Ask the grumpies: Ethics of being “our level of rich”

Cloud asks:

I struggle a bit with the difference between my wealth now and how I grew up so a post on the ethics of being our level of rich would be really interesting to me. For instance, my husband thinks we should buy a second house and rent out the one we’re in and I can see why this is a good idea but I really struggle with the fact that we could afford two houses in our expensive real estate market and whether we’d be making things worse by doing that.

I also struggle with this.  I grew up in an extremely frugal household in which our income was uncertain and every penny spent could end in screaming.  But we always had food and clothing and housing even through lengthy bouts of unemployment.  Genteel poverty.  There have been a lot of sea changes as we go through these different wealth levels.  I gain new levels of understanding of how the next chunk of income will make our lives different and how it won’t.  (Turns out, above the # mentioned in that previous post– frugality starts getting thrown out the window because it is less costly to just buy something than to think about it and I started thinking about all those things that kids I knew with high income parents got to do like fancy summer camps and travel.  Many of my colleagues have built their own 4 and 5K sq ft houses or bought vacation homes which makes them feel artificially low wealth, but we think 3K sq ft is plenty big for us and don’t want the hassle of owning more real estate when Air BNB is a thing.)  There’s less fear of bag lady syndrome.

Like I said in the comments before, as long as you actually rent out the second house, it’s likely ethical.  But you still don’t want to be a landlord because if you get unlucky it can cause no end of grief and anxiety.  There are much more peaceful ways to earn additional money.

Ethics:  Part of me feels like we should be giving half our incomes away instead of stock-piling it. We do donate strategically to a lot of causes, both activist and charity.  And we’re generous with tipping and pay people who do work for us either what they ask or more.  But it is nowhere near what would leave us with only a reasonable upper-middle class income (that is to say, once we have a few of DH’s payments under our belts again– we have been living on just my salary and unemployment for quite a few months).  We’re stockpiling for an uncertain future and because I’m worried about income inequality increasing in the US and want to make sure that our children and our children’s children (if they have them) have a safety net if the US is no longer going to be able to provide one.  I’m like, I want to take care of our own first.  And that’s selfish and money can do so much more for people who have less of it.  But… they’re my children and my potential grandchildren.  And we need structural change and I will fight for that.  I would feel much better about having less of a nest egg if I could trust our government and our society.  But I can’t.  So we need to stockpile money to stay “Haves” even if the “Have nots” need it more and I hate that.  I want everybody to be Haves.  I want all kids to have stability and opportunity.  But fear keeps me stockpiling.

It’s crazy to me that you have to be in the top 2% of household income or higher to be able to afford a high quality full-time legally documented dedicated personal assistant or housekeeper that you’re not married to ($150K/year give or take, themselves in the top 20% of income), but when you get to the top 1% of income, you can afford many such people.  That’s a huge concentration of wealth among a very small percentage of the population.  I think a lot of rich people think they’re not really rich because they can’t afford servants, especially when they remember being middle class back in the day meant having a woman come in to cook and clean and “do for you”– but back then people didn’t really think of the women who “Did” as people themselves.  I don’t want servants, except mechanical ones.  Though I do think it’s great when people have businesses that do a specific task for a large number of different households.  That seems efficient.

Which is to say:  I think hiring people is ethical, and hiring cleaning people and yard work people and so on is ethical.  But it’s not ethical to have a lowly paid personal servant (remember Alice on the Brady Bunch?)– if you want someone like that, you must pay the price for them, and at our income that is not a price we can afford.  We can afford college students or underpaid undocumented labor but the former is a crapshoot and the latter unethical, so it’s best to avail ourselves of whatever services are available.  For us that’s just yardwork because I hate the way cleaning crews cost money and get in my space and don’t clean things as well as I was brought up and grumble about how we don’t preclean before they get there.  (We’re currently not happy with our yardwork either, but have yet to find anybody who is happy with theirs– the crackdown on undocumented labor has really decreased the quality of this kind of service.)

Grumpy nation:  How do/would you deal with income and ethics?

