The Comfortable Poor

So what’s your net worth? Are you happy with it? Do you think you have enough? Do you compare yourself to others and think you can do better? Or thank your lucky stars for what you have already?

Felix Dennis, the now deceased publishing magnate and poet, wrote a very amusing book, How to Get Rich about how he’d built a personal fortune of over £500m. One of the more memorable passages in the book was where Dennis gives his opinion on what kind of money makes you rich. (I remembered this as I read Fire V London’s blog post on salary bandings in the capital city.)

We don’t often hear rich people defining wealth from their perspective, so here is the world of money according to Felix, a semi-billionaire:

Comfortably poor: £50k-£199k in liquid assets; £1m-£2m in total assets

Comfortably off: £200k-£499k in liquid assets; £3m-£4m in total assets

Comfortably wealthy: £500k-£999k in liquid assets; £5m-£15m in total assets

Lesser rich: £1m-£5m in liquid assets; £16m-£39m in total assets

Comfortably rich: £6m-£15m in liquid assets; £40m-£74m in total assets

Rich: £16m-£35m in liquid assets; £75m-£99m in total assets

Seriously rich: £36m-£49m in liquid assets; £100m-£199m in total assets

Truly rich: £50m-£100m in liquid assets; £200m-£399m in total assets

Super rich: Over £100m in liquid assets; over £1bn in total assets

I think by his own definition that Dennis falls into the banding of the “Truly Rich”. Interestingly not the Super Rich. That’s because, from what I’ve heard, rich people are somewhat obsessed by the people they know who are slightly richer than them. That’s why Warren Buffet was recently overheard saying, “That Bill Gates. He lucked into his money. If he’d been born thirty years earlier he’d be flipping burgers”. Okay, I made that up, but Buffet might have said it if he’s anything like a lot of rich people.  I mean, I thought it was interesting that someone like Felix Dennis would even categorise money in the way that he has. He’s accumulated way more wealth than he could ever spend, but he’s still wondering where he sits in the scheme of things.

You can bet your life that some of the most avid readers of the Sunday Times Rich List will be the multi-millionaires and billionaires, but it’s a safe bet they’ll only be reading the page they feature on. That’s because they’re obsessed with their peers and what they’ve got. (Seemingly they’re also terrified of losing it all too, although most would never admit this, even to themselves. It’s a big part of what drives them though.)

I’m speaking here only slightly from my own experience of meeting rich people. When working, I often had the company of some seriously rich individuals and it never ceased to amaze me how fixated on money they were. But they were even more fixated on the money that their peer group might have. One of my friends, an ex-fund manager in the city, backed up my observation, saying he was absolutely fed up of listening to clients worth £400m moaning and griping about their lucky neighbour or colleague who was worth £50m more than them.

I’m sure we all can relate to this though. When I used to have a company car, I would obsess about the next car up on the list, not a Ferrari or Lamborghini. Similarly, when I had a two bedroom house, all I could think of was affording a three bedroom one, not some country mansion with fifteen bathrooms. As for my mates who I suspected earned slightly more than myself, well, clearly they were just lucky. People I knew from school who were multi-millionaires….wait a minute, there weren’t any, so I never spared a thought for them!

The interesting thing about the book How to Get Rich, however, is that it’s quite anti-money. The message is that if you’re chasing Manon, then you’re chasing a false god. This is no self-help manual about how to make millions. It is, instead, a questioning of why you’d want to earn millions in the first place. Why squander the finite hours you have on this planet to chase money, when there’s so many other life enriching things you could be doing? Such as writing poetry, or planting trees, which became Dennis’s obsessions in his later life. Following these pastimes made him really happy and fulfilled, whereas building a fortune drove him only to drink, drugs, hookers and unhappiness (eventually. He seems to have quite enjoyed it at the time!)  He seemed almost sad to have come to the realisation too late that he could have lived a different life that required very little money, but might have offered the solace and fulfillment he found in walking through a forest or in penning a sonnet.

So, what’s your net worth? Or, more importantly, how much does it really matter compared with what else you could do with your life?

19 thoughts on “The Comfortable Poor

  1. I don’t care about my net worth, but I do care about money and my cash flow. I totally agree that one cannot serve both God and Mammon, that’s why we also have the phrase: ‘the love of money is the root of all evil’; sadly this is usually misquoted to ‘money is the root of all evil’. People of all income levels and net worths have weird attitude problems towards money. If they’re always thinking about someone having more, it’s because they serve money. If they say ‘money’s not important’, it’s because they probably don’t have enough. At least Dennis has enough to do whatever he wants without having to worry about income to pay the bills.

    I’ve been reading an interesting, pretty short book – ‘Secrets of the Millionaire Mind’, by T. Harv Eker, very American, but worth a read. He talks a lot about the unique money blueprint that everyone carries and why you should throw it away and get a new one.

    Remember when we were discussing the yachts? It’s not wrong to be rich! It’s our attitude to money that’s usually the bad part. Now, if you wanted to spend your life planting a thousand forests, you’d need money and time to do it. You’d need to be financially independent… With a pretty sizeable income. Most people would call that rich, but the pursuit of the money to get to that stage might be called serving Mammon. But the great difference is that person is not serving Mammon, they’re pursuing the goal of the thousand forests, it just so happens that money is required to do it. Chasing money for its own sake is foolishness.

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    • The philosophy of money is an interesting subject and everyone will have a different view about their own. I do think it’s healthy to think quite hard about it, and it never ceases to surprise me that for such an important subject you’re pretty much left to self-educate when it comes to cash.

