Why I Don’t Feel Wealthy Today

Why I Don't Feel Wealthy Today

Two recent articles got me thinking about personal wealth. The first is by the popular early retirement blogger Joe from Retire By 40 called When Will You Feel Rich? The second is from The Guardian called Scraping by on six figures? Tech workers feel poor in Silicon Valley’s wealth bubble.

The articles are quite different. But both address the premise that wealth is relative.

I Don’t Feel Wealthy Today

A big chunk of our family’s net worth is invested in stocks, stock funds, and ETFs. The U.S. stock markets have recently reached new all-time highs. As such, our net worth has climbed considerably in the past five months.

Our family’s net worth is higher now than it has ever been… Yeah! In the last five months alone, our net worth (aka naked selfie) has increased more than $100,000. Below is a five-month chart of our net worth taken from my Personal Capital account (it’s free to open your own):why i don't feel wealthy today
Aren’t bull markets great?

Part of why I don’t feel wealthy is I’m confident the stock markets won’t keep going up. As Peter Lynch always says, markets fluctuate.

We’re currently in this happy upward trend that makes everyone a good stock picker. When my 23-year-old co-workers are bragging about successful trades they made on the Robin Hood app, trouble is lurking.

Bull markets make me feel more vulnerable even though it’s fun to watch the numbers go up. Down is inevitable. When and by how much are unknowable.

Another reason I don’t feel wealthy is cash flow.

I’ve written a few times about our lack of cash flow last year and the various ways we’ve changed shit up to about improve our situation.

First, we refinanced our mortgage using LendingTree to find better rates. Then we eliminated car payments from our life (forever) using brute cash force. My side businesses helped us accomplish that.

But we still pay for pre-school tuition for two kids, college savings for three, housing costs in an expensive metro region, and groceries for five on one income.

We’ve chosen this lifestyle and we like it. But a suburban lifestyle is not conducive to feeling wealthy, especially when someone around the corner is always showing off their material possessions.

The Two Times I Felt Wealthy

Joe’s article asks what would make you feel rich if you don’t feel rich already. The question made me think about the two times I actually felt wealthy since I don’t today.

The first time was traveling in my 20’s. I had a relatively big bank account that was funding my travels in very poor countries where I was perceived as wealthy because of the origin of my passport and the color of my skin.

I felt rich because even though I was staying in crappy guest houses for less than $5 per night, I was living the life I wanted without the restrictions of time, money, or responsibility. Living on $15-20 per day with $10,000 in the bank, I had the freedom to travel for a few years.

Peak wealth hit me in Argentina in 2002 just a few months after the country defaulted on their public debt and its currency collapsed. For a few weeks, I ate the best all-you-can-eat buffets (tenedor libre) of my life for $2 per meal and never paid more than $0.50 for a beer.

I had few responsibilities. My main concerns were minor, like waking up for a tour with a hangover or finding a half-way clean bathroom after eating street food.

After traveling, I was broke and it took time to get my life back in order.

Not until many years later did I feel wealthy again when Mrs. RBD moved into my one bedroom condo and we married.

For more than a year, we were both working, our housing costs were cheap, and we had no debts. During that time, we were able to save $5000-$6000 per month after maxing out our 401ks and having active social lives.

That money eventually went toward buying a house in the suburbs. Then our housing costs rose substantially and soon after, Mrs. RBD stopped working to care for our children.

We haven’t felt wealthy since.

Ironically, our net worth is three to four times higher today than it was before we moved.

Maybe We Should Move To Feel Rich

After the kids go to sleep, Mrs. RBD and I talk about two things: the kids and money.

Actually, she talks about the kids and I talk about money. Our conversations go something like this:

Me: Hey, I’m gonna invest some money in this real estate platform called Fundrise. It’s a really innovative way to invest. What do you think?

Mrs. RBD: The baby had three of those rabbit-turd looking poops today. The fourth one was mushier. I wiped like seven bums today.  

Me: Because we have some extra cash this month. Is she eating enough fruit?

Mrs. RBD: What if we just moved somewhere cheaper?

The conversation always comes back to moving to a lower cost of living area to achieve financial independence sooner.

The other day I read that article in the Guardian. We think D.C. is bad. But San Francisco is awful.

The article is about a “Twitter employee in his early 40s who earns a base salary of $160,000.” which is a “pretty bad” income for raising a family in San Francisco.

San Francisco is a place where $3,000 is considered “ultra-cheap” to rent a two-bedroom house. The article points to a rent affordability index that’s rather disheartening, especially for Bay Area residents. But D.C. isn’t far behind as the fourth least affordable U.S. city (and this article ranks D.C. as #1).

The obvious solutions for that Twitter guy are to earn more, spend less, or move somewhere cheaper. Sounds so simple but it’s not.

We like the D.C. area, but I wonder if we’ll ever feel wealthy here? Why not move to lower our cost of living?

What Will Make Me Feel Wealthy Again?

