Well if they buy a house.. it would be cheaper than paying rent in a house.... unless the person renting it out was an idiot.

So buying a house doesnt have extra expenses then renting. Unless of course you go from a 1 bedroom apartment to a 3-4 bedroom house.

Bhutocracy, why don't you go get your own figures to quote before you bash mine?
I read those in a book so I don't have a link to post, but I'm sure I could find some info on the web if I took some time to look.

You ASSUME that people will win 2 million dollars and pay off thier current mortgage and car etc. But the reality is that MOST of them don't do that, they go buy a 1milllion dollar house and a 100K car etc etc.

The average middle class guy will make 30K a year and spend between 33-35K a year. That's why banks and credit card companies are rich.
Give that same guy 1million a year and he'll spend 1.2, that's just human nature.

I just read your book, "work hard, see results." Here is my response.

(In case you don't know) I used to do special effects for the movie industry. I've known quite a few celebrities (i.e millionaires), a few that I'm still close with. I have since quit fx, (because I wasn't seeing results for all my hard work). It suprises the hell out of me how poorly mismanaged they are with their money. Thier only saving grace is that they make millions every year. If some of them stop working, they will go broke. They live within thier means (which is millionaire status). Meaning, they fly off to some other country, they buy expensive cars, they have huge houses in over priced communities, they send their kids to the richest schools. If they stop working, they will go broke.

One of the few that I know isn't that well known, but she makes 90K a week, on her T.V. show. She doesn't have the slightest idea how much that really is. Seriously, she bought a new mercedes minivan/suv thing for her housekeeper, because she wanted to be nice. Well, that is nice, however, it's that type of spending that will eventually break her, since she doesn't make a whole lot (compared to the millions per pic bigger actors get) and I bet 80% of all tv actors careeres die with thier tv show. She has already said she will not go on to film after her show gets canned.

If those other stars (including the one I know) just invested the time to learn money. If they just learned finances, they wouldn't have to hire people that usually fuck them out of it. My friends money goes into an account, her management company deals with it, she has no idea how much she really has. And her actor friends, are the same way. They just know ball park figures. Instead of learning, they'd rather have fun with it. Better to understand finances, build your business up, and have fun when it's safe to do so. As in, put money to use and have it earn more for you, then go on those trips.


Ok, the enron thing, I just guessed at. Haha

No, I'm just a dumb designer. Look here at GFY, we're a dime a dozen.


No worries, M8. I never take anything too seriously.

Look... work hard.. get paided! Youre not going to win the lotto, so forget about it and work. You will be more responsible with your money if you worked hard and earned it yourself.


Sound advice. However, like I said it didn't work for me at first... so I switched jobs. Let's hope it works this time.

I've read "Rich Dad, Poor Dad" a couple of times. I think that there is a lot of crap in it, just like there is in most "self-help" books. However, this crap is mostly for people who dont even have $1 in the bank, and how to jump start themselves from being fat slobs, to being productive. In saying that, I think the author makes some very good points in regard to real estate - like buying a home is a massive liability. He's right on that. Interest rates, property taxes and home improvement projects make owning a home a bitch - the only way to really come out on top is to buy in a fast growing area of the country where the value of the home increases rapidly, and to buy it with cash.

But basically all else isn't really too useful. I still own a copy however, and recommend the book.

Here you go Bhutocracy

http://www.susancanthony.com/Resourc...hatwealth.html

That's the first relevant link I found doing a web search.

In the middle of that page it reads
Money reported in October of 1998 (p. 134) that 3/5 of lottery winners file bankruptcy within three years. They had more money but the same old bad habits.

3 out of 5 is 60%, and that's after THREE YEARS. The stat I quoted was from a book written in 2000 and it said 90% after 5 years, which isn't much of a reach from the stat above.

Just because you don't think its reasonable doesn't mean its not true.


The key to wealth and security is to spend less than you make and do it for a long time. What Red Shoe posted above about movie stars and such is very common. Income level has little to do with long term wealth and security if you constantly live above your means.

I have some great ocean front property in Winnipeg for sale if you guys want to invest in something safe.

let me know...

you got 60% I got 33%. ones from money magazine the other from the NY post.. both semi-credible.. i'd like to actually see a real study before I use any nicely fractioned news rag figures in an argument.
I said earlier if i was given proof i'd come around... it's not beyond possibility. it will just be another stat that makes me want to pitchfork people in the face.

because im an opinionated fuck :)
i've seen 40%, 52%, 33% blah blah.. not 90% though.

here's my :2 cents:
I think the key is to think long term, most of us are in our twenties and we're already making great money. If you can double your salary every 10 years and double your investments every 10 years as well, you will retire at 55 with several million or hundred million dollars. Plus most of us are workaholics so we'll still be making 50k a year working part time till we're 75, teaching or doing public service or running a small business, just cuz work is something we enjoy.

