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November 20, 2009


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Like the millionaire next door, it's all so true! I often go a couple streets over in my neighborhood to look at "former" $1M+ homes, they aren't $1M~ homes anymore but, the $1K+ a month (!) property tax bill exists....being a multi-millionaire myself, I can't imagine it all, I drive a '03 Mazda, DO NOT have Cable TV, my home is about $200k+ in that VERY nice neighborhood, I often saved $100K+ a YEAR when making $200-500K income, so: I retired at 47 and live GREAT on $50K~ a year. And don't work!No debts, no worries and no need to stive to stay alive. Those who rather consume, get the stress associiated with it!

Really like #4.

I know a few MDs and even more JDs that are barely staying afloat. Guess they incorrectly assumed their education also gave them a license to spend.

I loved the statistic about boat ownership... I've read that millionaires tend to rent boats when they want to use them. It makes sense; it costs less and is less work to rent than own unless you plan to use it all the time!

-Rick Francis

This is an interesting piece. But remember, $1M is not that much anymore. Curious to see how these metrics would change if the person had a $5 or $10 million net worth.

What constitutes a millionaire? Is it net worth? Is it cash flow? I think most people think of millionaires as those with incomes exceeding 1 mil a yea and not necessarily a calculation of net worth. I'm sure these would change dramatically depending on how a millionaire is classified.

Travis --

It's net worth. Cash flow of $1 million would be a LOT harder to come by (I'm guessing) -- assuming you mean cash flow = income less expenses.

"There are currently more than 350,000 millionaire educators (working or retired teachers or professors)--a profession that is far better at transforming income into true wealth than doctors or lawyers "

Three points on this:

* I think others have already pointed out the problems with going from "educators tend to have more net worth than others at their income level" to "educators transform income into true wealth," if "true wealth" is meant to mean a significant amount of money (and it's hard to imagine what else it's supposed to be in a book about being a millionaire). I haven't read the book myself, but if that's really what it's doing, the author is not someone I would rely on to tie my shoelaces.

* Lumping all educators together is tricky. If you are counting, for instance, professors at medical or business or law schools, many of them are also involved in practice or research, which can be quite lucrative with some luck. Such people are seeing incomes multiples, sometimes many multiples, of that of your average elementary school teacher. (For instance, in 2005, the average salary for a male faculty member at the University of Michigan was $179,296, and I don't think that covers money earned privately, though I'm not sure:

* But, even if the millionaire group within educators is dominated by non-professors (which I doubt, but I don't know)...what else separates educators from, say, doctors or lawyers? It's a heavily unionized profession with great benefits. I don't think that's a coincidence.

(Sorry, that should have been male faculty member at the University of Michigan Medical School.)

They still sell flowbees?

Hmm, I correlate more closely to this list than Nick Cage.

People still wear watches?! Really?!

Would you say you recommend this book? It sounds a lot like a rehash of "The Millionaire Next Door"

So most millionaires have bad haircuts, fail to enjoy finer things in life, and wear cheap cloths. Sign me up for this lifestyle! Sounds like a hoot.

Next time I hear our teachers are under paid, I am going to quote that stat.

This is a great post. Thank you. It is apparent that the true nature of millionaires is different from what is portrayed on the television. The millionaire achievement is merely the reflection of a mindset of wealth creation as defined by adding or creating value, investing in oneself, and most importantly, believing that there is unlimited abundance in the world that is fully accessible to you.

RQ --

Much of it is a re-hash. But I still enjoyed it. So I guess I'd recommend it for people who want "more of the same."

Tyler --

Yep. Just like most poor people spend $100 on haircuts that look no better than do-it-yourselfers, spend money on the "finer things in life" only to find out they aren't so fine after all, and buy expensive clothes that look no better than something from Walmart.

See, I can take any point and look at it in a twisted, negative way too. :-)

My comments were more tongue in cheek Friday fun vs ‘negative’. But I’ll respond anyways. I pay a little more for my haircuts ($28), but I am not a looker and need all the help I can get. I do wear custom made suits and dress shirts mainly because I can buy them for far less than anything you can buy ready made. If you think Walmart cloths and quality (generally more expensive) clothing look the same you are kidding yourself. Being put together can be a major investment in your career and it shouldn’t be discounted out of hand. Now I am sure someone here will bring up Buffett and his Sears cloths- that is part of brand Buffett. Pay attention to the details in life because they make all the difference. Some of the sales of $10 wine directly benefits me, so keep buying! I still stand behind my teacher comment- my mother is a teacher.

