Lifestyle of an Orange County Millionaire

[childplease_IHB]

Bk, I wouldn't say $1.5m. The $404,240 is probably more like a typical nice home in the suburbs of Chicago (Like Naperville). Perhaps a $404k equates to $600 - $700 in Irvine.

I am serious. This was true in Irvine during the subprime era.

That chart is not applicable to socal. To think you're worth 1.5 million and you're living in a place that's 400k...probably 2 bed/2 bath condo attached in every direction is pretty unrealistic. I'm sure true for some, but not the majority. Socal is not set up for you to have a 400k SFR in a decent neighborhood to raise a family(probably the majority demographic for people w/ that net worth), so to call cali residents living beyond their means based solely on that chart is unfair.

If I could get a 250k SFR with good schools and a 30 minute commute...sign me up. btw, my net worth is .8k

 

[Anonymous_IHB]

Here is article with the lifestyle of an actual OC millionare

http://articles.latimes.com/2009/mar/08/local/me-cafeteria8

 

[PANDA_IHB]

Bk, I wouldn't say $1.5m. The $404,240 is probably more like a typical nice home in the suburbs of Chicago (Like Naperville). Perhaps a $404k equates to $600 - $700 in Irvine.

I am serious. This was true in Irvine during the subprime era.

That chart is not applicable to socal. To think you're worth 1.5 million and you're living in a place that's 400k...probably 2 bed/2 bath condo attached in every direction is pretty unrealistic. I'm sure true for some, but not the majority. Socal is not set up for you to have a 400k SFR in a decent neighborhood to raise a family(probably the majority demographic for people w/ that net worth), so to call cali residents living beyond their means based solely on that chart is unfair.

If I could get a 250k SFR with good schools and a 30 minute commute...sign me up. btw, my net worth is .8k

I agree Childplease.. but i think a figure of $550k - $650k is more realistic and believeable for someone with a networth of $1.5M living in OC/Irvine.

 

[bkshopr_IHB]

Here is article with the lifestyle of an actual OC millionare

http://articles.latimes.com/2009/mar/08/local/me-cafeteria8

Nice link. An article that is well written. OCR please take note.

 

[Fishhead_IHB]

If you read "Million Next Door" and some other related books / articles, a common trait with millionaires is that they accumulate wealth, generally with a decent income and a somewhat frugal lifestyle. They also tend to be self-employed and/or business owners (a lot of them first generation Americans or from modest backgrounds). That is why a lot of millionaires are actually farmers, small business owners, low-spending professionals, etc. Those folks are into their work and their passions, not their egos so much. They're used to living cheaply as part of their culture and/or when they started their business. Thus, the spend less to impress other people and end up saving their money or re-investing it in their businesses.

Since the table is from national data, my bet is that most of those homes are in the more modest neighborhoods from which the owners started. They just haven't brought themselves to realize that they can spend their money on perigranteel ...

FH

 

[PANDA_IHB]

If you read "Million Next Door" and some other related books / articles, a common trait with millionaires is that they accumulate wealth, generally with a decent income and a somewhat frugal lifestyle. They also tend to be self-employed and/or business owners (a lot of them first generation Americans or from modest backgrounds). That is why a lot of millionaires are actually farmers, small business owners, low-spending professionals, etc. Those folks are into their work and their passions, not their egos so much. They're used to living cheaply as part of their culture and/or when they started their business. Thus, the spend less to impress other people and end up saving their money or re-investing it in their businesses.

Since the table is from national data, my bet is that most of those homes are in the more modest neighborhoods from which the owners started. They just haven't brought themselves to realize that they can spend their money on perigranteel ...

FH

I have no data to back this up, but i would guess that there are more high networth individuals living in a modest area like West Irvine compared to Turtle Ridge.

 

[PANDA_IHB]

Just because someone’s primary residence increased up to $1M doesn’t qualify him or her as a millionaire in my book.

There are a lot of people in Irvine living in $1M+ homes that are not millionaires but middle class.

Making those assumptions based on the value of someone’s primary residence is a complete joke.

Truth or Myth?

 

[JCie_IHB]

Just because someone’s primary residence increased up to $1M doesn’t qualify him or her as a millionaire in my book.

There are a lot of people in Irvine living in $1M+ homes that are not millionaires but middle class.

Making those assumptions based on the value of someone’s primary residence is a complete joke.

Truth or Myth?

Those housing stats may be a good example of taking stats and misinterpreting them. First of all, as your net worth grows, it's pretty normal that you don't spend in the same proportion to your net worth as you would when you make less. If you make $100k per year, the % of your income no basic living expenses is much higher just because you make less. If you have 1M per year, it doesn't mean that you spend 10x more on lattes, healthcare, etc. There are "base" living fees that don't grow in proportion to net worth.

The data doesn't necessarily mean that all rich people are very frugal. That is one way to get rich but there are many different ways to get there. Sure, if you spend 101% of your income you'll be poor no matter what but I think the book is wrongly making the case that there is this big "surprise" truth that millionaires live frugal lives.

For most people, your best earning years are in your 40's and 50's and so most wealthy people (in terms of net worth) are older. At that age, you probably bought your house sometime in your 30's or early 40's (when your net worth was less) and you're now an empty nester that has plenty if not too much room in their home. If you're 50, you're not probably gonna blow a huge % of your 2M for retirement on another house or give yourself a big house payment.

Also, if you've built your wealth over time, then you're not likely to have spending habits that match your net worth.

What would be more interesting to see is annual income vs. avg value of their primary home. If you make 200k per year, you can live frugally and become a multimillionaire over time but your lifestyle (and home) is going to match your annual income, not your net worth. If you make 1M per year, you can buy a "baller" house and spend a lot of money and still become rich very quickly.

Age also plays a role on spending habits. When you get older, you tend to have less of a desire to have the latest this or that. Once you're well established, you have less of a need to show that you're established. When you're younger, you have a lot to prove to the world (and the potential mate you're trying to attract).

Finally, 1M in net worth isn't a whole lot of money these days. If you're 29, it's fantastic. If you're 65, well, then, you have just enough to live a middle class life for the rest of your life.

If you don't have a 300k+ income, the trick is to live frugally, save money, and invest in assets that will grow in value (investment risk).

Another path is to work hard/smart/take risks and earn a high income and don't blow the money that you make (risk in yourself). The latter is harder to accomplish but you'll have a better lifestyle (if you're not stressed out all the time).

My 2 cents