Have's and Have-not's

Some of you saw it reported last week that King County, Washington (where I live) now has over 68,000 millionaire households (excluding primary residence), making it the 10th largest concentration of millionaires in the country. While I am not surprised by this given the companies located here (Microsoft, Amazon, Starbucks, Boeing, Nordstrom, etc), I am absolutely shocked by the fall-out of comments posted on the SeattlePI website. There must be 100+ comments on this story! ...and they're entertaining as heck!

While there is a LOT of commentary and heated discussion, following is a random selection that hopefully captures the spirit of the debate:

The immediate reaction was "Tax them all" to pay for all of our problems, like schools and our massive transportation issues. Since we have a higher sales tax in Washington to offset our lack of income tax, a renewed interest in a state income tax was being discussed.

Then there was talk of the "obligation" to give back. I firmly believe in giving back, but as I've discussed in the past, I don't buy into the fact that I need to give back financially, especially not right now as I'm on a push to hit financial freedom. I give back with my time, and that's my choice. The "obligation" word bothers me because it implies that someone else is "entitled" to it.

And then someone chimed in with an IRS stat about "45% of wage earners paying no tax at all" -- suggesting that, perhaps low-income folks were getting a pretty good deal already (that stat is pretty shocking if it's true). And then, finally, several people posted about "The Millionaire Next Door", claiming that more people should be living below their means, instead of making questionable lifestyle choices, choosing jobs knowing they don't pay well, and keeping up with the Joneses.

Of course, then the conversation moved on to the topic of native Seattlites being pushed out of their homes (real estate prices have been high for a long time). Someone even made the comment that all of these "nouveau riche", who moved to Washington, should move back to where they came from. These are real comments from some pretty passionate sounding folks. I was starting to wonder if I'm part of the problem here -- really. To be fair, I'm not one of the 68,000 households because my liquid assets are well below $1M.

Then, the conversation shifted back to: "HARD work got me to where I am -- stop complaining and do something productive." "Why do you think you're entitled to my hard earned money?", one guy wrote. Another one chimed in with a "you're not entitled to anything" argument. If you want it, you need to work for it, which is an attitude that has driven me all my life. I really hate that entitlement attitude.

...and then finally, someone chimed in, saying that a million dollars is not worth nearly as much as it was in the 70's and 80's, where one was really, really rich with a million dollars. One word: inflation. His point was: these people are well off, but they are not rich -- and clearly some of the less than financially savvy folks out there don't understand the concept of inflation and decreased buying power, given their comments.

Bottom line: It's clear that having money and showing that you have money is a recipe for pretty harsh criticism in this town (and probably most places). I had no idea there were such deep feelings and also mis-understandings about money, simple things like tax percentages, and how wealth is created. It's scary because people like this have the potential to drive important public policy (votes on state income taxes, etc), some of which will negatively impact even lower income households! We really need to start financial education in schools and possibly even requiring students to read books like "The Millionaire Next Door" so people understand this stuff. Hard work (not just working hard at your job) and LBYM really can make all the difference in creating wealth.

(Image courtesy of 4x4jeepchick)

Light bulbs?!

Over the past year or so, I've seen a lot of PF Bloggers writing about the merits of replacing your light bulbs with compact fluorescent (CF) bulbs as a way to save both energy and ultimately more money. I used to think it was a bit crazy, but they have a valid point: why not save the planet and money at the same time?

A few months back, I joined in and bought a few CF bulbs myself and have been very pleased with the performance. They're bright, no flickering and they come on instantaneously. Frankly, I don't notice any difference, which is great.

Now, as we're settling into our house more and more, we're finding more things that we want to "make our own". You know, customize. It's the American way, right? Well, my wife is pretty hell-bent on replacing many of our normal light switches with dimmers. I'm fine with that, but one thing I'm not sure how to handle is the combination of CF bulbs with dimmers. My understanding is that they just don't mix -- is that right? Are there any CF bulbs that can be dimmed?

If I go around and replace all of my light switches with dimmer switches, am I doomed to use normal, high consumption bulbs for eternity? On the other hand, I'm guessing that that dimmed bulbs use less energy, so perhaps it's a wash. Normal "dimmable" bulbs vs. compact fluorescent "non-dimmable" bulbs.

Anyway, it's a bit of a mind exercise that I'm throwing out there. For us, it's more of a comfort of life issue than a savings issue, but if you know me yet, I'll take any savings I can get. Either way, drop a comment if you have any thoughts on the subject...

Reminding yourself to live simply

This article in Kiplinger's contains a lot of the usual mumbo-jumbo about keys to financial security, but this one jumped out at me. It's good to remind yourself periodically in a positive reinforcement sort of way:

Key 7: Live simply today for a more comfortable tomorrow
Deferred gratification is no fun, but it's the only way I know to fund your long-term goals -- college for your kids or grandkids, that vacation home you've always wanted, early retirement, a generous bequest to your alma mater. Take a close look at your current lifestyle, and if you see a lot of spending that is dispensable, consider it found money for the bigger dreams in your life (see The Invisible Rich).

Now, I'm not saying that you should live a hermit's life, but simply that you should be mindful of your spending choices. I've been running the expenses numbers from last year and have a certain amount of frustration with our burn rate because I think it's too high (mostly due to costs associated with the new house). However, as I've said, you can't put life on hold between now and retirement, so I probably just need to let it go and do a little living for today. In the end, it's really a balancing act.