Producer’s note: Someone on Quora asked: What is the biggest surprise about getting rich? Here is one of the best answers that’s been pulled from the thread. Thank you to the team at Quora for making this happen!
1. You will lose all your friends, on the way up, and if you don’t stay there, on the way down.
2. If you feel like “risking it all” on a new venture with your own money, don’t. Risk taking is a prerequisite for success. Once you got the cash, if you want risky, go sailing/ocean racing, jump off a mountain top with two sticks attached to your feet, buy a glider, or buy a race car and go to the track, that is do anything that takes care of the fix. Risk-taking is an emotional condition. If you repress your emotions you pervert them. Find a “sane” outlet. Not good: gambling, fast women, fast cars on public roads; throwing alcohol into the mix makes for a great Molotov Cocktail. If you like open air fire making go camping in bear territory. Possibly in Alaska, if the bears don’t get you, the skeeters sure as brimstone will…
3. In order to make a million you got to earn three… two you burn getting there, and that leaves you with “one.” Then you calculate your effective tax rate at 62% because you took the “profit” instead of listening to your tax accountant. That leaves you with 380K. Then you run to the bank, and they offer you 2.8% on a 2 Year CD. That’s a whopping $10,640.00 in your pocket, every year.
4. $10,000,000.00 with the aforementioned certificate of deposit: $280,000 annual income. Ya ain’t that rich buddy….
5. You buy a million dollar home. Now you are paying 2.25% effective tax rate on that asset (net of the ‘assessed value’), which is 22,500.00. In order to pay that you have to have a million in the bank, just to cover it: $1m x 0.028 = $28,000. Now the math nerds among you will say “I got $5500 disposable out of my $2m “tie up.” Yeah and how about property insurance? And do you really expect your “significant other” to clean the toilets? All assets are liabilities unless properly disposed of. And I almost forgot, you have to pay taxes on that $28k but I am assuming you hired a tax accountant by now.
6. So from the original $10m. you got 8m “disposable.” You invest in a Bank CD (because you have decided to pervert your risk taking gene) at 2.8% which gives you $224,000. Barry says you’re a 1 percenter, and Nancy agrees. You pay 62% effective tax rate, and your net disposable income is exactly $85,120.00
7. For you to take home $80k, you really need to earn $160k. Your $160k job is really worth $10m, because you take the interest deduction on your mortgage, and you offset your property taxes.
8. So next time somebody asks you how much you spent on your sailboat you can answer: “It was worth a quarter million brand new, but I bought it at half that used from a guy entangled in a divorce proceeding because he got caught in the act of banging the nanny like a screen door in a hurricane and he had to pay his lawyer, and his wife’s lawyer, and the bills were starting to stack up. Ya know, what I really wanted was a Maserati. And then I thought to myself, same amount of cash, buy a sailboat, it keeps its value better…”
9. Lead the exact same life you led before. Don’t tell ANYBODY, what you really got in the bank. The great unwashed masses will think you got money to burn, the wealthy will simply say, “He did okay, smart guy, all around good people…”
10. Buy a nice house, because its good to own the toilet seat you sit on every morning. Buy a nice toy, because you only live once. Buy organic food even though it cost two times the amount, because you only got one set of teeth and they got to last into retirement. Marry “good people” because you need to believe that good things happen to good people. Be humble. Work hard. If your not working, read, because that is how humans download new ideas. Be generous with your TIME with those on the way up, and always bill REAL MONEY to those already there because time is money, and what the wealthy know better than most, is that working hard gets you nowhere, but taking responsibility for the results does.
I asked my lawn guy last month why he kept mowing the lawn considering it was half dead. He answered, “Because you pay me to mow it.” I asked him why my lawn was half dead. He answered, “Because you have a fungal infection.” I asked him why he thought I would know that. He answered, “Well obviously you don’t or you would have bought a ten dollar bottle of anti fungal treatment.” Hmmmm. I asked him, “WHY didn’t you charge me fifty bucks to spray that ten dollar bottle of anti fungal agent…?”
Blank stares all around.
Hard working dude.
Don’t be a dude.