Looking back at the only times I’ve felt rich in my life, wealth boils down to some combination of these three things for me.

  • Strong Cash Flow
  • Low cost of living
  • Freedom and lack of major responsibilities

Strong Cash Flow

Cash flow is monthly income minus monthly expenses. When that number is big enough to invest $5,000-$6,000 per month again, or if our passive income exceeds monthly expenses, I’ll feel wealthy.

Low Cost of Living

We’ll need a low cost of living to feel wealthy. This would strengthen cash flow, but also work well if we choose to live entirely off savings by utilizing the 4% withdrawal method. Moving is one option to achieve this. Paying off our mortgage is another.

Freedom and Lack of Responsibilities

Freedom is about doing what I want when I want to. That’s not my life today. My responsibilities are sky-high while raising young kids. When I’m not chasing kids, I’m holding down a full-time job and building side gigs for income and benefits. We own a house and rental property, both with mortgages. Two cars. Kids in pre-school for the next three to four years etc.

These responsibilities aren’t going away anytime soon. And I don’t want them to! Raising kids with Mrs. RBD is the best thing ever.

But feeling wealthy again will take some time and planning.

With three kids age five and under, our lives are kind of a blur right now. It’s hard to stop and appreciate the wealth we’ve built thus far. I consider building our net worth my life’s work.

But if a higher net worth isn’t the key to feeling wealthy, perhaps my targeting is off.

Do you feel wealthy today? What will get you there?

Photo via Pixabay

17 Responses to Why I Don’t Feel Wealthy Today

  1. Rich from www.pennyandrich.com March 8, 2017 at 7:29 am #

    I totally relate to this post. Even though my name is “Rich” on my blog, I don’t always feel “rich”. I can’t believe it because I never thought I’d have a household income of $260,000. But it’s the same thing — at this stage in life my responsibilities are sky high. My cash flow is all earmarked for 401k, IRA, HSA, 529, and so on. And then there’s cars and child care.

    So what makes me feel wealthy? For me — and this is not for everyone, I understand — the first part is living the lifestyle I want now, even if it means working longer and retiring later (because actually I like my job anyway). That’s why we spend generously on vacations and restaurants, and we rent in a more expensive / walkable neighborhood rather than the burbs. I just can’t and won’t put these things off until retirement. I’d rather have as much freedom and fun throughout the journey than extreme frugality followed by early retirement. Just me.

    The second part that helps me feel wealthy is something you mentioned — it’s hard to stop and appreciate what we have, the wealth we’ve built so far. That is so true. But when I take that time to step back, look at my life, and pinch myself for the relatively comfortable existence I have, I find that it works. I feel happier and wealthier when a post like this reminds me to stop and think about it. Thanks for writing this today! –R

    • Retire Before Dad March 8, 2017 at 8:41 am #

      Rich,
      Thanks for sharing your income. As long as you’re not in Palo Alto or NYC, you must be killing it overall. But yeah, even with a healthy income, most people don’t feel rich. It’s that lifestyle inflation always creeping up.
      -RBD

  2. Dan March 8, 2017 at 8:57 am #

    Good write up and encouraged some thinking. At the end of each month, I tally up our family revenue (job income, dividends, interest earned, CD, and now adding Fundrise) and compare to our expenses. Closing that monthly gap is the goal for now, but sure in hell don’t feel close to having enough. Raising a kiddo, mortgage, insurance, food, utilities, and all the other monthly stuff is the lifestyle we chose as well – but it sure eats it up. Thanks for the article. Keep going.

    • Retire Before Dad March 8, 2017 at 9:11 am #

      This lifestyle we choose. I think a lot of us land here, then a few years later start questioning if we made the best decisions. Then here we are middle aged and feeling a bit of suffocation.

      It doesn’t have to feel that way. I believe in a short period of time, less than five years, we all can significantly alter our path if we choose. But it takes sacrifice, and it may be hard to convince the whole family that is best.

      The sole income earner and money nerd of the house sees this more than everyone else. More often than not(but by no means always), that’s the Dad. I hope this blog is a place where other parents can relate.
      -RBD

  3. Retire by 40 March 8, 2017 at 9:35 am #

    I think you’re right about the strong cash flow. I used to feel a lot more comfortable financially when we had $3-4,000 extra per month. At that level, we could handle most emergencies and we could spend on what we want. We were frugal so we didn’t spend that much, but it made us feel a lot more financially secure.
    Thanks for the shout out. 🙂

    • Retire Before Dad March 8, 2017 at 10:26 am #

      Joe,
      Thanks for the inspiration on this one. When I made that comment on your site about cash flow vs. net worth, it definitely felt strange but is true.
      -RBD

  4. ML March 8, 2017 at 10:21 am #

    Nice article and an interesting take on wealth.

    Another thing I think a lot about with regard to feeling wealthy is “control.” As you take on additional responsibilities, it’s easy to start feeling a loss of control – especially as things shift. The whole idea of the “wage slave” is that you’re tied to expenses and they control you to some degree.

