In many of our debates, we banter the words "poor" and "rich"- I think it is high time we had a debate defining this! LOL

Please define "rich" in your terms or cut and paste a definition you personally agree with.

Do the same with "poor"

Mine is here:

"Rich" - $60,000.00 a year in "unearned" income- in others words, your money works for you to earn 60 large a year. I read this in Forbes a couple of years ago, and couldn't agree more. I have well over a million in property, but I do not consider myself a millionare, because my actual "salary" or "income" I earn from those properties is nowhere near a million bucks (ohhh, but someday.....)

Poor- Not able to afford health care, or to save any amount, or qualify for any loan over 2500 bucks, and cannot afford domicile payments of over 500 a month.


This is a completely material debate, with no recognition of intangibles, like the love of ones family, that makes some of us feel rich, that is a given in my book!

CR,

What about looking at net worth? I know you don't consider yourself a millionaire due to your yearly income, but total assets exceed a million. However, if you are carrying mortgages on your property, probably not.

So I'd define poor as having a low net worth. If no debt, then net worth might be the value of household items and a couple of goodies like guitar and amp, 10-year-old vehicle. Let's say net worth of $5,000.

But what if you're living in the 'burbs, have a mortgage and CC debt, some kids heading into college? Might net worth go into negative numbers? Then you could be poor but living well. In other words, bankruptcy isn't far away should something like long-term unemployment hit.

I think a lot of households considered middle class are in this boat.

So how to define rich. I'd say rich is a net worth at $500,000 and an annual income at $100,000, no debt burdens, as the lowest rung. That's for an individual with no kids.

Average rich, just double those numbers: one million net, 200G income.

Filthy rich, quadruple those numbers: 4 mil net, 400G income.

Absurdly rich, a billion in net, a million annual income.

Grotesquely rich, 10 bil net, 10 mil annual.

Obscenely rich, 100 bil net, 100 mil annual.

Sold soul to devil: 500 bil net, 1 bil annual.

Heh, that was fun!

Who is rich, is subjective. Amlord provided data from the Census Bureau indicating that "over three-quarters of a million "poor" persons own homes worth over $150,000; nearly 200,000 "poor" persons own homes worth over $300,000" yet they are classified as America’s poor.



The information in quotes above is located in this link:

In the World of the American Taxpayer, You're Only as Rich as You Feel

In several tax articles I have read this morning researching this issue, one tax bracket continues to come up as signifying “rich.”

The top 20 percent of tax filers. So, it might be safe to assume that somewhere between $55, 225 and $92,144, you become “rich” in the eyes of the IRS.

I wonder how many people here at AD fall somewhere in between those to figures.

In global terms, I suspect the "rich" are those who have uncontaminated water, enough food to eat, some kind of roof over their heads, and some minimal form of health care. Everybody else is "poor."

I quite agree that there is a strong tendency in the USA for the vast majority of people to consider themselves firmly middle-class. In global terms, of course, most Americans are rich. (This is not at all to deny that there are some Americans who live in extreme poverty.)

To me, a "rich" American is one who can afford to purchase a house; who can afford luxuries like a computer or a CD player; who can go out to eat at nice restaurants frequently. A "poor" American is one who has to decide between buying groceries or buying prescription medications; who has to donate plasma to make ends meet; who has to depend on others (government or private charity) for basic needs.

That data was not from the census bureau (it was in a response to a census bureau report), it doesn't represent true ownership (i.e. mortgage paid off) and it contradicts other figures from the same source (e.g. $39K median value). IMO it's mere propaganda and shouldn't be repeated in a serious debate.

I find that book called "The millionaire Next Door" very revealing. Based on what I read there, I now measure wealth in terms of how many days, weeks, months, or years a person could afford to loose her/his income and continue in a reasonable standard of living.

There are many doctors, lawyers, etc. that would have to file bankruptcy if they loose their income for a couple of weeks. This doesn't make them poor, but certainly makes their real wealth questionable.

The definition of reasonable standard of living is a bit trickier. In West Virginia, the US Census places the percentage of people living under poverty at about 22% for most counties. But if you have a semi-decent job you may buy an old but not-too-bad house for less that 60K in most counties. In most cities in California, you can't get a lot in the public dump for that.

Really poor is probably living in a mud house scraping rice off the floor like most Afghans are still living, but a single mother with two jobs, that still requires welfare just to stay alive until tomorrow, will probably tell you she's poor in the USA.

