jack

Posted by John Scalzi

https://whatever.scalzi.com/2025/11/28/poor-little-rich-people/

https://whatever.scalzi.com/?p=58394

The YouTube video above fascinates me, because it details how people making $500,000 a year — economically fortunate by any sane measure — are still frequently living paycheck to paycheck. One signal reason for this is the issue of lifestyle comparison, and the fact that income disparity in the 1% is vastly wider than the income disparity within other segments of American life.

Huh? Well, as an example, let’s look at the third quintile of income in the US. In 2023 that third quintile had incomes roughly between $61,000 and $98,000, according to the US Census. Everyone within that quintile was within $37,000 dollars of each other in yearly income, more or less. That disparity is not nothing, obviously, but it’s all within economic hailing distance. In the one percent, the income range was between about $560,000 and, well, more than a billion dollars (this is reported income, not unrealized, illiquid wealth in things like stocks and real estate). Someone on the lowest rung of the 1% is vastly economically closer to someone in abject poverty than they are to that billionaire.

Thing is, if you are in the 1%, you’re not comparing your lifestyle to someone living in a tarpaper shack, you’re comparing your lifestyle to other people in the 1%. This often means comparing yourself to people who have ten or a hundred times more income than you do, with similar inequalities in overall wealth. Your lifestyle costs more, and because it costs more, the temptation of the “lower rung rich” to financially overextend themselves to keep up appearances is real — and also, in the world of the upper classes, things just cost more, because companies catering to rich people know their customers don’t want to be seen counting their coins. The person in the market for a BMW 7 series is a fundamentally different economic entity than the person in the market for a Honda Accord. This person is shopping at Erewhon, not Aldi. In the 1%, apparently, you are who you appear to be, or at least, who you appear to be to your neighbors and co-workers.

(Mind you, shit’s getting more expensive for everyone everywhere, it’s not just the 1% feeling the inflationary pinch. But as the video points out, businesses and economists are aware that most people in lower four quintiles are as squeezed as they’re going to get; any new growth in sales/revenues are going to come from the top end, which makes them ripe for price increases on goods and services directed to them specifically.)

“Well, Scalzi, you’re bougie as fuck and yet you don’t seem to be living paycheck to paycheck,” I hear you say. And it’s true! There are reasons for that. One, I’m a writer, and my “paychecks” — advances, royalties, the occasional film/TV option — arrive so sporadically that if we tried to budget around their arrival we would be screwed. Early on, when I was still a freelancer (and, to be clear, with the help of Krissy having a more regular income) we built up a “buffer account” to make sure our paying of bills was not dependent on waiting for any one particular check of mine to arrive. That buffer account still exists, just a little more padded out.

Two, we’ve largely avoided the comparison trap. We live in rural Ohio, a location not exactly swimming with people whose income we directly index our own against, and not a place where shops cater to the higher end of incomes. I’m a writer, which means the professional community I am part of does not generally have the same incomes as, say, neurosurgeons or finance dudes. The highly sporadic nature of writer income also means I am aware the income is not reliable, and watching the careers of other writers through the years means I know one can’t just assume everything will be golden forever. Also, you know. Krissy and I both grew up with periods of our lives where we experienced, shall we say, a deficit of money. This has made each of us relatively conservative with what we do with our money, both individually and together. We’re not going to spend money to impress other people. We’re sure as hell not going to pile up debt to do it.

Three, we have other advantages and strategies. Where we live means we are able to acquire property at a discount to other areas (this means we’re unlikely to sell it later at ridiculously inflated prices, as we might if we lived in a city stuffed with high-income earners, but that’s fine). We don’t have any debt, which means we don’t have to pay out of our income to service it. I am financially literate and numerate (my very first book was on finance) and I don’t like to gamble, so our overall investment strategy is very much predicated on the idea that compound interest is our friend. Whenever I feel like trying to get rich quick, I buy a lottery ticket. It has roughly the same odds as me or any other non-professional without access to advanced financial market tools successfully day trading or timing the market.

Finally, for both Krissy and me, there’s a point where the use of money has diminishing returns, and we don’t tend to spend after that bend of the curve. Last year Krissy bought a Honda CR-V hybrid. Could we have afforded something more upscale? Sure. But inasmuch as the CR-V had everything Krissy wanted and needed in a car, and going upscale from there would have meant a lot more money for only marginal improvement in utility, was it worth it to her? No. Likewise, my 2011 MINI Countryman lacks some modern technological amenities that I would like in a car, but not so many or so much that I’m going to spend for a whole new car when my own car still runs perfectly well and, frankly, sticking my phone into an eye-level holder and using an adapter to plug the thing into my car speakers will handle 90% of what I want.

(This doesn’t mean I have never done silly things with money, as my frankly over-endowed guitar collection will indicate. But I don’t get out over my skis on stuff like that. I always check in with Krissy, who is our day-day-money manager, before I make any such purchases. If she tells me “no” then it doesn’t happen.)

Krissy and I have been smart, and also we have been lucky, which should not be discounted either. There are lots of points in our lives where we could have been one bad break away from real financial problems. Beyond this, I don’t pretend I haven’t been incredibly fortunate in my own career, sometimes for reasons that have very little to do with me directly. It also doesn’t hurt that my own skills were portable, which allowed us to live somewhere housing and living costs were not ridiculously high.

At the end of the day, however, we’ve avoided so many problems by simply not worrying about how we stacked up against other people financially, and by being able to be content when things are good enough. We didn’t need to keep up with the Joneses, or the Bezoses. We’re doing well enough to be happy. And that’s the thing.

— JS

https://whatever.scalzi.com/2025/11/28/poor-little-rich-people/

https://whatever.scalzi.com/?p=58394