Is Entrepreneurship the only way?

[a83]

@kereena Your missing some pretty important data

1. We have a very aggressive 15 year mortgage on our home versus the standard 30 year that most people get - which means we will be mortgage free in our 40s, which is great, but in current day it’s a big expense
2. We have two kids and daycare by itself is 25 grand net income a year , much less sports and other hobbies

It’s not a 230k DINK lifestyle

 

[phil4508]

@a83 Fair point about the mortgage, but if one of you loses your job and aren't able to find a new one quickly, the first expense you're going to drop is the daycare. And if you've actually been saving 20% of a $230k household income, it's going to take a long time before you truly can't afford just the basics (mortgage, utilities, groceries).

My wife and I have both lost our jobs once in the 9 years since we met (thankfully not at the same time) and you'd be surprised how much you can cut back when you know money is going to be tight, especially if you're living a middle or upper class lifestyle.

 

[a83]

@phil4508 Yeah I mean I wouldn’t really call it financial ruin, we could always pull from our 401ks in an emergency situation and go for a couple years, I meant just zero income and drawing right from the checking account type of scenario

 

[kereena]

@a83 My wife and I have a similar take home pay, we also have two kids in daycare ($3k a month) and we bought a new house this year. I’m saying you have a budget/spending problem because I am working with similar numbers/situation and thriving. Next few years until kids are out of preschool and into public school will be tight, but then it’s smooth sailing. Cutback on spending where you can and dial down trying to keep up with your wealthy friends - they are souring your perception of how well you’re doing.

 

[a83]

@kereena I would argue that I’m not trying to keep up with anything - when you remove daycare from the equation we are at a 55/25/20 ratio which is near perfect to the 50/30/20 guidelines (and that’s with a 15yr mortgage which obv inflates the needs value)

We are comfortable but I’m not sitting over here with 100 grand in a checking account is all I’m saying

Daycare is our second biggest expense aside from our mortgage, after daycare and mortgage our third biggest is groceries because our kids are constantly eating and we have to go to the grocery store what seems like 3 times a week just to keep food in the house and my wife likes to make home cooked meals at least twice a day every single day

I suppose if anything we can stop buying organic food and go generic but the general point is we aren’t buying frivolous things

I guess we could chalk the difference up to living in different COL locations

 

[jbron423]

@a83 At $230k salary and those connections, you’re already likely upper class or right on the edge of it if you live in a few select cities. Remember that it’s ok to be upper class. Everyone loves to identify as average rather than rich. Looking at rich friends makes you feel average, but you aren’t seeing a typical lifestyle when you look at them.

 

[routa]

@a83 So I work with those country club types of folks (nonprofit board management). And not a single one of them “earned” it; they were born to the right people, took advantage of the mortgage crisis and invested in real estate, or married someone whose father owned an established business and got to take it over when he retired. You’re absolutely correct that none of them actually work and collect income from investments and other capital they own that generates profit.

Unfortunately, outside of being born into that circle or marrying rich, your odds of getting to that income level are very low. Investing and real estate might help you start getting there but that also means you have to have the money to play that game and 99% of us normies can’t afford to do that.

If it makes you feel better, your listed combined income is more than most folks will ever dream of earning. Not sure what your cost of living expenses are but if it were me I’d be living on half that income and investing the rest in various things.

 

[refugeandstrength23jk]

@a83 You saw a selection bias. Who you didn’t meet at that dinner were the 800 people who forged out as entrepreneurs and didn’t make it or are still scraping by.

It’s also worth noting that “owner” and “entrepreneur” are different titles. With the 25% you save you buy assets, making you an owner.

 

[mjes]

@a83 Here are the multimillionaires I know personally, and their backgrounds:

A. Worked at IBM for 15 years, started his own business selling/servicing IBM things

B. Inherited the family business

C. Inherited the family business

D. Inherited the family business (could go on for a while here but I’ll stop)

E. Worked at GE for 25 years, started business selling/servicing GE things

F. Worked at Philips for 10 years, started business selling/servicing Philips things

G. Union electrician, started own shop

H. VP for Fortune 500

I. Army veteran, collecting full pension, contracted to run medic facility

J. Top 10 CS school grad, worked for Amazon, Meta, Microsoft

K. From rich Chinese family, works in finance

L. Rich family, has fun in the arts

 

[sunyi]

@a83 i don't do the country club thing, but we're in similar shoes. Like me, I think you're dreaming of not being on the teet. This is likely a poor mindset, but it seems that we're all wage slaves right up until you've got the only real freedom: the freedom to not work and still pay the bills, all the way to death. That means either passive income or a shit ton of savings (which is really both those things). But as everyone here says, that's just not really feasible. The ones who do it, did it with a huge leg up (ex, Bill Gates's mom being on a board of directors and telling them to give him a chance, six figure startup gifts, etc.) and a lot of luck. For those of us who need the sure thing, we're just stuck working. It's not fun or sexy, but it's the only way I can get to critical mass and maybe FIRE in my late fifties instead of 67. Wishful thinking...

