Dr. Thomas Stanley's new book

[Sarah in SC]

The author of the Millionaire Next Door has a blog now, and I've really enjoyed reading his commentary, especially regarding Atlanta's bevy of luxury car dealerships, but the latest blog entry, regarding his new book that will be released in early October, had this to say:

In Stop Acting Rich: And Start Living like a Real Millionaire, I detail why so many people who are not rich hyper spend on luxuries. Often they think that collecting these expensive toys will enhance their overall satisfaction with life. But, as you will read in detail, happiness in life has little to do with what you wear, drive, eat or drink. The people with the greatest satisfaction are those who live below their means. Even during the recent peaks of income production, the residential real estate market and the bull stock market when the main survey for this book was undertaken these millionaires maintained their habits of thrift and frugality. In other words, increasing asset values did not cause the majority of wealthy people to hyperspend.

Source: Thomas J. Stanley | Official Blog

My favorite part:
But, as you will read in detail, happiness in life has little to do with what you wear, drive, eat or drink. The people with the greatest satisfaction are those who live below their means.

 

[growing_older]

I really liked the Millionaire Next Door. I had no idea he had a blog. Thanks for the pointer, this stuff looks like wonderful reading.

 

[ziggy29]

In Stop Acting Rich: And Start Living like a Real Millionaire, I detail why so many people who are not rich hyper spend on luxuries. Often they think that collecting these expensive toys will enhance their overall satisfaction with life. But, as you will read in detail, happiness in life has little to do with what you wear, drive, eat or drink. The people with the greatest satisfaction are those who live below their means.

Oh, I believe it. I think for a while there was a feeling that even if we are not "rich," we can still spend our way into happiness. Maybe it makes some of us feel rich. Hence the rise of "affluenza" and the idea that you had to show everyone else, through the amount and value of your "stuff," that you were a success.

Until you amass a lot of debt and you lose your j*b, anyway. Or until you desperately want to retire (or downshift into a lower paying career you'd enjoy a lot more) but you can't because you still have a lot of debt and no retirement savings.

I can't speak for anyone else but I know I've become a lot happier since downsizing our lives, becoming debt free and feeling like the future is a LOT more in my own control than it used to be. That's a feeling that no amount of stuff can replicate. That's a feeling of true freedom and maximum liberty.

 

[traineeinvestor]

I really liked The Millionaire Next Door but found the follow up (The Millionaire Mind) very repetitive so I think I will wait to see a few reviews before buying Dr Stanley's latest offering.

Thanks for the link.

 

[Gumby]

My favorite part:
But, as you will read in detail, happiness in life has little to do with what you wear, drive, eat or drink. The people with the greatest satisfaction are those who live below their means.

Happiness is a fat wallet.

Thanks for the report Sarah. I too did not know he had a blog.

 

[W2R]

Even during the recent peaks of income production, the residential real estate market and the bull stock market when the main survey for this book was undertaken these millionaires maintained their habits of thrift and frugality. In other words, increasing asset values did not cause the majority of wealthy people to hyperspend.

Stanley is thinking like an ER Forum member. Many of us here on the ER forum are LBYM millionaires. Even more of us are millionaires since the market recovery. Our habits of thrift and frugality are all part of this for many of us.

Millionaires who spend substantially more than their income can lose their millions, even with a very large income.

 

[IndependentlyPoor]

Here, here! Allow me to chime in with hearty agreement.

I grew up in a blue-collar family in a hick town. After college*, I spent most of my young adulthood trying to prove that I was no longer blue-collar or a hick. That meant buying all the things that Madison Avenue said I had to have: cool car, cool house, cool clothes. I was going to include some anecdotes here, but they are too embarrassing and would ruin my LBYM image.

Now I look back on that time as my nouveau-middle-class years.

Contentment didn't come until I rejected that acquisitive lifestyle and stepped off the treadmill, stopped being an over-achiever and cooled it.

* That's another story. I d@mned near killed myself trying to prove how smart I was by going to the toughest school I could get into and then majoring in physics. Sheesh!

Hmmm. All of this sounds a little self-righteous upon re-reading, but I don't know how to tone it down. Anyway, it is kind of fun to look back on the foibles of our youths.

 

[ziggy29]

Stanley is thinking like an ER Forum member. Many of us here on the ER forum are LBYM millionaires. Even more of us are millionaires since the market recovery. Our habits of thrift and frugality are all part of this for many of us.

