King pay for his most expensive pair? King's purchase of alligator shoes is rare even among millionaires. Nonetheless, the popular media enjoy touting abnormalities in buying behavior. As a consequence, our youth are told that buying expensive items is normal behavior for affluent people.
They are led to believe that the wealthy have a high-consump- tion lifestyle. They learn that hyperspending is the main reward for becoming affluent in America. Why does Johnny Lucas get ignored while Mr. King receives head- lines? Because Johnny's consumption habits are mundane. His rewards are more intangible than product-related: financial independence; dis- cipline; and being an excellent family provider, a fine husband, and a father of well-disciplined children.
Can Johnny Lucas still rally and bring back the audience he lost? Johnny Lucas, the affluent business owner, is very punctual. He is never late for meetings and arrives at work each weekday at A.
How does he do this? It must be his wristwatch. Could it be that Johnny wears an expensive watch? By now you have probably guessed the answer. And once again, the audience is disappointed. Certainly some millionaires purchase expensive watches. But they are in the minority. Johnny would, we are sure, apologize to the TV audience for his mundane taste in clothing and jewelry. All my chil- dren's college accounts were more than fully funded before they even began attending college.
Unfortunately, Johnny's story, including his apology, will never get into syndication. Even most households with six-figure annual incomes are not affluent. These people have a different orientation than does Johnny Lucas. They believe in spending tomorrow's cash today. They are debt-prone and are on earn-and-con- sume treadmills. To many of them, those who do not display abundant material possessions are not successful.
To them, nondisplay-oriented people like Johnny Lucas are their inferiors. Johnny Lucas is not likely to be held in high regard by many of his neighbors. On a social status scale, he is below average. But on what criteria?
In his neighbors' eyes, Johnny has low occupational status. He is an owner of a small business. What happens when he occasion- ally comes home in one of his janitorial vans?
The van stays in his driveway until he leaves the next morning. What are his neighbors to think? They do not know that Johnny is financially independent. They don't give him points for being married and never divorced, fully funding his children's college tuition, employing several dozen people, having integrity, being frugal, paying off his mortgage, and so forth.
No, many of his neighbors would prefer that Johnny move out of the neighborhood. Perhaps it's because he and his family don't look affluent, dress like the affluent, drive the vehicles of the affluent, or work in high-status positions. Were your parents very frugal? Are you frugal? Is your spouse more frugal than you are?
This last question is highly significant. Not only are the most prodi- gious accumulators of wealth frugal, their spouses tend to be even more frugal. Consider the typical affluent household. Nearly 9S per- cent of millionaire households are composed of married couples. In 70 percent of these households, the male contributes at least 80 percent of the income.
Most of these men play great offense in the game called income generation. Most of these households also play great defense; that is, they are frugal when it comes to spending for consumer goods and services. One frugal high-income producer within the married-couple category, however, does not automatically translate into a high level of net worth.
Something else must be present. A self-made millionaire stated it best when he told us: I can't get my wife to spend any money! Most people will never become wealthy in one generation if they are married to people who are wasteful. A couple cannot accumulate wealth if one of its members is a hyperconsumer.
This is especially true when one or both are trying to build a successful business. Few people can sustain profligate spending habits and simultaneously build wealth. According to her husband of thirty-one years, she said, "I appreciate this, I really do. Nothing is so important as to interrupt her Saturday-morning chores. Made a lot of trade-offs Well, let's examine your lifestyle.
Is it one of great offense? Congratulations, you play wonderful offense. But how is it that you keep losing the game called wealth accumulation? Be honest with yourself. Could it be that you play terrible defense? Most high-income earners are in the same situation, but not most mil- lionaires.
Millionaires play both quality offense and quality defense. The foundation stone of wealth accumulation is defense, and this defense should be anchored by budgeting and planning. We have discovered that several occupa- tional groups contain large numbers of budgeters and planners. This percentage is slightly higher than the pro- portion of millionaire households living in America's finest urban and suburban neighborhoods. But their income alone was not what caught our attention.
Given the same level of income, who accumulates more wealth-an auctioneer residing in small-town America or someone who lives in a high-status urban or suburban neighborhood? As you can guess, it is the typical auctioneer.
