I recently read a post on GRS on how to make “6 Figures in 7 years.” By the time I got to his post, there were already 95 comments with a very negative undertone. I was surprised how many angry people were lashing out. Why can't folks be civil even if they are trying to challenge reality?
When I just questioned whether only 5.6% of the working population makes over $100,000/yr, there was even more negative reaction. A commenter Sarah wrote, “You are out of touch with reality!” Umm, I didn't make a statement, I just asked a question.
I challenged the 5.6% assumption because out of the 100+ comments, 20 people claim they make over 100k. That's 20% of the sample set, and much more than the US Census Bureau's data would suggest. If something seems off, we should investigate and challenge reality.
Perhaps the whole topic just brings about more people who are making over 100K to begin with. If that's the case, what are you doing commenting on a post on how to make over 100K if you're already there? Bragging isn't very becoming. Although I'd be curious to know what all readers make over here at FS. I've got some insights on the Financial Samurai reader demographic here.
Challenge Reality
The 5.6% statistic is probably correct by +/- 2%, but I just had to ask. I'm not afraid to challenge reality statistics if they seem questionable. Too many times, we just sit back and accept the statistics.
I think we seriously need to challenge assumptions, especially those that seem debatable. At Bargaineering, when I questioned whether the unemployment statistics were too high based on my recent findings on a business trip to three different cities, I got a mouthful from people saying the unemployment statistics were understating unemployment and the recession is far from over.
If you add the underemployed, our national unemployment rate probably is closer to 16%. And SVB at The Digerati Life highlights it could be as much as 20% in California! Again, I just had to ask.
Extrapolation
It’s easy to start extrapolating your reality onto the rest of the world. I’m guilty of this because if you come to San Francisco, you’d never be able to tell there was 11% unemployment with how packed the restaurants are. San Francisco is the best city for millennials and those who want to work in tech.
Reading over 1,000 comments and 300 blogs this week, it certainly seems like the majority of you are killing it. Just don’t believe GE Miller’s post stating that the average 43 year old American has only saved $18,000! You can save $19,500 a year tax free in your 401K alone. What is everybody doing?
Isn’t it curious that despite high unemployment, the stock market doesn’t really care? Unemployment is a lagging indicator, and the stock market is a leading indicator.
Therefore, we should expect unemployment levels to continue increasing to reflect our horrific downturn. At the same time, we should be hopeful that next year will be a job frenzy year full of new opportunities.
Being Happy When Others Are Suffering Is Wrong
The one thing that annoys me most about the mainstream media is schadenfreude. I hate it when the people poke fun of others who are suffering from financial misfortune. It's so insidious to take pleasure in other people's suffering, but that's what sells I guess. When we make fun of others, we highlight our jealousy, which in turn impedes our progress.
When I hear people say “everybody is suffering or losing money” in so and so bubble implosion, except for the people who are saying this, I scratch my head. If everybody is suffering, and we're not suffering, and we're everybody, what gives? Schadenfreude!
If you're one of the people who've been able to survive this downturn, count your blessings, and never stop appreciating your job no matter how mind numbing it is. I recommend visiting WSJ's “Laid off And Looking” blog once once in a while whenever to remind yourself there are real people out there who are still searching.
There's More Money Out There Than We Think
“Fortunes, Fortunes, Everywhere” highlights plenty of well-paying professions. From policemen to longshoremen, many make over 100K if they stick with their jobs long enough.
The more amazing thing is that many public service officials make $100k+/year just from their pensions! Even janitors can make six-figures. You too can get rich if you conquer your fear, are smart with your money and diversify.
The article's purpose is to highlight a tremendous amount of wealth in America, not just from the stereotypical high paying professions out there.
So why is there such a negative undertone to posts on making higher wages? The reason seems to be that of presumption, where anybody who wants to make 6 figures can.
The author of that article on six figures was just offering suggestions to the public if they desire to make more money. Yet there was so much negativity even when we should be civil and challenge reality.
Wanting to make more money is not a sin! With employment, there's really no in between. You're either nemployed or you're not. and I really do feel for those who've lost their jobs through no fault of their own.
Conclusion
If everybody earns $100,000 a year, nobody is rich or poor as we're all the same. With the recovery in the markets, there's a two-pronged objection from the less well to do who resent topics of upper tier incomes, and from the more well to do who feel demoted because they aren't as special if more people reach their level.
