Maybe this would be a good idea?
Except for extreme outliers, it is possible to estimate by visual inspection how much a person spends. If class differentiation holds, and I believe it does, people in a certain class have more in common, and given the import that society puts on socioeconomic class, expense level makes it easy to find people one has something in common with. Of course, humans, being humans, have found ways to game this system by borrowing money, feathers if you will, and this skews the system. It is interesting to know that having access to credit used to be a status symbol in the sense that someone considered you a trustworthy person. This is hardly the case today. The untrustworthy credit-“grades” are simply tagged with a credit-risk percentage on top of their interest rate. No dishonor in that. Now status symbols are something one buys.
Actually, I do not care so much about status symbols as I care about finding people I have something in common with in the small part of the complete human which is finance. Despite the title, I have always kept my money matters close. Very few people know what I’m actually worth, although if you put two and two together given that I make no secret of my expense level and my salary is or rather was fairly easy to guesstimate, it should be fairly easy to arrive at a ballpark value. However, obviously, in light of the first paragraph, that’s not how most people think.
- Wealth is strongly correlated to expenses; or,
- Wealth is inversely correlated to expenses
When I see someone, I tend to think using the latter model. Look, statistically speaking, a random person earns the medium wage. If he shows displays of riches. Chances are high he has little wealth. And vice a versa. But I digress …
This post is really about the things we keep hidden from others, because we are strange—on the theory that most people are not comfortable with “strange”.
When it comes to money, it would appear that many of my friends are severely in debt/underwater or have a net worth (I’m not counting housing) that is less than the price of their car. I can never understand quite how that happened, when I have enough saved to pay off those debts or buy their cars, in cash, just like that. Consequently, we have completely different ideas about money and economic events. I remember when the depression, excuse me, recession was getting started, that they would worry about their job and money. They would worry about their job, because they only had one. I had two, a backup.
And they’d worry about their investments, because to them, investments were the index funds in their 401k that were “promised” to go up by 10% in the long run and not claims on individual company equity. Talk about the panic that sets in, when the magic of compound interest suddenly stops working. Modern man utterly depends on magic, that is, performing rituals to work things he does not really understand—instead he counts on the replacement of the medicine man, the technologist. As the markets were crashing, I felt like a parent trying to comfort a kid who had just been told that Santa Claus does not exist, trying to explain where money really came from, how the fed works, how the stock market worked.
In terms of expenses, most were and are just getting by, not managing to save more than 15%, most of which go into retirement accounts to remain practically untouchable for the next three decades. Most think this means they are doing good, yet it would not take more than a 15% cut in income to default with their massive obligations. They talk about their worries. They all have them. I don’t know what to say. I mainly worry about a hike in the capital gains tax.
So maybe tattooing your net worth on your forehead might just be a good idea. What do you think?