32 Responses to “Ask the grumpies: Ethics of being “our level of rich””

  1. gwinne Says:

    Useful/timely question for me. My income has gone up in the past couple years to the point that I can outsource certain things if I want. (Inspired by this post, I actually looked it up…top 3% globally and 25-50% in the US). In COVID times I’ve certainly been making use of grocery delivery (and the occasional food delivery (I tip well for both). I’m now thinking about hiring someone to clean my house, because I can afford it, I want a cleaner house, and it seems worth doing if they are paid reasonably well? Still on the fence. I’m not seeing much of a downside right now.

    • nicoleandmaggie Says:

      If you don’t have the weird hangups I have (see post) and are paying reasonably well, I don’t see a problem! (Reasonably well around here for an hourly cleaner is like $25/hr+. It would be more in cities.)

    • omdg Says:

      The downside to hiring a cleaning person isn’t the ethics so much, rather that you end up doing the same amount of work for a marginally cleaner house than you can have if you do it yourself. I.e. you still have to pick up, arrange logistics, etc. At least that’s my experience, which is why I told my husband if he wants one, he’s 100% responsible.

      • nicoleandmaggie Says:

        In Ann Arbor you can get cleaners who don’t make you pick-up beforehand, but apparently they cost WAY more than the ones who do. This was a revelation to me at a conference a few years back. (In which one of my friends at a different school was complaining about how she had to pick up before catching the plane and then the cleaners canceled on her at the last minute so all that work was for nothing and then all the 1 percenter locals were like, why would you do that? We don’t do that.) But yeah, that is most of us upper-middle-class people’s experience… it’s a hassle, forces you to clean more than you would otherwise, and doesn’t actually get things as clean as you would. I prefer our cleaning flurry right before we have company.

      • omdg Says:

        Oh also, I had never heard the term “bag lady syndrome” but it totally speaks to me. I have a deep seated fear that I will be fired for saying something “provocative” and become unemployable and end up living under a bridge. I may or may not have referenced this particular fear more than once this past month. And I am pretty good with money (for a doctor)! So thank you for linking that article — it spoke to me.

      • nicoleandmaggie Says:

        It’s not a crazy fear if you don’t take care of yourself or your money in a country without much in the way of a social safety net. I’m sure you won’t be fired for saying something provocative or become unemployable, but terrible things do happen to people. And before the ACA it didn’t necessarily matter if you took care of your money– if you were uninsurable, a job loss combined with a health problem could wipe you out no matter what % of your income you saved.

      • teresa Says:

        SAME about the bag lady syndrome. I had never heard the term before and it’s weirdly reassuring to hear other privileged women worry about this. I mean, I think I am good about spending way less than I earn, but not necessarily about putting what I save in productive places. Also I flip between thinking that as a childfree person I shouldn’t be accumulating wealth because I won’t have descendants to benefit from it and thinking that as a childfree person I need to be accumulating wealth so I can afford long term care/not burden my siblings or their kids unnecessarily some day…and whatever’s left when I die can go to charity and/or said siblings and niblings depending.

  2. gwinne Says:

    I had hangups. I don’t think I do anymore.

  3. Debbie M Says:

    Oh, yeah I’ve been thinking I need to build an affordable granny flat to help with our real estate woes. (And if I get old and poor, I can move into the granny flat myself and rent out the big house.) It’s legal to build these where I live, but there are apparently a lot of crazy hoops to jump (like it can’t be attached?), besides the usual myriad problems with finding competent, ethical construction staff. So I’m still too chicken.

    To address the original question, it does remind me how writers beg other writers not to take crazy-low-paying assignments because it drags down all their salaries.

    My first version of this housing conundrum was that I wanted to buy the cheapest house I liked, not the most expensive house I could afford. So that’s what I did, yanking it out of the hands of someone who couldn’t afford more. Technically, the banks didn’t think I could afford a more expensive house, but that’s because they refused to acknowledge/believe that I would usually have paying roommates. So I didn’t actually have the choice of buying a more expensive house at that time. But I could have waited until I got married, presented the double-income to the banks, and then qualified for and bought a more expensive house. Of course then I wouldn’t be able to support my current under-employed roommate.