Auctioneers are more frugal than their high-income-producing counterparts in prestige areas; they have lower overhead both for household and business expenditures. To some extent, these data are explained by the lower cost of living and doing business in small towns.
Yet even when cost of living is taken into account, auctioneers are more prone to accumulate wealth. They are aware that consumer goods often generate few cents on the dollar.
One auctioneer explained why she was so frugal: When I was quite young, I watched a woman crying. All the while, bidders were walking away with everything she once owned. Let's ask the typical American self-made millionaire about her defense. We will refer to her as Mrs. Jane Rule. They also invest in several of the categories of items they appraise. Rule is the visible manager of their business. He gets much of the credit for its success.
After all, he speaks very well and very quickly. But it's actually Mrs. Rule who is the true force, the real leader, of this enter- prise. It's her planning, designing, budgeting, bill collecting, and mar- keting that made this auctioneering company successful. Why are Mr. Rule millionaires today?
Because Mrs. Rule plays tremendous defense! She is responsible for budgeting and spend- ing for both her household and their business. Is anyone in your household responsible for budgeting? All too often the answer is "not really. When we tell our audiences about the budgeting and planning habits of the affluent, someone always asks a predictable question: Why would someone who is a millionaire need to budget?
Sometimes we are forced to add analogies to make our point. We ask, for example: Have you ever noticed those people whom you see jogging day after day? They are the ones who seem not to need to jog. But that's why they are fit. Those who are wealthy work at staying financially fit. But those who are not financially fit do little to change their status. Most people want to be physically fit. And the majority know what is required to achieve this. But despite that knowledge, most people never become well conditioned physically.
Because they don't have the discipline to just do it. They don't budget their time to just do it. It is like becoming wealthy in America. Oh, you want to all right, but you play lousy financial defense. You don't have the discipline to con- trol your spending. You don't take the time to budget or plan. Note that under accumulators of wealth spend three times as much time exercis- ing per month as they do planning their investment strategies.
Rule is different. She's like most millionaires. She's disciplined. She takes time to plan and budget. This translates into wealth.
Rule's household income varies from year to year. It is typical for auc- tioneers to have ups and downs in their cash flow. Often downturns in our nation's economy translate into increased demand for auctioneer- ing services. But her net worth keeps increasing. Today Mrs. In our survey, she answered "yes" to four questions about planning and budgeting.
Do you wish to become affluent and stay affluent? Can you answer "yes" candidly and honestly to four simple questions? Rule does, and so do most millionaires. In fact, in our latest national survey of mil- lionaires, we found that for every millionaires who don't budget, there are about who do. We anticipate your question about those millionaires who don't budget. How did they become millionaires? How do they control spending? They create an artificial economic environment of scarcity for themselves and the other members of their household.
More than half of the nonbudgeters invest first and spend the balance of their income. Many call this the "pay yourself first" strategy. These people invest a minimum of 15 percent of their annual realized income before they pay the sellers of their food, clothes, homes, credit, and the like.
What about those millionaires who don't budget or create an envi- ronment of relative scarcity? Some inherited all or most of their wealth. Another minority, accounting for fewer than 20 percent of millionaires, typically earn such high incomes that to some extent they can eat their income and still have a seven-figure net worth.
In other words, their extraordinarily good offense compensates for a lack of defense. Technically you're a millionaire. But spiri- tually you're an under accumulator of wealth. And it's likely that your millionaire status is temporary. These are the people you read about in the newspaper. The press loves to tout freaks of both nature and economics.
Will the popular press ever do a story on Mrs. It's unlikely. Who wants to read about Mrs. Who wants to see her sitting at the kitchen table three nights in a row, putting together her family's annual budget? Is there anything exciting about computing and accounting for each dollar spent last year?
Would you be thrilled to watch Mrs. Rule compute and allocate future dollars of income into dozens of consumption categories? How long could you stand to watch her carefully complete her annual allocations calendar? Well, it's not fun for Mrs. Rule, either. But in Mrs. Rule's mind there are worse things, such as never being able to retire and never being financially indepen- dent. It's much easier to budget if you visualize the long-term benefits of this task.