Millionaires who spend substantially more than their income can lose their millions, even with a very large income.

I'd also add that I doubt many self-made millionaires got that way by blowing huge wads of cash on consumables and depreciating assets.

 

[Sarah in SC]

Here's a quote from Dr. Stanley's blog today, more preaching to the choir, but at least this will give you something to quote the next time someone asks you why you don't own x or y or z.

The reason why so many homeowners today are having a difficult time making ends meet goes way beyond merely mortgage payments. When you trade up to a more expensive home, there is pressure for you to spend more on every conceivable product and service. Nothing has a greater impact on your wealth and your consumption than your choice of house and neighborhood. If you live in a pricey home in an exclusive community, you will spend more than you should and your ability to save and build wealth will be compromised.

My research has found that most people who live in million dollar homes are not millionaires. They may be high income producers, but, by trying to emulate the real millionaires, they are living a treadmill existence. In the U.S., there are three times more millionaires living in homes that have a market value of under $300,000 than there are living in homes valued at $1 million or more.

 

[Rustic23]

I see this in my auto purchase. I look at the models with leather interior, but always buy the one with cloth.

When I was growing up, my dad, told a story of a very wealthy friend that drove a Cadillac with black wall tires. When dad ask him why, he got this reply, '.... it don't drive any better with whitewalls!'. This man could easily afford anything he wanted.

 

[haha]

In the U.S., there are three times more millionaires living in homes that have a market value of under $300,000 than there are living in homes valued at $1 million or more.

This guy is no doubt sliced bread, but this quote means a lot less than it might appear.

If it is in fact true (after all, where are people's net worths published for his research?) it may only reflect the distribution of houses in a given area.

I am pretty sure that there are no millionaires, and really very few paupers owning and living in sub $300,000 houses in Seattle, Portland, San Francisco, or the other bay cities, Santa Barbara, or anywhere on the California coast from Marin County South to the border. For the very simple reason that there are very few houses meeting this criterion. In the city I know best, a sub $300,000 house is a hovel in a neighborhood with frequent rapes, murders and muggings. If you can find it.

One could likely make almost the same claim about the east coast starting in Portland ME, going down the Atlantic coast, out and around Long Island onto New Jersey. My geography fades farther south.

I think if you throw out the west coast, and throw out the coastal Northeast (and while we are at it better throw out suburban Chicago) we have thrown out quite a few people. Surely all of them are not paupers?

Ha

 

[Sarah in SC]

Ha, we gotta get you to move out of the high rent district. Seriously!

I grew up on an island ranked 91st on the Forbes list of most expensive zip codes (not when I lived there, of course) and I know good and well I can get a very nice house in the same county for under $300k, no hovels!

I see this as reality in my home state. I would never entertain the notion of living somewhere like you do, where housing is unaffordable. That is no idea of fun to me, in retirement or still working.

And hey, who's talking paupers? His research is millionaires.

 

[haha]

Ha, we gotta get you to move out of the high rent district. Seriously!

I grew up on an island ranked 91st on the Forbes list of most expensive zip codes (not when I lived there, of course) and I know good and well I can get a very nice house in the same county for under $300k, no hovels!

I see this as reality in my home state. I would never entertain the notion of living somewhere like you do, where housing is unaffordable. That is no idea of fun to me, in retirement or still working.

And hey, who's talking paupers? His research is millionaires.

Sarah, don't about half the people on this board live on the west or east coasts or Chicago? Some of us just live where we live, even if some other place might be cheaper. Do we choose our food by what is cheapest? Our vacations? (I'll think I'll skip Copenhagan this year and go to Kansas.)

It could be that when you get away from even a long commute into the city there might be houses that wouldn't frighten you for less than $300,000. Seattle is by no means the most expensive city, just a moderately expensive one.

I try to live as cheaply as I can, but my choices must meet my needs and my tastes. Otherwise, why not just die now and end the suffering?

Ha

 

[kyounge1956]

(snip) I would never entertain the notion of living somewhere like you do, where housing is unaffordable. That is no idea of fun to me, in retirement or still working. (snip)

Well, that's you...I would never entertain the notion of living somewhere with hot, humid summers or sub-zero winters, or where there isn't a mountain (not hill) to be seen or the ocean isn't within a few hours' drive. That rules out most of the country, and the other parts it doesn't rule out are just as high-priced as here in Haha-land, if not higher. I don't think being physically miserable and financially solvent would be any more fun than being physically comfortable and financially strapped.

