Yes, Even Us Millionaires Are Feeling The Pinch.
The readers who have been following my posts know that I am third generation millionaire. I am NOT as well off as my siblings. They are multi-millionaires. I am just a lowly single millionaire. Recently over this past week, I've spoken to both my brother and sister over the state of our economy and how it is affecting their lives. Here is a synopsis of what changes they have had to make to their own lives in order to compensate for America's declining financial woes:
My sister had to finally close my father's business (she inherited it) after being in business for over 65 years. It's was a manufacturing plant that mass produced a plastic invention that my father introduced into the world back in the early 1940's. The price of oil, which is the main component of plastic, in addition to the competition from China forced my sister to finally close the factory doors and lay off most of her neighborhood employees. Since she owned the brick building outright, she and her husband were able to reconstruct the building into three apartment rentals with the main floor supporting another business that she started (and keep the remaining employees in a job). But the new business days may be numbered also. If the declining trend continues, she may turn the first floor space into more rentals and lay off everyone.
My sister also owns a condo in Florida (in addition to her eight rental units in New York). She doesn't have a mortgage on any property so they are all profitable. The high cost of airline tickets has forced her to rent out her Florida unit also. She used to travel there twice a month. Now, she is scheduled to go there just one more time in July for a vacation. After that the unit will be rented out. If she can find a renter. Florida is not as populated as New York is.
She drives a late model diesel Mercedes Benz that gets 47 miles to the gallon BUT the high cost of diesel fuel @$4.49 a gallon has given her pause. The car just sits in the drive way. It need thousands of dollars for repairs and she doesn't want to pay for them.
My brother and SIL, both retired doctors, who also own several homes in New Jersey and Florida, all without mortgages, are feeling a bit-of-the-pinch. So much so, that my brother told me: "He didn't want to talk about it." They sold their medical practice a few years ago because they couldn't afford the malpractice insurance in New Jersey. When they sat down with their financial adviser, when they calculated earnings against expenses, once they paid their employees, medical benefits, employer taxes and insurance, my brother and SIL only got to keep one days pay per month for themselves. Lately, the new owners of their sold medical practice can not make the monthly payments to my brother and SIL. So much for the fantasy people think that doctors are racking in money. HMO's and insurance companies limit payments to doctors. (Just as a side note: my brother used to restore eyesight to people who had lost their vision. It's a terrible loss to the world that he can no longer afford to practice medicine.)
My SIL was diagnosed with breast cancer and I won't go into great details. Let's just say her time on this earth is limited. Because of that fact, she wants to travel and see the world before she dies. Once a year they travel to far and exotic places, such as Africa, Thailand, Greece and Ireland to name a few. They stay at these locations for a month. The trips cost upwards of $30,000+. This year, my brother told me, they are going nowhere. The costs are too high. They don't want to spend the money.
Before we all get out our hankie and cry for them, let's not get hysterical. They are all better off than most people. My point is, no one is immune from what is going on with our economy here in America. My relatives in Italy are suffering just as well. They are also paying more for food (pasta up 97%) and gasoline. My uncles' children live only 12 miles away but they can not afford to see him, despite his own failing health, because of the fuel prices. I was supposed to see them this past spring but I too, am afraid to spend any money. The costs are much higher this year than last. I haven't been able to save as much money as I used to. I used to send my relatives cash checks for Christmas but my $100 gifts are literally worthless to them now because of the Euro-to-dollar ratio.
Every summer I host a family clambake at my beach house. I do this in honor of my father (we have the clambake on his birthday in August) and it is my way of guaranteeing that my whole family is together at least once a year. We spend the day reminiscing about our dad and all the sacrifices our mother and father made for us so that we three (and our spouses and children and grandchildren) can live a good life. We're all educated, have good careers and live happy lives. This summer, however, my family have reserved lower cost hotel rooms, are car pooling and spending less time here. Just 1 or 2 days rather than the weekend. I'm already worried about how I am going to afford lobsters for everyone, so I started saving up for the party. I'm going to ask, for the first time, that somebody brings the beer, wine, soda and a dessert. I'm searching yard sales so that I can buy tables and chairs rather than rent them.
If anyone tells you the status of their financial life is immaterial in today's economy, even if it is Donald Trump himself telling you so, I guarantee you, they are misleading you! Even the uber-rich are worried. I know because I rub shoulders with them inside my social circle. I see them shutting off the heat in rooms they don't use. I see them traveling less, hiring less, using less, doing with less or just going without. 'They' however, have the means to put in solar panels, purchase hybrid cars, invest in alternative commodities and make the necessary changes to their lives that most of us can not do. 'They' know that come the new election, 'they' are going to be the new targets, so 'they' have made the changes that will protect 'them' from the 'take from the rich to give to the poor' schemes. Did we really think 'they' would just sit still? Raising the capital gains tax has just forced 'them' to get out of the US stock market and seek foreign investment. Is it any wonder that our 401K's, IRA's etc. can not get the returns that we used to in the 'before time'?
