The Millionaire Next door

Jims5543 · 10-10-2005, 07:28 AM

I am 2 chapter into this book, I picked it up at the recomendation of some of the members here.

Very interesting reading but predictable all the same. Some of the wealthiest people I know live very simple lives.

When discussing this with my brother I lamented over my recent leasing of my Audi and wished I kept the old one. My brother made the point what good is a lot of wealth if you are not enjoying life.

So that is my question to some of you that are older and have a nice wealth stored for yourselves. Do you regret not "living" a bit more and enjoying yoursef when you were younger? Or are you content with all your choices, perticularly doing without to get where you are today?

Brother · 10-10-2005, 07:48 AM

There is certainly a balance to be maintained. My grandparents are millionaires next door but my grandmother won't spend any more than her social security check. No matter how many people tell her that she is rich, she won't/can't change. She's lived frugally for so long; I don't think she would know what to do with it.

pwd72s · 10-10-2005, 07:58 AM

Who says spending money is "the" way to enjoy life? TV ads? Would a new car make me happier, restore my (not lost...well spent) youth, and have supermodels draped all over me? I don't think so. Would a McMansion on a small lot make me happier than my '70's ranch house on 1 1/2 acres? Again, I don't think so. Yep, I've read the book...I'm not technically a millionaire...I just live like one!

cantdrv55 · 10-10-2005, 08:02 AM

I've read the book. Great advice if you follow it. I broke a cardinal rule by buying a new vehicle, twice. Gotta re-read the book.

RallyJon · 10-10-2005, 08:07 AM

Don't forget that those books are aimed at people who have generally screwed up their lives already by mis-managing money in one way or another. So they tend to give advice in an overly general and heavy handed way.

Spending isn't evil. Manage your finances well and you can spend on things you need (and want) and still be very secure.

The only thing more pathetic than an overextended credit card consumption fiend is a bitter old person holed up in their shack with a million bucks in the mattress.

pwd72s · 10-10-2005, 08:23 AM

Quote:

Originally posted by RallyJon

Spending isn't evil. Manage your finances well and you can spend on things you need (and want) and still be very secure.

The only thing more pathetic than an overextended credit card consumption fiend is a bitter old person holed up in their shack with a million bucks in the mattress.

Point well made...it's really about money management skills more than how one chooses to use his money. More money gives one more choices. The way I see it, spending on "bling", scrambling to live in the "right" neighborhood, belong to the "right" clubs, that whole "image" scene is actually an example of limiting one's choices in life.

dhoward · dhoward's Garage

Great.
Now you gave away PWD's hiding spot....

pwd72s · 10-10-2005, 08:29 AM

Gawd! Gotta run & check my mattress!

VaSteve · 10-10-2005, 08:37 AM

Quote:

Originally posted by pwd72s
Point well made...it's really about money management skills more than how one chooses to use his money. More money gives one more choices. The way I see it, spending on "bling", scrambling to live in the "right" neighborhood, belong to the "right" clubs, that whole "image" scene is actually an example of limiting one's choices in life.

The book keeps referring to th "right" neighborhood and mentions housing costing over $300K. I would love to live in a place where exclusivity could be bought for that price.

Apparently, the authors didn't visit the coasts when they wrote their book.

ken_xman · 10-10-2005, 08:42 AM

300k gets you a shack here. My little ranch is 500k... and its nothing great.
Keep in mind the book was written a while ago.

Jims5543 · 10-10-2005, 08:57 AM

Quote:

Originally posted by pwd72s
Who says spending money is "the" way to enjoy life? TV ads? Would a new car make me happier, restore my (not lost...well spent) youth, and have supermodels draped all over me? I don't think so. Would a McMansion on a small lot make me happier than my '70's ranch house on 1 1/2 acres? Again, I don't think so. Yep, I've read the book...I'm not technically a millionaire...I just live like one!

I am not saying spending money is "the" way to enjoy life but spending from time to time on something non-necessary can be enjoyable.

My life for the most part is right on track with advise given in the book excpet for when you look at my "car problem".

I love cars, I like driving fun cars, I like changing some of my cars which = losses sometimes. I have too much money invested in my 87 RX-7 and the Porsche was not needed in my garage but wanted. It is already whispering to me asking for goodies.

Our family car did not have to be a European Luxury car but I wanted AWD and I wanted a sedan and I love the Audi line so there it sits in the garage.

I am techincally a millionaire. I have had the same financial advisor for the last 8 years and he watched me attain my wealth and achieve my goals. Four months ago he did a new financial analisys on me and we were delighted to see a net worth of 1.3 mil. Compared to the analisys he did on me in 1997 and I have come a long long way.

That said I do not live frugaly, well, maybe I do. We live in a 3/2/2/ ranch home in a blue collar neighborhood, the mortgage is paid off on it. We talked about moving across the street to the "rich" neighborhood but cannot fathom a 700K mortgage. We paid 95K for our house in 96 and even that was scary to us. We do not go on expensive vacations, we go on one 1 week vacation a year and that is to our time share that we own outright.

According to what I have read so far I should not own the time share, the Audi is a no no, forget about the Porsche and RX-7. I want to accumulate enough wealth to be able to retire by 50 and enjoy my wife, children and perhaps grandchildren while living in leisure. I know sitting on my butt and just earning is not the right way to go but in all honesty I am not sure what to do.