Rich may be owning a Septic Tank cleaning business, and a couple of acres in the Appalachian hills, and a stone house build in 1929... and not having to worry if you got to close the business tomorrow cause the house is paid. That's not me, I'm sorry to say

I've got about $10 in savings, and I'll probably be able to keep the utilities turned on until my next payday. By most of the above definitions, I am poor. The problem for me is, that I am so much better off than I have ever been in my life, that I don't see myself that way.

The lady at the desk to my right often smiles and says something like, "Do you love me more than apple pie and Hessian Soldiers?" I have empty pop bottles that haven't been cashed in yet. When I met PE, cashing in the pop cans I could find when I was walking, put food in my refrigerator. It was an efficiency apartment, there was no table to put it on.

I've got a fixed income, a paid for car, and a house with a mortgage... ...and I can express my opinion without fear of death threats from co-workers.

I'm no longer married to the woman who routinely woke me in the morning with a knife at my throat, saying "Talk to me!" If I said, "I love you." to my ex-wife, her response was usually, "How nice for you." "What would you do without me? was always met with "I'd lead a better life." If my ex came home with something new, I had to presume it had been charged; although it was sometimes stolen from one of her employers. Perhaps she is leading a better life, I know that I am.

I am well aware that had I been born in another country, my annual income might be measured not in thousands per year, but hundreds. I'm not in a prison, a mental institution, or living in my car. I have at the moment no clear vision of what my future will be, and any hope of my being "rich" is limited to winning the state Lotto or being left a fortune by an unknown benefactor. The house I was raised in was a slum, with holes in the walls. The only serious purchase offer my parents received for it, was "$25.00 if you can hold a land contract on it." Both my parents routinely worked 80+ hours per week. I seem to recall seeing 120 worked hours on a check stub once, but 7 16 hour shifts is only 112 hours. Perhaps I had pay in there for a scheduled holiday. It was very routine for me to work an 84 hour week, 7 12 hour shifts. My dad retired on a Friday, was hospitalized on Saturday, and died in surgery on Sunday. When mother died, I inherited her entire estate, a building lot which sold after two years for $2,000. I have been able to enjoy five years of retirement, spending the time with my wife and daughter.

If I define poor as the guy with a dollar less, and rich as the guy with a dollar more; I will always be chasing the brass ring that Bill Gates is holding. If I remind myself that Bill Gates has a job to go to on a regular basis, probably vacations only a few weeks a year, and doesn't realize that he can afford to retire... I'm a much wealthier man than he is.

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My net worth if very high- but I have a very small disposable income- well, not small according to some folks, I have a disposable income equal to a small second job (about 20 thou a year)- does that make me rich? My personal finance plan is to retire with the same salary as I have now- but without the 40 hour work week LOL

About 6 years ago, I was in a very foul mood while leaving the court house after my divorce- I was just about starting from square one financially- and a homeless person asked me for some money- I asked him how much he had on him and how much he owed others, he said "Nothing and Nothing"- I retorted in a very loud voice "I am owing nearly 260 thousand dollars, and have 20 bucks in my pocket, you are not broke, YOU ARE EVEN, you should be loaning me money you creep! I am behind, AND YOU ARE EVEN!" (it was a republican moment for me, doesn't happen often. )

I will consider myself rich when I have 60 thou a year income, with no "job", and all three of my houses are paid off LOL, or with real low notes just for the tax man.

Ahhh yes, you are right Platypus, that was not from the Census Bureau. We'll have to agree to disagree on whether it's relevant to serious debate.

So, what's your definition of "rich"?

I think I define rich vs. poor mostly in terms of freedom. Very poor people are not free even from things like hunger or disease. A poor American is tied down by jobs and debts that restrict their options: they can't take time off when they want, or quit a job they hate, for fear of losing the ability to pay rent or buy food. A "fairly rich" American has a great deal of freedom to set their own work hours and terms, to take vacations when/where they want, to take extended time off, or to pursue a non-remunerative hobby. The truly rich are almost completely free. They can go wherever they want on a moment's notice, buy whatever they want on impulse, etc. They only need to work if they feel like it, to satisfy some desire for competition or personal fulfillment.

Can I put dollar values on these levels of rich and poor? Not really. I know people who are perfectly happy backpacking almost full time. They have no demands on their time, they can buy whatever they want (because what they want is very little) and their only significant worry seems to be the weather. They make almost no money, but I'd call them rich. At the same time I know people who make hundreds of thousands of dollars per year but who are so materialistic and so burdened by debt that I'd have to consider them poor.