If you invest at least some of what you make every month (10% minimum is what i allocate, usually closer to 40%), be it stocks, real estate, money market account, domain names or scripts or whatever investments you think you can get a return on, then you're opening yourself up for lots of potential return and you've diversified your portfolio. I make $30 a month just from my money market account, in 10 years, i'll be up to $300 a month and in 30 years, $3000 a month. My stocks bring in dividends and an increase in value and real estate will always go up more than down.

It takes money to make money, but you're in the right industry to make money you can invest with. With your income increasing every single year and those investments paying off, bit by bit, by the time you're fifty, you will be filthy rich. By the time you're 80 and the compounding of your millions really starts kicking in, you'll be a gazillionair. I'm only 28 and started with negative 35k in school loans, and so far, i've managed to pay those off, double my income every 4 years and i'm just starting to work on the investment part of my long term plan. it takes money to make money but time, smarts and compound interest are all on your side. I know how smart and resourcefull you guys all are, invest more than you spend!!! Just keep in mind what's really important. Family, friends and leisure. Having money helps make life more pleasant but it's definitely not everything!

To this poster


quote:
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Originally posted by IKE
The stock market averages about 10% a year in the long term. not talking about trading or trying to time the market. Historically it is 10% a year. Bull and bear years don't matter that much if you look long term.

Real estate (residential) isn't as good as a return. It's 3% long term. Obviously last 10 years in hot markets clouds the returns, but one shouldn't bank on huge gains. There are other considerations such as the power of margined money. Say putting 20% down on a piece of property and borrowing the rest. So you are getting a gain on the full amount. But you are paying interest. But it is tax deductable.

ALso read The Millionaire Next Door. Easiest way to save money is to not spend it. That BMW is worst inverstment possible. All it does is lose value. It doesn't increase like an investment portfolio.

Then again I like driving my 540.........
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Yeah it might but what idiot would put there money in the stock market now??? I was going to and then decided not to, thank god cause about 3 months later the Towels crashed a few planes into some big towers and it could of cost me big time.

I'm not touching the markets till the net boom.

Sammy



The whole idea of long term investing is that the booms and busts don't matter so much. If you had invested the day before the crash of '29 or the day after wouldn't really make any diff at all over the long term (20 plus years) . 10% a year return. No one can time the market. Your throwing darts at a bulletin board is as good as the average professional money manager.

The author of the book in question for one, he is on the way to becoming a billionaire. Robert Allen I think too. They may not have explicitly said it, but basically I have gotten their point fairly accurate.

70-90% of people winning 2M is not out of the question at all. 2M is NOTHING to lose. Taxes is #1. And then keep in mind that everyone and their dog (family & friends probably the worse) thinks your a fucking bank. How many cars and houses can you buy for all your friends with that 2M?

The problem is that 2M seems infinite, and it so is not. I remember an ex-NBA player speaking of how quickly a 2M contract disappears, and it was insanely quick (of course they have their agents to pay as well).

I agree. The list goes on and on and on and on... All people who never had a rich mentality. They even say Internet millionaires are the same way. They have one huge break and become mega rich. Cockyness comes with it along with the arrogance of thinking they can do it again. Sometimes this is not the case and when they go broke, they are done with. If "luck" truly plays no factor in instant millionaires, how come so many can not do it again?

One example doesn't refute the truth that many millionaires have gone poor because of improper finaincing!

... but what a horrible story (stories I should say) Enron is. That is sick.

actually i would almost go the other way around for 2M.. 2M is nothing to spend and it's because it's in the lower lottery amounts when you can actually quantify it mentally you aren't going to go as far overboard and potentially into debt..

you see the guys that win half a million say they're paying off their mortgage and buying a car.. maybe put the kids through college.. safe as houses. it's because they can mentally spend it on their few big or potential debts that it's such a boon to them.

2M isn't that much and would be more in the levelheaded end of the spectrum.. everyone knows a million dollars isn't piss these days... I don't know how it is in america, but over here theres a strong push on investment and many, many people have investment property - hell a local 18 year old highschool dropout who's a butcher was in the paper the other day after buying 120k worth of land in a new development on a special 5% deposit deferred payment scheme - 2M wouldn't seem "infinite" to most people I don't think.. I doubt theres that much of a cultural difference that the house, the car and the kids aren't the first things that are taken care of... it would be hard to go bankrupt on 2M.. but now the argument is changing to frittering it all away.. which i agree most people would be capable of doing. i was only arguing that 90% of people ending up with LESS than what they started with was a furphy.

1 million dollars is a LOT of money
2 million dollars is a LOT of money * 2


Anybody who thinks differently are people who have NONE, ask a rich friend today and see what they say :)

Would that be my hick town:1orglaugh

Great thread.

The American middle class has always valued certain personal traits that result in personal success and positive development. These may not make you rich [net worth over $1,000,000] but they are definitely not going to make you poor. I am not sure if public schools officially teach these values. Maybe they are translated nowadays through role models [mostly parents].

Bottomline, regardless of how you make money [pushing porn or selling liquor or helping people with health problems or suing people], these values still apply in whether you become successful both on a personal and financial level.

