Many people aspire to be rich and enjoy all of the trappings – luxury cars, palatial estate, unlimited assets – that are associated with wealth. But what actually constitutes “rich” remains a hazy concept in the eyes of many. Like many things, the answer to the question “what is rich?” is “that depends.” *
When pressed to classify “rich,” people in different parts of the country, even within different neighborhoods of a city or town, may offer various opinions. Individuals trying to define “rich” are influenced by current income level, where they live and personal characteristics.
This article examines the concept of what is rich in America in hopes that might serve to help readers not necessarily “get rich,” but instead recognize true wealth can be measured in many ways.
The Varying Definitions of Being Rich
When The Washington Post asked people to define “rich,” not surprisingly 54 percent of those surveyed answered that it is someone making more money than they did. If nothing else, this demonstrates how unclear the concept of fiscal worth is to many Americans. Rich means having more – but how much more?
The U.S. Census Bureau reports that the median annual income in 2014 was $53,482. That same year, The New York Times conducted a poll showing 27 percent of Americans think a family of four living off of an annual income between $100,000 and $200,000 qualify as “rich.” (Another 20 percent of those surveyed said rich means earning between $200,000 and $300,000 a year).
With U.S. median income levels hovering around $53,000, this means many Americans would not consider themselves rich unless their incomes were at least doubled.
Rich and Poor in America: Location Matters
Because people tend to congregate with their peers, home values and regional attitudes should be factored into any discussions about rich and poor in America.
Last year The Wall Street Journal published a list of the 25 richest and 25 poorest cities in the United States. Looking at these two lists shows a stark difference between rich and poor in America. Residents of the richest city earn nearly three times the average annual income of those living in the poorest city. (The disparity in property values, poverty rates and unemployment rates is striking as well.)
Below are the three richest U.S. cities and three poorest cities, according to The Wall Street Journal’s research:
3 Richest Cities 3 Poorest Cities
San Jose – Sunnyvale – Santa Clara, CA
Median household income: $96,481
Median home value: $735,400
Unemployment rate: 4.1%
Poverty rate: 8.7%
Washington – Arlington – Alexandria, DC
Median household income: $91,193
Median home value: $386,900
Unemployment rate: 4.3%
Poverty rate: 8.7%
California – Lexington Park, MD
Median household income: $86,417
Median home value: $291,300
Unemployment rate: 5.2%
Poverty rate: 8.9%
3 Poorest Cities
Brownsville – Harlingen, TX
Median household income: $32,093
Median home value: $76,200
Unemployment rate: 6.8%
Poverty rate: 35.2%
Pine Bluff, AR
Median household income: $33,838
Median home value: $80,200
Unemployment rate: 6.8%
Poverty rate: 26.2%
McAllen – Edinburg – Mission, TX
Median household income: $34,801
Median home value: $79,400
Unemployment rate: 7.9%
Poverty rate: 34.0%
Looking at these numbers (and the aforementioned belief that “rich is someone making twice as much as me”), confirms how location can factor into determining the difference between rich and poor in America. The average resident of Brownsville, TX might classify an annual income of $65,000 as “rich”, while a citizen of San Jose might believe earning $200,000 a year means rich.
Rich in America: Characteristics Count
According to a 2014 CNN Money article , the seven major traits that high-net worth individuals attribute their own success to include:
• Entrepreneurial spirit
• High energy
• Hard working
• Risk tolerant, but not impulsive
None of these traits are genetic. It’s conceivable that many hard-working Americans would demonstrate a commitment to these traits every day, while still being a long way from becoming possessing great wealth. So, what else contributes to success?
There’s more to being rich than earning. Once wealth is achieved, people – rich or poor – need to know how to effectively save, retain and grow their money. Equally important: knowing how to balance assets and debts, so expenses remain manageable and debts do not get out of hand.
It’s not as easy as it appears, even with immense wealth. Consider that 44 percent of lottery winners were broke within five years of winning substantial jackpots, according to a 2016 Fortune magazine article . In fact, about a third of these winners ended up declaring bankruptcy in that time period.
Suggesting, perhaps that ultimately the road to riches has less to do with income, location of work ethic. Instead, it might have more to do with learning to live within one’s means and maintaining a good debt-to-income ratio, or DTI. What is an ideal DTI? According to Zillow, the online real estate data base, most mortgage companies prefer to work with individuals that have a DTI of 36 or lower.
If debt far outweighs income, it’s probably an indication that a person’s financial health may be in jeopardy. One solution to get personal debts under control is to apply for a debt consolidation loan to pay down multiple monthly payments.
If an unhealthy DTI is due to outstanding debts, such as credit card balances with a variety of due dates and minimum payments, paying those off with a debt consolidation loan might prove to be a first step towards financial well-being. Managing multiple due dates increases the chances that payments will be late or missed entirely. Missed payments can result in expensive late fees and decreased credit scores.
Using a debt consolidation loan to pay down those balances means you need only to budget for one single, easy-to-manage payment. If you are considering this, be sure to select a reputable lender that offers attractive interest rates and flexible payment plans.
LoanMe can help. Our outstanding service representatives offer help ensure you are never alone during your loan application, approval and repayment processes. Specially trained to help clients at every point of their loan, LoanMe’s representatives can provide clients the answers they need.
LoanMe offers loans ranging from $2,600 - $100,000 and rapid loan approval process that gets qualified borrowers the money they need within hours!
Whether you are rich, working on accumulating wealth or right where you want to be, LoanMe’s debt consolidation loan options can help all borrowers move a little closer to realizing what is truly “rich in America”.
*This article has been prepared for general information purposes only. The information presented is not legal, financial, tax or accounting advice, is not to be acted on as such, and is subject to change without notice. Credit approval is subject to LoanMe's credit standards, and actual terms (including actual loan amount) may vary by applicant. LoanMe requires certain supporting documentation with each new application. If you have any questions regarding this, call us at 844-311–2274. California loans are made pursuant to LoanMe's California Department of Business Oversight Finance Lenders Law License #603K061. LoanMe also offers loans in certain other states which may have higher minimum loan amounts. Copyright © 2016 LoanMe, Inc. All rights reserved.