Current Events > Are upper middle class or rich people ever in huge debt?

(+) Yeah! (+)

People out there seem to assume that only trashy or ghetto people are in debt

But I dont always believe that

For some reason, I wouldnt be surprised if rich or affluent people are also in debt

Have you heard of a guy named Donald Trump?

Yes, the difference is that they understand how to leverage it

While so even they are living beyond their means? Does anyone not know how to save?

Trump is basically a maxed out billion dollar credit card.

They are playing 1d chess and winning

.

Wall Street Crash of 1929

Debt for rich people is a joke that theyll never have to repay.

Michael Jackson was $500 million in debt(One of the main reasons why he did the This is It tour. He owed so much money) when he died, so yeah. It happens ALOT than you know. It's not just a middle class, lower class thing. The big difference is, the debt the higher class are in are absolutely insane. For middle class, we may be 5 to 10 grand in debt. Top class? 6, to 7, to 8, to 9 figures.

Yes credit card debt can build up quickly.

Shishiwakamaru posted...

Yes credit card debt can build up quickly.

That is also why I wasnt sure it was a thing that rich people are in debt because dont you have to have a good credit to get the good rewards credit cards they have?

Wesley Snipes says hello.

Depends on the kind of debt. We have huge mortgages but usually very little credit card debt. We are getting more debt in buying new furniture and stuff these days but moving it to 0 to little interest cards with a plan to pay things off by summer or so. Others will have large loans but its all about cash flow.

Yes, very often.

MAR10_KarT posted...

That is also why I wasnt sure it was a thing that rich people are in debt because dont you have to have a good credit to get the good rewards credit cards they have?

You don't need to be rich or even that financially responsible to have good credit though.

Anyone can be in debt or not in debt. Lower, middle, or upper class does not define the skills for managing money. Having lots of income certainly makes it easier to balance your finances though.

Debt doesn't just mean living beyond your means, and I'd wager most wealthy people have debt because it's one way of manipulating money to your advantage

My personal debt to equity ratio is currently around 1.4.

I have a decent chunk of debt, but more than enough in assets to cover it all comfortably.

bump

Yes but not for things like furniture or luxury goods or title loans, payday loans, etc

Who do you think is filing for bankruptcy?

Sheiky-Baby posted...

Michael Jackson was $500 million in debt(One of the main reasons why he did the This is It tour. He owed so much money) when he died, so yeah. It happens ALOT than you know. It's not just a middle class, lower class thing. The big difference is, the debt the higher class are in are absolutely insane. For middle class, we may be 5 to 10 grand in debt. Top class? 6, to 7, to 8, to 9 figures. Seems to happen the most in sports though. Pro wrestling, boxing, football, basketball.

Jackson came to mind for me too. There are a number of athletes who squander their fortunes and end up in massive debt too.

lolife67 posted...

Who do you think is filing for bankruptcy?

I thought it was usually poor people that are financially irresponsible that do?

Taking a loan to get more and pay progressivly.

You would be surprised how many people in the upper/middle class or "rich" are actually living paycheck to paycheck. It's not just poor people that don't know how to manage their money.

48% of people making six figures or better said they lived paycheque to paycheque in December of last year.

Source: https://www.cnbc.com/2022/03/08/as-prices-rise-64-percent-of-americans-live-paycheck-to-paycheck.html

Now how in the FUCK do you screw up so bad you're living paycheque to paycheque with six figures?

MAR10_KarT posted...

I thought it was usually poor people that are financially irresponsible that do?

Um, no lol most poor people don't have enough debt to file, know much about bankruptcy to begin with or can afford bankruptcy lawyers.

eston posted...

Debt doesn't just mean living beyond your means, and I'd wager most wealthy people have debt because it's one way of manipulating money to your advantage

ding ding ding

lolife67 posted...

Um, no lol most poor people don't have enough debt to file, know much about bankruptcy to begin with or can afford bankruptcy lawyers.

er. theres no minimum on how much debt one can have to file bankruptcy IIRC

Once you're rich it's better to borrow than actually spend your own money. Even conservative investments earn ~5% annually in the long run. When you're that wealthy you can get secured loans with like 1-2% interest rates so you increase your net worth more overtime by taking on significant amounts of debt than by staying debt free.

Yes they can be.

But to me, if you're in huge debt, regardless of the income you make.. You're pretty much poor from living paycheck to paycheck just to pay off your debt and the roof over your head.

Though a lot of people in debt don't know how to budget save their money at all and blow it on stupid shit.

Generally richer people are smarter with their finances though, and they have multiple streams of income.

Of course. People from every walk of life live beyond their means.

Sheiky-Baby posted...

Michael Jackson was $500 million in debt(One of the main reasons why he did the This is It tour. He owed so much money) when he died, so yeah. It happens ALOT than you know. It's not just a middle class, lower class thing. The big difference is, the debt the higher class are in are absolutely insane. For middle class, we may be 5 to 10 grand in debt. Top class? 6, to 7, to 8, to 9 figures. Seems to happen the most in sports though. Pro wrestling, boxing, football, basketball.

How does this even happen? What was he spending so much money on?

sutree posted...

