"Real" Millionaires Different than What Media Portrays

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 have a commentary from the author on the difference between what the media portrays as "regular" millionaires and the lifestyle of frugal millionaires.

Here's the excerpt:

THE MEDIA AND MILLIONAIRES

There is a picture that the media paints of the so-called wealthy and famous. It’s a picture of flashy people, who make and spend a lot of cash…and have the “I can always make more, so what do I care?” attitude. Many people want to be like this because this behavior appears to be glorified and rewarded in the media.

These generally short term wealthy types would rather spend their money getting noticed than staying wealthy.

Consider this cocktail party chatter:

• Faux Wealthy Person says: Check out my new pair of $1,325 carbon fiber sunglasses! They are so cool! I just charged them at Barney’s. Have you been traveling lately? I just got back from a last minute (= expensive) trip to Monte Carlo. Oh, and I just leased a new Mercedes. My life is going well! Hey, how about you? How are you doing?

• Frugal Wealthy Person responds: How fun for you. I’m doing well. My life is far less exciting than yours when it comes to abusing my credit card! But I did just pay off my mortgage. And, I’m flying to France for a month, on frequent flyer miles, to go hang with the locals. When I return I’m going to pay cash for a nice, gently used, fuel efficient, three-year-old foreign car. I’m debt free. Are you really sure that you are doing well?

Which person would you rather be? Waste and excess are never a sound financial strategy.

Comments

[Ken]

Frugal millionaire hands down!

[thomas]

Haha, that's great.

[Mark]

So, what happened to dollar cost averaging into index funds? All gains from the past 12 years have been wiped out, and, in fact, given that dollar cost averaging essentially meant you were buying at even higher prices than in 1996 for the last 12 years, you are now well below the zero line. Factor in inflation, and dollar cost averaging has made you poorer for 15 years+.

This is the Great Depression II. Make no mistake about it. All support levels on the S&P 500 have been broken. The way Americans and, indeed, the world have lived the past 20 years is over...no more debt and phony home equity money to make you appear more wealthy than you really are...now back to hard work and honest saving.

Dow 6000, a once absurdly pessimistic prediction, will be here by the end of the month. Where does it end? Dow 3000?

[Mark B.]

Why does it have to be a "foreign" car?

Actually, if you read "The Millionaire Next Door", their statistics show that most millionaires drive late model domestic vehicles.

Help out your fellow Americans, buy an American vehicle where the profits stay in this country. When New Orleans was destroyed, the whole country rallied to support it. Now that Detroit is in shambles, we should do the same.

[wanzman]

Mark B.:

So, as Americans, we should all run out and support a Company that produces a poor product that nobody has really wanted to buy for the last 20 years, and support a Company that has failed to innovate or plan for the future for the last 50 years. Yea, that sounds logical.

And let me guess, you want me to put my tax dollars toward lowering the principal balance on your mortgage and subsidizing your interest rate so that you can afford the 4500 square feet McMansion that you "own", and the nice Lexus you bought 2 years ago when you did a cash out refinance.

That sounds just about as logical as supporting an uncompetitive Company that is sucking the teat of our tax dollars just to stay afloat.

This should be the new motto of the USA:

Entitlements & Handouts for Failures - The American Way

As a young person just starting out in the workforce...what is my incentive to work hard, move up tha ldder, save etc. when there will be no rewards in the future, as my tax dollars will only go toward bailing out people who didn't plan as well or work as hard as I did?

[My Life ROI]

Mark B --

I ask you what does it mean to have a "domestic" car? When some of the cornerstone domestic cars are made in Mexico and some of the cornerstone foreign cars are made in America... are you sure the cause you are supporting is legitimate?

If you truly want to support the US economy... you will look for the individual cars that support our economy. I think the Accord is pretty high up on that list (at least as of a few years ago... last time I looked).

MLR

[Mark B.]

Wanzman -

Your response is bitter and uncalled for, and does not support a spirited debate.

My problem with the original post was that it made an assumption that a "foreign" car would be more fuel efficient and reliable. While in general, foreign cars have a better track record, newer domestic vehicles from Ford and GM have made tremendous strides in quality and are worth a look.

"we should all run out and support a Company that produces a poor product that nobody has really wanted to buy for the last 20 years" - The #1 selling vehicle in the USA for more than 20 straight years has been a domestic one, the Ford F-150. And until about a year ago, they could not make enough Explorers and Suburbans to keep everyone happy.