At Financial Samurai, we suggest turning resentment into motivation. If you want to make more money, know that there are articles here on FS that can help! Start out by utilizing these top financial products to grow your wealth.
For those unemployed, hang tough, because the stock market is telling us the economy will improve. The government should absolutely extend the unemployment benefits across the nation.
We pay into unemployment benefits when we work, so we better be covered when we need it the most! If the government can spend $45 billion to bail out Citibank, anything less than a 6 month unemployment benefit extension would be inconceivable. 1.3 million people will lose their benefits by year end if the Senate doesn't pass the bill. Senators are you listening?
Related:
How To Make Six Figures At Almost Any Age
How To Make Six Figures And Still Not Feel Rich
Readers, how's it like in your neck of the woods? I'd love to hear anecdotes, both positive and negative about unemployment and the economy. Also, is making $100,000+ a year as rare as the statistics say it is? Am I just being way too optimistic about the recovery in the economy? Please set me straight!
Keigu,
Financial Samurai – “Slicing Through Money's Mysteries”
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Just a clarification, Sam: Employees do not have their pay deducted for unemployment insurance – it is paid for entirely by the employer. :-)
I am also not too sure why there is so much fuss about making $100,000. While a nice milestone, it doesn’t mean as much as it used to thanks to inflation.
People should be more concerned with attaining financial freedom – not their household income. The fact is people who know how to manage their personal finances can be financially free and live comfortably on far far less than $100,000 per year.
Don’t you agree?
And don’t get me started on public employees who earn $100k per year for their pensions (guaranteed by law, unlike the private sector, and courtesy of the taxpayer) – many are actually able to retire at age 50! Outrageous.
My $0.02 (after taxes)
Len
Len Penzo dot Com
Hi Len – Thanks for your thoughts. Yeah, someone else mentioned the employer pays entirely for unemployment insurance as well, and my rebuttal is that an employees wage bakes in ALL the employer costs to hire the employee (including salary, health insurance, and unemployment insurance).
You don’t like to talk about public employees who earn $100,000 a year?? Then you DEFINITELY won’t want to read “Fortunes, Fortunes, Everywhere” where I highlight a bunch of public service employees making $100,000+/yr, and that’s not even from work, it’s their pensions! Got to love it!
Best, FS
I’m not ashamed either and will throw my numbers out there! I will be 25 in a few months and make 46k a year at the moment. Sure 100k is a goal I have in mind…it’s a nice “round” figure if you will, something to shoot for. I guess time will tell if I get there or not.
FS – Great blog…I check through here on a daily basis just about.
Hey XtraCrispy! Good to hear from you man. 46K a year is awesome for 25, and 100K+ is definitely something fun and worthwhile to shoot for! Why not right?
I think you’ll be amazed by how much potential we all have to make a good chunk of change. There are plenty of jobs out there that pay well, we just have to find the right one that fits!
Thanks for your kind words. Those type of comments really inspire me to post more! It’s so fun interacting with folks who share similar goals. Best, FS
Glad FMF’s post was highlighted as I would have completely missed that guest post.
To be honest, as I scanned through the comments, I noticed more positive comments than negative, but maybe I skimmed too fast or were paying to the actual constructive criticisms.
I’ll be honest in that I also thought the $100k+ annual income was more than 5-6%. But its probably because I’m used to keeping on top of household income figures.
I think you know full well that random comments on the interweb can’t really be a good sample set for people making more than $100k+ — though it did seem like many of them were defending making 100k+ from the few negative comments.
Hey Cap! Thanks for visiting. I think I heard you speak on the Personal Finance Hour when Baker and Jim were debating the use of credit cards out.
There was definitely a negative undercurrent from many posters on FMF’s post, basically thinking making 100K is bad, and why FMF was posting this stuff. People felt he was being presumptuous, whereas I was thinking, hmmm… great tips, people should really benefit!
It’s almost as if it’s “cool” to NOT want to try and make more money. Donno if you remember in high school, some kids thought it was “cool” to not study and be morons. Look where they are now.
Random comments may not be so random, given selection bias. But, maybe I’m too trusting, because it certainly seems like there is much more wealth out there than I can imagine (see “Fortunes, Fortunes, Everywhere”). It gives me comfort a lot of people have made a lot of money this year, so we can pull through this recession.