    When I saw the title of the post, I remembered reading something about how no matter how much good the Bill Gates Foundation is doing, it’s not right that one man gets the power to decide the fate of that much money.

    But the way I prefer thinking of this is to focus on the things I’ve heard about how people with privilege should use their privilege to support those who do not have privilege. So, for example, my state is making it harder for poor and disabled people to vote, so I am going to go out of my way to vote for candidates and propositions that I think would help them. They should be making those decisions, not me. I should not have the power over that high a percentage of the votes (1 out of [N minus the people who would have voted] instead of 1 out of N). But society has given me that power, and, you know, Spiderman.

    “Part of me feels like we should be giving half our incomes away instead of stock-piling it.” Oh, I am right there! When deciding how much to donate, part of me says “Zero, I want all the money for myself” and part of me says I should live as cheaply as I safely can and give away all the rest. I looked up how much other people donate (almost nothing) and in relief settled on way more than average (but still only 10% of my net income). I like that this issue is settled. If I had more *income* (my pension is $27K), I would consider raising that. Yet my *wealth* is crazy right now (Zillow thinks my house is worth half a million; my IRA is almost a third of a million), but I’m conveniently ignoring that. There is something to be said for the idea that if you take care of yourself, no one else has to, but does it really take that much money to take care of myself? I don’t think so.

    Currently I mulling over income (and wealth) (and other privilege) and ethics. The ethics that are grabbing me lately are all of those “the dark side behind ____” stories. Basically every single thing I do has a dark side, and I turn out to be privileged in almost every imaginable way, from being a hetero white American with loving parents to being right-handed and having feet that fit into a the most commonly available shoe size ever. Should I buy shoes only from companies that make shoes for many sizes of foot? I’m just starting to look into these kinds of issues.

    That Monopoly game study haunts me. They had people play monopoly but the two players started with different amounts of money, got different amounts when they passed “Go,” etc. As I was reading it, I thought that if I were the privileged one in that study, I would then have split my extra starting money with the other player and found other ways to level the playing field because otherwise the game would be no fun (not that Monopoly is all that fun anyway). (In the actual experiment, as the privileged ones started winning, they started attributing it to their superior playing strategies and even started eating more of the provided snacks, which they felt they deserved more than the other people.) But real life is not a game and also there is way more than one other less-privileged player, and I don’t even know or see most of them except in the news. So it’s not so obvious to me what I should do.

    Here are some things I have changed in my life to try to be a better person (admittedly, focused more on climate change–which I’ve been thinking about for longer–than on equity):
    * I’m still visiting family in Indiana (though not this year), but I’m going by train rather than plane or car.
    * I buy certain foods only organic (I mean, Cesar Chavez spent his whole life telling me to buy only organic grapes and grape juice). And I buy only shade-grown chocolate (organic, fair-trade, and rainforest certified all qualify) except when I forget and for other occasional exceptions (clearance items, Trader Joe’s chocolate babka).
    * I’m trying new vegetarian recipes, and choosing chicken over beef more often. My current favorite fast food is mixing together Trader Joe’s palaak paneer (creamy spinach goo with chunks of fresh cheese), Trader Joe’s paneer tikka masala, and a can of garbanzo beans/chickpeas. (This lasts me two meals.)
    * I’m sticking with my old strategy of buying used whenever I can. When I do buy new, I try for things with recycled content and also for high-quality tools that will never have to be replaced.
    * All my savings accounts and credit/debit cards are with credit unions, and all my investments are with Vanguard (except for an HSA with Fidelity), so hopefully none of that money is financing evil. It’s hard to know who’s doing evil behind the scenes (that’s how they want it), so I’m slowly moving to more small businesses and coops, which seem less likely to be scummy. Unlike with Vanguard and Alliant Credit Union, sometimes this costs more, and my cheapskate self protests.
    * I pay a $1/person additional pandemic tip at restaurants. I know this is nothing, but if everyone did it, it would help (and some restaurants are now requiring an extra pandemic charge).
    * I’m trying to help my friends not freak out over weird-sounding things like “de-fund the police,” “Black lives matter,” and how some people want to be called “they,” but most of my friends are the ones teaching me that.
    * I share the research I do on election issues online. I have more time than many of my friends to do this research, and I’ve now started working on being more brief (obviously not a strong point) with links to sources for more details. I sometimes do this for other issues, too.