Almost two-thirds of the millionaires surveyed So did Mrs. But only about 35 percent of high-income-producing nonmillionaires answered "yes" to this question. Notice that we did not include mortgage payments in our list. Certainly most millionaires who have mortgages outstanding also take advan- tage of this provision. But most millionaires also account for their other categories of domestic expenditures. What will they tell you? A major goal they often name is to minimize their tax burden; they use the mortgage deduction as a way to accomplish this.
Then why don't these same people compute their other domestic expendi- tures? Simply because they do not perceive any value in doing so. As they see it, most of their domestic spending is not deductible in com- puting one's taxable income. But Mrs. Rule sees things differently. She believes that budgeting and accounting for domestic consumption is directly related to achieving this goal.
In her view, tabulating helps control consumption. It also reduces the proba- bility of allocating too many dollars to product and service categories that are not really important.
Rule has always tabulated expen- ditures for her business. She realizes that the same system she used for business accounting can be used for domestic purposes. This is an advantage of being a self-employed business owner. Rule wants to be free of financial worry before her sixty-fifth birthday. Who has concern about their financial future? Not Mrs. And she is in control of her household's domestic spending. Robert and Judy, on the other hand, are frightened. And they should be. Rule earns. Yet, like so many of today's high-income-producing couples, Robert and Judy have only a fraction of Mrs.
Rule's wealth. They feel that consumption controls them, not the other way around. Even Mrs. Robert and Judy have fourteen credit cards; the Rules have two one for business use, the other for domestic spending. Let's talk about credit cards for a moment. Ask a large sample of millionaires a simple question about their credit cards. The results will give you an excellent idea of who these millionaires really are.
Millionaire: Please indicate, by circling the appropriate number, the credit cards that you or any member of your house possesses.
Circle all those that apply. What credit cards would be congruent with your station in life? Perhaps you consider yourself a fashion-sensitive millionaire. You would be in the minority of millionaires if you did list these cards. The results from our national survey of mil- lionaires reveal some interesting credit card preferences see Table The source of this question came from a decamillionaire whom we inter- viewed a dozen years ago.
He told us that he started a wholesale food business at the age of nineteen. He never finished formal high school but did eventually receive his high school equivalency diploma. His response was as follows: I have always been goal-oriented. I have a clearly defined set of daily goals, weekly goals, monthly goals, annual goals, and lifetime goals. I even have goals to go to the bathroom. I always tell our young executives that they must have goals.
Rule also is goal-oriented. So are most other millionaires. For every millionaires who answered "no" to this question, there are who answered "yes. Many of the high- income and inherited-wealth types discussed in the last section. Many senior citizens and retired millionaires who have already reached most of their goals also answered "no. What are your current goals? After Mr. Clark turned on his hearing aid, we repeated the question. Mt: Clark: Oh, goals, not gold.
I see. My goals. I've accomplished what I've tried to do. My long-range goal was, of course, to accumulate enough wealth so I can get out of business and enjoy life. I've been down the road. I've got an international'reputation. Mine is one of the greatest welding companies in the world.
I never want to retire. But now my goal is my family and self-satisfaction about what I've accomplished. Clark is typical of seniors who have accumulated significant wealth. By the way, only two millionaires of all those we interviewed ever told us that their goal was to "spend my last dollar the day that I die! Clark nor Mrs. Rule plans to leave educational trusts for all her grandchildren.
She also wants to enjoy life now and after she retires. She wants to be financially secure. Rule knows how much she needs to set aside each year to attain her goals.
But is she happy? That's a question very often asked of us regarding frugal millionaires. Yes, she is happy. She is financially secure.
Rule enjoys being part of a close-knit family. Her family is everything to her. Her life and her goals are simple. Rule does not need a CPA to do her goal-planning for her, although she does seek his coun- sel in regard to both her domestic and business-related needs. They need a CPA who has considerable experience in changing his clients' orientations, one who will help them change their household environment from one of chaos and hyperconsumption to one of goal-oriented planning, bud- geting, and controlling.
Will they then be happy? Financially independent people seem to be better able to visualize the future benefits of defining their goals. Rule, for instance, visual- izes all her grandchildren graduating from college. She visualizes their success after college. She never sees herself being financially dependent on others, even if she is disabled in the future. Her goals are congruent with those of most millionaires in this regard.
