Don’t you want to make millions of dollars so you can buy that dream house of yours? You know, the one that overlooks the water and is in a neighborhood filled with other expensive homes?
I used to have that dream, but I recently realized that it just wasn’t for me. Here’s why…
My trip back home
A few weeks ago, I went back home to Orange Country, California, to spend a few days with my folks and to attend a conference in Los Angeles. I know, you’re probably thinking that Orange County (O.C.) is a ritzy area, but by no means is the majority of O.C. like that.
For example, my parents’ home looks like an average home, and it isn’t worth anywhere near a million dollars. This doesn’t mean that my parents live in a bad area. They just live in a middle-class neighborhood. The schools are pretty good, and the fanciest restaurant is The Olive Garden, which frankly isn’t too bad.
As usual, when I visit O.C., I spend time with my folks, and I also set up a lot of business meetings. Because I was also attending a conference in LA, I set up the majority of my meetings in Bel Air, which was close to the conference center.
My Bel Air experience
I met up with some awesome entrepreneurs when I was down there. The meetings were productive, and the people I was meeting were genuinely nice.
The only issue I had is that in a good portion of my meetings, the other person was trying to show off how successful he or she was. People randomly mentioned in our conversations that they owned fancy 6-figure cars or that they lived in multi-million dollar homes.
I never understood why they would show off because whether you drive a Nissan Versa like I do or a Rolls Royce, I would never treat you differently, and I would hope that you wouldn’t treat me differently either.
Luckily enough, none of the people I had meetings with treated me like crap. The worse thing that some of them did was boast about their successes, which is fine. Sadly, I have done this myself in the past.
What I have never done, however, is treat someone badly because they didn’t have money. For example, when I asked the valet for my car (in Bel Air), he brought my car last even though I was second in line of five people. And it wasn’t that my car was far – I could actually see it. It’s that he probably assumed that someone who drives a fancier car would tip more and deserves to be served first.
Even worse, when I was waiting for my car, a few of the locals started making some jokes about poor people and the way they dress. I knew they were talking about me because I was the only one in jeans and a t-shirt.
What these rich people don’t realize
The funny part about all of this is that if you look at the average household income in Bel Air, it’s around $207,938 a year. Hypothetically speaking, let’s say that these people who were speaking badly about the “poor folks” make more than the average person in Bel Air. If we assume that they are in the top 1 percentile of the U.S. income earners, then they are earning roughly $410,000 a year.
Out of that income, a good 40% will go to taxes. Which means they are left with $246,000 a year. And let’s say they have a big mortgage payment of $15,000 a month and an expensive car payment of $1,500 a month. That comes out to be $198,000 in yearly fixed costs. That means they are left with $48,000 to spend on food, traveling, clothes and other things that they may fancy.
So, my big question to people like that is… where’s your savings? When you spend that much money, you are living the lifestyle of the rich and famous, but you aren’t building wealth. If you want to build wealth, you need to invest in things like real estate, which isn’t possible if you are spending all of your income to support your lavish lifestyle.
If you have that sort of lifestyle and you lose your job or something bad happens like an economic recession, you’re screwed. This is the same reason why 4 out of the 6 Real Housewives of Orange County are broke.
My big realization
I know this sounds silly, but that whole experience made me realize why I don’t want to live in a ritzy area like Bel Air or Newport Coast. I just won’t fit in!
Now, if I really wanted to, I could probably fit in, but it just isn’t me. Fancy cars and big homes don’t make me happy. If they did, I could probably figure out how to live that lifestyle today, but I would rather build wealth. Once I have enough money, I would rather use it to try to change the world.
By no means am I saying that all of the people that live in rich neighborhoods are like this. I have a lot of wealthy friends, and the majority are very humble. But that small percent that think that they are better than the rest of the world make me never to want to live in a rich neighborhood.