Buy a house, get a visa

[panda]

Where is the serious flaw with Stanley formula? How many people do you know who makes $70,000/year right out of undergrad at 22 year of age? Unless you inherited a large sum of money from your rich Asian parents, it would be impossible to be wealthy at that age, unless you are a 19 year old world class entrepenuer like Bill Gates, Mark Zuckerberg or Larry Page.  All of us would have a networth less than $154,000 making us a UAW at that age. Time is needed to build wealth.

Some more interesting stats:

Wealthy Households of America

American Households with networth of $1M - not including primary residence - 7,900,000
American Households with networth of $5M - not including primary residence - 930,000
American Households with networth of $10M - not including primary residence - 350,000
American Households with networth of $30M - not including primary residence - 77,500
American Households with networth of $1Billion - not including primary residence - 371

Rkp,

The book was written in 1996, but I think it is a good "general" formula Thomas Stanley uses. You have to see it from a prospective of a boxer. You are not going to compare a light weight champion under 100 lbs to a heavy weight champion over 300 lbs. The guy who makes $10/hour who has $50,000 is wealthy in my eyes compared to the guy making $10/hour and in $50,000 debt.

I say it is a good "general" formula. Someone who is 59 years old who collects a passive income of $200,000/year needs a networth of $2.36M or above to be considered a PAW according to Stanley. That seems very reasonable. These retired couple have $590,000/year to live on if they are alive for the next 40 years. The crazy thing is that Stanley has found these people to live in homes valued right around $600,000 in his most recent book written in 2009.

A little off topic,

Yesterday I was waiting to make an international wire transfer at Bank of America and to kill time I picked up the bank's copy of the millionaire next door, a book I've haven't read for more than 10 years.

On page 13. the title was "How to determine if you're wealth? The author had an interesting formula to determine if you are a Wealthy, Average, or Not Wealthy.

You take your age and multiply it to your annual household income. Divide that number by 10. If your networth is double this number or greater.. you are considered to be wealthy. You are average compared to your peers with the same age and income if your number is around the same. You are not wealthy if your networth is only half this number. Keep in mind that the equity in your home is not counted in this networth calculation.

For example, Let's take an median age of Irvine of 34 call him Kirk. Let's say he is a senior management position and makes $150,000 a year.

$150,000 x 34 = 5,100,000 divide by 10 = $510,000 networth puts Kirk as an average accumulator of wealth among others who make $150,000/year in his age group

If Kirk has a networth of $1,020,000 or greater, he is considered to be wealthy as Thomas Stanley would call it, Prodigious accumulator of wealth.

If Kirk has a networth of only $255,000 he is not weathly. (Under accumulator of wealth)

Then you know nothing about the mentality of Asian immigrants...especially rich ones.  The schools are the only reason why a rich person in Taiwan or Korea would send their kids to the US.

I'd be willing to bet that I know a LOT more super rich Chindians than you do, and I'd be willing to bet you if I asked them how much they covet California Public Schools, they'd agree with my general opinion and laugh at yours.

I agree with both of you guys.  Indie is certainly right about the super-rich.  We know some super rich Taiwanese, and they live in Crystal Cove.  They think about Irvine the same way white people in PV think about Torrance.  No Irvine public school is going to convince them to pay $1M for a 4 bed home sitting on a motorcourt with the back wall of the neighbors home 10 feet away. But maybe that is the problem --- the definition of rich.  The FCB's concerned about public schools (and no doubt many are) are probably not at all "rich", just upper middle class like most of newer* Irvine.  They may have a lot of "cash" to put down --- but enough cash for an Irvine home certainly does not = rich.

*If your address includes the words Ridge or Shady and you have no common walls, you are exempt from the middle class tag.

That seems very silly.  I get that the point they are trying to make is about being a saver vs spender and hence the heavy reliance on income.  But reality is that if you have $250K free and clear and you are making $150K at 34, you are no way "Not Wealthy".  On the same note, if you make $10 bucks an hour at age 34 and have $50K saved up, you arent wealthy either.

there is a serious flaw in this equation. What if you are 22 year old, right out of school, making $70k a year and have zero net-worth?
At least you have to subtract some fixed number from your age.

