How Much Do You Need To Be Considered“Rich?” Ten Million, Apparently

On November 9, 2024November 9, 2024 By Dean BrooksLeave a comment

According to Grant Cardone, that is.

Is he wrong? Technically, no. Based on inflation, a million dollars back in 1960 is equal to almost $10.6 million now.

Cardone and the article from Yahoo Finance add:

“A million was a lot of money in 1960. If money deflated at the rate that it has in my 65 years, money is worth 10% of what it was then. So, if a millionaire was rich in 1960, you need $10 million in 2024 to be considered rich.” According to him, if you’re still using the idea of $1 million as a benchmark for wealth, you’re behind the times.

Cardone is not the only uber rich guru sounding the alarm about the rapidly rising bar of what’s considered “wealthy.” Andrew Tate, Suzie Orman and others are repeatedly out here warning that even a few million is nothing anymore.

Michael Saylor, Mr. Bitcoin himself, has mentioned how the real rate of inflation is closer to 7%, not the traditionally lower figure of 2–3% that the government likes to quote.

The true rate of inflation is probably unknowable because it’s a constantly shifting figure. But Saylor’s not wrong. Things like college tuition and housing have gone up way more than 2–3% a year over the last few decades. As I’ve written about before, a base model Honda Civic (a popular middle-class car) was $13,000 back in 2004. Now it’s closer to $25k. That same model car, by the way, cost anywhere between $1,850 to about $5,000 back in 1984.

That’s an astounding rate of cost growth. Granted, Civics over the years have seen technical improvements and such that have inflated the costs. But a five-fold rise in 40 years for a basic set of wheels? That’s a lot.

Then you have housing. In some states the average cost of housing went up over 10% just between 2023 and this year. In some states like California such astronomical growth is a given pretty much every year. The Covid pandemic stimulus and money printing only made things worse. Prior to 2020, homes in the suburbs outside Philadelphia, where I went to high school, were routinely $300k-$500k to start. They were obtainable. Now the floor is $500k+, making housing in the area I consider home almost out of reach.

So, yes, the true rate of inflation is certainly higher than 2–3%. Seven percent is probably about right give or take.

Cardone, Tate, Orman, and Saylor are right to warn about the spiraling cost of living. But how useful or worthwhile is it for the average person to try to achieve a figure like $10 million? All this guru cauterwauling is kind of pointless when you consider that the median net worth for retirees is closer to $200,000.

Even if the average retiree net worth is closer to $1.2 million, that number is skewed by the ultra wealthy. And it’s still way, way behind the ten mil figure Cardone quotes.

Rather than being obsessed with making everyone try to get a bigger number, shouldn’t the focus be on what’s causing all this inflation? Why is our standard of living being rapidly eroded away? Why do we accept that tuition will just rise way beyond the rate of inflation? Or that things like real estate will just go up ridiculously higher no matter what? All while our wages stay stagnant relative to the cost of living? Why do we just accept those things as if they were cycles of the moon or river currents? Pure natural phenomena with no human element controlling them.

Just recently the longshoremen went on strike, giving the country a little scare for a few days. One of their demands was a pay rise of 61%, which evidently they’re going to get. Labor rights activists and other pro-union types may celebrate, except this pay rise is only going to trickle down into the cost of unloading stuff at port. This will increase costs for everyone else. Meaning you and me.

The longshoremen are not wrong to seek higher wages. Everyone wants to get paid more and be richer, obviously. But the pressure of all this inflation and the rising cost of living has created a rat race treadmill panic that virtually guarantees that most will lose out anyway.

I read an article on here a few days ago about how the American Dream is dead for Gen-Xers and beyond. And how the Boomers had it best. I left a comment about how most complaints that generations after the Boomers have about being “screwed” are related to the rising cost of tuition and housing. Without those twin cost threats, life becomes way more manageable. In the effort to make things “affordable” to more people, the government intervened in those two areas significantly, via low interest rates and government-backed student loans. That intervention has only driven up those costs way more than they would have otherwise.

