even more then the 1% if it were up to me.

And comparing us to the rest of the world is never a good idea. Its all relative.

I would be too although I would really like to see more income brackets for capital gains tax. I don't like being taxed the same rate as Warren Buffet on my capital gains

I'm perfectly fine using .1% if that helps you. But when someone says the 1% i also realize they are actually talking about the .1% in reality. Typically at least. They are usually talking about the 5million+ crowd. Not the 300k crowd for example.

We differ there. While people here may be able to make that distinction I don't think most do. I've had too many conversations with people who don't really know where the 1% starts

 

[Exterous]

Ok lets not pick apart 1 word. You know what he meant. We should all start acting more civilized when debating instead of attacking little mistakes like that when its obvious what was meant to be said.

Cant we all just :wub:

You sir, appear to be a true gentleman. I shall en devour to be less of a self righteous dick around you (No promises though)

I 100% agree and the only reason I nitpicked him is because he was nitpicking in the first place.

What? I never nitpick

I combativley debate semantics

 

[soulcougher73]

You sir, appear to be a true gentleman. I shall en devour to be less of a self righteous dick around you (No promises though)

I try to be. I know its easy to get sucked into the fray of endless trash talk though. But i do get tired of most people here (not saying you) that just repeat the same arguments or trash talk over and over without actually attempting to discuss or debate the actual topics.

I'm trying to ween myself from coming into P&N because i do get tired of the endless drivel that seems to be the same stuff regardless of the topic at hand. And i will admit even though im agnostic athiest/socially liberal and fiscally conservative in my overall views, the typical GOP shills in here really irk me the most and wish i could reach through the monitor and punch them in the face lol. Way more so then the D shills.

 

[Throckmorton]

Originally Posted by Braznor
History has come full circle. America hates rich people!



As the 99% join together against them they better start losing that "incentive to keep wages and hours down for everyone else".

Band together? You and what union?

 

[berzerker60]

Is it now? Where do you get your data from? The US census data puts the number far closer to $1.5 million as the start of the 1% wealth

http://www.census.gov/compendia/statab/2012/tables/12s0717.pdf

For reference $1.5 million is the amount required for a retiree to provide the US median income during a 30 year retirement. It may sound like a lot but in practice having $1.5 million for retirement should be a goal

http://economix.blogs.nytimes.com/2012/01/17/measuring-the-top-1-by-wealth-not-income/

Also there: "Some readers wondered if the 1 percent by wealth weren’t an entirely different group of people from the 1 percent by income. But there is substantial overlap: the Fed data suggests that about half of the top 1 percent of earners are also among the top 1 percent in the net worth category.

Almost all the rest of the top earners are still in the top 5 percent when it comes to net worth."

So it's not a huge distinction that needs to be made between income and wealth here. It's absolutely possible to feel not-so-rich on $400k income, and indeed people absolutely do, but that's just too bad. You don't actually need to Keep up with the Joneses, and basing your tax system around enabling that lifestyle is morally abhorrent so long as poverty and poor access to health care exist in the country.

 

[Throckmorton]

Why can't it be both? You may say 'Man it sure would be easier to save if I made more because I sure can't afford it now!' but lets take a quick look at how American's spend money. Americans spend about ~28% of their income on housing. (29% for poor, 27% middle class, 27.5% rich). Yet somewhere along the line we decided that we needed we needed more than twice the house size we needed in 1950 even though our family size was less. Clearly our parents survived in a smaller house that cost less. If saving was really important it would seem to figure that we could also survive in a smaller cheaper house. Now - assuming a house 25% smaller costs just 18% less and they saved the difference they just effectively doubled their savings rate by going with a smaller house! (Does the average home size in America really need to be over 2300sq ft? Really? That's almost 1000 sq ft a person!)



I would be too although I would really like to see more income brackets for capital gains tax. I don't like being taxed the same rate as Warren Buffet on my capital gains



We differ there. While people here may be able to make that distinction I don't think most do. I've had too many conversations with people who don't really know where the 1% starts

The price of a house doesn't depend on the size. Are you just completely ignorant of real estate or what? The reason suburban houses have gotten bigger is because the costs to the builder and the buyer aren't very high. You don't get a half size house for half price.

 

[blackangst1]

Really, you think that they are wealthy because their saving rate is 2x the average American's and it's not that their savings rate is x2 the average because they are wealthy?

Gee if I had an extra hundred thousand coming in, even after some whores and blow, I'm sure I would probably quadruple my savings rate.

You seriously fail at comprehension.

 

[Exterous]

The price of a house doesn't depend on the size.