If I had to define rich and poor in purely economic terms, I'd probably focus on assets plus five-year earning power. A rich person could retire in five years or less with an expectation of income over $100K indefinitely. A poor person can't retire at all because their retirement income would never match their debt. Someone in between might be able to retire, but would have only a subsistence income and/or might run out of money before their life expectancy.

I have to agree with Vicky that by any reasonable global standard virtually every American is wealthy.
To me, the real distinction in the US is between "working class" and "leisure class". It's not how much money you have, but how hard you work to earn it.

There's a straightforward sum that is used by the UK government, and the rest of the EU, to define "poor" for the purposes of benefit (welfare) targeting, etc.

Anyone (more properly, any household) who earns less than 60% of the median income, after deducting housing costs, is "poor". It is a rule of thumb, rather than a hard-and-fast rule, but it works reasonably well for most purposes.

(If you don't already know, the "median" is the income figure that has 50% of the population above and 50% below it. It is not necessarily the same as the "mean" - what we usually talk about as the "average", and certainly isn't for income distribution, where the bottom end is fixed at zero and the top end is not fixed but has the likes of Bill Gates to pull it upwards.)

The median income (from memory) is currently $63,278 for a four-person family (for calendar 2001) (source), compared to £14,800 per taxpayer in the UK (source - for UK fiscal 2001: April 2001 to April 2002. In the same place, the mean is given as £20,300, but in a Poisson-like distribution, the mean is skewed upwards by the few very high incomes at the top end, of which more later.)

If we assume that the four-person household contains two taxpayers (a reasonable assumption?), an assuming that the median British household also contains two taxpayers (another reasonable assumption?) the direct comparison is $31,639 to £29,600.

Not knowing what housing costs are in the USA, and since many of the things we pay for through tax here are paid by individuals or companies there (most notably healthcare), I don't think there is a direct comparison, but for the sake of argument (and 'cos it's fun!), let's assume the costs of housing are about the same in both nations, and just compare pre-tax incomes levels.

Which gives us "poverty lines" at $18,983 and £17,760 per household, respectively for the US and UK.

When comparing ourselves to the Third World, we should use global median incomes and housing costs. I couldn't find these anywhere, but I'm guessing than the global median would be less than $1,000, so yes, we'd all be "rich".

Also, by implication, if a two-person household earns more than 140% of the median, that household is "rich". So, if you live in a household that earns more than $44,295 in the US or £41,440 in the UK, you're technically "rich" and should stop complaining!

I think this is the core of the problem - no matter how wealthy we are in absolute terms such as these, there is almost always someone richer than we are. We tend to measure our wealth by our disposable incomes, forgetting that the non-disposable part is earmarked in our minds on those expensive cars, plush houses, foreign holidays, etc.

And, we tend to think about income distribution as if it is a "normal" or "Bell" distribution, with ourselves at about the "average" level, when in fact it is tails of a very long way upwards, with a bunch at the downward end (a bit like the Poisson probability distribution for those with a statistical bent).

The truth is, the state of being "rich" starts comfortably in the middle classes. As indeed does the state of being "poor".

By American standards I am poor. I make $9.50 an hour and my partner makes about the same. We both have full health coverage from our jobs and I get free cable and internet service. I just paid off my beat up 1991 Geo Prism and we have 30 years to pay on our house. We can pay our bills every month and buy food (and smokes ) and all the basics for life. BUT we have no savings what so ever and if one thing deviates in our lives or something breaks we're put in a spot. So I wouldn't say that we're in poverty, but we're definitely not financially secure.

I'm not sure what the monetary dividing point would be.

Surely, in the United States if you don't have health insurance and you don't have thousands of dollars in the bank you are in serious danger of becoming poor very quickly.

I've been there, working part time or "temp" jobs without insurance. Luckily, I have never been seriously ill. The one time I had a skin infection and suffered for a couple months because I went to the doctor, was misdiagonsed, would have had to take further time off work I couldn't afford to go again. I finally had to "call in sick" to get it taken care of and found a Dr. that diagnosed me immiedetly. And that was cheap by most standards, $110 for the Doctor, and $75 for the prescription. But I only made a $250 a week before taxes! That's a personal example. So without insurance something fairly simple costs $200, with it say $25.

If you are rich, I guess paying $200 is nothing. If you are poor it's the difference between suffering and being well.