Bad government policy and government spending have largely driven inflation. Inflation is not magic. While gurus like Cardone and others are not technically wrong, the focus shouldn’t be on more “toxic wealth accumulation.” That’s an unwinnable quest. The focus should be to rein in reckless government spending and irresponsible central bank lending, which only hurts the very people those institutions say they’re trying to help.

When you’re being told that even if you’re a millionaire you’re “broke” and essentially hopelessly behind the curve, that doesn’t mean it’s time to dig in and “grind harder.” That means it’s time to focus our efforts on examining the messed up system in which we live, and to figure out how to get it to stop screwing us so hard.

How Not To F*ck Up Your Chance At Becoming Financially Secure

On November 7, 2024November 7, 2024 By Dean BrooksLeave a comment

A few common sense tips to avoid some common pitfalls.

I’m constantly seeing all kinds of articles about side hustles and other ways to make money and become wealthy.

While these are helpful, I’ve found that building your net worth is less about what you do and more about what you don’t do. Unfortunately, nobody hands you a guide called “How Not To Fuck Up” when you turn 18, that shows you the many spring-loaded bear traps laying about out there. In fact, it seems people are more apt to let you walk right into one and snap your leg off.

Nobody was there to tell me anything. So some of these pitfalls are ones I learned myself, the hard way. Others I was fortunate to avoid on my own.

Finish High School And Keep Your Fucking Legs Closed (meaning don’t have kids) Until You’re Married.

I combined these two tips because they are common refrains from Dave Ramsey. It really is that simple. If you do these two things, you are virtually guaranteed NOT to end up in poverty. Do one of them, and your chances of one day becoming financially successful are very low. Do both and it’s almost impossible. The welfare register, the ghettos, and the trailer parks are filled with people who did both or either. I’ve met many single moms in my life who were not married before having a kid, and virtually all of them were in the poorhouse and on government assistance. I’ve met guys who had kids when they were super young, and nearly all of them were broke.

Guys are less threatened by this pitfall because young children are not physically dependent on us to live, obviously. We’re also expected to work regardless of our ejaculative accomplishments, too. But for women, this is a crucial, even life critical step. Having a baby with some lowlife dickbag loser who runs off, then not having the legal and financial support that a committed marriage provides, can seriously fuck you and the kid up for life.

Even in a good marriage having kids is tough. And yes, people divorce and go through hell. But trying to raise a kid while dealing with baby daddy or baby momma drama is a complete fucking nightmare and almost impossible to work through. Yet millions stumble into this pitfall every year. It may be funny to watch child support fights or paternity drama on Judge Judy or Maury Povich, but in real life this shit is tragic and often forms the basis for why our society is so fucked up. So, to be clear:

Keep it in you pants if you want to keep money in your wallet!

Don’t Take Out Student Loans For Stupid Bullshit Degrees. Let Me Repeat That. Don’t Take Out Student Loans For Stupid Bullshit Degrees.

This is a BIG one. And it hits home because I fell into this pitfall myself, and it seriously screwed me up for years. I mean, I would be a completely different person today had I not borrowed money for college. I would not be living where I am. I would not have gone through hell as a result. I might even be in a better place. While I’ve since cleaned up the disaster I made for myself and am doing quite well now, I lost YEARS and therefore OPPORTUNITIES because I needlessly saddled myself with student loan debt.

Here’s the deal. For years, only the wealthy earned liberal arts college degrees for a “well-rounded education.” Then the banks, working with the government, came along and convinced everyone else they could and should too, even if that meant taking out vast sums of money. Now you have millions of college graduates stuck with trillions in student loan debts they can’t discharge through bankruptcy, while having no real employment prospects, and therefore no income. You have young people graduating with $100k+ in debt for fucking useless art degrees.

There’s a reason only the wealthy used to do this. Because they knew they had a job at daddy’s company when they graduated. They knew they’d end up on their feet. As harsh as this is to say, if you’re middle-class or lower, you’re almost certainly wasting your time and money by doing the same thing as the rich. Sorry, no, you don’t need a “well-rounded education.” You’ve been duped by banks and the government. What you need is fucking money. You’re not sophisticated and elite because you learned about the French Revolution and fill-in-the-blank-philosopher’s-name, you’re poor and broke. Unless your degree leads to a real career with real prospects and real money, do not waste one goddamn second on it.