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      • It is interesting, but it’s very personal isn’t it. Money education is like sex education in schools, kids should be taught the basics, the functionality of things but there’s a lot of philosophy that goes with it which I think is best left to the family and culture of the child.

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  2. Perhaps Felix Dennis fell into a category he failed to list, “The Uncomfortably Rich” … ? I notice he doesn’t bother listing an “Uncomfortably Poor” category either, but presumably everyone who has less than £1m in assets fell into that band in his worldview.

    Btw, Jim, I can’t access your blog at my workplace because the workplace internet filters block it! I’m guessing with “Sex” in the title the filters assume it’s porn.

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  3. Have you read “Your Money or Your Life”? It was the great motivator for me, inspiring me 15 year ago to figure out a “way out” of working. Dream came true 3.5 years ago–I’m not rich by any means–but I have *enough* (as I have chosen to define the term).

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    • Hi Ed, although I know of the book I haven’t yet read it. It’s seemingly an inspiration for a lot of people and I should read it for that – I think a lot of the content and practical advice might be familiar to me, but the motivation and “philosophy” behind it is probably something I could benefit from.

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      • Hi Jim, & Ed,

        I recently bought Your Money or Your Life and have started reading it. So far, whilst it is not given me anything I would describe as “new” it does put a good twist on things and makes it easy to look at what you are doing and where your money is, so I would recommend getting it out of the library for a read
        Cheers,

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  4. Once you get closer to the end, you realize much more vividly that your days on this Earth are limited, and in hindsight, maybe the drugs and hookers weren’t that good compared to poetry or planting trees.
    It’s also possible that hookers are very enjoyable when you’re young, not so when you’re in your 70s 😉

    To answer your question: I care about my wealth, only because it is a direct indicator of when I’ll be able to retire. I’m not on the scale at all though 🙂

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  5. Hi Jim

    Funny, for whatever reasons, when I was younger, I was quite resentful of rich people. However, it’s been a while since I felt that way.

    I don’t know when I changed or what happened to change me but I was no longer bothered about people earning more than me, being richer than me, doing better than me. I happily celebrate (genuinely) the financial successes of both friends and family alike.

    My Mum seems to think that this ‘trait’ of mine has led to me ‘under-achieving’. I think it’s led to me being a lot happier during most of my adult life than those continually striving for that higher salary to better/keep up with their peers.

    Anyway, I’m with M in that personally, I don’t really care about my net worth.

    I only started tracking it on my blog because it seemed that a lot of readers in the PF community thought it was an important number.

    Mine’s increased by over 25% this year – whoop-de-do! But what does that mean? Isn’t it just another number that people can use to put me in some category?

    Anyway, today, I’m worth £1,098,327.50 – that’s my weight worth in gold! After Christmas, it’s going to go up but it had better come back down again in the new year!

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  6. Interesting point of view – I think most ‘non-rich’ people would feel pretty good about themselves with something a little less than his comfortably poor boundary. It seems from my blog reading most US FI aspirants aim for about $1M or thereabouts. Not sure what the UK equivalent would be – but I guess most employers schemes for mid-level professional staff with 35-40 years of work provide a pension fund of about £500-750k, which with a paid-off home mortgage I suppose is a reasonable baseline.

    Funny thing I was just this morning thinking whether anyone had written about ‘comparitis’ along the lines of ‘excusitis’ that MrMoneyMustache often brings up. I think this is an difficult habit to overcome but one that can completely undermine ones ability to feel good about your lot in life. This relates to the idea of knowing what ‘enough’ is that sometimes comes up too.

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  7. I do think in many ways people “luck into” the upper echelons on wealth. They bring forth the right idea, but it only makes them uber wealthy if they also happen to be at the right time, and the right place. You only have control of two of these things.

    That being the case, having achieved a certain level of comfort on your scale (but not top shelf), I’m happy to check out of the working world and “get in with my life”.

    We’re 3+ months away from early retirement at 49 years old. I almost walked away last year, but am saving every check in our last year of work in a philanthropic fund. That’s my transition to changing my life’s focus.

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  8. I can see where I sit in that lot, and I have a long way to go to get higher up, if I want to!

    As many have commented, Net Worth is just a number, I only first calculated it about 2 or 3 months ago having finally read up all the PF blogs I could find – its a nice buzz to see that number, but does it actually make any difference to me, right now? No. The number that matters to me is my average monthly passive income stream – when that covers my expenses I am free to do as I please!

    Don’t get me wrong, I spent time last night looking at some nice places I would love to move to, but, do we *really* need an 11 bed house, with swimming pool, gym, bar, flower room(!) etc… I suspect we can live just as happily without all the extra cleaning and maintenance 🙂
    Cheers
    London Rob

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  9. Another blog, or maybe a forum – I forget which, prompted me to calculate net worth for the first time. By the measures here, I’m comfortably poor.

    Is it “enough”? I have no idea. Certainly is if you’re a childless single man but, like most people who’ve used earnings to reach FI, I am neither childless nor single!

    Something I’ve noticed about investing and becoming FI is that it turns you into a damn philosopher. “What do I want to do with my life, if not work?” leads to all sorts of introspection. Even the mechanics of investing get philosophical when you start contemplating the nature of “risk”, the merits of investing in an environmentally rapacious economy, or asking oneself “what is money?”.

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  10. Interesting, based on this scale, I am not even on the comfortable poor stage. My net worth is something I only started calculating when I filled in the moneystepper spreadsheet and I have nowhere near a £1m in net worth! If only! Based on my calculations, I don’t need to have a £1m in net worth to give up work.
    I would like to say I had a net worth of over £1m but I think my ability to do so would mean grinding the job for another 10 years!

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