
Redditors who are rich (net worth $1 million+) - how did you get rich? - rinnbehr
http://www.reddit.com/r/AskReddit/comments/rqejz/redditors_who_are_rich_net_worth_1_million_how/
======
dwc
There's a sad undercurrent to this, as some redditors respond that they find
this depressing. While I understand their plight, I do not understand the
sustained pessimism for most of the depressed ones.

I went to work right out of high school at menial jobs. No college, no big
family business. Paycheck-to-paycheck, and any minor emergency like a dead car
battery was a financial crisis. I did not "get lucky" on stocks or anything.
While getting rich has not been a focus for me, I decided I definitely did NOT
like being poor. Lots of small steps, and staying on the lookout for ways to
improve matters has led me to not be poor. I'm not rich but I'm in decent
shape and moving in the right direction: no debt except the mortage, which
will be payed off soonish; some money in savings, stocks, 401k, etc. I'm
living at a decent level and should be able to retire in some comfort. No
magic. No big windfalls. This is doable by most of those depressed people.

~~~
stevear
I am really glad someone else has noticed this and feels the same way.

This quote from that thread pissed me off all morning: "If you told the common
man any time in history other than the baby boomer generation, that the way to
get rich was 'hard work' and 'Budgeting' they would die of laughter."

Every day I feel more and more alienated by the victim mentality on Reddit. It
seems to be the only tangible by-product of the Occupy Wall Street protests.

I don't even know why I visit Reddit anymore.

~~~
kylebrown
I'm not sure why you would find that quote so offensive, but to be fair, the
disillusioned youth on Reddit are probably just as sensitive to the "anyone
can pull themselves up by their own bootstraps" assertions by smug boomers
(like the GP). Such a world-view is increasingly at odds with an economic
reality in which income inequality is higher than its been in decades, and
growing.

~~~
astine
High income inequality is not at odds with the ability for folks lift
themselves out of poverty or social mobility in general.

~~~
alex_c
It may not be inherently at odds, no, but I haven't seen any evidence or
studies that social mobility is in any way increasing - and it does seem
counter-intuitive that social mobility could increase at the same time as
income inequality.

<http://www.economist.com/node/15908469>

"How rising inequality affects social mobility is still unclear. Those born
since inequality started to rise sharply are only just now becoming adults.
However there are some troubling signs according to two papers to be presented
at the Tobin Project, an alliance of scholars, this month. Christopher Jencks
of Harvard University finds that income inequality has been accompanied by a
widening gap in college attendance. Ms Sawhill argues that a rising
correlation between income levels, likelihood of marriage and level of
education will make society more stagnant."

~~~
paulhauggis
"It may not be inherently at odds, no, but I haven't seen any evidence or
studies that social mobility is in any way increasing - and it does seem
counter-intuitive that social mobility could increase at the same time as
income inequality."

The Internet has given many more people opportunities..if they choose to take
it. There is so much free information out there..there's no reason why more
people aren't able to pick up a new skill and bring themselves out of poverty.

If you don't have the Internet, pretty much every city in the US has free
access at a library.

~~~
nitrogen
There's more to social mobility than just skill, however. As a hypothetical
example, if a currently poor person who is genetically/psychologically
predisposed to shyness and introversion learns a new skill, they'll still have
the difficulty of forming the social connections necessary to know how to
apply that skill toward generating life-altering levels of income.

------
hkarthik
Our path to be on track for a net worth of $1 mil:

1) Two good incomes on the professional track. We both have good degrees from
universities and don't plan on taking any breaks in employment. Even with
kids, there are plenty of great childcare options available. Living near
family helps too.

2) Drive paid off cars. Buy new cars if you want, but structure your costs so
you can pay them off in 2-3 years max and then drive them for another 5 or
more. Stagger your purchases so you never have more than one car payment at a
time.

3) Buy a home well below your means in area with a lower cost of living. There
are plenty of parts of the country where you can earn a combined six figure
income while spending less than $100/sqft for a home in a good neighborhood.

4) Limit how often you eat out for lunches and dinners to twice a week or
less.

5) Live frugally so that you can save 20-40% of your income. Don't cheapen out
on things for you or your family, but don't let yourself be manipulated by the
consumerism that surrounds us. If you have a disposable income, use it for
experiences like travel rather than collecting stuff.

6) Avoid expensive hobbies/activities that consume a lot of time and don't
contribute much to your marketable skills. If a hobby requires spending a
considerable chunk of your monthly income, reconsider whether it's really
worth it.

TL;DR: It's really not that hard to save your way to $1 mil, you just have to
be willing to work a little harder and spend a little less than most people to
get there.

~~~
mikeryan
I have to say I almost wondered if this plan was meant as a bit of a joke.

I'd rather spread my income around now on a nice(r) house, some fun hobbies
and a bit of abject consumerism, and enjoy life more evenly then save now not
have as much fun but end up with more money in the bank later. You'll never
get your younger years back.