Uh huh. So a house in the same neighborhood where everything is the same but one is 2300sq ft and the other is 1725 sq ft will be the same price? Yeah - not buying it. Perhaps you meant to say it doesn't only depend on size but that wouldn't really make sense either as I never said it did.

The reason suburban houses have gotten bigger is because the costs to the builder and the buyer aren't very high.

Yet houses today cost about ~2x more for ~2x the sq ft so the cost savings aren't really there or their markup increased. Either way that doesn't mean its not possible to save some money by buying a smaller house. (Adjusted for inflation the average price of a house in 1963 was $142,000 and got you a bit above 1,000 sq ft. A house in 2010 average price is $273,000 for around 2300 sq ft)

You don't get a half size house for half price.

Not sure why you added this as I never said it worked that way

 

[Jhhnn]

Americans spend about ~28% of their income on housing. (29% for poor, 27% middle class, 27.5% rich)

Where did those numbers come from?

I question them because the ultra rich don't spend anywhere near that on housing...

 

[God Mode]

No worries about basic bills even with the best lifestyles, residence(s), food ,medical, education, legal representation/less people to answer to etc.

The rest of us work to the bones to achieve these basic standards of living with one illness or accident away from losing it all while the rich have unlimited options and the capital to experiment with new investments or ideas without any worries.

 

[Exterous]

Where did those numbers come from?

I question them because the ultra rich don't spend anywhere near that on housing...

http://www.npr.org/blogs/money/2012/08/01/157664524/how-the-poor-the-middle-class-and-the-rich-spend-their-money

Part of that might come from the fact that the Consumer Expenditure Survey stops at '$150,000 and up'. While often referred to in the 'rich' range it definitely isn't in the same league as ultra rich

 

[Jhhnn]

http://www.npr.org/blogs/money/2012/08/01/157664524/how-the-poor-the-middle-class-and-the-rich-spend-their-money

Part of that might come from the fact that the Consumer Expenditure Survey stops at '$150,000 and up'. While often referred to in the 'rich' range it definitely isn't in the same league as ultra rich

No shit, Sherlock.

That 27.5% doesn't apply to the 1%, at all, right? Let alone the .1% or .01%... If you think the rich can hide in the top 1%, and they obviously can, then they're invisible in the top 5%.

 

[Exterous]

That 27.5% doesn't apply to the 1%, at all, right? Let alone the .1% or .01%... If you think the rich can hide in the top 1%, and they obviously can, then they're invisible in the top 5%.

I never said it did (although technically they do enter into the calculations of those values) - I certainly said nothing about anyone hiding anywhere. Your post has nothing to do with the point I brought up about the average amount Americans spend on housing. The average amount spent + the large increase average in size despite a shrinking average family size means that housing is a very easy way for the average (not 1% not .1% - average) American to increase their savings rate. My rough estimate on the increase of savings was based on the average house price, the average income and the average savings rate

 

[Jhhnn]

I never said it did (although technically they do enter into the calculations of those values) - I certainly said nothing about anyone hiding anywhere. Your post has nothing to do with the point I brought up about the average amount Americans spend on housing. The average amount spent + the large increase average in size despite a shrinking average family size means that housing is a very easy way for the average (not 1% not .1% - average) American to increase their savings rate. My rough estimate on the increase of savings was based on the average house price, the average income and the average savings rate

Peachy. And that has what to do with the topic at hand?

One of the issues facing young families today is the availability of more modest housing in decent areas. Think about it- go drive around the vast expanse of Suburbia, and what you'll find they can mostly buy is housing in the 2000-2500 sq ft range, because that's what's been built in the last 20 years or so. The dearth of more modest housing actually drives up its price, because it's in demand.

 

[Exterous]

Peachy. And that has what to do with the topic at hand?

Its in response to hal2kilo. He responded somewhat derisively that:

Really, you think that they are wealthy because their saving rate is 2x the average American's and it's not that their savings rate is x2 the average because they are wealthy?

He went on to say how with a hundred thousand more he could easily increase his savings amount. I showed him the average savings rate could be doubled within the existing average income levels. This goes along with the report that pre-1% wealth holders who eventually became 1% wealth holders were able to save at double the rate of average Americans. Combine that with the calculations I did earlier on the savings rates needed to become a 1% wealth holder and it goes to show that it is achievable for those middle class Americans that want to do it and start early enough. Instead, most Americans choose to spend more on housing and save a pittance for retirement. They live in the now at the expense of their future

Think about it- go drive around the vast expanse of Suburbia, and what you'll find they can mostly buy is housing in the 2000-2500 sq ft range, because that's what's been built in the last 20 years or so. The dearth of more modest housing actually drives up its price, because it's in demand.

