Frugal Millionaires on Retirement and Credit Cards

Here's an excerpt from the book The Frugal Millionaires: 70 millionaires anonymously share their ideas about money to help each other and you. Today we're seeing what the millionaires have to say about retirement and credit cards. There's lots of good advice here -- as you would expect. After all, these people are doing pretty well financially.

FYI, these are some representative tips from The Frugal Millionaires. There are over 800 tips in the book. The frugal millionaires are only referenced by their initials. The author signed a confidentiality agreement that the millionaires' identities would never be disclosed in exchange for them saying whatever they wanted. If they chose not to have their initials used they were given the initials AFM which is an acronym for Anonymous Frugal Millionaire.

RETIREMENT

AFM – To have a great retirement work hard at keeping your marriage healthy and fulfilling. Not only is divorce unhealthy for your emotional and physical well-being, but it also devastates one’s finances. Think defensively when it comes to inheritances because of high divorce rates (approximately 50%). You cannot stop your spouse if they want a divorce. Always keep your assets separate; do not co-mingle them with joint marital assets!!! Will your assets to your kids. Otherwise you may see a portion of your estate going to your ex and even to their future spouse and their heirs. That sucks.

J&CB – The best thing one can do to prepare for retirement is to remove “stuff” from your life. Instead of “retiring” you free yourself to really enjoy life. In other words when you don’t have stuff holding you down there is the opportunity to retire often and whenever you want. Our goal these days is to maintain a small foot print so that we can live large (this is not a money thing). However, most people wait too late in life to realize how much “stuff” is impeding on their happiness.

VTN – People that develop a sense for money, building wealth, investing and retirement planning when they are still in their 20s seem to do well. (Not a scientific view, just my opinion.)

AFM – Retirement Planning Tips:

1) Create a plan working with, but not blindly relying on, a reputable fee-based third party you trust. They should provide objectivity and question your
sanity when needed.

2) Review the plan at least annually.

3) Know what you own and why you own it.

4) Have a disciplined plan to sell and stick to it (see 1 above) and take the emotion out of your investment decisions.

5) Make sure you have a will and review/revise it regularly.

6) Term life insurance is all most people ever need.

7) Repeat after me: a broker is a salesman, a broker is a salesman…

CREDIT CARDS
 
AFM – If you can’t afford to pay off the balance each month then you probably shouldn’t buy on credit. If you believe you have the self control to buy on credit, make sure you set specific limits on your credit and don’t exceed them. If you over extend yourself you can end up with credit card balances that you will be paying off for the rest of your life.

JSB – Don’t ever carry credit card debt! This is purely a “math idiot” tax on the stupid and undisciplined.

AFM – Pay them off every month or burn them.

Comments

[Neal Frankle]

I like this. The common theme is that these folks are very mindful of their financial lives. Just being mindful translates into living on purpose instead of by default. I like it.

[poor boomer]

Do the Frugal Millionaires have any advice for people earning minimum wage?

[Tarah]

Are the initials at the beginning the initials of certain millionaires or certain types of millionaires?

[FMF]

Tarah --

I believe they are from specific millionaires.

[Jeff Lehman]

You all have a few questions...and I wrote the book, so:

Yes, The Frugal Millionaires are all very mindful of their money. They know where it is and what it's doing for them. But they don't obsess over it (like looking at stock prices 10 times a day...that's the shortest distance to insanity that I know of!)

My advice for people earning minimum wage is to be more ambitious. Make a goal to only hold a minimum wage job for a set period of time. I'm sorry if that sounds harsh. I started my working life at 16 in a minimum wage job and got a hourly increase about two weeks later. That was the last I saw of minimum wages. You'll never create wealth on a minimum wage job alone. I sense that you don't have a money issue since you are on these blogs...maybe it's more of a motivational issue.

The initials are specific to the millonaires, although they could choose to jumble their initials if they wanted to...or simply make them up. If they didn't want to pick we gave them the AFM designation as FMF mentioned.

Jeff