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Advice for the 'Poor Rich'
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Everybody hates Todd Henderson.

In case you haven't heard, he's the University of Chicago law professor who unwisely blogged last week about his financial woes in a post headlined "We Are the Super Rich."

Mr. Henderson and his wife, an oncologist, make more than $250,000 a year, and apparently they're struggling to get by. If President Barack Obama gets his wicked way, and tax rates rise for those earning more than $250,000 a year, Mr. Henderson says it will mean real sacrifice in his family.

It's too easy to pelt Mr. Henderson with rotten eggs, as so many have now done. (He yanked the post, but way too late—and on the Internet, one's blunders never die.) But can we, instead, give him some useful advice?

Sure.

Adjust your expectations. "I can show you a client of mine right now who lives in a suburb of Chicago, he's a doctor, makes $350,000 a year, and he routinely racks up $25,000 on his credit cards," says Michael Kalscheur, a financial planner at Castle Wealth Advisors in Indianapolis. The reason? Too many people have "unrealistic expectations," says Mr. Kalscheur. They figure they should be vacationing in Italy, driving expensive cars, the whole deal. "We need to knock him upside the head. He's got to stop spending money." Every financial planner will tell you the same thing: The real challenge is tackling the psychology.

Refinance your mortgage. I have no idea how big and expensive your home is, but you can now get a 30 year jumbo mortgage at around 5.3%. Even on a $1 million loan that comes to $5,500 a month, and it's tax deductible. If your home is so expensive that you can't even afford it at these rates, you can't afford it. Sell it and move somewhere more affordable. If you're underwater on the mortgage, talk to the bank. Forget about "equity," which may not exist, and look at the cashflow.

Get a grip on your discretionary spending. Carry a pocket notebook with you for a month, and write down everything you spend. Get your wife and children to do the same. It will help you understand where your money is going. Almost every financial planner will tell you that this is invariably a huge eye-opener. As Jonathan Sard, a financial advisor in Atlanta, says, you may find you spend $100 in Target every time you go in for lightbulbs, or spend $300 taking your kids to a White Sox game. With everyone it's different, but you need to know where the losses are. If writing everything down is too much of a challenge: Junk the plastic, and just carry cash. This is instant budgeting. If you carry $500 a month, that's all you can spend.

Stop blaming the government. According to the Congressional Budget Office, a household earning $265,000 a year is in the top 20% in the country, and one earning $395,000 is in the top 10%. (The relevant thresholds are $190,000 and $290,000, respectively. And those figures were from 2007, a more prosperous time). So you're near the top of the tree in the richest country in history. At the same time, contrary to what you seem to think, federal taxes are not extortionate by modern historical standards. According to the CBO, families in the top 20% pay average federal taxes of 25.1%. The figure in President Reagan's final year in office: 25.6%.

Think about relocating. No kidding. It's not about how much you earn, it's about how much you get to keep, and if you are paying too much to live in an expensive town like Chicago, you may be much better off earning less somewhere cheaper. You and your wife both have highly portable jobs. According to the ACCRA Cost of Living Index, someone earning $350,000 in Chicago could get the same standard of living on just $230,000 a year in, say, Austin, Texas or Cincinnati.

Reconsider the investments. You say you're putting money into the stock market each month, even though you are paying off huge student loans. You need to do the math. If your investments are through a 401(k), they make sense: They're saving you taxes, maybe taking advantage of a company match. But if they are in addition to your 401(k) plan, they may not make sense right now. You are probably better off using the money to pay down that debt.

Rethink the two cars. Are you leasing them? How much are they costing you a month? This is one of the biggest ways middle class families blow their cash. I can't believe the number of people who think these moving white elephants are a status symbol. When I see an expensive car go by, all it tells me is that the owner is (a) insecure and (b) has no sense. These days you can get a decent set of wheels for a lot less than $10,000. Buy used. Pay cash. Run it till it dies.

Rethink the schools. You're sending your children to private school. But how much is it costing you? I take your point about terrible local public schools, but can you move to a neighborhood with better public schools? Or downscale to less-expensive schools?

Talk to a tax accountant. You say you're using TurboTax. With your income, you might benefit from some professional assistance. Are there deductions you can take that you're not using? Are you subject to Alternative Minimum Tax? Should you make your fourth quarter state and federal tax payments before Dec. 31? You may be able to help your financial position.