Sometimes I feel like something is missed in these stats and general discussions: This is not a dress rehearsal. There needs to be balance. Living like a pauper, but having a ton of money accomplishes nothing. The guy who gets the $10 haircut might drive a bmw or like a bottle of wine that costs $30. The pure stats can miss these trade offs. My intention as always is to merely spur discussion.

I enjoy this site and find it worth commenting.

Buffett and his Sears clothes ;)

I think all those things apply to me except that I"m not a teacher.

I'm guessing that the key reasons teachers tend to do better is good job security and benefits. Especially professors who have both relatively high salaries and good job security. Being a teacher certainly doesn't make you smart with money. But having a very secure job makes it a lot easier to get ahead financially.

I like earning a good income, living well, and still saving plenty. Finding that balance is great and still achievable with good job.

FMF - Are you a millionaire yet though?

I think that a lot of one's habits are formed early in life so it no doubt makes a difference when you first became a millionaire.

Leaving out my California real estate, my investment portfolio went over $1M in 1997 at the age of 63.
I am real frugal, some might justifiably say "Cheap".
I have a Seiko titanium self winding watch bought online and I love it - engineers love titanium.
I don't own a suit - I got sick of wearing them at work and gave them to the Goodwill when I retired.
My wife decided where I have my hair done and makes an appointment when it gets too long - it's a beauty shop - but the owner is a guy and that's who I have - I pay $30 (tip incl) and that also includes having my full beard trimmed - I am often mistaken for Kenny Rogers.
I don't have a boat but I do have a condo at the beach.
Our house wine is Two Buck Chuck from Trader Joe's but I have just discovered a better one from Australia, called "Down Under" and it's only $3 so I am thinking of splurging.
I drive a 'black opal' 1991 Mercedes 560SEL.
One quirk I have is that I fell in love with expensive Coogi and Tundra sweaters. My wife bought me the first one, a Tundra, and before you know it I added another 25, purchased on eBay at bargain prices. I would have more but our walk-in closet's full and If I spill over into her space I might well find them sitting on the front porch.

Love the stat on educators vs. doctors & lawyers; although I imagine that's also in part because people's expectations are so drastically different on how teachers vs. doctors & lawyers should appear. (Probably lots more peer pressure in what's viewed by many as "rich" professions, essentially.)

Financial Samurai,

I'm quite sure FMF is over $1M in net worth already. In one comment FMF mentioned that his house was fully owned at less than 15% of his net worth. Safe to guess his house is worth more than $150K and therefore is a millionaire. I would estimate about $1.4 - $1.6 M.

FMF- if this is too much to say please feel free to delete this.


I do my best to skimp on many things so that I don't feel so bad when splurging on a few. I think this post is full of great advice. Thanks!

I match on some a different a others. Here is my list:

- I drive a used Mercedes E350 as I got a great deal that wasn't much different in price to a Toyota (bought from a company eliminating its fleet cars). I thought about turning around and selling it for a profit, but I love driving the car.

- I spend around $18 (including tip) for a haircut.

- I don't drink alcohol

- I work a professional job

- I paid $350 for my last suit and have never even come close to spending $1000 on a suit

- I do not own a second home

- I owned a small ski boat at one point, but no longer have a boat

- My home is in the middle of the price range (about $600K). We may be moving and am looking to downsize to about $450K (which we will pay cash). Just like FMF, I am looking to buy the next one at a great price or I will not buy.

- I wear a Seiko watch. This one and the previous Seiko have not been great. Next time I will look for another brand.

- Yes on charitable giving


You are an educator and this blog proves it.

Let's see where I stand:
I own a Scion xA for personal use and drive a pickup provided by the company for work.
Like FMF I cut my own hair, #4 on top and #2 on the sides. I've spent upwards of $50 previously for a style that "will work" and it never did. If someone mentions that I'm having a bad hair day, I explain that I'm having a bad hair life.
I drink beer, usually Sierra Nevada PA or Sam Adams' Boston Lager.
I work as a blue collar technician, roughly earning $50k a year.
I own two suits (funeral and wedding) and cannot for the life of me remember what I paid for either.
I don't own a second home.
I own two boats. A Necky Looksha IV and a Walden Paddler.
Thanks to California's foreclosure rate, Zillow says my home is worth $79k.
At work I wear Red Wing Boots, at home it's either Kmart sneakers or Teva sandals.
I own a Seiko, given to me by my company for 10 years of service. I rarely wear it. At work I have a $15 belt loop watch that I bought at Radio Shack. It's has a compass (wooo hooo).
I don't give enough to charity and I know it.