    This is hitting home for me at the moment as the Mrs. is changing jobs in our 2-income, 4-person family. Also, tenants are moving out of our rental at the same time. Expenses are being curtailed, but there are of course costs that either can’t be reduced or take significant time or additional investment to reduce. We’re in DC as well, so expensive living.

    The Mrs. will find a new job as she’s a rock-star at work, and we’ll get new tenants as our rental is in a hot spot. However, as we go through this transition its impossible to feel at all wealthy despite a 7 figure net worth. The more I think about it, this comes down to feeling like I have less control.

    • Retire Before Dad March 8, 2017 at 10:32 am #

      Dude,
      Awesome that your wife is a rock star. Mine is too, but she’s still overwhelmed.

      A while back I wrote a post called “Control” which I think you might relate to and touches on some similar concepts. This post has one of my favorite features photos, btw.

      My tenants just told me they are moving out too. Throws a wrench into my life. In the process of deciding what to do next.
      -RBD

  5. Dividend Growth Investord March 8, 2017 at 11:07 am #

    I somehow understand how you feel RBD. Having some extra cashflow laying around is definitely helpful. Prior to 2012 I never maxed out retirement accounts and had a lot of cashflow that I invested in taxable accounts.

    When I switched to tax-deferred accounts, and essentially maxing the heck out of the 401K ( pre-tax and now after-tax), HSA, SEP, Roth I am left with little more than to pay my bills. I do not feel as wealthy as I felt half a decade ago, despite the fact my networth today is a multiple of what it was then. However, each of us overall is probably both better off. Of course, I am not you, as may also have some higher expenses due to the kids.

    So I wonder, is the move to a lower COL area possible? Or does Mrs RBD plan to come back to work?

    The stock market is high, and has plenty of people wondering about a crash. Of course, a lot of people I have talked to have been expecting a crash for years. It would be nice if stocks get cheaper for a chance, which may speed up the retirement dates of many ( lower prices means more stock and higher potential future returns)

    Good luck in your decision!

    DGI

    • Retire Before Dad March 8, 2017 at 11:24 am #

      Mrs. RBD is open to both moving and working. However, deciding where to move, and how to earn income are not an easy choice. There are some obvious possibilities, but she isn’t quite ready for either yet.

      In preparation for a decline in the market at some point, I am keeping some dry powder. But like you, I don’t advocate trying to time the market. I’m mostly all in. I have, however, experienced large market declines and seen my net worth fall 20-30% pretty quickly. Knowing that’s a real possibility at any time makes me feel less wealthy. The longer the bull run, the more it’s on my mind.

      Thanks for stopping by DGI!
      -RBD

  6. Brian March 8, 2017 at 1:04 pm #

    I’m with you too RBD, I don’t feel overly wealthy these days. It does boil down to cash flow. We have two children getting ready to head to college in the fall and we are doing all we can to save and help them. We know the next 4-8 years, (third son is freshmen is HS) we are going to be cash poor. We felt the wealthiest after we had paid off our consumer debt an have our fully funded e-fund in place. Short after I was out of work for 8 months. A great place to be when that event occurred, but have been playing catch up ever since.

  7. SeekingtheDividends March 8, 2017 at 1:17 pm #

    Great post. I can say that I do not feel wealthy right now, but definitely feel I am on the right path, as I am growing my dividend income every month, and maxing out my retirement accounts. I have a decent net worth, but I do have concerns that most of it is tied to the stock market.

    At the moment, I feel I am just doing ok, but working on improving that.

  8. Tawcan March 8, 2017 at 1:50 pm #

    Great post. You’re right cash flow does make you feel wealthy. I think the key is to have sufficient cash flow so you can do whatever you want without having to think about the price tag. Hard to get there though.

  9. Financial Velociraptor March 8, 2017 at 5:03 pm #

    I am content. I think that’s the best word. I don’t have a sense of ‘woohoo euphoria’ but I’m pretty comfortable with passive income more than covering the budget with some wiggle room to invest and stay ahead of inflation. The FIRE life is a good life.

  10. Smart Provisions March 9, 2017 at 2:25 am #

    Great write up, RBD.

    I don’t really feel rich or wealthy. I think I will probably feel it once I reach FI and the choices I make everyday free up to ultimately what I want to do. For now, I’m content with what I have.

  11. JTF March 9, 2017 at 7:26 am #

    RBD,

    Given that the stock market went up about 10% and your net worth increased by over $100,000, you must have at least a million or two already. 4% of that gives you $40,000 to $80,000 annually. If that is not enough to live on, that’s a spending problem, my friend.

    • Retire Before Dad March 9, 2017 at 8:12 am #

      Right off the back of the napkin! You can call it spending if you like. Housing costs are high for a modest home as is healthcare for a family of five. Relocation could make a big impact for us.

      A lot of this money is tied up in retirement, college savings, and home equity. So we can just start drawing down yet. Or if we can, we’re not yet comfortable doing so at this stage.
      -RBD

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