~~~
smackfu
There's a middle ground between not spending and spending extravagantly. So
many people with large incomes just waste it away and end up with nothing at
the end. We're not talking about a single $500 iPad. We're talking about a
$500 night at a club.

~~~
spindritf
How great a night we're talking here? Because, in general, experiences are
worth more than gadgets (see below what I mean). Though (sky)diving lessons or
vacation would probably be better than a night out.

"Asked which of the two purchases made them happier, fully 57% of respondents
reported that they had derived greater happiness from their experiential
purchase, while only 34% reported greater happiness from their material
purchase."

"If Money Doesn't Make You Happy Then You Probably Aren't Spending It Right",
Journal of Consumer Psychology

"In 5 studies, we find that people's material purchase decisions are more
likely to generate regrets of action (buyer's remorse) and their experiential
purchase decisions are more likely to lead to regrets of inaction (missed
opportunities)."

"Buyer's remorse or missed opportunity? Differential regrets for material and
experiential purchases.", Journal of Personality and Social Psychology, Vol
102(2), Feb 2012, 215-223.

~~~
smackfu
As I said "There's a middle ground between not spending and spending
extravagantly." Whether that is experiences or material goods. A $500
nightclub night once a year in Vegas is perfectly reasonable. A $500 nightclub
night every weekend is probably over the line for most people.

------
aresant
The #1 expense over your lifetime won't be your house, your entertainment, or
your cars.

It will be TAXES.

If you build a career path that can take advantage of tax breaks you wind up
with a huge advantage from the start.

For tech entrepreneurs - focus on building your enterprise value. Reinvest
profits into GROWTH so that you wind up paying the bulk of your taxes in
capital gains vs. personal income tax. On $1m or 2m in money the difference in
what you save is staggering.

In real estate you can take advantage of all sorts of loopholes to reinvest or
shelter profits that let you drastically increase your available pool to
invest and create gains.

And for goodness sakes at the very least start a LLC or S-Corp if you're
making more than $25,000 or so a year from "side projects / consulting" so you
can properly write off and document all business related fees (computer
hardware, cell phone usage, home office, etc).

~~~
rprasad
As a tax lawyer, I can say with complete certainty that healthcare costs will
trump taxes as the #1 lifetime expense for almost everyone (except the Buffets
and Gates). #2 will be costs associated with childraising. Taxes are a distant
#3, and for people with sufficient debt (mortage and/or student loan), may
actually fall to #4.

Also, while the rest of your advice is sound, it is unncessary to organize an
LLC or incorporate a S-Corporation for side projects. In either case, you will
face additional taxes (nominally called "fees") for the privilege, along with
additional tax filing burdens. You can already deduct business-related
expenses as an individual. Indeed, both LLCs and S-Corps are treated as "pass-
through" entities, so you would already be doing that for your LLC/S-Corp
expenses.

The primary reason to form an LLC/S-Corp for a side project or for consulting
is for liability protections (i.e., lawsuits, debt, etc.). Unfortunately, for
single-member LLCs or sole-owner S-Corps, creditors will generally require the
owner to contractually waive such protections.

The secondary reason, and the reason you're probably thinking of: you can sell
the LLC/S-Corp, recognizing capital gains (lower tax rate) or even avoid taxes
altogether (via certain norecognition transactions). In contrast, it is
extremely difficult to sell an unincorporated/unorganized business, and you
will essentially always recognize the gain in such a sale.

~~~
ajross
Amen to the childraising point. My wife and I took a total of six months of
leave for each of our two kids (mostly her, though I did a 1-1.5 months at the
end too). That's a year's salary down the toilet. We're mid-career (i.e.
unlikely to see an increase in real income unless we get lucky or change
career paths). So that's probably 1.5-2% of our lifetime earnings right there:
even before the kids started daycare, and long before they'll go to college.

~~~
ryguytilidie
Are you saying 1.5-2% of your lifetime earnings is higher than what you will
be paying in taxes? I assume youre in a higher tax bracket than 2% right?

~~~
replax
He was referring to the first six months of child raising. Therefore, the
total cost is definitely higher and may well trump taxes, depending on when
your definition of "child raising" stops.

------
smackfu
Easiest way:

No kids. Two good incomes. Reliably saving 20%. Mid 40s. No college debt or
health issues.