    • nicoleandmaggie Says:

      But if you buy a bigger more expensive house more of those get built!

      • Debbie M Says:

        It seems true. But it’s not like anyone’s building more houses like what I did buy (a 960-square-foot 2-1 with a driveway only wide enough for one car). And, not surprisingly, a lot of them are being torn down and re-built to be bigger, stronger, faster. (Well, okay, just bigger.)

      • nicoleandmaggie Says:

        The person who would have bought yours might have torn it down to put in so,etching bugger!

      • Debbie M Says:

        Yep, or sold it to someone who did.

  4. Dame Eleanor Hull Says:

    I know you meant “something bigger” but I am enchanted by the phrase “so, etching bugger.” What you say to the person who’s always asking you up to see their etchings?

  5. middle_class Says:

    I would have qualms about owning more than rental single family homes when there is a housing shortage AND the house is in a middle class (or even upper middle) neighborhood in which the investor likely outbids people looking for a first home. However if you didn’t buy it, there is no way to know if the final buyer is a family or another investor. In other words it is a gray area.

    Also, good landlords are important! I think you can profit and offer reasonable rent. I had a great landlord who did not raise rent every year (and made repairs in a timely manner), allowing us to save enough for a down payment. note;
    : he house was fully paid off and purchased by my landlord in the 70s so they had a lot of wiggle room. Also they did rent in accordance with market rates but rent prices became insane after we got there. When we moved out the rent promptly went up.

    I do have issue with people who buy and turn family homes into AirBnBs. I know the profit incentive is great but I know of neighborhoods that suffered from too many AirBnBs and the local government had to put restrictions. AirBnBs can definitely impact the number of afforable rentals. I don’t have stats to back this up so this ia purely personal observation.

    • nicoleandmaggie Says:

      More rentals available means rent goes down (though it might affect new builds), and a rental is better than an empty second vacation home. Also homeownership isn’t always a good thing for people if they buy too much house.

      Still, I wouldn’t do it. Stocks don’t trash a house after a year + of not paying rent.

      • middle_class Says:

        I totally dont understand how people can get away with staying rent free and trashing a rental. I was evicted once and moved promptly because I don’t want a bad landlord reference to affect me in the future.

        I wasn’t evicted for financial reasons so I also thought an eviction would hurt my credit score? In hindsight i guess an eviction is an eviction. It may not matter how many notices you get before moving.

  6. First Gen American Says:

    My godparents never had children but I am one of 8 godchildren. They do a lot of charitable giving. (Like $1/2MM to at least one nonprofit that he’s been involved in for 30+ years) They live frugally and were good investors but I wouldn’t consider them in the top 1% or even 5% and they are very religious. I am positive they tithed at least 10% during their working years but they really haven’t been giving the giant gifts until recently (they are in their late 80s). Do I consider them less charitable because they waited this long to make the really big gifts? Absolutely not.

    So right or wrong, I feel like I can figure out the big stuff later once I know the other bases are covered and I can update my will later in life. A lot can happen in the next 40 years and I do not want to be a burden on someone else. I won’t consider a big gift until I know my kids are educated and on their feet.

  7. Cloud Says:

    Thanks for doing this post! It (and the comments) are interesting and helpful. I have never had any guilt/worry about hiring a cleaning service. Maybe because my first non-babysitting job was cleaning for elderly women who could no longer clean their own apartments and it has always just seemed like a job to me. I found it less annoying than customer service, to be honest. We’re in between cleaners right now, and so cleaning our own house. I hate spending time on it, it messes up my asthma, and I will be glad to hire someone else to do it again once we’re ready to do that. It is easier to have a housecleaner come in where there are fewer of us in the house, so we’ll probably wait at least until school starts again and maybe until I feel like I can go into my office. We’ll see.