Go after all the little costs. You're hemorrhaging money. Get the kids to mow the lawn or do it yourself. Bake your own bread. Cook your own meals. Buy generic brands and bulk brands. Go to Costco, Sam's Club and other discount clubs. Junk the landline. Junk cable for Netflix. Rethink your banking: You're probably bleeding money through needless "fees" every month. Forget the "conspicuous consumption." Go for the conspicuous unconsumption. Brag about how little you spend. Find new ways to avoid spending money.

Oh, and one more thing. Never, ever, ever again blog about how hard it is to live on $300,000 or $350,000 a year at a time when one middle-aged man in four can't find a full-time job, and one in five can't find any job at all.

http://finance.yahoo.com/banking-budgeting/article/110801/advice-for-the-poor-rich?mod=bb-budgeting
 

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Think about relocating. No kidding. It's not about 30,000 a year in, say, Austin, Texas or Cincinnati.

Rethink the two cars. Are you leasing them? How much are they costing you a month? This is one of the biggest ways middle class families blow their cash. I can't believe the number of people who think these moving white elephants are a status symbol. When I see an expensive car go by, all it tells me is that the owner is (a) insecure and (b) has no sense. These days you can get a decent set of wheels for a lot less than $10,000. Buy used. Pay cash. Run it till it dies.
Well are we hunting down and making fun of the rich in the USA? Isn't the world on it's head now? :huh:

I do have two cars, both paid for cash, so I have no issues of "lease" there. As a matter of fact, I don't have debt at all, not even a credit card, so your financial advice isn't practical to me ...

However I will take your advice, the one to relocate. The actual increase in taxes and ominous behavior towards the "rich" has actually been a factor in my decision between staying here and leaving the country.

I have currently elected to leave the country and go back to France.

I think I will be more than fine because people like me have no issues, wherever they go. Of course, NJ and the Fed will certainly not notice the loss in revenue related to my taxes because no one will notice the departure from someone in the top percentile of revenue as our contribution is so insignificant.

Neither will the people at my office who may be let go. After all my company was taking decisions on where to execute projects based on my location. My going back could change the financial redistribution and therefore impact local economy.

Oh no, what I am saying, that's not what statistics show, so my going away is not going be an issue.
As according to your article, our contribution to local economy is negligible and unimportant.

So my departure is painless and will go unnoticed :thumbsup:

:cheers:

Fluffy

PS: By the way, if everyone buys 10k$ second hand cars, who will buy brand new cars? You know the ones that keep the UAW members employed?

Just wondering, let's all stop buying new cars and only buy second hand 10k$ cars ... how very smart you are.
 

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Discussion Starter #3
Well are we hunting down and making fun of the rich in the USA? Isn't the world on it's head now? :huh:

I do have two cars, both paid for cash, so I have no issues of "lease" there. As a matter of fact, I don't have debt at all, not even a credit card, so your financial advice isn't practical to me ...

However I will take your advice, the one to relocate. The actual increase in taxes and ominous behavior towards the "rich" has actually been a factor in my decision between staying here and leaving the country.

I have currently elected to leave the country and go back to France.

I think I will be more than fine because people like me have no issues, wherever they go. Of course, NJ and the Fed will certainly not notice the loss in revenue related to my taxes because no one will notice the departure from someone in the top percentile of revenue as our contribution is so insignificant.

Neither will the people at my office who may be let go. After all my company was taking decisions on where to execute projects based on my location. My going back could change the financial redistribution and therefore impact local economy.

Oh no, what I am saying, that's not what statistics show, so my going away is not going be an issue.
As according to your article, our contribution to local economy is negligible and unimportant.

So my departure is painless and will go unnoticed :thumbsup:

:cheers:

Fluffy

PS: By the way, if everyone buys 10k$ second hand cars, who will buy brand new cars? You know the ones that keep the UAW members employed?