These values, as told to me [and more importantly, as demonstrated] by my grandfather, are:

-- Always live within your means

-- Always save money for a rainy day

-- Avoid habits that are unhealthy

-- Be punctual

-- Always keep your word

-- Be humble. Don't judge others too harshly.

-- Remember what you are working for.

-- Measure twice but cut once. Before you act, think clearly about your plans and put a lot of effort in finding out the rewards and the costs of your plans.

-- Hard work is fine but hard efficient and focused work is better. Just because someone spends 16 hours working does not make them a better worker. It is output and results per hour that count.

-- Take responsibility for your actions. Don't blame others for your failings.

-- Things don't always work at first try. Analyze where you failed and try and try again.

-- Obey the law

-- Always put yourself in the other guy's shoes. Don't do things to him/her that you wouldn't want others to do to you.

-- Value education. Never be too proud to learn something new.

-- Never look down on others. There is a difference between being judgmental and being observant. Learn that difference.

-- Everything you do will come back to you. There IS such a thing as karma.

-- The real measure of success is your ability to improve yourself by setting out goals and accomplishing them.

-- Your life is the Greatest personal investment asset you have. Don't be afraid to switch markets. Find out which areas in life will give you the reward you want and make the switch.

-- Sacrifice and compromise are part of life. Deal with it.

Right On HQ :thumbsup

The question is - how are you living?
If you are living beyond your means and don't understand the concept, you will always be broke.
A guy gets a substantial raise. He trades in his beat-up car for a nice new shiny one. He gets satellite TV. He's got a raise, he can afford it!
6 months later he has less monthly "spendable" money than he had before. But how can that be? He's making more money!

When people get money, they spend it. Plain and simple. They think it will always be there. They don't EVER think of the maintenance costs or associated costs (ie higher insurance, monthly add-ons, etc). Sure, they just won $100k so that means they can buy a $100k house. They don't think of the yearly taxes, the bigger insurance payment, the bigger electricity bill, the larger repair/upkeep bills.

People want toys. They want to SEE and TOUCH something that validates their hard work. A nice car. A nice house. A big-screen tv. A kick-ass surround-sound stereo system.
Money in the bank that they can't touch earning 4% a year doesn't give them that satisfaction that they're earning something for their hard work. They can't see it. They can't touch it. Out of sight, out of mind - there's no immediate gratification. You can't walk out of your shitty 9-5 job, look at your beat-up Taurus and think "yeah, I'm doing well for myself, my money is earning 4% and growing!"
But you can walk out of your shitty 9-5, slip into your nice black expensive car with leather trim and Bose sound system and *immediately* be rewarded for slaving so hard all day as you cruise down the road...
it's hard to get that out of someone's head.

Anyway, the secret really isn't working for yourself. You can work for someone else and still live well when you retire... it all comes down to two things:
1. Don't live beyond your means. Before you buys something, ask yourself if it's a necessity, if you NEED it to live. If not, don't buy it.
2. Don't put your eggs all in one basket. Multiple streams of income are essential, so that if one goes away, you're not up shit's creek.

Live simply, not extravagantly, and don't depend on one thing to bring the money into the house. Pretty easy to understand, but to the masses who've been taught that you reward yourself with more toys, it's as useless as heiroglyphics.

Do you have a source for this? I invest in residential (1-4 families) and my returns are monumentally larger than that. Do you have any experience in RE or was that a guess?

Wow man, you should really read the book. take from it what you will, but he's quoted you here. "It takes money to make money" That's what I used to say. That philosophy will get you far, but I want more than going far.

You are primed for this book. You have a good head on your shoulders. You've gone from -35K to a basic financial understanding of what needs to happen for you to make it.

Mrs. RedShoe and I are 28 as well, and we didn't go from -K but we did indeed start at ZERO dollars in the bank. We went from homeless (literally... as in, lived in a van for a while) to being home owners ("home buyers" is more like it). We are proud of what we've accomplished, and we are always looking for financial guidance. This book helped us see a more promising future, than just "saving our money" (which is what we have been doing all this time) We're ready for the next level, of financial education.

To quote the master poet Warren G., "I want it all"

When is Howling Wulf going to hit me up on ICQ?

I just remembered another example. Remember Survivor 2? Tina won the million. She said that she spent that money in a single year. She said that after she spent it all, she turned to endorsements as a source of income.

It just goes to show you 1 million can be totally pissed away by someone who is not financially literate.

Snowpimp and Carrie - Are you aware that sensible, logical posts are ground for being banned?

I'd be very curious to see where Lens invests his cash. The best way to learn something is to observe it.

I read in "money" magazine about a year ago how this guy made 18 million by day trading. He had this bad ass setup in his basement where he had like 4 monitors running stock programs. From the hours when the stock market opened to when it closed, this guy would trade his ass off. and basically made 18 million from scratch.

He would often invite his friends down to the basement, and set them up in chairs behind him so they could watch him work.

I would love to study Lens during his financial investment days.