My last net worth calculation put me a third of the way to millionaire status.
I'm happy, healthy and a little over two years from total debt freedom.

No, they don't make Flo-Bees anymore. Nineteen dollar Conair, #6 on top, #4 on sides, once a month...

Here's how we stand:

•We own a Toyota and a Chevy.

•Husband pays $15 for his haircut. I have to pay around $20 for a 2-3 inch trim every 6 months.

•We both enjoy a $12 bottle of Mondoro Asti Spumante.

•Hubby is a teacher and I'm a cubicle monkey for a car dealership software company.

•His suit is 10 years old and cost less than $200. My business suit is 5 years old and cost $150.

•We don't own a second home, but we do want to buy a rental property in the next 1-3 years.

•We don't own a boat and I don't want to (although I've seen my husband eyeball a few...).

•Our house is worth around $130,000.

•Our favorite clothing stores are Kohl's and Walmart, but I only shop for clothes once a year or two...

•Hubby wears a Timex and I wear a Casio.

•We only make cash donations of about 5% of our income, but we are also foster parents for Pughearts and I work the Houston SPCA telethon every year.

We currently only have a net worth of about $140,000 including our house or $85,000 without it at age 26...but we should hit the million mark no later than age 40.

Where in California is there a home that is only worth $79,000?
That low of a price disappeared about 40 years ago, you cannot even buy a lot for that price.

Since no Docs have stepped up to the plate, here goes:

Docs make above average income, so building wealth "should" be easier.

Dr. Stanley's first book stressed very little correlation with income and saving.

The Doc Parking lot yesterday consisted of a new Mercedes sports car-don't know the model cause I don't pay attention, Lexus sports car, new Camaro, almost didn't park my 10 year old paid for truck next to them, for fear of bringing down property values...

Don't wear scrubs-don't you know ties carry MRSA and H1N1-my scrubs cost about 30 bucks.

My CPA/Financial Adviser's (my brother and my son) say most Doc's financial IQ is pretty low.

My second career-but no I haven't quit my day job-is teaching nurses about personal finance.

Great discussion.

Sorry for the typo above- fourth line should read-don't wear "suits".

Old Limey,
San Joaquin County (particularly Stockton) is the heart of the nation's foreclosure meltdown.
Using zillow dot com, with a zip of 95207 there are 329 sub-100k homes for sale. Care to invest? I know a couple of agents I can put you in touch with.
Scary, SJCo also boasts a 16% unemployment rate.
The foreclosure and unemployment rates may explain why I have 24 mo in Emergency funds and am paying my debt off as quickly as I can without diving into a total miser lifestyle.

OK, I am not a millionaire at least not unless I include the value of my paid off home. In terms of financial assets it's around 750K, divided almost equally between retirement and taxable. I am 50. I've never thought of myself as frugal, but then until I started to read these blogs I equated frugal with cheap. I think I am cheap at some things, I spend more money on other things.

• I drive a Honda Civic. Bought new, for cash, 3 years ago.

• I used to pay $45 for a haircut and $42 for color; but my area is very expensive. Last couple of time I went to a more expensive place simply because I had no time (I am taking care of a relative with cancer) and it was closer.

• I like sweet wine, so I usually pay $10-15 for a bottle. Once a friend brought me a $60 bottle and I didn't like it -- too dry.

• I am a software engineer.

• I'd never pay $1,000 for a suit. Double digits or a little over $100 is more likely.

• Being single, I cannot even handle one house. I own a townhouse style condo. But I live in an expensive area.

• What would I do with a boat?

• My townhouse is worth around 400K. I bought it in the 90s for 180K though.

• I found some really nice shoes in TJ Maxx, even designer ones' for double digits. Ellen Tracy's all-leather shoes for $29; Tahari - for $59. My favorite clothing store is Ann Taylor (sale items); I also like Annie Sez, Lohemanns and TJ Maxx. Can you believe it - I got a really nice skirt at Ann Taylor for $9 recently (nope, I didn't miss a zero).

