Figures from the Tax Policy Center say if your annual household income is $107,628, you are in the top 20% of income earners. If you exceed $148,687, you are in the top 10%. The top 5% earn over $208,810. And if your household income is over $521,411, congratulations. You are one of those “1% ers” and likely demonized by those who view hard work and risk-taking as a matter of luck or good genes. However, like a company, your personal balance sheet should be the determining factor. If you make $200,000 a year it does you no good if you’re spending $210,000.
You may in fact just appear rich instead of actually being rich.
Take for example the recent news about NBA legend Alan Iverson. Shockingly, a man who before age 35 had amassed a fortune more than the average person will see in a lifetime had blown it all. To quote from the article: “Iverson blew through his money at an alarming rate on gaudy jewelry, expensive cars, and other frivolous purchases. In 2012, a Georgia judge garnished his wages to satisfy a $859,896.46 debt to a jeweler.”
Huh? Almost a million dollars to a single jeweler! Here is a