That should get you to about a million in assets.

~~~
Jun8
I fulfill all the above (except that I have a son, but he's young so the only
big cost is daycare, around 13K/year), so where's my million!?

In order to develop a successful model, one should also have negative
examples, i.e. people who _could have_ had ~$1M in their mid 40s but do not.
The greatest mistakes I made that I see with hindsight are (i) doing a PhD in
EE where a MS was more than enough and then taking too long to finish that and
(ii) taking too long to get acquainted with the concept of creating wealth, a
la <http://paulgraham.com/wealth.html>; I'd say that, had I read _Hackers and
Painters_ 15 years ago (it wasn't printed at that time or course), my life
would have been different (or maybe not, it's easy to get caught with might
have beens). That's why I buy a copy of this book to many young people I know
who are starting life.

~~~
patrickd
Thanks for that link... enjoyed it a lot.

[9]This is a good plan for life in general. If you have two choices, choose
the harder. If you're trying to decide whether to go out running or sit home
and watch TV, go running. Probably the reason this trick works so well is that
when you have two choices and one is harder, the only reason you're even
considering the other is laziness. You know in the back of your mind what's
the right thing to do, and this trick merely forces you to acknowledge it.

~~~
alanfalcon
Fantastic pull quote. I'm reading this on my iPhone and felt too lazy to bring
up this page on my phone to copy/paste the text to send to a friend, so I just
voice dictated it. (Which I guess is a reminder that there's also the
possibility that sometimes the harder choice is also simply the less
efficient.)

To add some value to this anecdote, I'll share that I've been using voice
dictation more often, both for convenience (as here) and also as a tool to
help improve my diction. I tend to swallow my words and speak unclearly, so by
having a computer check me I'm slowly learning to enunciate a little better
and specifically figuring out which areas I need the most work. I am not
speaking to the phone robotically, the only change from my conversational tone
is the speaking of punctuation. (As for the pain of to/too/two and similar
homonyms, the iPhone helpfully underlines these in blue and makes it a snap to
tap and pick the correct version, a trick it took me a while to learn so I
thought I should share.)

------
c16
I think the best line from the whole thread has to be:

'TL;DR If your reading this first, your not going to be successful. You're too
fucking lazy.'

\-
[http://www.reddit.com/r/AskReddit/comments/rqejz/redditors_w...](http://www.reddit.com/r/AskReddit/comments/rqejz/redditors_who_are_rich_net_worth_1_million_how/c47vz37)

~~~
noodle
Generally agree with the sentiment, though that guy seems to have deleted his
account because (apparently) his post is a big lie.

------
freehunter
WRT the top post there (as of right now), you have to be pretty lucky if
driving a 20+ year old car is a net gain. Especially if you weren't the owner
of that car for the majority of its life. Like with old codebases, there's a
lot that can go wrong at any moment and be so difficult and expensive to
maintain that it's worth it to just throw it out and get a certified pre-
owned.

Depends on the car, I guess, I ditched my 12 year old Dodge for a 14 year old
Toyota and feel much better about the reliability.

~~~
vaksel
with cars you can just buy them used and sell them before they depreciate too
much. Buy a 3 year old car, keep it for 1-2 years, then sell it. (if that's
still too rich for your blood...get a 5 year old car and keep that for 2
years)

Just look at the cars as the cost to own...not actual price you pay.

So even if a car depreciates 20% in that time period, you can still drive
something decent.

A $10,000 used car...will depreciate $2,000 or $1,000/yr or $83/mo

$83/mo is a small price to pay to have a reliable car that's just 3 years old.

And if you want something better...

A $40,000 used car...will depreciate $8,000 or $4,000/yr or $333/mo.

$333/mo is nothing, and a $40,000 car started off its life as an $80,000 one.

And that's if you hold the cars for 2 years....if you sell them within the
year...you can sell it for the same price you paid for it.

~~~
replax
While your calculation is correct, you do not include a rather important fact.
Owning a car which you intend to sell in a couple years is a risk. Even though
the cost of ownership of a $100k car and $40k car might not be much, it will
turn out to be significant at the moment you crash it.

Which will then inevitably lose you the full value.

~~~
fr0sty
"Which will then inevitably lose you the full value."

Not even close. Insurance will reimburse you for the loss (minus a
deductable).

~~~
replax
I have to admit that I don't know about the situation in the US, but in Europe
you generally will not get your full car reimbursed if you drive it against a
wall. Unless you have some disgustingly expensive car insurance of course...

------
toddmorey
Entrepreneurism seems under-represented: most of the responses seem to be
inheritance or stock investments. I'm wondering if that reflects on the reddit
community makeup, the type of people who would answer this question, or just
that growing a successful startup is really hard / rare.

~~~
eli_gottlieb
9/10 start-ups fail, just like most other forms of new business. I believe we
could apply Bayes' Law here...

~~~
jaxn
That is crazy talk. The rate for small businesses as a whole is around 50%
failure within the first 5 years.

There are exceptions to that rule and ways to increase the odds. As an
example, 90% of franchise businesses are still running after 5 years.

~~~
carguy1983
Anecdata: Walk down a main commercial street in any large metropolis and count
the number of completely unviable businesses (these are the ones that turn
over their real estate every few months). These are further polluting the
statistics.