Best, FS
I agree with Geek. There is a huge selection bias of readers here so I wouldn’t be surprised if 30% of those who comment make north of $100k.
Seems like not many people are listing what they make though- which is probably for the best.
-Mike
I’ll probably put up an anonymous poll Mike/larry on income. Could be fun to see what the average is.
@Don@Moneyreasons
Opps, I get it now, it’s a guest post from Free Money Finance… I guess I should have followed the link a bit better.
Say, In your article above, it reads that “Free Money Finance” wrote “6 figures in 7 years”, but in the actual link that goes to the article it looks like it’s really the “getrichslowly.org/blog” site.
Both are great sites…
I know many people doing operations in finance that make 50-55k only 2-3 years out of undergrad. That said they could easily hit 100k before turning 30 without having a graduate degree. In any case it all depends on ones field, location, and the background of the company.
Samurai-san:
More power to you on questioning the status quo! Personally, I work with a lot of numbers in fortune 500 companies and smaller. I rarely see a statistic that proves to be accurate when you start digging in the data. Why would government data be different?
On unemployment… traveling the country, I believe that as a whole it is much worse than reported. More concerning IMHO is that it will remain a lagging indicator much longer in this recession:
A) Most of the run up in the market is spurred by estimate beating profits. These have been driving by aggressive cost cutting measures. Never before have companies gotten ahead of the curve as they did during this recession. They acted swiftly and are enjoying the rewards.
B) The money that has driven the market is not from Joe next door, it’s from those of us that have accumulated assets and are taking advantage of the opportunity.
C) 50% of jobs are created by small business… nothing is promoting the growth of small business and credit remains restricted for the small business person.
D) CEO after CEO continues to state that they will begin hiring again, but not yet and cautiously when the day comes.
” I also suspect the audience your web site targets would be higher than the norm.”
I agree with Larry’s point here and have some additional thoughts regarding the 20% –
First, people concerned with their finances as much as readers of GRS, FMF, and maybe even FS ;), may trend to slightly higher intelligence in math/logic, leading to more lucrative professions.
Second, people with more money are more likely to have computers.
Third, people with more money are more likely to have leisure time.
Fourth, ego combined with the guaranteed anonymity of the internet brings out the braggarts…and a few liars, but probably not a significant number since there are surely a few silent 6-figure-earners.
That said, I have no professional idea about unemployment or the economy as a whole – I’m in a rather sheltered company in a well-off city, and I’m not an economist.
Geek – Thanks for your thoughts. Maybe you’re right. If I read one more blog post from the PF community about how save on credit cards, and then see the publisher pimp out a credit card special deal, I may lose it! :)
I try and write stuff that goes beyond the basics and challenge people’s assumptions. I should hope all readers of Financial Samurai know that they should spend less than they make.
Anonymous braggarts are very annoying indeed. However, it’s not bad bragging of the webmaster asks for the info! Best, FS
@FS – the unemployment figures are significantly understated due to the exclusion of discouraged workers. But alas, unemployment doesn’t really matter in the go-forward analysis because, as you state, it’s a lagging indicator. I came over to this post from MvD because you’re glowing comments on the state of finance were very funny because while true, they’re also on very thin ice.
With respect to the negative tone expressed by some related to making more money or six figures, that’s a mere reflection of their individual realities. I have always believed that if you are a reasonably intelligent and responsible person that you can find a career path that leads to a minimum of the median household income (in other words, if you’re married with both spouses working, you should be able to earn $100k or so which is two times the median household income). The six figure mark is just like the million dollar mark for net worth – arbitrary goals perpetuated over many years.
What really counts is one’s net worth-to-expenses ratio because this is the best determinant of financial well being (exclusive of risk measures including insurance, investments, etc.). Though income and expenses play a significant role in this ratio, income, net worth, or expenses don’t tell us the story individually. Put them together and we can paint a pretty good picture of how someone is doing financially.
More on net worth-to-expenses ratio at
BTW, doesn’t that old adage go something like, “Whether you think you can or you can’t, you’re right”.
Hi Michael – Thanks for sharing your thoughts. I also do touch upon the underemployed. But, while everybody is complaining about how bad the economy is, I’m looking at the stock market rise every day since February, and I see with my own two eyes tremendous consumption all around. I think people get easily stuck in the past, and recognize the present too slowly.