Just wondering, let's all stop buying new cars and only buy second hand 10k$ cars ... how very smart you are.
I didn’t write the Blog, he did, I didn’t write the article, The Wall Street did. I too, carry my own load, I too, am one of those who would pay more in Taxes if Obama gets his way and I have no problem paying what I was spaying in Taxes a decade ago. :thumbsup:

See ... not so scarry when things are put in thier proper perspective. ;)

Have Fun in France … :cheers:
 

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What parents need to be telling their children: Work hard in school. Stay away from alcohol and drugs. Choose your friends wisely, Think ahead about the career you would like to have. Go to college and have fun, but work hard toward a goal that will serve you for a lifetime. Then, when you are successful, get ready to be reviled by the Democratic Party and treated like a greedy evil person. On top of it, get ready to spend a lifetime watching group after group try and convince the government that your income is the key to repairing the financial damage done by previous administrations.

This wasn't the message when I was a kid. We used to look up to people who did the right things and were rewarded for using thier younger years to plan for a good future. Ah, the good old days.
 

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I didn’t write the Blog, he did, I didn’t write the article, The Wall Street did. I too, carry my own load, I too, am one of those who would pay more in Taxes if Obama gets his way and I have no problem paying what I was spaying in Taxes a decade ago. :thumbsup:

See ... not so scarry when things are put in thier proper perspective. ;)

Have Fun in France … :cheers:
Well in that case, I am not to sure why you are posting this article?

There are some parts that are misinformed:

Go after all the little costs. You're hemorrhaging money. Get the kids to mow the lawn or do it yourself. Bake your own bread. Cook your own meals. Buy generic brands and bulk brands. Go to Costco, Sam's Club and other discount clubs. Junk the landline. Junk cable for Netflix. Rethink your banking: You're probably bleeding money through needless "fees" every month. Forget the "conspicuous consumption." Go for the conspicuous unconsumption. Brag about how little you spend. Find new ways to avoid spending money.
In response to: "Bake your own bread. Cook your own meals"

My wife bakes everything herself. On Friday at our children's school it's Pizza day. All get take away Pizzas except ours as my wife makes the pizzas, including the dough. She makes her own ice-cream, bread, brioche, cakes, ... everything is home made.

It is the poor that eat fast food and as result are over weight. Our kids are fit, healthy and eat home made food.

In response to: "Get the kids to mow the lawn or do it yourself"

What people don't realize is that if the rich stop spending, it will choke the economy and more people will be out of job. My Gardner is very happy of my financial situation because it keeps him and his employees working.

So I am not clear why you are providing this article to us?

:huh:

Fluffykins.
 

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Discussion Starter #6
What parents need to be telling their children: Work hard in school. Stay away from alcohol and drugs. Choose your friends wisely, Think ahead about the career you would like to have. Go to college and have fun, but work hard toward a goal that will serve you for a lifetime. Then, when you are successful, get ready to be reviled by the Democratic Party and treated like a greedy evil person. On top of it, get ready to spend a lifetime watching group after group try and convince the government that your income is the key to repairing the financial damage done by previous administrations.

This wasn't the message when I was a kid. We used to look up to people who did the right things and were rewarded for using thier younger years to plan for a good future. Ah, the good old days.

Sounds like we grew up with similar up bring, with one very important exception … I was taught, it’s not every man for themselves. Never has been and never will be. :cheers:


BTW ... The Good Old Days are Gone. ;)
 

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Well in that case, I am not to sure why you are posting this article?

There are some parts that are misinformed:



In response to: "Bake your own bread. Cook your own meals"

My wife bakes everything herself. On Friday at our children's school it's Pizza day. All get take away Pizzas except ours as my wife makes the pizzas, including the dough. She makes her own ice-cream, bread, brioche, cakes, ... everything is home made.

It is the poor that eat fast food and as result are over weight. Our kids are fit, healthy and eat home made food.

In response to: "Get the kids to mow the lawn or do it yourself"

What people don't realize is that if the rich stop spending, it will choke the economy and more people will be out of job. My Gardner is very happy of my financial situation because it keeps him and his employees working.

So I am not clear why you are providing this article to us?

:huh:

Fluffykins.


The reason why I’m posting this is simple, but I’m having difficulty understanding why you’re taking offence and defending the person who this article portrays? The person who wrote the blog is BITCHING about how hard it is for him in this Economy … what part are you having difficulty relating to? :huh:
 

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Quick definition:

Dem : "Fortunate"

Pub : " Earned"
 

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Discussion Starter #9
Quick definition:

Dem : "Fortunate"

Pub : " Earned"
Thank you for your opinion. But what part of this article does it indicate what Political party this Person voted for and the relevance?

