Can one really become the 'Millionaire Next Door'?

[utrecht]

Breaking my own rule about no more postings on this, but I can't resist.

BTW, my disdain for TMND has nothing to do with sour grapes. We're retired and have a very comfortable nest egg. Some of it was frugality, some of it was periods of high income due to ... yes ... a combination of luck and hard work.

Are you willing to share more details? I'm assuming that your statement about not making close to $90K isn't total income, but individual income. So (and correct me if I'm wrong), I'll make a wild guess and assume that you each earned $65K for $130K total income. According to this calculator, that means you earned more than 85% of all households. And if you retired more than a few years ago, you were in an even higher percentile.

One of the interesting side effects of this conversation is discovering how many people think that their household income is typical when it is anything but. Perhaps that's because they rank themselves with their neighbors.

You are completely missing the point. The point is that you can save a lot of money if you have the discipline to do it and spend the time to learn how to invest it properly. Obviously its easier to save more and end up with a larger portfolio if you make more money. Just about every one of my former co-workers, who made generally the same amount as I did, complains that they don't make enough money and that there's no way to put any aside for the future. Then they get a raise, find a way to spend it and continue to complain.

Very few people would expect 2 married cops to end up as millionaires, and very few do, but most any of them could if that was really their goal instead of buying the newest car and biggest house.

 

[Fred123]

You are completely missing the point. The point is that you can save a lot of money if you have the discipline to do it and spend the time to learn how to invest it properly. Obviously its easier to save more and end up with a larger portfolio if you make more money. Just about every one of my former co-workers, who made generally the same amount as I did, complains that they don't make enough money and that there's no way to put any aside for the future. Then they get a raise, find a way to spend it and continue to complain.

Very few people would expect 2 married cops to end up as millionaires, and very few do, but most any of them could if that was really their goal instead of buying the newest car and biggest house.

No I'm not missing the point. You can save a lot of money (if by a lot of money you mean levels equivalent to TMND's 1 million in '96 which would be 1.5M now) if you have relatively high wages AND you are frugal AND you have a bit of luck (no disabling chronic health problems, for instance). As another poster said, frugality is necessary but not sufficient. Something that should be remembered by all of those who pat themselves on the back for accumulating a decent amount of wealth.

But, 'nuff said.

 

[CardsFan]

Very few people would expect 2 married cops to end up as millionaires, and very few do, but most any of them could if that was really their goal instead of buying the newest car and biggest house.

+1
Have we circled all the way back to LBYM?
Not everyone can save a million. But most everyone can save. Even a little helps, and multiplies over a full working career. The sacrifices don't need to be large. You can still have fun. Just pay yourself first!!

 

[akrono]

When I read the posts from UTRECHT it struck me as something that I could have written. It exactly mirrors my situation and opinion. My wife and I are also police officers who earned an average wage here in Ohio and have always lived beneath our means while saving and investing through 457 plans, IRA's and our pension fund DROP program. I am now retired and my wife will work for two more years. We have accumulated assets well into seven figures which will allow us to live through retirement in comfort.
I am firmly convinced the average person who starts saving & investing early, stays out of debt and adopts a disciplined approach to living beneath your means can indeed make it to millionaire status. While still working it always amazed me how the co-workers who cryed poor mouth were also the ones leasing new vehicles and not participating in our 457 plan available to everyone

 

[Mulligan]

Police officers make a pretty good salary, at least in urban areas. Here in Seattle, police officers make $90K/yr after 5 years. For the two of you, that would be 180k, 3x the King County median of 60k household income. And that doesn't include overtime. I'm still waiting for an example of someone with near median income who accumulated $1M without a significant amount of investing luck.

My dad has a million in investable assets. He was broke at age 43 after divorcing my mother. He never made more than 50k his entire life and that was way late in his career through additional side gigs. His job he retired from in mid 90s made him about $11 an hour, and he now gets a $600 month no cola pension. Being frugal, working side jobs, and the compounding of time got him there in the past few years. He is about 80 now. And he isn't going to spend any of it now either. It's his favorite hobby to look at his investment account every day.


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[harley]

My dad has a million in investable assets. He was broke at age 43 after divorcing my mother. He never made more than 50k his entire life and that was way late in his career through additional side gigs. His job he retired from in mid 90s made him about $11 an hour, and he now gets a $600 month no cola pension. Being frugal, working side jobs, and the compounding of time got him there in the past few years. He is about 80 now. And he isn't going to spend any of it now either. It's his favorite hobby to look at his investment account every day.

Good job, Mulligan. You win. It can be done. Conversation and thread over.

 

[brewer12345]

Wow, over 150 posts of acrimony. Ever heard of "agreeing to disagree?"

 

[Mulligan]

Good job, Mulligan. You win. It can be done. Conversation and thread over.

Ya he made it Harley, but it certainly isn't the path to early retirement since he was in his 70s when he got there! . Living in a rural low cost area also helped him too, I might add.


