Wealth.

I got this in my email inbasket today from Early To Rise, and it nails it: I have no additional comments, as I think none are necessary (although I did comment on the post there, one lady was just wrong).

How To Tell If You're Rich

By Alexander Green

One of the biggest points of contention in the last election was whether the rich pay their fair share of taxes. Polls show the majority of voters don't believe they do.

Of course, this raises the questions: Who is "rich" and what is "fair"?

Answers are largely a matter of opinion. But here is a fact: IRS figures show that the top 10% of income earners make 43% of all the income and pay 70% of all the taxes. Is that fair? If not, how much should they pay: 75%… 90%… all of it? And how about the now widely recognized fact – thanks to Mitt Romney's secret videographer – that 47% of Americans don't pay any income taxes. Is that fair? Opinions will vary.

According to the IRS, the top 2% of income earners – the ones that just had their marginal tax rate raised 13% to 39.6% – already pay approximately half of all income taxes. President Obama says it's about time these folks "chipped in." What a kidder.

And who is "rich"? 

For today's discussion, I'll leave aside the truism that you are rich if you enjoy good health, a loving family, close friends, and varied interests. Politicians (and most voters, apparently) seem to believe that a person's wealth can be determined by his or her income. I would argue that you determine real wealth by looking at a balance sheet, not an income statement. But why not look at both?

According to the Tax Policy Center, if your annual household income is $107,628, you are in the top 20% of income earners. If your income exceeds $148,687, you are in the top 10%. You are in the top 5% if it is $208,810. And if your household income is $521,411, congratulations. You are in the top 1%… and perhaps demonized by those who view hard work and risk-taking as a matter of good genes and good fortune.

However, net worth is a far better measure of wealth, in my view. According to the Federal Reserve Survey of Consumer Finances, a net worth of $415,700 puts you in the top 20% of American households. You are in the top 10% if your net worth is $952,200. (This jives with the findings of Dr. Thomas J. Stanley – author of The Millionaire Next Door – that one in eight American households has a net worth of $1 million or more.)

If your nest egg totals $1,863,800, you are in the top 5%. And – trumpets please – if you have a household net worth of $6,816,200, you are again in the top 1%… and possibly frowned upon by redistributionists who resent folks that live beneath their means, save regularly and handle their financial affairs prudently.

How do you get rich if you aren't currently? 

The basic formula is pretty simple: Maximize your income (by upgrading your education or job skills). Minimize your outgo (by living beneath your means). Religiously save the difference. (Easier said than done.) And follow proven investment principles. 

Most millionaires – folks with liquid assets of one million dollars or more – are not big spenders. Quite the opposite, in fact.

According to extensive surveys by Dr. Stanley, the most productive accumulators of wealth spend far less than they can afford on homes, cars, clothing, vacations, food, beverages, and entertainment.

The wanna-be's, on the other hand, (people with higher-than-average incomes but not much net worth) are merely "aspirational." They buy expensive clothes, top-shelf wines and liquors, luxury cars, powerboats, all kinds of bling, and often more house than they can comfortably afford. Their problem, in essence, is that they're trying to look rich. This prevents them from ever becoming rich.

It surprises many, but the vast majority of millionaires in the United States:

• Live in a house that costs less than $400,000.
• Are more likely to wear a Timex than a Rolex.
• Generally pay $15 or less for a bottle of wine.
• Have never paid more than $400 for a suit.
• Are more likely to drive a Nissan than a BMW.
• Spend very little on prestige brands and luxury items.

Yes, they're frugal. But they're also happy, not to mention financially free. They are not dependent on their families, their employers, or the federal government. What a feeling.

Some can't abide by this important lesson, but the bottom line is clear: If you want to be rich, you have to stop acting rich… and start living like a real millionaire.

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[Ed. Note. Alex Green is the author of excellent books like, The Secret of Shelter Island: Money and What Matters, andBeyond Wealth, that show you how to lead a "rich" life during trying economic times.]

Socialists Tell You What They Are All About

See, I have a lot more respect for honest, upfront socialists than the progressives, who are for socialist policies but either don't realize it or won't admit it.