People such as Mrs. Rule accurately label themselves as planners. In fact, the responses to this question are highly correlated to the actual hours the respondents allocate to planning their financial futures. On average, millionaires spend significantly more hours per month study- ing and planning their future investment decisions, as well as managing their current investments, than high-income nonmillionaires.
The real law of wealth: Leverage this and wealth has no choice but to be magnetized to you. The leading cause of poorness: Change this and you change everything. How the rich really get rich - and no, it has nothing to do with a paycheck or a K match.
Why the guru's grand deity - compound interest - is an impotent wealth accelerator. Why the guru myth of "do what you love" will most likely keep you poor, not rich. Demand the Fastlane, an alternative road-to-wealth; one that actually ignites dreams and creates millionaires young, not old.
Change lanes and find your explosive wealth accelerator. Hit the Fastlane, crack the code to wealth, and find out how to live rich for a lifetime. Richer Than A Millionaire A Pathway to True Prosperity Having taught thousands of students over our careers, it is clear to the authors that many young people are clueless about their direction in life. Yes, they want a career, and yes, they want a good life, but knowing what to do is to many quite a challenge.
Some say they want to be rich, but they really don't know what that means. In a sense, to paraphrase the Italian Renaissance polymath Leonardo da Vinci, many are like ships on the high seas of life without rudders! They have tremendous potential but no direction.
In our book, Richer Than A Millionaire A Pathway to True Prosperity, we hope to inspire and to point all people but especially young adults and concerned parents and grandparents who want sound advice for the next generation in what we believe is the right direction. This direction has been reinforced by over forty years of academic and consulting research on what it really means to be rich. Our approach relies heavily on tried-and-true social science research methods of personal interviews and large-scale structured surveys.
In other words, we have more than our personal opinions to offer. While there are many self-help books about wealth or happiness, we believe our book is unique in that it combines these topics. We show that it is possible to be modestly wealthy and happy. In order to reach true prosperity- health, happiness, and wealth, in all likelihood behavior modification will be required. And change is hard. Benjamin Franklin understood this, as he concluded in The Way to Wealth essay years ago: the people heard the advice, agreed with it, and then practiced the contrary.
The myth: If you get into a good college, study hard, and graduate with excellent grades, you will be pretty much set for a successful career. The reality: The biggest thing you won't learn in college is how to succeed professionally. Some of the smartest, most successful people in the country didn't finish college.
None of them learned their most critical skills at an institution of higher education. And like them, most of what you'll need to learn to be successful you'll have to learn on your own, outside of school. Michael Ellsberg set out to fill in the gaps by interviewing a wide range of millionaires and billionaires who don't have college degrees, including fashion magnate Russell Simmons, Facebook co-founder Dustin Moskovitz and founding president Sean Parker, WordPress creator Matt Mullenweg, and Pink Floyd songwriter and lead guitarist David Gilmour.
How billionaire Phillip Ruffin went from lowly department store employee with no college degree, to owner of Treasure Island on the Vegas Strip. This book is your guide to developing practical success skills in the real world. Even if you've already gone through college, the most important skills weren't in the curriculum-how to find great mentors, build a world-class network, learn real-world marketing and sales, make your work meaningful and your meaning work , build the brand of you, master the art of bootstrapping, and more.
Learning the skills in this book well is a necessary addition to any education. This book shows you the way, whether you're a high school dropout or a graduate of Harvard Law School.
Learn how to cut down on spending without decreasing your quality of life, build a million-dollar portfolio, fortify your investments to survive bear markets and black-swan events, and use the 4 percent rule and the Yield Shield--so you can quit the rat race forever.
Not everyone can become an entrepreneur or a real estate baron; the rest of us need Shen's mathematically proven approach to retire decades before sixty-five. Hogan shows that God's way of managing money really works.
Millionaire status doesn't require inheriting a bunch of money or having a high-paying job. The path to becoming a millionaire is paved with tools that you either already have or that you can learn. Take personal responsibility; practice intentionality; be goal-oriented, a hard worker; and be consistent. If you adopt this mindset, you, too, can become a millionaire. Struggling with debt? Frustrated about work?