The present is of great wealth creation again. I was incredulous in the summer, but I’m a believer now. Just look at corporate profits, all annualizing at 2007 year highs.
Again, I believe people like to say the economy is bad while saying things are fine with them. B/c if everybody else starts getting wealthy again, they just don’t feel so special.
Notice comments on these topics around the community. “I know someone who lost their job. I know someone who got a pay cut etc” Yet, it is never themselves who suffer. We are everyone else!
I can’t believe Baker is spending $3,000 on vacation when he still has the debt and talks about combating debt. I don’t think I’ve ever spent that much frankly. But to each his own. And again, if Baker with his debt can spend $3,000, then it is another sign of a terrific economy.
FS
@Financial Samurai
Ok yes I agree on all points. Yes the cheap money isn’t the only factor, but that being said the market is overvalued slightly because of this reason.
I live right next to a major mall, you would never know a recession exists with the traffic going into it.
Shadowstats is an interesting alternative view site. Without question, the govt definitely has incentives to fudge the numbers.
Larry – China says their GDP grows at 8-10% every single year. Nobody believes their numbers, but everybody accepts it b/c of the China miracle. Government statistics need to always be questioned.
You say you think the markets are overvalued, yet you see with your own two eyes terrific consumer spending in your neighorhood mall. Could it be that the market isn’t overvalued, since people are spending now, which means 4Q profits and 2010 profits will increase, leading to actually lower valuations than reality?
This is my entire point. Everybody sees great wealth creation, so why do people think unemployment is so high, not many people can make $100k, and the stock market is overvalued? It’s inconsistent with reality. Look at ANY personal finance publisher who puts up their networth, and they are all progressing nicely.
FS
I think a lot of the negativity in the FMF post comes from the simple fact of the matter that *everyone* can not earn more than $100,000.
We can sit here and preach and preach about how it is a question of motivation and this and that. However, an economy is built upon a class system. You have your grocery store merchandisers who get paid $8/hr so that the groceries are cheaper so that everyone can afford them. Can they make $100,000/year at that job? No. Can we just get rid of the job so that they can become a paper pusher in an office? No (unless we want to get rid of the grocery store system).
Not everyone can just go get a degree and get a high paying job. As the % of people with degrees goes up, the supply will go above the demand. As basic economics tells us, this will either lead to underemployment or it will actually drive incomes down. We are already seeing this now where a lot of people with degrees are getting jobs that *actually* only required a HS degree a few years ago. The playing field is rising.
Unemployment is a function of the economy, it is not an unfortunate accident. And people getting paid at the poverty line is what keeps the machine running and allows you, and I, to go out for a quick (and affordable) bite to eat.
Hi MLR – Thanks for your thoughts. But to FMF’s post, if you WANT to make more money, or in his case $100,000+, there is a way. His way is a 7 year process.
Like your post on your site suggests, major in one of those 10 majors and you’ll be making $48-50,000 on average at 22. In 5 years, lets say two engineers get married. That’s $100,000 in household income right there.
Let’s say you didn’t major in those majors, but now decided you wanted to make more money. There’s nothing wrong with following FMF’s suggestion and going to grad school. To your point, it’s important to realize the playing field is rising, hence getting your graduate degree may very well be the new minimum.
Like I said, it’s not a sin to want to make more money. It’s as if it’s “uncool” to try and make more money. That’s just not the case. Sometimes, I think it’s absolutely stupid to just focus on trying to save $5 bucks a month here and there. Instead, just focus on propelling one’s career forward.
FS
@Financial Samurai
A quick review seems like Yes, more tha 5.6% make above $100K.
@Larry L, New York
Interesting site on statistics Larry. I’m going to bookmark it, because I love seeing independent thought analysis, and not everyone just accepting whatever the government tells us is reality. That’s my whole point. Our realities are very different from statistics, so I’m interested in hearing if anybody sees anecdotal improvements in their area.
Cheap money is definitely a factor in the rise of the stock markets, but that’s definitely not the only factor. That’s ascribing liquidity as the main driver for all things and taking out fundamentals. Fundamentally, earnings ARE improving after seeing some sold 3Q results from the big tech and banks. On YoY basis, comps are getting easier and earnings growth is accelerating.