Are you saying anyone who makes more that $250k belongs to a particular political party? :rolleyes:
 

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Sounds like we grew up with similar up bring, with one very important exception … I was taught, it’s not every man for themselves. Never has been and never will be. :cheers:


BTW ... The Good Old Days are Gone. ;)
SAme here. I spent 13 years as a volunteer coordinator for a food and clothing distribution center for the poor. The efficiency of a local operation is 10X greater than a centralized government solution where most of the money disappears into the bureaucracy. What you want is painless charity where people don't give their time and work. They just get their money confiscated and feel superior because they have funded someone else to do their work for them. I'll teach my kids to give of themselves, you can teach yours to donate so others can give of themselves. :thumbsup:
 

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The reason why I’m posting this is simple, but I’m having difficulty understanding why you’re taking offence and defending the person who this article portrays? The person who wrote the blog is BITCHING about how hard it is for him in this Economy … what part are you having difficulty relating to? :huh:
Anyone earning over 300k$ should be living like a king because he is in the top 10% of the country.

If he is not living like a king that means that all are equal, or equally poor ...

This means that government employees are not making it worthwhile for people to work their ass off and make money because they are being taxed like crazy.
In turn this means that we are going to be equally mediocre as there is no incentive for excellence.

I recall having a similar discussion with my brother in law who is a communist a while back. For him, the only reason I should work my ass off is for the love of work and that all people should earn the same amount of money, regardless of their productivity and ability. For him, I was gifted by nature and therefore should work for the good of mankind and compensate for those who were not gifted by nature.

In France, everybody earns the same thing, as a result people are driven to being mediocre because there is no incentive.

The current trend of chastising the rich by the press is going to kill the US. Anyone with half a brain should realize that. I have seen countries become socialist and all have followed a path that the US is following.

:cheers:
 

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Thank you for your opinion. But what part of this article does it indicate what Political party this Person voted for and the relevance?

Are you saying anyone who makes more that $250k belongs to a particular political party? :rolleyes:
Because we have to make sure we have basic guidelines for determining the "rich". I'm not the first that mentioned politics in this thread. Also it helps with defining motivation for
the blog being scrutinized and the thread being posted. I don't feel sorry for the guy but I don't envy him either. Sounds like he needs to do what most
common sensed people try to do. Would you like me to remove my post. If it offends you I'll get rid of it.
 

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not sure I can categorize $300K as wealthy-. i personally have a cousin who lives in San Franscisco. He makes $280K a year.
But due to extremely high mortgage $850K for a crappy brownstone, high insurance on his one toyota avalon, stupidly high malpractice and other related expenses. His out of pockets just to live there are HUGE. Yes he could easily relocate and have more money in his pocket so i don't pitty him.


Just saying that some of our markets/living expenses depending on Locale are out of whack..
 

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not sure I can categorize $300K as wealthy-. i personally have a cousin who lives in San Franscisco. He makes $280K a year.
But due to extremely high mortgage $850K for a crappy brownstone, high insurance on his one toyota avalon, stupidly high malpractice and other related expenses. His out of pockets just to live there are HUGE. Yes he could easily relocate and have more money in his pocket so i don't pitty him.


Just saying that some of our markets/living expenses depending on Locale are out of whack..
I have friends that live in San Fran also … it’s a shame to give all that money away, just for a place to live. I know living in the Chicago area isn’t cheap either, but I look for and got good deals for the real-estate I own. Living in San Fran is a choice … and if you what to pay that about to live there, so be it.

I can go to a lot of places other than where I am, and live much better, but I choose to live where I am. :cheers:
 

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not sure I can categorize $300K as wealthy-. i personally have a cousin who lives in San Franscisco. He makes $280K a year.
But due to extremely high mortgage $850K for a crappy brownstone, high insurance on his one toyota avalon, stupidly high malpractice and other related expenses. His out of pockets just to live there are HUGE. Yes he could easily relocate and have more money in his pocket so i don't pitty him.


Just saying that some of our markets/living expenses depending on Locale are out of whack..
But according to:

1. figures (say 15% of the population for over 300k$)
2. your current president for whom above 250k$ is a lot.

Anyone earning over 250k$ is wealthy and therefore should be paying more taxes, or according to the article, relocated to a cheaper place.