Fortunately I don't have to make that choice, because I moved up here years ago when prices were much lower, and I'm just glad I was able to get my foot in the door before they took off. I'd hate to want to move here from a less expensive part of the country and be unable to do it because of the high prices. That would really be miserable

 

[Sarah in SC]

Alright guys, I guess you didn't see my point. I live on the water. At the coast. With a real honest to god beach about 20 minutes away. Launch a kayak from my back yard. You know, Charleston. Lovely place, piles of tourists, yadda yadda yadda. House is worth, I dunno, in this market? Maybe a bit more than $300. Cost me $234k and change to build in 2003.

We have plenty of houses that aren't in the millions, and I think it is a pretty nice place to live (or die, if need be, Ha).

I guess I mean to say that you shouldn't discount Dr. Stanley's lifetime's work with millionaires because of your anecdotal experience living in a high priced urban area.

 

[haha]

Alright guys, I guess you didn't see my point. I live on the water. At the coast. With a real honest to god beach about 20 minutes away. Launch a kayak from my back yard. You know, Charleston. Lovely place, piles of tourists, yadda yadda yadda. House is worth, I dunno, in this market? Maybe a bit more than $300. Cost me $234k and change to build in 2003.

We have plenty of houses that aren't in the millions, and I think it is a pretty nice place to live (or die, if need be, Ha).

I guess I mean to say that you shouldn't discount Dr. Stanley's lifetime's work with millionaires because of your anecdotal experience living in a high priced urban area.

I know you live in a top flight home in a top flight location and you live a life that I couldn’t afford. Congratulations on your success!

Remember, I live in a one bedroom apartment. I think there are also really nice houses in Florida at this price, and at various locations all around the GOM.

But unless most millionaires live in the South or Midwest, Dr. Stanley is likely wrong on this one. (And maybe a lot of other points too)

A lot of writers write to an audience. It doesn't have to be correct, just appealing to a certain group. Except for some wealthy farmers, and people who own successful blue collar businesses, most all the millionaires I have known live in houses that are valued at more than $300,000. Of course almost everyone I know lives in a relatively expensive city, which is also true of at least 50% of the US population.

It is also true that almost anyone with a successful business without a lot of debt against it is a balance sheet millionaire. Many of these people might live in less expensive homes, as they can't get the cash flow out of their businesses without creating risk. But not in large West Coast or Northeast coastal cities because these houses just don't exist.

BTW, I think in my original post I said West Coast, and Northeast coastal areas. I believe I mentioned that I know nothing about anything south of New Jersey, other than metropolitan DC.

Ha

 

[audreyh1]

Whenever I read about The Millionaire Next Door, I remember a very sureal meeting we had with an accounting firm in the late 90's where we were trying to get some answers on how pending legislation would impact AMT. We were somewhat newbie millionaires. I remember the accountant getting all gushy and excited about our net worth (ick!) and telling us that "you've just GOT to read The Millionaire Next Door!!!"

I remember thinking - wait a minute! Why would we read that? We are the millionaires next door - our neighbors certainly had no idea.

But, in fact, curiosity got to me and I did end up picking up a copy and reading it. And low and behold - I found ourselves in the pages in terms of being extremely inconspicuous consumers and very LBYM and over the years we had consciously chosen not to fall into a lot of traps he outlines in his book.

Oh yes, modest home as well.

Audrey

 

[audreyh1]

Millionaires by State 2006: Millionaires by State from NETSTATE.COM

 

[harley]

In the U.S., there are three times more millionaires living in homes that have a market value of under $300,000 than there are living in homes valued at $1 million or more.

I've got to agree with Ha on this one. He can't throw out numbers like this in this forum without some attribution. Of course, if he is counting the $300K house as part of the net worth of the family, that might push a lot of people into the millionaire category. I don't know if he's right or wrong, but my instinct is that he's making up statistics, like I used to do back in high school for debates. Just throw that sucker out there, see if anybody challenges it. Media types do this all the time, and the numbers just become accepted. I would like to see facts.

 

[kyounge1956]

Alright guys, I guess you didn't see my point. I live on the water. At the coast. With a real honest to god beach about 20 minutes away. Launch a kayak from my back yard. You know, Charleston. Lovely place, piles of tourists, yadda yadda yadda. House is worth, I dunno, in this market? Maybe a bit more than $300. Cost me $234k and change to build in 2003.

