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The book started out at a marketing book for wall street firms to find new client and probably should have stayed that way. It is great that you want to live like a cheap skate but no thanks. Stanley then had Schwartz read it -- author of Self help books -- that of course include topics such as "improving" yourslf so you can earn more and spend more. (no one else sees the irony of this).
The clincher for me was reading Stanley's blog where it reported that decedents of estates of 3.5 million or more lived in a house valued at 400k.
That is great for the person inheriting the 3.5 m -- the person who lived in a 400k house--NOt so much. I don't know about you but around here 400k doesn't even get you a house in a rough neighborhood.
I'm not even sure what your post is about. Did you actually read the book? The entire premise is that the majority of millionaires in the US aren't the people traveling first class, living in 6k sq ft mansions, driving Mercedes S class cars with 50ft cruisers. They are rather ordinary people making middle to upper middle-class incomes that were purposeful about what they spent their money on. I never took away the idea that they were cheapskates, just that those that are millionaires got there by not spending every dime they made on stuff that depreciates. I'm not sure if you're aware of this, but the book was written about 25 years ago. Even if you ignore the fact that some areas have gotten ridiculous with real estate $400k in 1994 is equivalent to $700k today.
I think it did a good job of painting a picture that there are millionaires next door. The reality is most people that are thinking about millionaires are thinking about the deca-millionaires and billionaires and the "Lives of the Rich and Famous" or "MTVs Cribs".
I'm not even sure what your post is about. Did you actually read the book? The entire premise is that the majority of millionaires in the US aren't the people traveling first class, living in 6k sq ft mansions, driving Mercedes S class cars with 50ft cruisers. They are rather ordinary people making middle to upper middle-class incomes that were purposeful about what they spent their money on. I never took away the idea that they were cheapskates, just that those that are millionaires got there by not spending every dime they made on stuff that depreciates. I'm not sure if you're aware of this, but the book was written about 25 years ago. Even if you ignore the fact that some areas have gotten ridiculous with real estate $400k in 1994 is equivalent to $700k today.
I think it did a good job of painting a picture that there are millionaires next door. The reality is most people that are thinking about millionaires are thinking about the deca-millionaires and billionaires and the "Lives of the Rich and Famous" or "MTVs Cribs".
I did read the book. A couple of times. The 400k number comes from a more recent work than the 1996 original. it is from his subsequent work from 2007.
You don't get the idea they were cheapskates because Stanley had a vested interest in not portraying them as such. So frugal "millionaires" aren't living a MTC cribs lifestyle. I guess my point is who cares. Again someone who dies with a 3.5 m estate an lived in a 400k house is great if you are the inheritor of the estate -- not so much if you had to live life that way to get it.
The Millionaire Next Door basically confirmed what I had suspected from a young age:
That people who work hard, save their money and live modestly tend to have a higher net worth. And people who spend lavishly and beyond their means tend to have a lower net worth.
Even if you make $1 million a year, if you spend it all then you will end up poor. It is all rather common sense, actually.
I did read the book. A couple of times. The 400k number comes from a more recent work than the 1996 original. it is from his subsequent work from 2007.
You don't get the idea they were cheapskates because Stanley had a vested interest in not portraying them as such. So frugal "millionaires" aren't living a MTC cribs lifestyle. I guess my point is who cares. Again someone who dies with a 3.5 m estate an lived in a 400k house is great if you are the inheritor of the estate -- not so much if you had to live life that way to get it.
Haha, that's a pretty short-sighted view. What do you spend all of your money on that makes your life so much richer than the person's that doesn't just spend to spend? I guess if your point of view is that spending more always equates to more happiness, then sure they are frugal and miserly. I don't feel frugal at all and I have a 50% savings rate. I just don't spend money on things most people do. I spend on things I personally value. We could always buy a 3x more expensive home, two brand new $60k cars, spend $20k/yr on vacations, etc. and save nothing, but I can almost guarantee you that wouldn't make us happier than we are now. Almost certainly more stressed knowing that we are one bad thing away from financial ruin.
I'm sure some of them were cheapskates, but the data he showed wasn't that the majority were cheapskates, but that they were spending for value.
Plus the majority of millionaires got that way from investing or owning their own business, so it's not as if they were living on beans and rice so they could save everything they had to get to the 1-2 million. Investing a small amount in the markets over 40+ years gets there. $150/month for 45 years at 9% CAGR gets you to 1 million. If you adjust for today's dollars that's the equivalent of saving between $500-$1k/month over the years. Is that really the difference between living like "the good life" and living like a cheapskate today?
Basically everyone I know that is a millionaire and in their late 50s early 60s lived like this. I don't consider any of them cheapskates. more financially responsible.
If spending money = happiness to you then I can see how you feel that anyone that saves anything is a miserable cheapskate. Personally, I identify what makes me happy and then spend accordingly. I spend a lot of money on daycare (my kids are a huge priority to me), on mountain biking (my favorite hobby), on beer (beer and friends is our social outlet), and on vacations (when we aren't traveling non-stop for weddings, lol). But I don't spend a ton on eating out (I'd rather cook at home), new clothing, new cars, a huge home, the newest gadgets, etc. Because none of those things make me any happier. I guess I'm one of those cheapskates One that'll go from a NW of 0 to a millionaire in 8 years though.
I can maybe see doing this if you were to retire at very early age but, they were sill in their late 50s and working 50 hour work weeks. Having a 50% savings rate is just ridics. I would also like to see a study which shows even if people drove a 500 dollar car their whole life would it even matter given their (limited) income. It really comes down to your numbres. If earning a really high salary then ok. Most are not so again who cares. I doubt most mnd s spent a lot on international luxury travel.
I can maybe see doing this if you were to retire at very early age but, they were sill in their late 50s and working 50 hour work weeks. Having a 50% savings rate is just ridics. I would also like to see a study which shows even if people drove a 500 dollar car their whole life would it even matter given their (limited) income. It really comes down to your numbres. If earning a really high salary then ok. Most are not so again who cares. I doubt most mnd s spent a lot on international luxury travel.
Maybe....they enjoyed what they do. I like what I do....I know...crazy right?
Where are you getting a $500 car from? The book said most millionaires had purchased slightly used cars. How does that equate to a $500 car?
Perhaps they started spending more lavishly as they got older, but it just didn't put a dent in their NW because they had already hit a tipping point for their investment accounts. As the old saying goes...the second million is easier than the first. The larger your account balance the less of an impact any additional investments has on it. Notice the authors didn't really say anything about these millionaires' hobbies, vacations, etc. He discussed depreciating assets and general spending habits (eating out all the time, clothing, buying extravagant homes, the newest cars, etc.).
Last edited by mizzourah2006; 08-12-2019 at 10:49 AM..
You obviously didn't read what I wrote about the 500 car. The point is -- I think it would take an inordinate level of income to do what they did, and the author admonishes those who spend freely. My point is -- I doubt for most if you did what the MNDs did it would amount to a hill of beans; no matter if you drove a lexus or rode the bus your whole life
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One that'll go from a NW of 0 to a millionaire in 8 years though.