ROI - You are right, it is hard to tell what makes an American vehicle these days, but the labor costs are only a small fraction of the cost a vehicle. So there might be workers making Accords in the US, but the R & D costs and profits are all spent overseas.

My point is - break the perception regarding foreign cars - take a look at what we are doing here in Detroit to make better cars. If you don't like it, don't buy it, but at least look at it.

[wanzman]

Mark B. :

My response is bitter and uncalled for? Why? Because I do not agree with you that handing out money to uncompetive businesses is a HORRIBLE idea?

Let me ask you this...

Do you agree with tax dollars supporting a publicly traded company that is not able to compete on its own?

How do you feel about AIG? How do you feel about Citi? (It is obvious you feel that handing out money to GM and Chrysler is OK)

Is that not the same case? They cannot run their business so lets all support them and pat them on the back while they hand out $50 billion in bonuses and fly around in private jets.

EXECUTIVES OF THESE FAILING COMPANIES DO NOT GET IT! (Including GM & Chrysler). THE GOVERNMENT DOES NOT GET IT.

The Unions do not get it. Nobody gets it. The American (for the most part people are sick and tired of financing failure. I know I am.

Just becuase I do not agree with handing out money to failures formerly disguised as businesses does not make me bitter. It just means I have a BACKBONE....something, you, and the US government obviously need to look in to.

Get a clue....at the end of all this, the likely outcome is that several of these "businesses" are going to fail, AFTER BILLIONS of taxpayers dollars are thrown into oblivion.

My thought is that we might as well realize this now and cut our losses.

[Ben C]

wanzman, you are bitter. All Mark B. said was to not blindly buy a foreign car and to look at domestic cars. You then throw all this crap about the stimulus package which really has nothing to do with his comment. You make blind accusations about Mark B. and saying he doesn't have a backbone and telling him to get a clue. You really should start your own blog and keep the vitriolic comments to yourself.

[rdzins]

Dear Mark B,

Uh Ummm, I drive two domestic cars and I have to say that they have both been exceptional. My Eagle vision has 322,000 miles on an untouched engine and transmission, lack of quality, I don't think so. I also have a boring Buick Le Sabre which also has been an excellent car. They are also very inexpensive to fix when they do need repairs.

We have our own mechanic shop and I have to say all makes and models have some issues including the "foreign" cars. The difference that I see is in the cost and availability of part for the repairs on them.

Lets get back to what the true millionaires buy a car for, TRANSPORTATION. Not trying to look like a millionaire or be cool.

Lets face it, even the foreign car makers are feeling a pinch, when nobody is buying new cars. It hurts more than just the automakers bottom line.

[Mark B.]

Ben C --

Thanks for getting my back there.

Wanzman --

Toyota is now asking the Japanese government for a bailout loan. This is not just a domestic auto industry issue, this is a global economic crisis that even the strongest companies are struggling to survive.

[Paul Morales]

I use to be Faux Wealthy Person. I now would rather be the Frugal Wealthy Person :) Great post ;)

[My Life ROI]

wanzman --

I second "Your response is bitter and uncalled for, and does not support a spirited debate."

I also find it funny that you claim to be tired of financing failure. Tell me... how much have you paid in taxes? Being that you are a young person just starting out in the workforce and all...

And usually when you are the ONLY one who gets it... the problem lies within.

[wanzman]

Mark B.:

When did I ever argue FOR Toyota? I think ANY company getting a bailout is wrong.

You said: "...this is a global economic crisis that even the strongest companies are struggling to survive."

You are wrong. I work for a Bank in the United States who was the largest bank to COMPLETELY REJECT ANY FEDERAL ASSISTANCE. Perhaps this can provide a little background to my viewpoints. For years, my bank was very conservative, and often chided for not providing high enough returns to investors. We passed on subprime, refused to get overly extended into commerical real estate, etc. And now today, we stand as one of very few banks not accepting handouts.

Global economic crisis or not, if you manage your business as it should be managed during good times (not getting too greedy, not chasing every dollar of profit just because everyone else is making money hand over fist, etc.), you will be financially able to weather "global economic crises".

This, perhaps, is a lesson the American business and the American consumer need to learn together.

Am I bitter? Hell yes. As a consumer, I have always been responsible. I work for a Bank that has always been responsible.