 

[villiagepeople]

How many people do you know who makes $70,000/year right out of undergrad at 22 year of age?

Ummm more than you think.  First year analysts at i-banks, hedge funds, PE firms will make $70k+.  First year consultants at PWC, Deloitte, E&Y, etc can make around $50-60k base + bonuses.  Now when you break it down on an hourly basis, then that's a different story....

You also have the engineering guys who go work for apple/google/groupon/etc.

agree with bones here, we don't normally higher junior level people so i don't know what college grads "normally" make nowadays, but we just hired a college grad for 65k (finished uci this summer)... granted he worked with us for a year as an intern.  (he also claims that "all his friends" got offers of between 50-65k)

*** come to think of it, after read p-star's... with bonus the new guy could make 75+k at the end of the year...

 

[panda]

You guys are probably right. Right out of college (1998) I had a business analyst position in SF with Accenture. They paid me $45,000 back then and I thought it was a lot of money. With inflation perhaps $50-65k is the norm for engineers, computer science, and business majors in 2011.

However my point is that whether you make $100k or $20k as a 22 year old. 99.99% of 22 year olds are not wealthy according to Stanley's wealth formula as earning a high income does not equate to wealth. 22 year olds have little to no savings, if not in debt with college loans.

How many people do you know who makes $70,000/year right out of undergrad at 22 year of age?

Ummm more than you think.  First year analysts at i-banks, hedge funds, PE firms will make $70k+.  First year consultants at PWC, Deloitte, E&Y, etc can make around $50-60k base + bonuses.  Now when you break it down on an hourly basis, then that's a different story....

You also have the engineering guys who go work for apple/google/groupon/etc.

agree with bones here, we don't normally higher junior level people so i don't know what college grads "normally" make nowadays, but we just hired a college grad for 65k (finished uci this summer)... granted he worked with us for a year as an intern.  (he also claims that "all his friends" got offers of between 50-65k)

 

[irvinehomeowner]

But that does not mean I don't still think Rihanna is hot.

Was watching Modern Family the other night and it reminded me of this... or vice versa.

Phil Dunphy was urging his wife to run for city council and in his "confessional" he says this:

"I'll admit it, I'm turned on by powerful women... Michelle Obama, Oprah, Condaleeza Rice, Serena ... Williams ... wait a minute."

It's funnier if you watch it:
http://www.wetpaint.com/modern-fami...ned-on-by-powerful-women-in-modern-family-305

 

[momopi]

  Back in HS, I was pushing shopping carts at Diho Supermarket in Artesia for $3.25/hr.

During my college years, I got trained & certified in IBM OS/2, thinking that I'd be fixing ATM's.  The logic was that money is in ATM's, so I should work where the money was.

For some odd reason, my contract agency decided to send me to Southern California Gas Company instead, to do an OS/2 upgrade project on um...  ~2,100 PS/2's and Dell desktops.  I know the contract agency charged around $40/hr for my services, but my cut was only $22/hr.  I did not have a BA degree at the time, only an AA in Business Information Systems from Fullerton JC.

 

[Liar Loan]

I think the formula is flawed in three ways:

1.  Your age does not determine your wealth.
2.  The size of your income does not determine your wealth.
3.  The number 10, or dividing by it, does not determine your wealth.  (Why not divide by 12, 20, or 100?)
---
The owner of my company is around 50-60 years old, maybe earned nothing during this recent rough patch in the economy, yet has a net worth of 1/4 billion dollars.  Is he wealthy or no?

55 x 0 / 10 / 250,000,000 = ???

 

[kalbi]

interesting article.
http://news.yahoo.com/almost-half-chinas-richest-want-emigrate-survey-063620562.html

 

[irvinehomeshopper]

China already has her Orange County but people still want the real thing.

http://mycoffeelounge.net/forum-replies.php?t=6537