We have plenty of houses that aren't in the millions, and I think it is a pretty nice place to live (or die, if need be, Ha).

I guess I mean to say that you shouldn't discount Dr. Stanley's lifetime's work with millionaires because of your anecdotal experience living in a high priced urban area.

I wasn't trying to discount Dr Stanley's point, because I really have no idea what houses cost in other parts of the country, or what sort of houses millionaires live in. Maybe he's right and maybe he's not. Given the huge variation in housing prices between different parts of the country, maybe his point would have been better made by asserting that few millionaires live in a house that is worth more than some multiple of the median house price for their area.

The point I was trying to make is that the cost of housing is only one factor, and perhaps to many people not the most important one, in deciding where to retire. You live closer to the ocean than I do. It would take me longer than 20 minutes to get to salt water (Puget Sound) and three hours or so to get to the actual ocean. Your house sounds like a beautiful place. But I just looked up the climate data for Seattle and Charleston, and your average high temperatures in the summer are between 15 and 20 degrees hotter than here—your average high in April is the same as ours in July and August, and the average low in June in Charleston is only 2 degrees cooler than our average June high here. It doesn't matter how much less houses cost in Charleston, I just can't cope with that kind of heat! After nearly thirty years in Seattle, I start to wilt if the temperature gets much past 80 degrees, so it doesn't make any sense for me to retire in a place that on the average is that hot or hotter for almost half of the year. Some people love hot weather, and it would make as little sense for them to retire in western Washington as it would for me to retire in South Carolina.

 

[Sarah in SC]

I know you live in a top flight home in a top flight location and you live a life that I couldn’t afford. Congratulations on your success!

Ha

Real nice there, sport. Real nice.

We built it ourselves. I think they called it sweat equity when I worked for Habitat. It isn't so nice, but it is ours--we own it, and that pride is what makes me feel like a success, not your twisted notion of what my life is like. Good luck to you.

 

[IndependentlyPoor]

After nearly thirty years in Seattle, I start to wilt if the temperature gets much past 80 degrees

Take my most heartfelt advice.
Never, ever, under any circumstances visit Texas between April 1 and September 30. Even March and October might be iffy for you.

 

[kyounge1956]

After nearly thirty years in Seattle, I start to wilt if the temperature gets much past 80 degrees

Take my most heartfelt advice.
Never, ever, under any circumstances visit Texas between April 1 and September 30. Even March and October might be iffy for you.

Thanks for the heads up IP. I changed planes once years ago at Dallas/Ft Worth airport and remember getting off the plane and thinking it smelled like a tropical fish store, very damp and green. I didn't see a thermometer but for sure the temperature was over 60 degrees and may well have been approaching 70. That's no big deal except that at the time, I was flying to Monroe LA to visit my parents...for Thanksgiving.

So I consider myself warned to schedule any trips I may take to the Lone Star state during the winter months. Texas in the winter might make a nice change from my own stomping grounds where the weather tends to be raw & rainy at that time of year.

 

[mountaintosea]

I have to agree with Sarah. But like anyone else here my evidence is only anecdotal. I live in California in a small cabin 11/2 hours from the beach, 1 hour from the desert and in the mountains. It's quiet for the most part. It is still possible to buy a much nicer place (than mine) here for under 300,000. I'm sure that my neighbors don't know I'm the millionaire next door. Of all my sibs I think I'm the only one. My parents live in a townhouse 1 hr. north of Santa Barbara and they are in the multi-mil range. They have been frugal their entire lives. And I don't consider the home real estate in that net worth. My sibs with the big homes are underwater so to speak. But there are plenty of places to live in Ca. for around 300,000 where one would not take their life into their hands, especially now.

 

[Khan]

Oh, I believe it. I think for a while there was a feeling that even if we are not "rich," we can still spend our way into happiness. Maybe it makes some of us feel rich. Hence the rise of "affluenza" and the idea that you had to show everyone else, through the amount and value of your "stuff," that you were a success.

Until you amass a lot of debt and you lose your j*b, anyway. Or until you desperately want to retire (or downshift into a lower paying career you'd enjoy a lot more) but you can't because you still have a lot of debt and no retirement savings.

I can't speak for anyone else but I know I've become a lot happier since downsizing our lives, becoming debt free and feeling like the future is a LOT more in my own control than it used to be. That's a feeling that no amount of stuff can replicate. That's a feeling of true freedom and maximum liberty.

I realized I could take early retirement when my spreadsheets showed I was spending less than $20K/year.