Just not satisfied with life? The Simple Dollar can change your life. Hamm shared his experiences at TheSimpleDollar. Now, The Simple Dollar is a book: packed with practical tips, tools, and lessons you can use to transform your life, too. Trent Hamm will show you how to rewrite the rules, creating healthier relationships with money… and with your loved ones, too. A UAW makes choices that, although financially insignificant at the present value, have a very significant future value.
Choices such as drinking two cases of beer a week, smoking several packs of cigarettes a day, and buying large amounts of unnecessary food and objects are some examples of typical UAW choices. These choices are not necessarily large financial purchases right now, but over a long period of time, the opportunity cost of that money is very expensive. According to the authors, a common UAW drives a current model car, purchased new, and may have financed it on credit.
PAWs rarely purchase new model cars and are less likely to own foreign or luxury vehicles. An example from the book details a UAW that spent roughly 60 hours researching, negotiating and purchasing a new car. In the end, while the car was purchased 'near dealer cost,' in the long run the UAW's time and money could have been more efficiently spent creating wealth rather than collecting possessions notorious for depreciating in value.
Wealth is usually obtained through investment strategies that maximize unrealized nontaxable income and minimizes realized taxable income.
Appreciating investments such as a k or an Individual Retirement Account IRA constitute tax-deferred growth and produce an unrealized income for the individual holder. Maximized realized income minimizes unrealized income, increases taxes paid, and produces low portfolio values. Active traders move from stock to stock to try to maximize capital gains on investments based on daily fluctuations of the stock market.
This investment strategy is very risky, but has potential for some enormous capital gains. UAWs also are more prone to being swindled out of money from cold callers. Cold callers, usually brokers who in fact know very little about the stock market, target high income earning families and persuade them into purchasing investments with them. Doctors and lawyers are especially susceptible.
A vulnerability to cold callers can subject individuals to lose trust in the stock market and eventually become a UAW. Then there are UAWs that have relatively low risk tolerance for investments. Then there are some UAWs who have considerable knowledge of the specific market of a company or type of investment, but do not utilize that knowledge to their advantage. The Millionaire Next Door uses Mr. Willis as an example. He is a six-figure, very successful executive for Walmart.
He has been employed there for 10 years, during which the company has been explosively growing. Stock prices have shot up in this year period of time. During this enormous growth period, Mr. Willis bought zero shares of the company he worked for, although he had firsthand knowledge of its success. Although UAWs exist in all career fields and have obtained different levels of education, some professions are more likely to lead to a UAW lifestyle.
Doctors, physicians, lawyers, and dentists are among the top professions with a high UAW concentration of individuals. First, because these professions require advanced degrees, individuals get a delayed start in the accumulation race.
Most of the income during these educational pursuits is used to fund tuition, housing, and student loans rather than investment. The second reason is that American society has prescribed a lifestyle to these professions.
Doctors are expected to live in an upscale neighborhood with multiple cars, a boat, and other luxury items. He looked at me and smiled as I walked through the door. As beautiful as Adalynn was, I knew her partner would be equally as gorgeous.
And, oh my God, look at you. Come in and have a drink. She led me to the living room, which was filled with men in suits and women dripping in diamonds. I felt so out of place. After leading me through the living room and introducing me to some of her friends, Adalynn and I walked out onto the patio and I stopped dead in my tracks as I looked a few feet in front of me.
Ian was staring at me. There was no expression on his face at all. Just a blank stare and dead eyes. My stomach began doing flips and I wanted nothing more than to run away. I grabbed a glass of champagne off the tray as the waiter walked by and started to sip it as I turned away.
I was angry at him for ignoring me the way he did and it stung to look at him. I felt so out of place with all these rich people, even though some of the ones I met were nice. I walked over to a beautifully lit gazebo that sat in the middle of a large flower garden. I could hear the soft music that was playing throughout the entire property. I sat down on the bench and took off my shoes. My feet were already killing me in those heels. As I admired the flowers that surrounded me, the mixture of colors and the beauty of them made me feel both happy and sad.
My heart started racing and my belly did flips. I closed my eyes for a moment before I turned around and looked at the sexy man standing in my presence.
This was awkward and uncomfortable. Why would he talk to me now? Stay calm. Be nice. How are you? I really wanted to ask him why the fuck he cared how I was now and not a week ago when he chose to ignore me and my text messages. He folded his hands while he looked straight ahead.
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