 

[ubicaritas]

@a83

We bring in roughly 230k household income a year and very very much live what I would consider middle class lives while following the 50/30/20 rule - however make no mistake that if we lost our jobs tomorrow we would be up shits creek within a couple months if nothing changed, that’s just how it goes

Our household income is half of that, and even we have over 12 months worth of savings that we can dip into in the event I lose my job (I am the sole income earner). That doesn’t even include our 401k or other retirement accounts. We also have 2 kids on top of that.

If you have a household income of $230k and you are not able to 1) eventually make it into the upper class by simply saving and investing, or 2) last more than a couple months post a job loss before hitting financial ruin, that shows me you guys have a spending problem, not an income problem.

 

[ben896]

@a83 Entrepreneurship isn't the only way but it's a common path for building wealth due to control over income sources. Not everyone wants or succeeds in running a business; some thrive in careers, climbing ladders, and investing smartly. High income doesn’t always mean high net worth - smart money management matters. Investments, real estate, stocks can build passive income too. The key is increasing income sources, not just quitting your 9-5. Also diversifying income and investments helps reduce risk of being trapped in middle class. Ownership is one piece of the puzzle, not the whole picture.

 

[ktb]

@a83 I don't really understand this question. To the extent that I do understand it, the answer is obviously not.

I don't know what you think being upper class is, but let's just say that it's having wealth in excess of $6M. That puts you in the 1%. Source.

I don't know exactly what you mean by being an entrepreneur, but let's say that means starting a new business.

Putting those two definitions together, you're asking if the only way someone could have more than $6M is by starting a new business. The answer is obviously not.

Take your hypothetical heart surgeon, earning 800k annually. That person has a takehome pay of around 40k per month. If they invest 20k per month, getting 7% real returns, they have the $6M in less than 15 years, and they haven't started any new business.

There are many other ways that people enter the 1%: inheritance, buying into an established, profitable privately held company, royalties, and even selling their labor. Famous athletes, actors, and singers sell their labor. But CEOs also sell their labor for millions of dollars.

It's true that you're unlikely to become a 1% person by waiting on a long-lost relative to give an inheritance, and few people are famous celebrities or even brilliant surgeons or CEOs. But, most entrepreneurs aren't in the 1% either. Most run small businesses that squeak by for a few years until they become insolvent. The truth is, it's hard to be in the 1% because there are lots of other people in the world.

Personally, I don't really care about what bracket I'm in. I care about having enough money to meet all of my needs and some of my wants, and getting the chance to do work that I find meaningful. I'll let someone else worry about my level of wealth and income.

 

[misterboy]

@a83 No. You don’t have to “get lucky” investing or do something drastic. Pursue opportunities to increase income, invest like a normal person, and you can become wealthy.

 

[bobbyz]

@a83 …yes? Karl Marx told you all 150 years ago to own the methods of production. He was wrong about a lot of things but “leverage other people’s labor or money” is a certified banger

 

[jok]

@bobbyz A system where the goal is to own other people’s work is fucking horrible though. That was the whole point.

 

[mjr88]

@jok Hold on...if other people's work is reasonably compensated, what's so horrible about it? Especially if their alternative sources of income don't pay as well.

 

[jok]

@mjr88 What’s “reasonably compensated”? Because right off the bat, you won’t be employed unless your output is worth more than whatever your compensation is, so it’s not your “worth”.

If it’s the market price, we’re screwed in the long haul because the market makers (with the power to bribe politicians and mold public opinion) want the rig the market, or alter it, so that wages are as low as possible, and prices as high as possible.

And that’s not to talk about the fundamental unfairness of investors living off other people’s work because… they already had money? Money (and the opportunities to have that) the likely inherited. That’s a gentry. We fought a whole ass war because we hated the gentry.

 

[mjr88]

@jok Not sure what war has been fought because of the "gentry"...but I have to say that your socialist talking points contain nothing to support the assertions that people with money somehow possess inherently evil motives, want to screw over everyone else or want to bribe politicians. Some, sure. But that's what we call painting with too broad a brush. Also you've no evidence that most of that money is inherited. Statistically in the U.S. the vast majority of millionaires are self-made. Finally, "worth" is an amorphous term quite subjective in its application. What you feel you're worth may be different than what your employer feels you're worth. In which case you're free to seek employment elsewhere.

 

[jok]

@mjr88 “Evil” intent is not nuanced enough. They maximize profit making opportunities and exert their power to mold the economy to their benefit. They don’t rub their hands and hope poor people die when doing so (well, some do, less than in the past. And it’s largely racial too. But besides the point).

Unfortunately the larger arch of enabling capital to dictate the course of history and society has left 90% of people worse off and our world in ecological disarray.

This is too big a discussion to have here. And an exhausting one.