And Yet Another Millionaire Says the Same Thing

I'll probably get a ton of flack for this post (as I do on many around this subject), but at some point people need to start listening to people who are where they want to be. For instance, if you want to be a millionaire (or multi-millionaire), who do you listen to, someone who's not even close to that goal or someone who's already surpassed it and knows what works? Seems like the answer to that is pretty clear to me.

That's why I loved this post -- it's an interview with a real life millionaire -- someone who isn't speculating on how to get rich, but someone that is already rich. It's really great stuff IMO.

And just to set the scene, this guy never made a bundle of money. He was a shop teacher at a junior high school, a carpenter, and worked in the juvenile court system. Certainly not a recipe for making a fortune. Sure, is family was rich, but there's no indication he got any of that wealth. Nope, he just applied simple principles over time and became rich. Oh, and he retired at the age of 58.

What's his advice for becoming a millionaire? Here are the highlights -- all quotes from this man:

• The real secret is to spend less than you earn. I don’t care how much you earn, you spend less than you earn. Spend less than you earn. This is true whether you’re on welfare or a millionaire.

• No smoking or alcohol consumption. This has nothing to do with morals and health — okay, maybe health — it’s all about the money.

• No-load mutual funds are the only way to go. To give anybody 3-4% of your money off the top is insane.

• Volunteer to help others.

• I can buy whatever I want. Not need, but want. I just don’t want very much.

• Wealth is created by investing money, not by working longer and harder.

He also shares various ways to save money. It's obvious that he's frugal, and that he's built his wealth from simply making sure that the difference between what he's made and what he's spent has been as big as possible.

A few more thoughts from me:

1. Told ya.

2. Funny how this guy who's never made a ton, contrasts so positively (from a wealth standpoint at least, though probably in many other ways as well) with those we assume are rich.

3. Index funds are as no-load and least expensive as you can get.

4. Again, a wealthy person talks about giving back. Must be a relationship between giving and wealth, huh?

5. The road to wealth really is pretty easy.

Comments

[Eugene Krabs]

Arguably one of the best entries I've ever read on Get Rich Slowly.

What really struck me home is the line, "I can buy whatever I want. Not need, but want. I just don’t want very much." I think this is actually his real secret to success (and perhaps ours too if we can get to that point and stay there). The reason I say that is because, while we all know that "The (supposed) real secret is to spend less than you earn." the fact is, we also know that it's much easier said than done.

But not if you have all that you need and even want. Not if you are truly content with what you have in this earthly world. Otherwise, we will always be fighting an inner battle within ourselves. There will not be a true sense of peace, including financial peace.

That's it isn't just good enough that we earn more and spend less, but we also have to soul search and find out what we truly need, what we truly want, and what we truly can go and are willing to go without... to attain financial peace.

[ss]

I have tons of things on my "wish" list. Though I can afford all of them, I haven't bought any of them:
iPod
iPhone
PS3
HD cable
BluRay
BMW
A bigger house

[MoneyEnergy]

I agree... I read that article on GRS too. Great story. I'm glad he recommends investing, since I love investing. I suppose he'd include real estate in investing, though I don't recall if that guy invested in RE or not. The things I "want":) (always fun to make these lists):

iPod (for working out at the gym)
iPhone (or some version of it)
a car (corolla or hybrid)
laptop (havent' had one yet, need one)
money for travel

[Matt Jabs]

The more I get into monitoring my personal finances, the simpler and more clear it becomes that you just have to spend less than you earn! Sound simple & obvious? That's because it is!

[Sean G.]

"Wealth is created by investing money, not by working longer and harder."
Could use some expansion:
It leaves out starting your own business or choosing a profession where you don't work harder but your skill set is worth more (some academics, biotechnology, medical fields, law, management, some high risk jobs).

I suggest:
Wealth is created by investing money in your earning power or in investment instruments, not by working longer and harder."