This came from The Blaze (to which I never go, frankly) via a tweet. WARNING, a socialist drops the F-bomb several times and talks about his feelings (this is highlighted in the only manipulative edit. It's funny, so it's okay with me, and doesn't change the meaning of what he says).



So, watch and make fun of the total inanity of what these folks are saying.

Let's see, Rob, two things: when the workers pay for the fixtures, the licenses, the taxes, the fees, the inspections, the supplies, the insurance, etc., that the owner has paid, then we can talk about shared ownership. Seriously, did he whine about being told when to come to work, and what to cook? "I'm sorry, Ma'am, the cook chose to make your Pad Thai with beef a Wisconsin Chicken Macaroni in the face of your oppressive capitalistic demand."

Then, let's discuss you selling the magazine... that's okay, right, because the proceeds from the sale are evenly distributed among all that were involved in the production of the magazine, right? Maybe I should have him read my very short explanation of capitalism.

Oooh, and I love the kid, Ben, that identifies himself as from a "radical collective space in West Bend Wisconsin." Seriously? I would have laughed out loud saying something that silly, but not Ben, he believes it.

Now, I might challenge their definition of socialism, anyway, as I have always been taught that it means the government owns the means of production, not the people, but that's just quibbling. Shouldn't they belong to a communist organization, not a socialist one?

Capitalism for Dummies

An idiot caller on a talk radio show inspired me to write this. Chrysler and GM will come up, I promise.

Capitalism is what happens naturally between free people, it is not an "economic system." Bartering? Trading? Examples of capitalism, my friends. The manifesto's line about "from each according to their ability, to each according to their need?" That would be not natural and qualifies as an imposed "economic system."

If I have a skill that earns me money, that's bartering: I "trade" my skills, knowledge, and experience for currency. I can be a farmer that grows corn who trades my corn (the resulting product of my skills and efforts) to a blacksmith for making a plow, or or I can sell the corn to hungry non-farmers and use the coin to pay the blacksmith. No difference.

If I'm a crappy blacksmith, I won't stay in business very long. That's capitalism at work, no intervention necessary, no imposed system required. Maybe, though, there's only one blacksmith, so I'm screwed. Or maybe I learn smithy, or have a child of mine learn it, or gather some friends and find a better blacksmith to entice to our community. That's capitalism and freedom all wrapped up together. Maybe I have two available blacksmiths, one that works fast and cheap, and one that works slower but better and more expensively. I get to choose which meets my needs: do I save up for a better product or do I need it now, and don't have as much cash? My choice.

The idiot caller (who claimed to be writing a book about this on a $50,000 grant) seemed to think that wages should be capped ($100,000.00) by taxing anything above his pathetic notion of too much income at 90%. Idiot. He didn't seem to think it fair that one person working "just as hard" as someone else should get paid less than anyone else. Idiot. Never mind that silly notion that some types of work are actually WORTH MORE TO HUMANITY, idiot. Let's see, I used to sweep, mop, clean the bathrooms, and stock the coolers at the family bar. Monkey work, no skills necessary. Should I have been paid the same as a teacher? Never mind the Master's required by most districts these days? I worked "just as hard," right. WRONG. How 'bout the doctor's excessive wages? Surely, unless you are an idiot, the time, money, qualifications, experience, dedication, skill to become a doctor that is worth more than me sweeping a bar and should be rewarded as such?

Idiot.

Now, it seems to me that the Dealership closings point out a sad aspect of our modern, messed up version of free markets and capitalism. Dealers that are profitable are being forced to close. The market isn't determining their worth or viability. What is, then? Where does the buck stop in this? Hmm. The reasons the car makers were in trouble are well known, right? Excessive costs took away profitability. They are in debt up past any eyeballs on the tallest member of the board, mostly becoming pension and health benefit providers that make cars to pay for it. In steps the Federal Government with loans and gifts that have strings attached: strings that will them that they have to do certain things for the money. Now we know who decided viable dealerships would be forced to close, don't we?

When you hear the talking news heads say "Chrysler closed nearly 900 dealerships," or GM did the same, substitute "The Federal Government" for the manufacturers' names. That's where the buck stops.