As the rich decline, so does everything else. The closing of my sister & brother's business lost many, many neighborhood jobs. As for DH and I, we're self employed, but we run our company just by ourselves.
And so it goes.
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10 comments:
The doctors I know are all a few years out of school, and all of them are just up to their eyeballs in debt.
One of them says that the only way to make good money as a doctor is boob jobs. Every time he says it, I hope it's a joke.
"She drives a late model diesel Mercedes Benz that gets 47 miles to the gallon BUT the high cost of diesel fuel @$4.49 a gallon has given her pause."
Poor thing.
"They stay at these locations for a month. The trips cost upwards of $30,000+. This year, my brother told me, they are going nowhere. The costs are too high. They don't want to spend the money."
Can't spend 30k, awe shucks..
"I'm already worried about how I am going to afford lobsters for everyone, so I started saving up for the party."
Oh the horror!
Dear Anon-Diesel just hit $5 a gallon here in New York. Diesel is what ALL the truckers use to haul food and needed commodities across America. Same for Fed Ex, UPS and the postal system. Fuel costs for FedEx alone have gone up by 100 million:
http://online.wsj.com/article/SB121036449867581405.html?mod=hpp_us_whats_news
Is it less of a problem because her vehicle is a Mercedes?
My SIL is dying of cancer. $30K is nothing for my brother to spend for her to see the world. But they can't do it.
What would you spend if you only had a short time to live? What would you do?
Lobsters, as well as all fresh caught fish is becoming cost prohibitive for EVERYONE because the fishermen can no longer afford the fuel for their boats. My local fish store just went out of business after being in business for 15+ years. The new shop charges 50% more than what I paid last year.
Yes. Oh the horror!
Wow,anon...bitter. When people no longer spend 30k on their vacations,or 10k, or anything, as was the point, guess who gets laid off? Hotel employees, restaurant employees, and retail salespeople to name but a few. This is the mentality of the soon-to-be administration--tax people with means--give it to those who didn't earn it. It's scary. Money does indeed make the world go around, and if people aren't spending it, then others aren't able to earn it. You obviously aren't a frequent reader, nor did you even understand the point being made. SF
A million isn't what it used to be. When I was a kid, a millionaire, even just 1, was enough to retire and live well. Today, that million can give out about $40,000 per year at the start. Even if little tax is due on that money, the property tax and maintenance of a house can eat a large chunk up. No one is living a lavish lifestyle on that sum. Aside from your point number 2, I like your list and will pass it along.Joe
Dear Joe-You're right. A million dollars is nothing today. That's why I still continue to work and live off only what I earn.
Dear 2nd Anon-I'm glad somebody understands. Thank you. It is the rich who feed us all. God love 'em.
Dear Dog Ate My Finances-boob jobs aren't covered by insurance. That's probably why doctors can make money doing them. The women pay for them in full rather than have an insurance company or HMO cut the doctors fee. Unfortunately, I am sure the women take out loans or use a charge card to pay for them. But you've made a very good point! Thanks.
Ahh Cinzea I wish my mom would read your column. Her thoughts (albeit wrong) is that only doctors can be rich. She says a doctor will always have a job.
But I've found in today's modern world many doctors work for HMOs, managed care (Kaiser), and they instead make substantially less than many professions because they have less risk. The golden age of doctors raking it in is OVER.
And why don't your Bro and SIL spend the $30k? Is it because they can't leave the medical treatments? Or want to spend time with family at home?
My aunt has MS and travels extensively. My uncle says all the time they are spending every penny hopefully by the time she dies (He really can't live without her). They are way too bonded. When she was in a coma, he sat by her bed and did nothing else. My mom and the eldest managed all financials etc. He'll eat himself to death (being diabetic) after she dies.
But they enjoy every day they have together. They aren't millionaires, but they have a paid for home, 2 paid for cars, 2 pensions, SS, and paid for insurance for life on top of medicare. I think they are just grasping at whatever time they have.
LAL-I just spoke with my bro again today. He has decided to take the vacation BUT only for 2 weeks. It's going to be another adventure and my SIL is very excited. They are going to the capital of Croatia for a few days and then sailing up the Adriatic Sea to Venice, to spend a few more days. I wish them only the best.
I am a hospital pharmacist and work with many doctors every day. I am so glad that I did not go to medical school. By the time the docs pay their malpractice insurance and office expenses, I make more money per hour than they do. Plus I didn't have to go $100,000 in debt for the degree; I went to a state 5 year program, Then there is the lower cost of living expectations--no one expects a RPh to live in a big house in the best neighborhood or drive the fancy cars or whatever.
Florence
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