    The rental thing remains unresolved and we’re in the process of putting solar panels on our current house… so who knows what we’ll do in the end. We seemed to have settled on spending a lot of our “spare” money on green upgrades for our lifestyle. We do need to figure out a long term plan, though. I am still working on the right question to ask to get you and your readers to help us do that!

    • nicoleandmaggie Says:

      Sounds good! But don’t do a rental — see if you can find where agaishanlife talks about where theirs went bad and notawastedword (for hers look up “bed bugs”). Rentals are not passive income and when they go bad they go very bad (especially in California where renters are protected over landlords). If you want more real estate in your portfolio get an REIT! There was another blogger called boxcar something I forget but her tenant actually bankrupted her during the great recession. Landlording does not make enough upside to justify the potential downside or the work.

  8. Revanche @ A Gai Shan Life Says:

    Rentals: Been there, not doing that again unless I become filthy rich and actually can afford to offer really low rent to people who won’t trash the place (and have it not matter much to my finances if they do). I don’t anticipate being that wealthy in this lifetime, though. Not ethically, anyway.

    Moral quandaries: We’re in a somewhat similar boat. PiC didn’t come from the same financial origins as you, but I did. A lot of folks were in the kind of poverty that meant saving was just about impossible, though they did find some ways to force savings. Debt was, for too many, a way of life. (That or scamming folks, if you were my dad. -__-)

    Being *reasonably* well off now is still really weird. I still feel like I’m making up for coming from nothing and also missing out on ten+ years of retirement savings. Like you, I both want to save for my kids and if they have kids, grandkids. I also want to give back where it’ll make a difference. We don’t have the money to do both equally right now. I very MUCH have bag lady syndrome, having become an adult with chronic health conditions and needing to always have a job to pay for healthcare because I’d be uninsurable, and losing my mom so early because she didn’t have a good consistent standard of care. I don’t want that ever to be a loss that my kids or grandkids suffer. (I wonder what it says about me, having read Debbie M’s comment, that I LOVED playing Monopoly as a child and never could get people to play with me. You’d think I had the killer instincts to be unethically rich by now except, ethics and morals, I has them.)

    Our experience recently with having cleaners was so stressful I don’t think either of us are willing to try it again. I liked having a really nicely cleaned house for a couple of days but it’s just not that important to me to have it that sparkly clean if I have to give up that much time to de-clutter first. Though I do want to stay more on top of decluttering.

  9. SP Says:

    I read this book a while ago, The Anxieties of Affluence, and it was interesting, but then the final conclusion was basically that there was no ethical way to be affluent.

    Renters have strong protections here, so much so that we would even be concerned to rent our house out to an unknown if we went on sabbatical. Mostly, I think it is good renters have strong protection, but sometimes it seems very extreme. Also, the rent control is not at all means tested, so newcomers rent is much much higher, just by virtue of being new to the area, and it just doesn’t seem quite right. It is like the renters version of prop 13! I’m pretty mixed on land lording (and also home flippers, ugh!). These provide a useful service, and they should be compensated for it, but the main way to get into the game is by having access to capital, which inherently makes it a path for the “haves”. My imaginary ideal world somehow make housing more equitable. Landlording wouldn’t be a for-profit thing, but more like a job you could take on and get paid a fair amount for your time/efforts, but wouldn’t pit you getting $$$ against providing a good home by making repaiirs. I am not sure I’m explaining that clearly and I guess I’m somewhat describing socialized housing…. Anyway, not a fan of landlording, but even less of a fan of someone have two houses, one of which is mostly empty.

    I agree that it is deeply unfair that we have so much, but this is the society we live in, and I have accepted that I’m playing my role and taking care of my family. It isn’t a great feeling, but the future feels so uncertain and if I can get in the “Haves” camp, I’m going to. There are huge structural changes that could make everyone’s life better, and make things more equitable. I could do more, give half my money away, and devote my life to selfless pursuits, and this all would still be so unfair. So, I do make what contributions I can, and support equitable policies. *(It still feels hopeless.)

  10. Good Things Friday (126) and Link Love « A Gai Shan Life Says:

    […] Do you struggle with your current level of wealth/income now relative to how you grew up? […]

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