Isn't that the whole point of the OP/initial article?

a++ Cedric
 

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Discussion Starter #16
But according to:

1. figures (say 15% of the population for over 300k$)
2. your current president for whom above 250k$ is a lot.

Anyone earning over 250k$ is wealthy and therefore should be paying more taxes, or according to the article, relocated to a cheaper place.

Isn't that the whole point of the OP/initial article?

a++ Cedric
I’m not sure what you make, but would paying the amount Tax that you paid more than 7 years ago be a bad thing?

Would that be a Tax Increase for you?

Exactly what on Earth are you paying for now, that you where paying the same for 7 years ago?

Come-on, let’s get real.
 

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I’m not sure what you make, but would paying the amount Tax that you paid more than 7 years ago be a bad thing?

Would that be a Tax Increase for you?

Exactly what on Earth are you paying for now, that you where paying the same for 7 years ago?

Come-on, let’s get real.
If it's so important to you that more taxes be paid, why don't you do your part, put your money where your mouth is? Why don't you support a voluntary tax basis or just pay all your salary to taxes? This way you can feel good about you paying your fair share, and even better that you are doing your part to support those of us that would be having a harder time making ends meet by lifting our tax burden.

I might even find some 'love' for you in there somewhere.
 

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This thread is where two fools met. The first fool is the guy who wrote the post about how hard it is to live as a rich person and how Obama taxes are going to hurt him.
The second fool is the wall street journal reporter who wrote this condecending piece of tripe.
Yes there are ways that anybody who makes good money can tighten his belt but as has been mentioned it comes with concequences for the economy. But of course paying a little more in taxes is also not going to kill anyone or take them from easy street to the gutter. Our tax rates have been much much higher in past times and millionaires still were millionaires then. The hysteria over the end of the Bush tax cuts is as usual rediculous and simply diverting attention away from the real problems facing this country.
I am very lucky to have been able to fund out of pocket my two sons college education and that expense ends this year for both of them as they graduate. I am sure the extra money will come in handy and I will be much more comfortable, hell $100K not going out every year is great especialy when I got no tax break for it going out. So I guess I will be more able to pay this increase in taxes without a problem but then again shouldn't we all live in a way that allows us to absorb the unforeseen. And this tax increase is by no means unforeseen. This tax cut was well advertised as temporary. Only a fool would live planning that it would be extended. So sorry I don't feel for the fool that will have a hard time paying for the added tax burden, which by the way probably is much less an issue for him since he is probably already paying the alernative minimum tax which hurts those of us with write offs much more than this tax increase. He should have planned better. As for the author of the Wall Street Journal article, he should maybe go write for something more suited for his style like womans day or the National Inquirer.

By the way Fluffy....Sorry to hear that you are leaving the USA for France but as you stated in other posts, you didn't exactly choose to leave because of the hatred of the rich here or because of the taxes, but because your company wants you to move, so you move or look for work in a horrible job market. Doesn't seem like a terribly hard choice.

By the way as I have mentioned to you many times, don't confuse your high taxes in mega taxed Bergen County with Federal taxes. The people in your county choose to have every concievable public service and they choose to have very very expensive schools. You could easily pay half or a quarter of the property taxes you are now paying if you were willing to commute a little. You chose to live there and you should have known what the taxes were there before you moved in, right? So again sorry, but my heart doesn't bleed for you and your high taxes. You had a choice just as we all do. Enjoy France and I hope you still come to this site.
 

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The sheer waste of hard earned tax dollars just being pissed away absolutely chaps my ass. Increasing taxes will only add to the problem and I cannot support it. Government wants more and more and displays zero responsibility or even respect to the wage earners/taxpayers. ANYTHING that can reign in spending or develop a sense of fiscal responsibility deserves consideration. I don't give a crap what "Party" generates it!
 

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If it's so important to you that more taxes be paid, why don't you do your part, put your money where your mouth is? Why don't you support a voluntary tax basis or just pay all your salary to taxes? This way you can feel good about you paying your fair share, and even better that you are doing your part to support those of us that would be having a harder time making ends meet by lifting our tax burden.

I might even find some 'love' for you in there somewhere.
Yes. There in lies the problem. Most of a true liberals motivations are emotion not logic based. Emotions cloud judgement and blur black and white into gray. There is no way they would do that unless everyone had to do it. Remember there are no true individuals in liberal logic. Only groups.
 
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