Lifestyles of the Rich and Incognito

https://unsplash.com/@tinaflour
Photo by Kristina Flour https://unsplash.com/@tinaflour

Rethinking Robin Leach’s Catchphrase

When I was a kid I loved watching the show Lifestyles of the Rich & Famous. The host, Robin Leach, took viewers on open house tours of some of the world’s wealthiest estates. It was fun to gawk at and then talk about the elegantly decorated mansions with guest houses larger than most American’s homes, and garages full of luxury sports cars. At the end of each show Robin would say his signature catchphrase, “champagne wishes and caviar dreams” while enjoying someone else’s yacht, swimming pool, or Learjet and then send viewers back to their average and anonymous reality. The show highlighted a very small percentage of society and a lifestyle that very few people will ever know. It was successful in part because it highlighted beautiful places and luxury products, but more than anything it played on people’s emotional fantasies of living in stress free self indulgent luxury and the narcissistic desire to be special. The reality is that the television show was primarily an advertising vehicle for the travel industry, similar to the currently popular The Bachelor television franchise. Lifestyles of the Rich & Famous highlighted beautiful travel destinations around the world and created the illusion that being rich and famous is like being on a permanent vacation. The show was an early form of reality television that presented an overproduced faux version of real life.  

“champagne wishes and caviar dreams”

I think most people don’t actually want to be famous, but most want to feel significant and accepted. Some people choose to live an inflated lifestyle by spending money on things that visually communicate to others and give the impression that they are a person who possesses wealth and status. Even though many people can’t afford to buy designer, luxury, and lifestyle brands they will because they want to enjoy nice things, but also to be seen by their peers as having achieved a level of success and status. There are people in every community who actually have some wealth and they live a life that lets everybody around them know that they have money. Typically these people are not on the same level as what was featured on Lifestyles of the Rich & Famous, but their wealth appears to be greater than the majority of people living around them. The reality is that some of these people are also living an inflated lifestyle built on credit that is at risk of being upended. However, even truly wealthy people who don’t have debt issues can fall into the envy trap. Everything is relative and we often make buying decisions based on observing our surroundings. For example, one day I was riding in the car with one of my mentors on our way back to his house after grabbing lunch, and he drove me through a newer neighborhood that was close to his home. The houses were enormous. My friend pointed to several and told me which big organization executive owned which. When we returned to his house he joked that after seeing the new homes he wanted to throw rocks at his piece of junk. Which I found hilarious because he owns a beautiful custom 5,000 square foot home with a pool on a two acre lot in one of the richest communities in the United States.

Robin Leach never highlighted the challenges and headaches that come along with a rich and famous lifestyle. Being rich is a fantasy for most people, so in their minds there’s no need to consider anything other than the luxuries. Here at Rich Incog Blog we aren’t focused on living the luxurious life presented by Robin Leach, but rather we are focused on enjoying the freedom and financial independence that comes from being rich and incognito. Rich means being financially independent which is achieved through basic math: maximize your income, spend less than you earn, wisely invest the difference. You should view your personal finances as a business, even if you are an employee like me. Well run companies generate a profit and reinvest them; so should you.

INCOME – EXPENSES = PROFIT

Incognito, or “incog” as we like to say, means being unknown. You may be asking why is it necessary to also pursue anonymity?  Here is a list of four reasons why we choose to live our lives this way.

  • To Constrain Yourself

Probably the number one status symbol is a big home in the “right neighborhood”. So many people have bought into the myth that their primary residence is a good “investment”, which leads them to buy bigger or sink money into expensive upgrades. If you buy a bigger house you will eventually fill it with stuff and many upgrades never recoup their cost, especially when financed. On several occasions we have almost made the mistake of up sizing our home. What kept us from making this mistake was waking up and realizing that even if we controlled ourselves and didn’t fill the house with stuff or waste money on expensive upgrades, the on-going costs of ownership would inhibit our ability to build a larger income generating asset portfolio. A bigger home will cost you more in taxes, electricity, gas, landscaping, and insurance every year. Plus living in the “right neighborhood” often brings unwanted peer pressure for your family to constantly spend money. This pressure is especially felt by children. The classic keeping up with the Joneses syndrome is alive and well in many affluent neighborhoods.

  • “Polite Conversation”

It’s still true that there are three topics that should not be part of polite conversation – money, politics, and religion. The recent 2016 U.S. election demonstrated just how true this saying is. If you have observed people around you whose relationships have been strained by openly discussing politics, then you need to understand that discussing money can have a similar impact. This doesn’t mean that we shouldn’t talk about money or politics. I think it is important to have discussions with each other in order to learn, but you need to be prepared for the consequences of talking to the wrong person. There are people in our lives who we know would think differently about us if they knew how much money we have. Mrs. R and I don’t want to hear someone say, “why are you being so cheap, you can afford it?” or “if I had the money you have…” We don’t apologize for working hard and saving our money, but we also don’t want to feel pressured by friends and family to spend money.