I’m bullish for all of us in 2010! FS
@Gen Y Investor Definitely makes sense. And that’s why i think there should be a cost of living adjustment for taxes.
It’s VERY hard to find a decent 1,000 squarefoot 2 bedroom, 2 bathroom condo in a good part of San Francisco to buy (think Pacific Heights, Marina, Presidio Heights, Russian Hill) for UNDER $700,000. If you do find it, it might not have parking or could be very dated.
When I visit my buddies in Denver, or even Seattle for that matter, $500,000 can get you a nice 3bed/2.5 bath, 3,000 house no problem! It’s probably even better in Texas, Iowa, and Arkansas.
Living in NYC is even worse. That 2/2 in SF that costs $700,000 is going for $900,000 to $1.1 million Yowza! FS
@Evan
Gotcha, thnx Evan. Gosh, why can’t the government make their website clearer?! I’ve seen the statistics before, and that’s kind of my point I’m trying to make. Do only 5.6% of Americans make more than $100,000?
I think I’ve just realized the issue must be becomes I’m seeing a recovery full time, and the government statistics are dated. I also think a lot of people HIDE their income so they can fly under the radar, that’s why I don’t entirely trust government statistics. Challenge the Borg! FS
@canz
What a great comment! Awesome Canz for your boldness in revealing your own income (which is a very handsome figure) and great points about highlighting the RANGE of 6 figures and range of 5 figure bonuses!
A $10,000 bonus is better than a sharp stick in the eye if you got it last year! Many of us got zero bonus, or down huge last year at my firm and in my industry :(
If I was earning just $1,000 shy of $100,000, I think it would tickle my annoyance actually. I’d wait tables for however many hours just so I could breach $100,000. Because YES, didn’t you know? Once you get to $100,000+ there is a secret handshake for that year, and you get to be on the government’s exclusive “Higher Revenue For America” list!
Best, FS
FS,
Check out:
You don’t have to just believe CNBC – you can get the facts and figures directly from the IRS.
I’ll just be bold and say I earned 86k last year.
i wonder why people are so [seemingly] obsessed[?] about making six digits? Will they be happier? What if they were “stuck” at $99k–as if that’s a bad place to be–would that suffice? Would 1k more a year get someone into an elusive club? Is 100k the magic number? If it is, remember, 100k is still the dregs of the six digits. Compare the lives of someone who makes 100k and someone who makes 850k a year: it’s the same as poverty ridden (10k/yr) to a single well-off dude at (85k/yr). Once they realize that, what is the next goal? 200k, 400k, 900k? highly unlikely goals.
Related… at work, there was a competition and the prize was a “five digit bonus!!!” Great, I thought, $99,000 possible bonus!!! Alas, it was _only_ $10k [dregs of the 5 digits].
i think that stats could be correct, but could be higher. I think there a few reasons why it isn’t in the “2 digits.” People aren’t in the correct field for advancement/wealth accumulation, they don’t know how market themselves for the skills they have, they learn the “wrong things” (things that anyone can learn), or they work too hard/long (rather than working smarter).
Learn something that is valuable and only a few people can do. As long as there’s a demand–and you do it well–you can command top dollar. Not because you lust for “6 digits” but because that is what your skills are really worth.
This type of discussion always gets heated for some reason. I think it may have to do with regional differences. People living on the coasts (ie expensive areas) think 100K isn’t a lot of money and more people make that kind of money b/c the cost of living is higher. Where as to those in other less expensive parts of the country 100k can go a lot further and is seen as a lot of money and perhaps an unreachable goal to some. Does that make any sense? Just my thoughts.
Some comments…
Great site: https://www.shadowstats.com/
Keep in mind unemployment is calculated differently than in the 80’s. So when the news states unemployment is equal to 1983, that’s false. It’s much higher than that period! The news fails to state this fact, and maybe does not know this.
How much does my family make? More than a dollar and less than 1 mil. :-) I think an anonymous poll you’ll get more honest answers. I also suspect the audience your web site targets would be higher than the norm. Same goes for those other web sites.
The stock market is higher because of cheap money from the Fed, nothing more or less.
Keep in mind two factors, cost of living, SF and NY are MUCH more costly than say Kansas. The census states income level per household, not per person. On the whole, people appear to be more wealthy than reality (hence the issue we got ourselves into).
It’s not an unreasonable goal. This economy change a lot of those high earners into Low or No earners.