Where did that get me.....in the same boat as all the jackasses who do not take time to understand how to properly manage their own finances or to properly run a business.

I feel that most logical, responsible Americans would share my viewpoint.

[wanzman]

My Life ROI:

Just because I am a young person who is yet to pay a large dollar amount of taxes, does not mean I am not smart, and not entitled to defend my viewpoints.

******Check out the average age of people running this country.....doesn't seem that older, more experienced Americans necessesarily have all the answers, right? Seems like they are running the USA into the ground.*****

By the way, paying taxes is obviously overrrated. Just check out the endless parade of Obama appointments being outted for not paying their taxes during Senate hearings. Just saw another one on the news this morning...

Perhaps just by paying my small share, I am actually contributing more than most politicians making the decisions to throw this money into oblivion....just a thought.

[My Life ROI]

wanz-

I didn't say you weren't smart or entitled to defend your viewpoints. I just said that your statement that YOU were tired of financing failure is deceiving.

But, you do need to learn the art of civil debate.

Have a nice day.

[My Life ROI]

Mark B -

"ROI - You are right, it is hard to tell what makes an American vehicle these days, but the labor costs are only a small fraction of the cost a vehicle. So there might be workers making Accords in the US, but the R & D costs and profits are all spent overseas. "

Perhaps I am just a stickler... but I would argue against the assertion that their R & D costs and profits only go overseas.

The car companies are a publicly traded companies, so any shareholder can get a piece of the profit. The executive leadership team has American counterparts. Most of the companies have R&D plants for the North American market, too.

I will be honest... I don't know the exact numbers. But saying "all" as opposed to "some" is questionable. And really, if you want to make the assertion, you should prove it to yourself (most importantly) before posting it.

I have changed my opinion on many things by following that advice!

MLR

[wanzman]

As an aside, I think some disclosure would be required to help me further understand the opposing viewpoints. When repsonding explain if you have skin in the game i.e:

Do you work for one of the hurting companies and stand to lose your job?

Do you own significant stocks/bonds on one of these companies?

Any factors that might make a person biased toward a bailout.

See my previous post for my background...I am biased against because I work for a Bank that would stand to gain market share if bailouts were stopped. I am also biased against consumer bailiuts as a responsible consumer myself.

[Mark B.]

ROI --

You are correct, I have also changed my viewpoint several times doing just what you mentioned, trying to prove out my point with support, etc.

I am very aware of the R&D, management,etc. that Japanese automakers spend in the US. My brother works at an R&D facility for Toyota right here in Michigan, their largest US research facility, which employs around 200 people. However, just down the road in Detroit, there are over 10,000 engineers, managers, etc. working for the Big 3. While the 10,000 engineers, managers, etc. for Toyota are in Japan. All of those Big 3 engineers, managers, etc. are helped when someone buys a domestic vehicle, they in turn pour their money back into the US economy, it is good for everyone. That is my first-hand account.

wanzman --

Full disclosure - I have been living through a single-state (MI) depression. You do not want to see the rest of the nation go through what we are going through right now, it is not pretty. I am standing up for the hard working people all around me that have given their lives to making good quality American vehicles. If GM and Chrysler were allowed to fail the City of Detroit would have become a disaster of humanity like no one has ever seen. Yes, I am biased, I live and work in the Detroit area, I support the Big 3.

[Jim]

Wazman, your point seems to be that you think bailouts are bad. I don't think anyone has said otherwise or is arguing against that. I'm not sure why you're arging about that at all.

I don't think anyone here thinks its a good thing that we're bailing out irresponsible companies. Nobody said otherwise.

Mark B's point was that foreign cars aren't necessarily better than American cars and buying American will help our economy more.

Jim

Jim

[Elliot]

This book sounds like it is a reconstituted work of Tom Stanley who wrote the Millionaire Next Door and The Millionaire Mind. Same kind of stuff.

[Mule Skinner]

Approximate quote: there are two ways to be rich -- acquire great wealth, or acquire few needs.

I'm trying hard to slay the needs.

[mysticaltyger]

Poor wanzman. He's right on! I don't know why he's being accused of being bitter. But then again, maybe he should be bitter about subsidizing companies that are probably going to fail anyway. That's not bitter, though. It's just a rational response to working your a$$ off and getting nothing in return.