I look back at my stupid idiot self. I took out over $25,000 in loans for a degree in political science from a private college that I had absolutely no business attending. I hated it there, too. Most of the students were, unsurprisingly, trust fund kids, or at least had big help from mommy and daddy toward paying tuition. I did not fit into the scene whatsoever being a broke mixed-race kid from the other side of the tracks. I left after one year without a degree. Obviously, I had no help myself other than what I could scrounge up through financial aid. I’m not even proud of the fact that I qualified to get in to this school. I’m ashamed, because going there left me in debt with no way to repay. I wound up working in a fucking department store afterward before getting back into the printing trade.

To say that student loan debt ruined my life would be an understatement. Robbing a bank would have fucked me up less. At least then I’d have a cool story and some prison tats.

Look, I get it. The allure of an “elite” institution is hard to overcome. Everyone wants the prestige of a four-year degree from a “top” college or university. But the reality is, especially in this day and age, it’s not necessary. And if you’re poor, it might even be financial suicide. If you want a “well-rounded education,” go to the library or watch YouTube. They’re both free.

The delusion over degrees is un-freaking-real. I could go on for hours. One time I met an obese broke single woman in her mid-20s who was a few months pregnant. She was convinced she was still going to get into a prestigious law school in New York City and become a lawyer and fight for “women’s rights” or some bullshit. I asked how she planned to do this with an infant, no money, while living in one of the most expensive places in the world, all to chase a profession in what was certainly low-paying non-profit work, to which I received only a derisive snort and nostril flaring in response. As though I were a complete idiot for even asking. I never saw this lady again, but I’d be willing to bet she ain’t hobnobbing with high-powered feminist do-gooders in Manhattan.

Drive A Shit Box You Paid In Cash For Because You Don’t Need A Luxury Vehicle To Pick Up Hungry Man Microwave Dinners At The Grocery Story.

I’ve written previously about my “senior vehicle” and how it only costs me $64 a month to drive.

I drive a 2006 Saturn Ion with over 180,000 miles despite having an above average networth for my age, and more than enough to pay for a premium new car in cash. I fucking love my “shit box.” At this point, I’m planning on keeping it and driving it for as long as possible, and giving it a Viking funeral for whenever that time comes. It’s a “grocery getter” at this point. It used to drive me back and forth between Philadelphia and New Jersey. Nowadays I don’t drive it more than 120 miles at a time. If I need to go on a road trip I rent a car or fly. If my life situation were to change and require me to upgrade vehicles, I’d still get something cheap and used and do the same damn thing that I’ve done with this car.

My “senior vehicle” only costs me $25 a month to insure, and very little to maintain. Because of the substantial savings I’ve made over the years, I’ve been able to put way more into my investment accounts. If I were instead one of those clowns who feels the need for a new shiny set of wheels just to drive to my crappy cubicle job, I’d not have been able to max out my 401k, my IRA, and build up a solid net worth that has put me on the path to financial independence and early retirement. The average car payment nowadays is around $700 a month, which means many people pay WAY more than that. That’s just the financing payments. There’s insurance and maintenance on top of that. You have people literally pissing away millions in potential compound gains because they need to sit in a metal box with a name brand logo on it. Absolutely ridiculous.

Once again, for many years, only the wealthy bought premium vehicles because only they could afford them. Then along came “easy” financing schemes and loose lending standards by the banks. Now everyone can “afford” to buy BMWs and Mercedes and SUVs that cost a gold brick to fill up at the gas station. This is why you see hot rods parked in the ghetto, and those giant monster “America-fuck-yeah!” trucks parked in the sticks. Isn’t “equality” great? Well, it’s not really equality, because those people still can’t afford those vehicles. They can only (barely) afford the $1000 monthly payments. At least until they lose their job. Then it’s the repo man laughing all the way to the bank. And the dealership, too, which just turns around and sells the car to another sucker who needs to compensate for his inadequacies by overpaying for a pile of plastic and sheet metal that can move 70 M.P.H.