Real Estate, right now is too risky and almost a guranteed loss. Stocks take a lot of knowledge that I do not posses and that is a recipe for disaster for someone like me. Business investment is an option that I am willing to investigate I am good at start ups. I have a couple of ideas, I have complained about this town I live in and my complaint is actually a great idea for a business.

I am also reading Rich Dads Guide to Investing and that basically is telling me I have no business in high risk investing until I understand the way investing works fully.

David · David's Garage

I don't enjoy dealing with money, I know many do but I don't. I prefer racing and working on my Porsche. I put together a plan several years ago that will allow me to retire comfortably at 55 (I doubt I'll retire that early). I spread my 401K over several safe investments and I have a broker to handle my other investments. I could give up racing and other hobbies to live better later in life, but I would prefer to set a budget that allows me do what I enjoy. I'm not a millionaire and I don't believe I need to be one until I approach retirement. I think the book has a formula of total income*age/10. I'm not rich by that formula, but I will be in a couple years. I think as long as I follow my plan I can still do the things I enjoy.

RallyJon · 10-10-2005, 10:10 AM

There's this new thing called the Internet coming. It could be big.

fintstone · fintstone's Garage

A study I read showed that most of thse "millionaires next door" types actually live in the midwest where jobs, housing, and expectations are more constant. Of course the current "get rich" on real estate in the hot markets would be another type entirely. It seems that life on the west coast, etc would not make this manner of becoming a millionaire (outside real estate) as likely.

yellowline · 10-10-2005, 11:01 AM

Wow. This thread is really interesting to me.

Right now, I'm beginning to scope out career fields. I really want a secure job that pays enough for me to be financially sound, seeing as how it's harder and harder to be middle class. Of course I want to have some hobbies and the means to afford them, but I also want to gain wealth by living frugally, and finding true happiness in a family. Here's to hoping I can strike a balance.

I look at my parents...no debt, house paid, biggest expense now is my college. All this from a single-income blue-collar worker (a specialized job though.) Surely I can do the same or a little better with a good degree and smart money management.

Seahawk · 10-10-2005, 11:18 AM

Most of the advice from, 'The Millionare Next Door" is baseline common financial sense, timeless in terms of guidance and percentage of total income devoted to specific investments.
The keys to financial independence are basic:

- have a plan, know where your money goes and accept responsibility for your fiscal future

- delay gratification until you can afford it...accept the consequences if you don't and re-adjust your plan

- don't get a divorce...Willy Nelson, or another C&W singer, was right.

- start financial planning early. The miracle of compound interest is undeniable

- investment risk is unavoidable but better absorbed early. Betting the college fund when the kids are in high school is ill advised.

- have fun...I just lost a good friend of mine who died early; he paid for everything in cash and was the essence of the MND. But dead is the final frontier...have some joy in spending. He banked on the future and lost.

- marry well and have kids...the toughest nut of all.

- don't listen to anyone else's financial advice...

RallyJon · 10-10-2005, 11:21 AM

Quote:

I really want a secure job that pays enough for me to be financially sound, seeing as how it's harder and harder to be middle class.

I suggest becoming a plumber. Or an electrician. Or a heating contractor. I can assure you that there are far too few of them, and they get paid far too well. And they never return phone calls so they must have plenty of work.

Jims5543 · 10-10-2005, 11:44 AM

Quote:

Originally posted by yellowline
I look at my parents...no debt, house paid, biggest expense now is my college. All this from a single-income blue-collar worker (a specialized job though.) Surely I can do the same or a little better with a good degree and smart money management.

You really need to pick up this book and read it. Your dad was blue collar and you are preparing to be whiter collar and have a "better" life. Your dad has amased a nice egg for himself despite what might be called a disadvantage as far as lack of education and a professional career.

You are a classic example brought out early in this book, to identify the "peer pressure" early in life and not get sucked into it would be the best move you ever make. Once you complete college you would be wise to stay simple and not go for the country club membership and big fancy house.

I have only read 2 chapters but I have learned a lot already.

yellowline · 10-10-2005, 03:33 PM

Jim, I'm absolutely agreeing. I look at my parents, and I think they've done really well with what they've had. I hope that I can manage money that well. I'm not always frugal, but I recognize the need to learn the lifestyle, so to speak. I hope I can do better, in fact that I can do really well for myself. I need to just rein in my spending and investigate lucrative careers that have demand for qualified people.

Granted, my dad has worked 70 hour, 7 day weeks at some jobs, and he truly strives to be the best in his field (foreman for industrial instrument calibrations and electrical personnel). He had a chance to go to college, but didn't. I have to somehow use that for motivation for myself. Hopefully I can do as well, or perhaps better, while still having a relatively normal job and workload.

I'm still young, and I do have the "you only live once" mentality.

Jims5543 · 10-10-2005, 03:40 PM

I read Charles Givens Financial Self Defense when I was 25 and wished I lived by just one of his rules.

Pay yourself first.

Take 10% of your take home pay and put it away. Never touch it no matter what. Invest it in an IRA. In 20 years you'll be very set.
I read it and did not do it and regret it. Learn as much as you can about personal finances and investing and put together a plan. I am playing catch up at the ripe young age of 40 and knew better when I was 25 and didn't act on it.