• Seiko is the last watch I bought. I do have one fancy watch: Longines, gold. I got it for free: this was one of the items I could select as a gift for my 25th anniversary at my employer. I looked up its value before I choose it as a gift - around $1500. The value wasn't taxable because it was considered a gift rather than an award so it was really free. Keep it in my safe deposit box.... Take out every now and then when I go to the Metropolitan opera.

Far from being a millionaire, but most of my millionaire relatives live like this. The article doesn't talk about the trade-offs though: an uncle of mine doesn't own a car since he gets an exxy Merc from work; he gets relatively cheap haircuts; he likes nice watches (think Rado, but not very very high end).

I like how this book dispels the notion that millionaires party and spend like no tomorrow. Most average millionaires (I think) are more focused on their work than on their wealth and flaunting thereof.

You're right of course.
Years ago I took a couple of real estate classes at a J.C. and I remember the instructor's first phrase relating to property values, it was, "Location, Location, Location." It's become even more important in this recession.

Stockton is 80+ miles away from us, but we know of people that sold their old, tiny, 2br. homes in the Bay Area and suffered the long commute in order to buy a brand new, monster home in Stockton and nearby cities for about the same price. The newspaper carried stories of people that did that, some also over improved the new home by adding pools, putting greens, brick BBQ's etc. Everything was fine until their jobs disappeared, their loans went under water, and they had to walk away from their mortgages. The sad thing is that when you look at some of those zip codes you see the huge percentage of homes/for sale in some sub-divisions. Some of the families in the articles also had to move in with relatives. Not many working people are like you with a two year emergency fund and getting out of debt fast.

You look like a survivor and have good money sense. I think you are well on your way to success. There's a guy in our hiking group that was a blue collar technician at Lockheed, he started buying rental properties years ago when prices were reasonable and then after he retired, started unloading them one per year to minimize the capital gains taxes. He has two homes left (one he lives in) and about $800K in the market, most of it being managed by an advisor, recommended through the company where he does his business - he seems very happy with the results.

Mike Hunt - Good stuff. It's too bad FMF doesn't really interact with his readers as much anymore. It would be more fun if so.

Mike Hunt - I think you are spot on. Did the same calculation myself the other day.

Financial Samurai - I'm not sure I agree with that. I can only speak for myself, but he is very good in responding to e-mails. As for comments, many of the recent discussions have flowed very well on their own without need of a nudge from an outside moderator.

I am 40 and wish I had accessed the internet 'back then' (age 24 or so) to guide us with our biggest financial decisions. Too many mistakes that feel impossible to rectify, i.e. $35,000 student loans, $24,000 new car purchase, major renovations to a small brick 1965 ranch house (which I loved) only to sell way below market price 5 years after purchasing (we were dumb and had no one wiser to guide us).

Myself, hubs, and 3 kids now living in a 2600 sq. ft. ($315,000) house with large payments, lost quite a bit of equity, long commute, lost money in ret. funds, only one spouse working, $16,000 left to pay on auto, private schooling. Good thing I am frugal, or we would definitely be in a heap of trouble; Most of these mistakes were caused by my DH, who loves new, expensive things (excluding clothes). If only I could've talked some sense into him...I tried but he wants what he wants, he 'deserves' it - LOL.

I thank all of you (FMF and those who have commented) for the inspiration to reach for fin. independence.

I like Dr. Stanley's books, but I confess I do think Tyler has a point. What's the point of being a millionaire if you get $15 haircuts, don't own a second home, etc.? Based on "The Millionaire Next Door," these guys also work full-time on their own businesses, so it's not like they benefit from additional spare time. What benefit are they getting from this money?

Also, FMF, re: "most poor people spend $100 on haircuts... spend money on the "finer things in life"... [and] buy expensive clothes." Are you sure you know what "poor" means? Because jeez, what a callous statement to make.

I don't own a watch. I have a cell phone

Financial Samurai --

I comment when I think I have something to add. In fact, I start every discussion with several comments -- they're called posts. And as far as responding, I generally take all weekend (from Friday at 5 pm to Sunday afternoon) off to spend with my family. So be careful saying I don't interact when you leave a comment Friday night and expect me to be glued to the web and respond.