~~~
jaxn
I am not knowledgeable enough to know whether or not a business is viable just
from looking in the storefront.

Though I would argue that as the owner of two retail locations, I am probably
better equipped to make that judgement than most.

In my experience, most retail leases are for 5 year terms. I can't imagine
that the default rate on those is anywhere near 50%. Most business "failures"
likely never got far enough to sign a lease.

~~~
carguy1983
My gist was you don't have to be able to know, just walk down the street, then
walk down the same street 6 months later, and many of the shops will have
changed.

------
stephencanon
Take pride in doing good work. Find a job that will reward you for it. Be
lucky. Don't pay more for things than they are worth to you.

------
dirkdeman
It's funny how RICH is defined in a monetary value. I live a very rich life
(including kids, those of you who don't have them yet: you'll get it when you
have them), can afford everything I need and most of the stuff I want. I never
got the lavish spending of the wealthy, why on earth would someone buy a
Ferrari or 50,000 dollar pool table? What I'm trying to say is money is just
the means to fulfilling a desire.

I knew an old lady who saved every penny in her life to amass 10.000 euros, it
was her dream. She did accomplish it, but never had any fun in her life
because she'd always save her money. When she died she had the desired amount
on the bank. Her children inherited the money, but only after they paid 40%
tax.

How to get rich? Live your life to the fullest and have fun. And yes, raise a
family at some point. I promise you that all the money in the world can't buy
you what you get from your that!

~~~
UK-AL
A whole life to to amass 10000 Euros?

------
mfieldhouse
This comment is why I stopped reading reddit. The person mentions they
"noticed a couple of GOOD POINTS"...

Get lucky, either through a series of serendipitous events or through birth.

Be old enough to have lived in an era when you didn't have $50K or more in
student loans to pay off and could get a good job.

~~~
PagingCraig
I like reading it to see how people react to such a question, not really the
advice people give. Most people seem to think divine intervention is the best
way.

------
ckpwong
Net worth of $1m is hardly "rich" in my definition, since it's not sufficient
for most of first-world population to retire on. Heck, that 2500 sq ft down
the road was listed for $700k and had multiple offers, and my neighbourhood
isn't even considered "rich" (perhaps middle- to upper-middle class).

Net worth of $1m quite easily achievable by 50 with two middle class income,
not being a spendrift, and not being a bonehead in investing. (For the record,
trading stocks too actively is usually a bonehead move, so is putting all
savings in CD's.)

------
mcphilip
Long response from a redditor who launched a reasonably successful startup:

[http://www.reddit.com/r/AskReddit/comments/rqejz/redditors_w...](http://www.reddit.com/r/AskReddit/comments/rqejz/redditors_who_are_rich_net_worth_1_million_how/c47vz37)

~~~
davidw
Looks like it's fake though. The thread is a reminder of the awful S/N ratio
on Reddit.

~~~
SatvikBeri
I'm curious-what in the post indicates that it's fake?

~~~
davidw
The reply to it:

[http://www.reddit.com/r/AskReddit/comments/rqejz/redditors_w...](http://www.reddit.com/r/AskReddit/comments/rqejz/redditors_who_are_rich_net_worth_1_million_how/c48bw7n)

------
corkill
This book sums up everything you need to be wealthy, what people who live hand
to mouth believe and why most people's 9-5 job, live frugally for 50 year plan
to be rich in their retirement is stupid (hint: because you just pissed away
your whole life).

<http://www.themillionairefastlane.com/> (scammy title I know but seriously
read it). The guy who wrote it was the founder of limos.com.

~~~
jodrellblank
s/pissed away/lived/

Just beceause it's not a constant adrenaline high doesn't make it wasted.

------
b2hack
For the HNs who are rich. If you have to start it from the beginning.

What would be a good startup to you start, service/product ?

------
tferris
Interesting reads on the Reddit thread—most of them feel grounded and
authentic.

It's pleasent to get some new views on this topic if you are used to the
typical screaming self-help books or blogs post about getting rich and success
(where you never know wether the author is really rich or just a good writer).

------
sayemm
Best book on the topic: [http://www.amazon.com/How-Get-Rich-Greatest-
Entrepreneurs/dp...](http://www.amazon.com/How-Get-Rich-Greatest-
Entrepreneurs/dp/1591842719)

<http://en.wikipedia.org/wiki/Felix_Dennis>

------
scotty79
So to have a million and also have free time you have to either inherit it
(best case) or build up your real estate.

You might be able to get that money other way but it will take so much time
that you won't even have few minutes for yourself to brag about your success
on reddit.

------
mase
I hope to someday know what this feels like and not have to learn these
lessons the hard way