All these tips basically boil down to “Don’t buy shit you can’t afford.” Which seems easy. But so much of money management has nothing to do with math, but emotion. People attach emotional value to things like college degrees or vehicles that they really don’t need, that they don’t realize will screw them for years to come. People get irresponsibly caught up in the passions of a relationship and wind up trapped with offspring they are not prepared for or capable of properly taking care of.

People have gross misunderstandings when it comes to money. Many think making big money is all about some big score or windfall. Winning the lottery. Making out on some stock or cryptocurrency. While a lucky few will hit those jackpots, for the most part, building wealth is a largely a “brick by brick” deal. It’s a stifling boring process, actually. People overcomplicate it. But it’s less about doing a bunch of things right, and more about simply not colossally fucking up with a few wrong decisions that are actually quite easy to control.

I Sure Hope I Don’t Catch ‘Sudden Wealth Syndrome’

On October 28, 2024October 28, 2024 By Dean BrooksLeave a comment

You think being broke and destitute is bad? This is far worse.

Dollar sign lesions. One of the first symptoms of this horrible new disease. (Made with Midjourney)

Forget Covid. Forget Monkeypox. Don’t even think about H.I.V. or Ebola. There’s a new pandemic threatening to strike soon. It’s called ‘“Sudden Wealth Syndrome.” What’s that, you ask? A recent Yahoo Finance article explains:

Sudden wealth syndrome is a real challenge for people who suddenly get a lot of money. Children who inherit enormous sums or receive unexpected wealth may experience overwhelming anxiety and uncertainty about what to do with all of their newfound income.

I don’t know about you, but that sounds downright terrifying. I once found $200 on the ground as a kid and I had to be hospitalized for six weeks due to acute shock. I couldn’t even imagine the impact of a million dollar windfall on my fragile psyche. Surely, that would kill me. I’m no longer worried about bleeding blood from my eyes, losing my immune system, or being covered in puss-filled lesions, I’m worried about waking up every morning with eight figures in my bank account.

So, what’s driving this new epidemic? Is there anyway to avoid this scourge? Or are we all doomed?

Well, as it turns out, Sudden Wealth Syndrome, will likely only effect the super wealthy. More specifically, their kids. There’s a generous tax incentive for inheritance that’s set to expire at the end of 2025. Right now, individual parents can transfer up to $13.61 million tax-free to their children, while couples can transfer up to $27.22 million.

But that tax incentive is scheduled to end in a little over a year. Many wealthy people are worried that if Democrats retain control over the White House, they won’t renew the benefit, and may even increase taxes. This has prompted a stampede as parents try to hand down their wealth before the window of opportunity closes. If that happens, the amount that can be transferred down tax-free may drop by a whopping half.

The article goes on to state that over the next decade, 1.2 million people worth $5 million or more will pass down over $31 trillion. The vast majority will come from those worth more than $30 million.

My heart goes out to those poor people who will soon be suffering from this ravaging new disease. I’ve had the good fortune of associating with a few trust fund kids in my life, and let me tell you, it’s not their fault that they’re often entitled, condescending, lazy assholes who think the world revolves around them. Those traits are just symptoms of Sudden Wealth Syndrome. They’re helpless victims in all this, and this new scourge threatens to only make things worse.

Is there nothing that can be done for these poor souls? I sure hope the CDC is cooking up a vaccine or some kind of cure for them. Should we hold a telethon and ask for donations? Maybe not. More money would just make things worse.

Luckily for the super wealthy, I’m here to help. I’m starting a professional counseling service. For the low rate of $700 an hour (plus travel and lodging expenses), I’ll happily lend guidance and emotional support during this troubling time. Note: my services are only available to heiresses aged 18–25 with modeling contracts, and my counseling involves sensual massages and seductive pillow talk.

Minimalizing Your Way to Wealth: Can It Work?

On October 15, 2024October 15, 2024 By Dean BrooksLeave a comment

It’s possible, but requires discipline and commitment.

Striving for a high income vs. cutting your spending and investing the maximum possible. Which strategy comes out on top?

It’s not easy to withold buying stuff. Especially when anything you could ever want is just a click or finger tap away. Dave Ramsey is known for making the point that credit cards help numb the “pain” of spending, making it feel like it’s not real money. Until the bill comes due.

