June 6th, 2015

NYT and frugal millionaires. Again.

I don't know _why_ the NYT periodically emits articles about people who are very wealthy and who are amusingly cheap.

Here's the latest example:

http://www.nytimes.com/2015/06/06/your-money/skimping-on-the-splurges-even-as-a-millionaire.html

Look, if you see an article like this, just assume it's bullshit and start sniffing around. Here are some turds:

"The couple are the face of the self-made millionaire who has the financial security of true wealth, not the fleeting rush of sudden riches."

True wealth, for the purposes of this article, is defined as: "single-digit millionaires". Why exclude people with more money? Great question. Here is the answer -- and it stinks. (Hint: there is a subtext here, that "true wealth" is actually about knowing what you want and not just spending in response to cultural stimuli. While I don't necessarily disagree, presenting it in this particular way really annoys the hell out of me.)

"(Once people’s wealth goes substantially past the estate tax exemption, they need tax and legal advisers for planning to minimize the estate tax. It’s a good problem to have, but it changes how they think about money.)"

What do tax and legal advisers tell people who have single digit millions? It has a lot less to do with the estate tax exemption and a lot more to do with how a pile of money translates into an income stream and vice versa. One of the things financial advisers tell people lucky enough to have single digit millions is that they aren't very rich, and it could all disappear quite quickly, in the event of a divorce or long/intense ill health (cancer, trauma, etc.). By taking the greater than 10.86 million dollar types out of the picture, the author of this piece has removed the people who can enjoy a $250K/year income without excessive worry that the money will run out before they die. Essentially, the people in the piece have the money because they are frugal and if they stopped being frugal, they would stop having enough money to be certain of an enjoyable retirement starting in their 60s and ending with death in their late 80s and leaving enough for the next generation of the family to get a good start on life (education through professional school and down payment on a starter home). It would require even more frugality for these people to extend their single digit millions from retirement in their 50s to death in their late 80s, so saying they don't "need" to be frugal is basically innumerate.

The rest of it is the usual array of, well, don't they have any fun at all? Sure, they have some nice vacations. Despite the comparatively young age of these people, there don't seem to be any small children running around. It's a lot easier to say, we don't need a big house, there are only two of us when there aren't four of us, as a for instance.

It has become abundantly apparent to me from reading news articles that the actual definition of "millionaire" in Massachusetts is, income of a million or more. The idea that the people in the NYT frugal "millionaire" piece are not the middle class that they believe they are is, well, odd. They are middle class. They're the very lucky end of middle class: good jobs, good health, stable marriages and basic good luck. They are not an example for anyone nor should they be pressured to change their ways. Policy should not be set on the basis of these people (unless we're looking to punish people who don't have good jobs, good health, stable marriages and basic good luck -- oh, wait, seems like we might have a political party with more or less that policy perspective. Hmmm).

Maybe this is just like one of those cards at the zoo that explains you are looking at rhesus macaques or solomon island skinks. Oooh, look at the weird animal, thriving in its enclosure. Here's what they eat and what they like to do for fun. Let's not think about all the dead and sick monkeys and lizards that didn't adapt so well to life in the zoo, never mind all the ones who died in the wild when the wild quit being so wild.

ETA: R. told me about this article, and made a few misleading remarks about similarities between the people in the piece and us. I pointed out some really big differences between us and the people in the piece, then I read it. And then I went over and asked him, "Did you know this thing was bullshit and you just pointed me at it so I would explain _how_ it was bullshit?" Short answer (which he did not give): Yup. Sometimes I feel like a vending machine. Insert URL for news article, out comes a vicious critique. This is probably not good for me.