How does this even happen? What was he spending so much money on?

I saw a show he was on one time and he went to the toy store and bought every single toy he saw that he wanted. Im sure the dude spent a ton of money that day in that store.

if this was a preview of what he usually does with his money. its not looking good.

Quite often. Its just a classier kind of debt

sutree posted...

How does this even happen? What was he spending so much money on?

Majority of that debt came from his Neverland ranch. From paying millions to his staff alone to run the place, maintenance for the Zoo animals, plants, carnival rides, etc. He was also a huge spurger of materialistic items from jewelries to paintings. His painting collection alone is worth like 90 million.

MAR10_KarT posted...

People out there seem to assume that only trashy or ghetto people are in debt

I dont think ive ever heard that

Cleo_II posted...

Depends on the kind of debt. We have huge mortgages but usually very little credit card debt. We are getting more debt in buying new furniture and stuff these days but moving it to 0 to little interest cards with a plan to pay things off by summer or so. Others will have large loans but its all about cash flow.

Is basically it

There will be more low interest debt, generally mortgages/HELOCs

EyeWontBeFooled posted...

48% of people making six figures or better said they lived paycheque to paycheque in December of last year.

Source: https://www.cnbc.com/2022/03/08/as-prices-rise-64-percent-of-americans-live-paycheck-to-paycheck.html

Now how in the FUCK do you screw up so bad you're living paycheque to paycheque with six figures?

Depending on where you live, six figures may not be all that much money.

sutree posted...

How does this even happen? What was he spending so much money on?

Once he did an interview that aired on prime time where they showed a day in the life of MJ and they were walking through a shop selling incredibly expensive tchotchkes(cheapest things were high 5 figures) and he was pointing at things, saying Ill take that over and over again. At one point the sales person said you already bought that.

EyeWontBeFooled posted...

48% of people making six figures or better said they lived paycheque to paycheque in December of last year.

Source: https://www.cnbc.com/2022/03/08/as-prices-rise-64-percent-of-americans-live-paycheck-to-paycheck.html

Now how in the FUCK do you screw up so bad you're living paycheque to paycheque with six figures?

You basically think that since you make that much money you deserve a certain standard of living. But if you have rent (or a mortgage), an auto loan, and student debt you cant afford that. Doesnt help that they think they deserve the fancier cars.

My husband makes 6 figures. I do not work. But we live just pretty much at the level when I was on my own (spend a bit more since we have 2 kids to take care of). We both have 10 year old cars. We live in the house that I bought on my own (we would qualify for a loan for a house 3x as expensive on his salary). I have an iPhone 8 that I just changed the battery on because I dont see a need to upgrade. He has a cheap Samsung we got for $150 a few years back. We dont go out to eat. That is expensive. I dont buy the cheapest cuts of meat, but it sure as heck is cheaper to feed a family of 4 at home.

Cuticrusader09 posted...

You basically think that since you make that much money you deserve a certain standard of living. But if you have rent (or a mortgage), an auto loan, and student debt you cant afford that. Doesnt help that they think they deserve the fancier cars.

My husband makes 6 figures. I do not work. But we live just pretty much at the level when I was on my own (spend a bit more since we have 2 kids to take care of). We both have 10 year old cars. We live in the house that I bought on my own (we would qualify for a loan for a house 3x as expensive on his salary). I have an iPhone 8 that I just changed the battery on because I dont see a need to upgrade. He has a cheap Samsung we got for $150 a few years back. We dont go out to eat. That is expensive. I dont buy the cheapest cuts of meat, but it sure as heck is cheaper to feed a family of 4 at home.

Thank you for this. I don't know. Making six figures, for me, would be life changing. It just boggles my mind how you couldn't be made if you're making nice money like that.

^the insane part is, six figures is nothing in the bay area

I read recently taht the super rich (billionaire status) are rich because of majority of their wealth is in stock. So, in order to get cash, one option is to sell some of their stock to buy stuff. However, for many of them, they don't want to do that. They borrow against the value of their stock.

So if they buy a hundred million dollar property, they don't sell their stock to get it. Instead they borrow money with their stock as assurance. That way they continue to have their stock and have the house. Kinda like having your cake and eating it too.

What I also read was that they normally continue to live that way indefinitely as long as their stock is still valuable. They can continue doing this until they die, at which point they'd have never needed to pay back the loan. Of course, after death the lenders can move to get their moneys worth by liquidating some of the rich guys assets, but he's already dead. Why does he care?

DipDipDiver posted...

Yes, the difference is that they understand how to leverage it

Understand, or have the capacity to leverage it

Bit fucking hard to leverage debt when you have no assets, little income and no equity

EyeWontBeFooled posted...

48% of people making six figures or better said they lived paycheque to paycheque in December of last year.

Source: https://www.cnbc.com/2022/03/08/as-prices-rise-64-percent-of-americans-live-paycheck-to-paycheck.html

Now how in the FUCK do you screw up so bad you're living paycheque to paycheque with six figures?

It goes faster than you might think.

https://youtu.be/xW1CrQu_H6E?t=92

yes, a lot.

most luxury cars you see on the road are not paid off

most houses you see are not paid off