Well, if you want me to drive around suburbia here I can tell you that sub 2,000 sq ft housing is readily available in nice neighborhoods. The range of housing in my massive cookie cutter subdivision is 1200-2600 sq ft. Its divided into 3 sections totaling about 200 houses each. The middle section averages a sq ft size of 2200 sq ft. The north section 1400 and the south section (mine) 1800 sq ft. Obviously this will vary by location but I don't think anyone really has accurate information about the inventories of sub 2,000 sqft housing and 2,000+ sq ft housing. I am willing to bet though that most areas outside of suburban/rural Texas will have sub 2,000 sq ft houses for sale

 

[Jhhnn]

Its in response to hal2kilo. He responded somewhat derisively that:



I showed him the average savings rate could be doubled within the existing average income levels. This goes along with the report that pre-1% wealth holders who eventually became 1% wealth holders were able to save at double the rate of average Americans. Combine that with the calculations I did earlier on the savings rates needed to become a 1% wealth holder and it goes to show that it is achievable for those middle class Americans that want to do it and start early enough. Instead, most Americans choose to spend more on housing and save a pittance for retirement. They live in the now at the expense of their future



Well, if you want me to drive around suburbia here I can tell you that sub 2,000 sq ft housing is readily available in nice neighborhoods. The range of housing in my massive cookie cutter subdivision is 1200-2600 sq ft. Its divided into 3 sections totaling about 200 houses each. The middle section averages a sq ft size of 2200 sq ft. The north section 1400 and the south section (mine) 1800 sq ft

You just confirmed that ~2/3 of modern housing is bigger than what our parents considered large, & that there's a premium on smaller homes in good neighborhoods... couple that with your statement that the average home is 2300 sq ft to get my point.

Median & average new home sizes by year from the census bureau-

http://www.census.gov/const/C25Ann/sftotalmedavgsqft.pdf

We're moving towards a profound mismatch between housing & what people want & can afford, as well, due to the preponderance of what has been built over the last generation, confirming what I offered.

http://www.theatlanticcities.com/housing/2011/09/single-occupancy-homes/171/

There are other considerations beyond size, as well, with older homes often being much less energy efficient even though they're smaller, needing serious renovations & repair, so forth & so on.

We built a monster in the 90's & the 00's- big houses way out there that fewer & fewer people can afford to buy & live in.

The "ownership society" succeeded in locking down a lot of people in larger homes, and current wage trends aren't exactly promising for the prospects of younger people moving up & into them... It was only "innovative financial products" that allowed such expanses of large homes to be built during that time frame, anyway. Those are now a thing of the past, with lenders forced to conform to the wishes of very, very much wiser investors in their lending practices.

The .1%? No problems, other than sometimes selling off their old manse to move up to a bigger one... with the fewer & fewer young & successful doing exactly what you advocate...

 

[PJABBER]

FWIW, when I was younger I used to buy big, well built houses in decent neighborhoods that were selling under market but only required cosmetics to hit going values. I rented out to young working professionals while I worked on the property. I wasn't that diligent about it all as I was working 60 hrs a week at my regular job plus doing Army Reserve duty. Still, I flipped one or two houses a year and was cash flow neutral, at the worst, two months into each project.

Right now I look at McMansions around DC and wonder why people just starting off don't pool their money and live in places like that instead of the cramped tiny apartments that they wind up in, paying rents that are much more than what they would pay for a mortgage share.

 

[Exterous]

You just confirmed that ~2/3 of modern housing is bigger than what our parents considered large, & that there's a premium on smaller homes in good neighborhoods... couple that with your statement that the average home is 2300 sq ft to get my point.

I am not arguing that the average size of a house the randomly drive past is between 2000 and 2500 sq ft. That would be stupid as I noted the average size is 2300 sq ft. My point is that there are smaller houses out there that cost less and are available for purchase. My point is that purchasing one of those would allow you to double your savings rate. I am not making a case on how many Americans can do that or will do that only that it is completely and utterly possible for those that are willing to do so

http://www.theatlanticcities.com/housing/2011/09/single-occupancy-homes/171/

Why are you bringing lot size into the debate? Unless I missed something his actual research shows no data on what the demand for home size is. Everything I have seen and read shows at most a slight decrease in demand for house size. A return to the 2100sq ft average within the next 3-4 years is the most drastic decrease (A whopping 9%!) of the reports I have seen while some show just a minor increase in average size over the next 10 years

 

[Exterous]

with the fewer & fewer young & successful doing exactly what you advocate...

You don't need to be 'successful' to do so. The average American would only need to save between 8-15% of their income a year until retirement (Obviously if everyone did this the bar would move but we'd have a drastically different wealth landscape). It would be less with tax deductions, pensions or any company 401k matches should they be offered any of those options