  • Rich Kids Sometimes Have It Tough

“Privilege” is the new dirty word in academia that ignites plenty of discussion and debate. Mrs. R and I didn’t grow up rich, and we both worked when we were kids. We achieved what we have today through hard work and discipline. As parents, it’s important for us to develop those characteristics in our kids, and we recognize that learning the value of money comes primarily through personal experience. Our kids know that we are financially secure, and that they don’t need to worry about their basic needs or enjoying many of the simple pleasures. However, they also have no idea how much money we actually have. Living the life of a rich incog helps us keep our kids grounded and teach them the value of money. We have regular conversations about the value of money and making choices that maximize the benefit we get from the money we spend. Our kids aren’t growing up in a neighborhood where other kids are getting everything they want. The kids don’t feel the pressure to keep up with the Joneses, and they are learning the importance of delayed gratification. Teachers at school do not view our children as “rich kids”, or us as an upper income family. The unfortunate reality is that some teachers do have negative or positive biases towards kids from affluent families. I believe that most teachers view us as a stable middle-class family, with usually well behaved children (hey… they’re kids not angels). Children need to learn to stand on their own merits, and hiding our wealth helps them do so.

  • Don’t Become A Mark

I work in sales and I know who my target customers are. They can’t hide from me, because they are a particular kind of business owner that my products serve. Sometimes they openly want to meet with me and sometimes it takes a while to get in front of them. Living the life of a rich incog makes it harder to become someone else’s mark. I’m not talking about sales and marketing campaigns. The only way to avoid them is to stop going where they advertise: internet, T.V., movie theater, shopping mall, mailbox, train station, airport, driving down the road… good luck! I mean the thief, borrower, beggar, and tax man. Anyone can be robbed anywhere, but rule number one is to not attract attention to yourself. So quit showing strangers you’re rich. If friends and family know you have a lot of money there is a greater chance you will be approached to lend them money or invest in their crappy business ideas; which can strain relationships. I think you should help people in need (including friends and family) and give back to your community, but mostly anonymously and without high pressure. Finally, there are only two guarantees in life; we all have to pay taxes and eventually we all will die. Choosing to buy more house than you need is also choosing to be taxed more. Property taxes have nothing to do with your income and the local tax man doesn’t give you a break for having a downturn in your earnings. Your local property tax collector only knows that you “own” a home with a valuation determined by them and then multiplied by the tax rate. Worst of all, if you don’t pay your property taxes you could lose your home to the local tax man. We have all heard the horror stories about an elderly widow losing her home because her deceased husband took care of the finances, but didn’t leave her instructions about paying the property taxes. Property tax impact depends on where you live, but there is no need to exacerbate it by buying too much house. In some locales you will pay additional sales tax on cars, hotels, restaurants and other items. Local governments have targeted people who like to live an inflated lifestyle, and have made them their mark.

Being rich and incognito does not mean that you have to live the life of a pauper. It is living a very comfortable life that could be classified as firmly in the “middle class”. A rich incog maintains a position of financial security and therefore lower stress, that is much more fulfilling than choosing to telegraph to everybody around you that you have money. What you’re doing is avoiding the problems listed above and at the same time accelerating your wealth accumulation, because your lifestyle isn’t eating up so much of your money. Often the reason why people buy a large home, expensive cars, lots of clothes, electronics, and all the things that go along with an inflated lifestyle is because they are unsatisfied and discontent. Choosing to live the life of the rich incog helps you to find contentment, while also developing more meaningful and honest relationships that are based on who you are rather than what you have. You also find a sense of freedom in knowing that if things get tough economically you will be okay. You have lots of money in the bank to see you through hard times.  Also, because the cost to maintain your lifestyle is minimal, you could choose to find simple work to pay the bills rather than using your savings.

Many people who have chosen to pursue the Lifestyle of the Rich and Famous are on some level, always concerned about what will happen to them if things go wrong economically. They are people who would feel a greater sense of loss, if there were an economic downturn and they were not able to maintain their inflated lifestyle. The loss they would experience would not just be the physical trappings that they’ve become accustomed to, but also their status and standing in the community as a member of whatever visibly wealthy crowd they’ve joined. I’ve known people who lived the big house and luxury cars inflated lifestyle, went bankrupt, and then discovered who their true friends were. It’s sad how shallow some of us in Western society can be.