Net worth as a multiple of minimum wage employee salary?

[dragoncar]

Hey all, there's a discussion over at MMM about how having 330k invested roughly equates to having a minimum wage worker earning money for you. I could have sworn I read about that concept here, but I couldn't find it. Is it just in the ERE book? Thread is here:

http://forum.mrmoneymustache.com/welcom ... d-per-hour

[jacob]

I began thinking in those terms around 2002 or so, so it's quite likely that I might have used that example once or maybe a dozen times in various writings at some point. I found that it tends to piss people off though, especially minimum wage workers, so I stopped using it.

The ERE book contains a specific example of $330k (not that exact number but something comparable) representing a mortgage of a family with them working for me for the rest of my life in return for me providing them with a place to live that they otherwise don't have the money to buy.

I found that this example also irks some people

[workathome]

Get back to work slaves! Your chariot of debt is waiting.

[dragoncar]

Well, that link doesn't seem to work, here:

http://forum.mrmoneymustache.com/welcom ... -per-hour/

[Dragline]

I laughed and then went to Lending Club and said to myself "Who wants to be my debt-slave?"

Hmmm -- that sounds like an idea for a reality show.

[IlliniDave]

Hmm. Just to make the math easy 8/hr * 50 wks/yr * 40hr/wk = $16K, and $16K/.03 = $533K. So having that big a stash for me will be like getting a full-time minimum wage salary to do whatever I feel like doing. I kinda like that way of looking at things!

[Devil's Advocate]

I began thinking in those terms around 2002 or so, so it's quite likely that I might have used that example once or maybe a dozen times in various writings at some point. I found that it tends to piss people off though, especially minimum wage workers, so I stopped using it.

The ERE book contains a specific example of $330k (not that exact number but something comparable) representing a mortgage of a family with them working for me for the rest of my life in return for me providing them with a place to live that they otherwise don't have the money to buy.

I found that this example also irks some people

Only a true-blue Extreme-INTJ would have to discover through trial that those things would be irksome!

I like!

At the risk of merely formally stating the wholly obvious, may I say : INTJs rule!

[chipmunk]

Only a true-blue Extreme-INTJ would have to discover through trial that those things would be irksome!

At the risk of being labeled a "true-blue Extreme-INTJ"...can someone please explain to me why the mortgage example is irksome to some people?

(I understand the minimum wage example. A minimum wage worker puts in a lot of labor to earn the minimum wage while the investor does nothing. The minimum wage worker would argue that is not fair.)

[dragoncar]

Only a true-blue Extreme-INTJ would have to discover through trial that those things would be irksome!

At the risk of being labeled a "true-blue Extreme-INTJ"...can someone please explain to me why the mortgage example is irksome to some people?

(I understand the minimum wage example. A minimum wage worker puts in a lot of labor to earn the minimum wage while the investor does nothing. The minimum wage worker would argue that is not fair.)

I guess in either case, you are analogizing yourself as "the man," and people don't like "the man."

[Felix]

Only a true-blue Extreme-INTJ would have to discover through trial that those things would be irksome!

At the risk of being labeled a "true-blue Extreme-INTJ"...can someone please explain to me why the mortgage example is irksome to some people?

(I understand the minimum wage example. A minimum wage worker puts in a lot of labor to earn the minimum wage while the investor does nothing. The minimum wage worker would argue that is not fair.)

Same thing basically. You tell people that they are your slaves. People do not like to hear that.

[chipmunk]

Ok, but at least in the mortgage example both parties are clearly benefiting. The investor is getting a passive income stream and the family is getting a place to live they otherwise could not afford. In this case one can avoid (or significantly reduce) being a "save" or working for "the man" by living in a cheaper house.

[dragoncar]

Ok, but at least in the mortgage example both parties are clearly benefiting. The investor is getting a passive income stream and the family is getting a place to live they otherwise could not afford. In this case one can avoid (or significantly reduce) being a "save" or working for "the man" by living in a cheaper house.

And in the minimum wage example both parties are clearly benefiting. The investor is getting a passive income stream and the employee is getting a wage.

[BeyondtheWrap]

And in the minimum wage example both parties are clearly benefiting. The investor is getting a passive income stream and the employee is getting a wage.

No, the employee is not getting a wage in that example. The employee is working and then giving their entire wage to the investor for nothing in return.

I think one reason people dislike measuring one's money in multiples of minimum wage is that ERE tends to consider minimum wage sufficient to live on, whereas most minimum wage workers do not see it that way.

[chipmunk]

I think one reason people dislike measuring one's money in multiples of minimum wage is that ERE tends to consider minimum wage sufficient to live on, whereas most minimum wage workers do not see it that way.

This makes more sense to me. The amount of the wage is more the issue than the fundamental employer/employee relationship.

Edit: should have realized this sooner since maintaining very low expenses is already a point of tension with the general public.

[jacob]

I think it's a question of self-image.

In the minimum-wage worker case, they are angry that they are working at a low wage. Pointing out that all that work corresponds to someone's passive income is just twisting the knife.

In the middle-class mortgage case, they are angry because it's being pointed out to them that they don't really own the status symbol of achievement they hold so dear.---That they are in fact beholden to whoever lent them the money.

In both cases, it's being made explicit that someone else is benefiting in a material way from their effort [however indirect] due to a situation they can not easily escape.

Now, whether that spurs the person into action or simply pisses them off is a question of temperament. It seems that most people fall in the latter category. In any case, it definitely gets people's attention compared to a more veiled or clinical argument.

[chipmunk]

Continuing what Jacob said, seems like people are able to accept their situation as long as an image is maintained. Those making mortgage payments are rewarded with the title of "homeowner" (I'm sure banks had something to do with this practice). Not sure how minimum-wage workers are rewarded. Perhaps just the fact that they have a job and are contributing to the overall economy/society?