Combined with the ease of e-commerce, credit cards make for a potent combination that can lead to fiscal disaster. Making matters worse is the current subscription trend. Not just streaming companies like Netflix, either. Even razor blade companies want you to subscribe for a monthly fee. Wal-Mart just tried to get me to start a toothpaste subscription. It’s getting out of hand.

Diligently investing a part of every paycheck into retirement accounts and personal investments, particularly into S&P 500 index funds/ETFs is probably the best and most assured path to wealth for the average person. The problem is most people in the United States don’t make a high income. The median individual income is only $37,000, while the national average wage index is only around $64,000.

If you live in a major city or have a family, those incomes hardly go far. This is why side hustle culture has become so necessary and so big today. Everyone has some kind of side gig or second or even third job. Because without one, it’s almost impossible to get ahead.

It’s easy to blame things like out of control cost of living expenses, greedy companies, competition, industry fluctuations, economic crises, and inflation. Those things are at fault in many cases. But very often people set themselves up to fail.

It’s not an income problem, it’s a spending problem.

Years ago I worked for a market research company. When our director got promoted to the Vice President level overseeing our facility, she immediately went out and financed a downtown condo and a new Cadillac Escalade. All while declaring openly she had “no idea” how she was going to pay for any of it. Her new “big” salary was all of in the $70,000 area.

Another guy I knew at another place did something similar. When he got a promotion he ran out and financed a new Ford SUV, justifying it as a “need” because he went on camping trips a lot and needed something to pull his camper. Oh, and he also bought a high-end camper, too. Something he was somehow convinced would actually save him money in the long run on lodging costs for his family. All on a salary of around $100,000.

I worked with one lady who was studying for a Masters in Psychology so she could get higher pay in the mental health field. She was already $40k in the hole in student loans, with more to come. When I asked her how much she stood to gain once she had this prestigious degree, she just smiled and shrugged her shoulders.

I’ve screwed myself, too. Twelve years ago I was drowning in debt. I had about $20,000 in student loan debt, $6,500 in an auto loan, and two credit cards maxed out. What was really sinking me was the student loan, as my payments were being garnished out of my paycheck. Garnishment is not a fancy side dish, by the way. It’s a horrible thing that allows your employer to extract money from your paycheck for repayment to the government. It sucks. Before my wages became garnished, I was actually doing okay, even though I was only making about $35,000 a year. I had extra money every month. I was contributing what I could to my retirement accounts. But that garnishment took the maximum allowable of 15% out of my income. A huge chunk.

On top of that, I had constant car troubles. Eventually, I was forced to finance a newer car since my beaters kept breaking down. That left me with a monthly auto payment and a much higher insurance rate. Between those and gas and tolls I was paying almost $750 a month just to drive a car back and forth to work. Mere existence became a living nightmare.

Looking back, my wounds were largely self-inflicted. I made the wreckless decision to take out student loans for a private college that was way out of my economic station. For a worthless liberal arts degree, too. I chose to keep working in a bad industry (printing) that was undergoing consolidation, that offered little real prospects for growth and promotion. Basically, I wandered onto a minefield and eventually got blown up.

Had I not hamstrug myself, even with my low income, I still would have been able to squeak out a win. I was investing something like 15% of my money until the garnishment hit. That was about $5,000 a year into my retirement accounts, including the company match. A mere $5,000 a year over 30 years earning an annual 10% comes out to almost $900,000. Not bad for a low salary.

As you can see, becoming wealthy is not all about just having a high income. You can make good money and cripple yourself with debt and high ticket purchases that lose value. You can also make a low income and still become a millionaire.

Nowadays, I invest close to 60% of my income. I live pretty simply. I still drive a beater car. I have zero revolving debt. Most importantly, I weigh spending options much more carefully. Generally, it’s not so much a lack of income that will get you. It’s making a few big mistakes that can set you up badly for years to come. Student loan debt. Car debt. Or something catastrophic like a nasty divorce or relationship issues.

As I’ve learned over the years, financial succes or failure very often comes down to making good or bad personal choices. Especially when you’re young. It doesn’t mean it’s all on you. Medical problems or family issues can make things very hard, and those struggles are not always anyone’s fault. But you should try to control what you can.