From personal experience, I know that when my husband & I only made about $50k a year it wasn't enough to buy a house or save very much. Going from that up to $70k has made a huge difference. Now we have savings, a house, and are looking at getting a second car now that the first one is paid for. We don't live extravagently but we live well. We have health insurance, life insurance, a moderate house (1500 sq ft) and a 1999 car.

So I imagine that another $20k and I would feel quite rich. Certainly anything above $100k in the United States I would say is wealthy. Beyond that, it's truly hard to imagine, the discrepency becomes so great.

I guess in answering that question you would get limitless answers.

1. In determining if you are rich by a salary, I believe most people look at it wrongly. It is not how much you make, but how much you save. If you make 100,000 a year and save 5,000. If I make 60,000 and save 10,000. Who is the richest.

2. The terms, WANTS and NEEDS should also enter into the discussion. What our parents and grandparents considered wants,are now considered needs by us. Such as tv in almost every room,air-conditioned,2+ bathrooms,etc. We are all conditioned to having so many luxuries,that we consider needs.

I admit that I'm a little surprised that nobody has commented on the "official" statistics defining "rich" and "poor" that I posted earlier on this thread.

'Cos I was surprised how small the difference between rich and poor is under these definitions.

Certainly I think the boundary of "poor" is reasonable enough, but "rich" seems both surprisingly low in monetary terms, but also, after some thought, also seems to be a reasonable definition.

Maybe it should be pitched a little higher, since the income distribution curve is skewed to the higher end, so a symmetrical 40% above and below the median isn't justified. Maybe +60% as a "rich line" is fairer, which puts the boundary at $50,622 in the USA and £47,360 in the UK.

Even then, the impulse to think that to be rich your income should be in six figures at least still makes $50,000 seem too low.

I think that our media has some part to play - most of the people we are presented with in magazines and newspapers as "ordinary" people (the celebrities that we see over long periods of time, rather than "real" people who only tend to appear for a few weeks and months before disappearing back into obscurity) are all way above this type of income.

Perhaps seeing the truly rich as ordinary in this way, or even mundane, makes us think that the threshold to being "rich" is much higher than it really is?

Any thoughts?

Remember the conversation between F. Scott Fitzgerald and Ernest Hemingway? Fitzgerald said, "The rich are different from you and me" and Hemingway said, "Yes, they have more money."

It seems a bit of a paradoxical exchange between two very wealthy, famous people about how the "rich" were different than they. Clearly many who are (technically) very wealthy never consider themselves to be. I'm curious how much money one generally has before they are willing to call themselves rich. I guess it's just a natural part of the human condition to look for problems where there are none and not realize luck when they have it...because someone somewhere is bound to be luckier.

I feel both lucky and rich. I've felt lucky as long as I can remember, but I get luckier all of the time. I felt relatively rich when I had to save for a month to have enough money to buy a CD, and I feel much richer now. We live in a nice neighborhood and send our kids to good schools. I could even go get a five dollar frappachino every day if I wanted to...though the kids might not get new shoes if I did

Question: Is a person truly poor if she has the ability to live beyond her means?
I think that's what you're saying, Mrs. P.

My answer would have to be no.

On the flip side, I would define being truly rich as not only being able to afford whatever you want, but not worrying about how much it costs, either.

I think rich or poor in America depends on how precarious your personal situation is, for example, if you were to have a loss of employment, a disability or a health situation for yourself or a loved one that could easily take you under, or could you manage it?

I suspect many are living in this way. Pay the rent/mortgage and bills, live in reasonable comfort, have little left over, do some nice things, go to a restaurant or concert not to get bored to death, but live a paycheck away from disaster, all on faith that nothing terribly bad will happen.

The rich can pay or have insurance to get through this, the poor can only hope that it doesnt occur.

living in the philippines rich here would be defined as someone with two cars, enough to put their children through school and enough to spend money on leisure activities.

since the philippines is unmistakeably associated to being poor it is in fact true.
poor here relates to the kids who sell flowers on the road and live in areas facing the highway often torn down without their permission hence the name "squatters"
their "houses are usually no bigger than the size of a VERY VERY SMALL bathroom. and thats usually for a family of six.
sigh.
how sad. :C

As I've been reading through this thread, I've realized how many different ways there are to define rich and poor.

I've always considered myself poor by American standards. But a few months ago someone sent me this link: http://www.globalrichlist.com/ which was an eye opening experience for me. It gives me an idea how well I'm doing compared to the rest of the population of the world.