[Liz]

Okay, so it seems I keep reading about spending less than you earn. Is this what getting rich is all about? Is that the secret? Can someone please confirm? (kidding) ;)

Seriously, I think it is mentioned a lot but it always bears repeating... and it actually might be sinking into my thick skull finally. :)

[JerryB]

One reason that I related to this particular millionaire is that he was a simple man. Not uneducated mind you, but simple none the less. He takes his pleasures simply, working on Organic farms, doing carpentry, fishing on his (paid for) boat and visiting with neighbors.

[Adrian B.]

"Wealth is created by investing money, not by working longer and harder."

Sean G., I think he's saying that working longer and harder usually means a person has a bigger income as result. But an income, regardless of size, doesn't necessarily yield wealth if none of it is saved and invested.

I also would add this quote I got from the "Wealthy Barber" that "a dollar saved is equal to two dollars earned". Which says that after taxes most people would do better holding on to their money(saving and investing) than working overtime ("longer and harder") trying to get more.

[rwh]

There is a lot to commend and I emulate much of his lifestyle. But there are a couple of snippets in the interview that are worth noting. First, he has a pension. Second, he said he would have financial worries if he had health problems.

So, while he appears to have lived a frugal life, gives good advice and has had positive life experiences, he is also enjoying a couple of advantages that many younger people won't have.

[Old Limey]

My wife and I arrived in the USA as newly weds in 1956 from England with $400 between us and I had the promise of a job. We are now multi-millionaires and have achieved every aspect of the American dream.
Looking backwards there are several reasons for our success.

The Cold War was underway and America was desperate for engineers. I retired in 1992, not long after the end of the Cold War, after working 36 years without being unemployed for a single day. That involves a certain amount of luck and good timing for which I cannot take credit. Growing up in England during WWII in working class families we both learned firsthand what it takes to live frugally and both sets of parents were great role models for us. Those lessons have helped enormously, we can now buy anything we want but we also don't want very much and since we started saving from day one we have found that it is a habit that is nigh impossible to break. Now, as senior citizens we also receive two pensions and two social security checks, and have fantastic, inexpensive, healthcare. We don't have any debt whatsoever and live in a wonderful custom home in a beautiful neighborhood, have an equally nice beachfront condo, and each drive a Mercedes. There's an old saying, "You can take an Englishman out of the Garden but you can't take the Garden out of an Englishman". My most time consuming hobby is gardening and I love to grow as many as possible of the fruits and vegetables that we need, especially fabulous heirloom tomatoes - the San Francisco Bay Area climate makes that possible.

After retiring in December 1992 I put my engineering and computer knowledge to use learning how to produce software to help me in my investing. I learned quickly that Buy and Hold was not the way to go but that a certain degree of market timing was essential. I also have used only No-Load mutual funds and was able to ride the Dot.Com bubble up and get out within four market days of the top. My software also enabled me to completely avoid the recent market collapse. Here again, Lady Luck was on my side since I believe that the Dot.Com bubble was a once in a lifetime opportunity that won't come along again for a very long time.
The bottom line is that my annual compound rate of return over the 16 years since I retired has been 19.7% (Total Gain 1878%) versus 4.5% for the S&P 500. Now I only own CDs and Municipal Bonds and am content to earn a nice sum of interest and to minimize my taxes.

I am not at all hopeful that my story can be easily repeated - so many things have changed.
Marriages tend not to last a lifetime. World overpopulation where 1 billion new people are added every 12 years has guaranteed that the earth will start running out of many of its most precious natural resources. The young people of today have a hard timing finding good jobs, cannot anticipate a really nice company pension when they retire, cannot buy very affordable real estate with very good loans, and will be hard pressed to achieve the success of their parents. Many of them also don't have a clue about what it takes to live frugally.

The bottom line is that there are great times to be born and there are terrible times to be born all because of events and circumstances over which you have no control.

[Matt]

Suddenly I'm glad that I do not drink or smoke anymore! I always knew that those were one of the places I spent way too much leaving little of what I earned behind.