Mike and Aron --

You two are smart cookies. :-)

imelda --

My response was a tongue-in-cheek one to Tyler because he made some assumptions that are clearly not warranted (such as simply because people don't spend wildly that they are not happy.) You make the same conclusion. Where do you get your facts to back up this sort of finding?

I am a multi-millionaire and adding another million every 4 years, my wife and I lead a life that is in equilibrium. We are about as happy as two people can possibly be and have been married for 53 years. We do not go without anything that we need, on the other hand, our upbringing in the England of WWII shaped our personalities and neither of us get any satisfaction from spending money just for the sake of it. It doesn't matter what the item is or how much the item costs, if we decide to buy it then we both want VALUE for MONEY. That's why my wife still clips coupons, I do my own gardening, fix everything in the house if I possibly can, and we get no pleasure whatsoever from going to fancy 5 star restaurants and paying through the nose for food and wine. There is no restaurant meal that compares with one of my wife's home cooked meals, eaten in far nicer surroundings than most restaurants. We eat out twice/week just to give my wife a break from the work of planning, shopping for, and preparing a delicious meal. Neither of us replace things just because we have had them a long time and there may be a better product available. If an item is functioning perfectly and we are happy with it we don't junk it just because we see an ad on TV or in the newspaper promoting the latest version of it. She does spend a fair amount of her own money on her appearance but I am all in favor of that, and encourage it, because I want her to look younger, better dressed, and more attractive than 98% of the women of her age that we encounter. We have very different personalities - my wife has found the joy of giving whereas I have not. She has an outgoing personality, loves people and makes friends wherever she goes, I do not.

We are finding retirement to be truly "The Golden Years". The years raising our family and being busy in our careers were great but as you get older and your energy level subsides there is nothing quite like the peace and contentment of retirement. We get some excitement when we go on international vacations, we fly business class and always purchase the best accomodations available but are always very glad to return again to the beautiful home and garden that we love and to resume our current lifestyle.

The primary benefit of having far more money than you need is not in lavish spending but in providing great security in a world where bad things can happen without warning to anyone, at any age, at any time.

I really think the 2 homes thing is out of line when the author decided for himself that he wouldn't include home's worth in the net worth he calculated. Of course if you take away the net worth of people home's when they own two you are going to have fewer 'millionaires' who own two homes. That's kind of lame.

I never knew people derived such pleasure from haircuts (such that people might think living with a $10 haircut is somehow the epitome of living too frugally). I've never thought twice about it and couldn't be happier, where hair on my head is concerned.

I think the wine thing is really a great analogy for all of this. I'll bet the percentage of people that can distinguish a $10 bottle of wine from a $100 bottle of wine is in the less than .01% range. Yet, people still waste money on the $100 bottle to 'live the high life'. It's all on their heads--and this applies to a great many things (TVs, automobiles, hotels, some clothing, etc.).

Great topic.
= i drive a 1992 benz that I bought new over 17 years ago.( i still enjoy driving it every day, it has over 285k miles)
=I go to my local barber for $16 haircuts (incl tips)
=I currently substitute teach and enjoy it.
=my wife loves AnnTaylor
=I enjoy wearing nice clothes, they tend to last longer, and look better than walmart quality clothes
= I own 5 suits, the most I've paid for a suit was $700ish
=I own 7 pairs of Ferragamos, I love those shoes ,they are great looking and last forever.
=I own 1 seiko, 1 pulsar tankwatch , and an ironman timex
= i did own a ski condo, but in hindsight, I should of never bought it
= Ive never owned a boat
=Its rare for me to spend over $8 for a bottle of wine

At the height of my networth, I owned 35 rental units and had a net worth of just over $2.5million.
currently my networth is less than $150k . I really dont feel any different, and what i miss the most about having the higher networh is ...well...nothing really. This economic recession hit me hard, but I will recover. I did it once, I know I can do it again, but this time I will try to do it doing things I love.

Old Limely, I have read many of your comments and would just like to say how inspired I am by them. I wish I knew you personally so I could learn even more from you.

@ Tyler....It's "clothEs", not "cloths".

Teachers = millionaires because of ever rising public COLA pensions, with half in my district "double-dipping" the system while everyone has to support their shenanigans with ever increasing property taxes..
There was just a bust in my town's paper with a whole slew of public employees working the system by claiming disability payouts then working another public gig to exploit the taxpayer.

It's a different world.

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