Happy Friday everyone! Here is the conclusion of Wednesday’s post.
Now let’s look at the high end. A six figure salary is yesterday’s news since everyone has one now, right? Wrong. An annual income of $100k puts you in about the 90th percentile as an individual or the 75th as a household. Keep in mind, we are back to US only numbers now. And I want you to see how steep things get from there. Want to be in the top 5% of earners? That’s about $150k. And that top 1% that is always being demonized by the media? Roughly $300k. Not nearly as much as you thought, I’ll wager. And that means everyone making any amount larger than $300k is in an increasingly smaller fraction of the top 1%. There really aren’t that many of these people.
Not quite the common perception, is it? The distortion is caused by free and easy credit. Fifty years ago, if you were driving a Corvette, it meant something. Today, you see them everywhere because any idiot with some combination of a halfway decent income and a halfway decent credit score can buy one brand new. You don’t necessarily even need both of those to qualify anymore. Subprime auto loans are starting to blow up now that the recession is most likely in progress, but they’ve been handing the damn things out like candy on Halloween over the last several years.
The point is this: appearances mean nothing. Zilch. Most people have been so busy maxing out their credit to show off how successful and important they are for so long that they didn’t even notice when what they were doing ceased to mean ANYTHING. Women, here’s a special PSA for you. That guy driving the fancy car might be the hyper successful whatever that he claims to be. But more likely than not, the story is a lot more ordinary than that and he’s either borrowing Daddy’s car or he’s just maxed out his credit to sell you something a little different. It’s called peacocking and it’s extremely common – and a fairly logical response to a phenomenon called hypergamy. Women don’t usually do it because most men don’t care about the finances/career success of the women they date. They put on makeup and get breast implants to make themselves more marketable. But that is a whole different topic for another day.
When I was growing up, there was a very exclusive subdivision in our area where every single house was a million plus and living there almost seemed to make you a celebrity. And in fact, there were some living in there, even in lowly Wisconsin. A certain Green Bay Packer who once got in the wrong hot tub and suffered some pretty serious consequences for it was among them. Anyway, this was one small suburb of Milwaukee, Wisconsin. Today I realize there aren’t enough jobs within fifty miles of that subdivision that pay $300k or more for someone holding one to have been living in every one of those houses, let alone every similar house in all the other similar “rich people” enclaves in the metro area. Most of these people that I thought were living fairy tale lives were in fact living in financial prisons they themselves had built. I don’t need to know every one of their personal stories. The statistics make what I just said an undeniable fact.
There is a wonderful book called The Millionaire Next Door that I highly recommend to everyone. It goes into detail on this very thing and I still remember specific parts of it to this day that just blew me away. The summarizing message is that now that almost anyone can appear to be wealthy, it has obscured the fact that most people who are actually wealthy don’t care very much about appearances. The lesson? If you want to actually BE wealthy, you’re pretty unlikely to get there by trying to LOOK wealthy. In fact, spending everything you have on trying to keep up appearances will almost guarantee that you will never actually have much of anything.
This is a seemingly obvious concept. But everywhere you look, style is being valued more highly than the actual substance it supposedly represents. Most of what you see is fool’s gold. And bringing it back full circle, don’t let these peacockers fool you. Live your life reasonably and be happy. Remember that a very tiny percentage of the people who have ever lived on this earth have had things as good as you do. This is whether you make $30k a year or a million or anywhere in between. Perspective is incredibly valuable. It’s easy to lose it in a culture like ours where results are often valued more than the principles and the processes that produced them. But fight back against that. It’s only a feeling. The facts are much more relevant to your success or failure in life. And I want every one of my readers to have the former.