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There’s just about no tolerance left in America for wealthy people griping about their financial woes. But put down the pitchforks for a moment and consider one possible exception we might all learn something from.
The money-news site The Billfold recently ran an interview with an anonymous physician who earns $570,000 a year and says, “I know that technically I am in the 1%, but I don’t feel rich at all.” He went on to explain how he owns a home worth nearly $1 million, three cars, a couple of investment properties, and a chunk of a profitable healthcare company yet still frets that he doesn’t have enough. “I don’t feel secure,” he said. “Before I had a job, the six-figure mark was a goal for everyone. And now I’ve hit the half-million dollar mark. I don’t know if I’d feel rich if I ever met the seven-figure mark.”
Commenters howled, of course, deriding the discontented doc’s self-indulgence and making many predictable observations about materialism run amok. “It’s emblematic of the insane level of lifestyle creep that allows someone who makes $500k+ a year to feel not rich,” wrote one reader, reflecting the sentiment of many others.
The anonymous doc, whom the site dubbed “Jake Smith,” acknowledged his own materialistic impulses. “There is a palpable pressure to keep up with the Joneses,” he said of the social demands in his affluent community, which is in the suburbs of a sizeable eastern city, according to Logan Sachon of The Billfold. Yet he also showed a degree of restraint, making do, for instance, with a 7-year-old Lexus when many of his neighbors drive brand-new Range Rovers. That doesn’t exactly generate sympathy but it shows more self-awareness than the wealthy — or caricatures of the wealthy — are typically known for.
The lengthy Q&A also reveals a few legitimate concerns about money, whether you have a lot or a little. Here are four reasons to cut some slack to wealthy worriers such as the $570,000 man, assuming he actually exists:
They take risks. “Jake Smith” invested in one business that flopped and lost “maybe a few hundred thousand dollars” in bad investments overall early in his career. Those losses wiped out his cash, he said, and left his family living paycheck to paycheck for a while. Yet he learned from those mistakes instead of retreating into a shell, and had the guts to invest in another business. That might sound easy to do when you read about it, but in reality it’s damn hard to risk your own money on an unproven venture — which is why most people never do. People who take risks earn higher returns for good reason.
They’ve been burned. A lot of wealthy people who earn their fortunes (instead of inheriting them) stumble along the way, and it’s often the ability to bounce back rather than some magic knack for making money that leads to their success. Smith describes feeling “scarred” by earlier setbacks, like many people who have survived difficulties. “There were people depending on me and I felt like I was letting them down,” he says. “I know it’s very easy to squander what you have.” Like Depression survivors who grew up to become misers, Smith might never be fully free from worry, even if he ends up with millions in the bank.
The soaring cost of college scares everybody. College tuition has been rising at 2 to 4 times the rate of inflation, making education a huge financial burden for many families. Smith has three kids, which could add up to $600,000 in college bills, at a rate of $50,000 per student per year for tuition, room and board. And it’s safe to assume a family in his income bracket won’t quality for financial aid.
Taxes on the rich are probably going higher. To his credit, Smith doesn’t whine about this, but his taxes went up considerably this year, since he’s above the cutoff for some of the “fiscal cliff” tax hikes meant to hit only the wealthy. Beyond that, the kinds of additional revenue-raising measures getting a serious look in Washington — such as eliminating mortgage-interest deductions for second or third homes and ending some investment tax credits — are designed to snare people exactly like Smith, while exempting most working people.
Rather than attacking Smith’s sense of entitlement, it might be worth reconsidering what it means to be rich in the first place. A lot of wannabe millionaires fantasize about a life in which they never have to worry about money at all. But that may be the very thing that leads to the gaudy behavior we find most appalling about the rich. A healthy dose of worry might help the wealthy remember how the other half lives, and even spend their money more like the 99 percent.
I occasionally bring up the idea that people making $250K-$1 million a year aren't exactly rich, this is more proof to my argument.