I think I'd define wealth, or lack of it , two different ways.

1) Poverty: As a legal, or governmental definition, for the purposes of tax breaks and aid: more than 35% of net income is needed for adequate housing. Inability to save (or spend) 10% of income due to cost of living. In other words, if all the necessities of life (food, housing, medical expenses, electricity, heat, water, etc) take more than 90% of net income and a person or family has no cushion to fall back on for emergencies (savings) or to spend on occasional entertainment or non-necessities.

Wealth: Total of basic necessities cost less than 50% of net income, regardless of how the other 50%+ of income is used -- luxury housing vs. basic housing, expensive cars, debts on non-necessary items, etc.

Middle class is somewhere in the middle here.

***

2) While considered lower-middle class to poor by most people I know, I do indeed feel very rich. I have everything I need, I live in a comfortable home, and my family can indulge in occasional luxuries, like eating out, entertainment, and occasional travel. When asked by my mother to come up with a Christmas list this year, I felt at a loss -- I couldn't think of anything I really needed and there's nothing I really want right now that I don't already have. And that is the richest feeling in the world.

This link is not represent the worlds "richest" people, "the highest paid people in the world" would be a more accurate title. In does not take into account of cost of living into account. 50K in the US will buy alot less then 50K in a third world nation.

While this is true, it is also true that with minimal sacrifice on our parts we could make a huge difference to the poor in those third world countries.

And as far as standards of living, no one would argue with the fact that most Americans have a very high standard of living compared to most of the people living in third world countries.

Another thing to consider -- many in the US consider necessities which are luxuries elsewhere. For example: TVs, CD players, DVD machines, camcorders, cars, computers, more than 3 changes of clothing, large meals, etc.

Rich is being defined as 60,000.00 American dollars per year of UNEARNED income vs actually having to work for it- in other words, you have investments that earn the money for you, you may have an actual net worth of well over a million dollars, but the earnings make your income. That is my actual goal for retirement myself.

Your are considered poor In America if your income is less than $773.00 per month and have no assets, to speak of. Below that you qualify for Medicaid, food stamps and housing assistance. Thats for one person.

The average person on Social Security gets about 900 per month, just enough to not qualify for Medicaid, which pays for drugs and Nursing Homes, Medicare does niether, except for what ever the newly passd law will do.

Home Ownership has to do with how much equity you have in the home, if the home is paid for you have a major asset and are not poor.

A great many elderly people are living in acute poverty, income is just above the poverty level, so no help with drugs or food.

This is now an oldie moldie that is coming back into it's own as the debate over tax cuts for the rich heats up with the upcoming election.

I have been reading hard copy stuff on retirement and taxes, so I am sorry I can not post it- but a few things off hand- perhaps others will provide links if this debate continues-

First- the definition of wealth is very fluid in all the debates- alot of it centers around "1%ers"- those that are the top 1% of earners in the US- but the numbers are so huge in difference between 1%ers- a Doctor making the "cut" of a 1%er at the 350thou per year is in the same category as Bill Gates and Warren Buffet!

And since this definition applies as tax law- more than a websters like definition of rich- the Dr is treated exactly like Mr.Gates- and Mr Gates pays a much smaller percentage of his earnings, but far more in actual dollars than the imaginary Dr.

For instance- let's say the Dr is a great Dr but a poor money manager that does nothing to re-invest his income- therefore he pays the full 39.9% in taxes of his income with no deductions- whereas Mr Gates would have to fire his tax accountant if he paid anywhere near 1% of his actual increase in a year- if in fact, the goverment didn't actually pay him for earning the money!

So the definition of rich and poor is really arbitrary, and has more to do with tax code for the rich and receiving benefits for the poor than what you are I may define as rich!

Present Value Net Worth: Net worth (assets less liabilities) plus present value of expected future income.

Poor: Bottom 10 percentile of PVNW of population.
Rich: Top 10 percentile of PVNW of population.

Choose your populations with care to make relevant comparisons.
To make comparisons between populations with radically different costs of living, we'd probably have to look to Maslow's hierarchy of needs or some such thing.

A thought on health care (because Maslow doesn't mention it). I don't believe that health care is a need. By and large, what we consider health care didn't exist a few centuries ago...those people existed just fine, therefore it can't be a need. Our lives today are longer and more comfortable, therefore it must be a luxury. If you wish to address this paragraph, please find another thread.