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[HFWR]

Are we sure we all read the same book? I read TMND years ago, so the minutiae is long gone from my memory, and I don't intend to read it again. But since when do we take 100% of any book as "gospel".

Hell, even Rich Dad, Poor Dad has a pearl or two of wisdom.


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[Andre1969]

OK, you tickled my curiosity, so I had to click on the link to see the car, and the woman too, of course. And as the photo caption says, an overpriced luxury car does not impress me. As for the woman, well, she's too young and too high maintenance for me, so impressive or not, I would only look, as I always do.

A car like that could bankrupt you pretty quickly. So could the woman. When you get to that price point, I think most people lease them. That way, by the time they become too much trouble, they're no longer your problem.

 

[AnIntentionalRoad]

You all have some malfunctioning troll RADAR.

Someone take this thread out back and shoot it.

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[haha]

Wow, over 150 posts of acrimony. Ever heard of "agreeing to disagree?"

Well, someone who claims it cannot be done is easily refuted, as Fred has been, by several posters' personal experience. The cherry on top is obviously Mulligan's Dad. If this is a controversy, it has been laid to rest with the yeas winning.

Any claims to the contrary are now plainly trolling.

Ha

 

[razztazz]

Well, someone who claims it cannot be done is easily refuted, as Fred has been, by several posters' personal experience.

Who said it couldn't be done?

 

[Mulligan]

Well, someone who claims it cannot be done is easily refuted, as Fred has been, by several posters' personal experience. The cherry on top is obviously Mulligan's Dad. If this is a controversy, it has been laid to rest with the yeas winning.

Any claims to the contrary are now plainly trolling.

Ha

It definitely happened, Ha, but at a price I wouldn't have paid. Of course my Dad would disagree though. LBYM ingrained habits don't disappear after you have "made it". He has everything he wants paid off in cash and all that investment money, but still to this day saves $1000 a month from their SS and small pension. About 20% of his LBYM rubbed off on me. I wish 50% had, but certainly not 100%!


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[daylatedollarshort]

You all have some malfunctioning troll RADAR.

You are probably right.

However, I personally got a lot out of TMND and I think it might help others as much as it helped me. So I am paying it forward by trying to keep people interested in the book. I wish my own kids would read it!

 

[NW-Bound]

I personally do not think anyone was trolling here. The difference between arguments was mostly semantic.

Many posters here who brag about having million(s) and retiring in their 40s and 50s indeed have higher incomes than average, and may have stock options to boot. It is impossible for someone making $50K/yr to save and invest to get $1M to retire early, unless he bets on the right stock like Apple or Intel when the companies are still in infancy.

There are millionaires with modest income like Mulligan's dad, geezers who get their million after saving and working their whole life, and underspend their SS and pension too, for crying out loud. They are not the young millionaires who goof off early as people here are doing or aspiring to do.

No point in arguing if people are talking about different things.

 

[Sunset]

A MND may not be impressed by the car, but it is hard not to be impressed with the woman in white pants standing next to it. Maybe she'd like a ride in the MNDs F-150 out to a barbeque at his 60 year old suburban ranch?

Sure, maybe.

Ha

The implication is with a woman like that, one will definitely never become MND

 

[Sunset]

Never got stock options, did get some bonuses at one job, it was a total $1,500 per yr.
Whoopie Doo.

No Serverence packages either from anywhere, no golden handshakes for me
Didn't buy APPL, GOOGLE, darn it all....

Was willing to move to new states for a better job, repeatedly...
Worked 80 hrs a week when opportunity came, "make hay when the sun shines".
Always pay my bills so I don't pay interest, forgot once on a single CC and am still pissed at myself for that !

No Pensions either, so I knew I had to save for myself.

Happy I can FIRE as MND considering I was homeless mid-life.
Sure its luck, just as today I was lucky to not get hit by a meteorite

 

[Gumby]

... today I was lucky to not get hit by a meteorite

The day's not over yet.

 

[NW-Bound]

It is possible to survive a direct hit by a small meteorite, I think, given that many are really small. The size of a bullet, perhaps?

REWahoo's oft-mentioned asteroid, now that's a life-changer (life-ender?) , and no direct hit is needed.

 

[Fred123]

Never got stock options, did get some bonuses at one job, it was a total $1,500 per yr.
Whoopie Doo.

No Serverence packages either from anywhere, no golden handshakes for me
Didn't buy APPL, GOOGLE, darn it all....

Was willing to move to new states for a better job, repeatedly...
Worked 80 hrs a week when opportunity came, "make hay when the sun shines".
Always pay my bills so I don't pay interest, forgot once on a single CC and am still pissed at myself for that !

No Pensions either, so I knew I had to save for myself.

Happy I can FIRE as MND considering I was homeless mid-life.
Sure its luck, just as today I was lucky to not get hit by a meteorite

"The plural of anecdote is not data."

 

[brewer12345]

Well, someone who claims it cannot be done is easily refuted, as Fred has been, by several posters' personal experience. The cherry on top is obviously Mulligan's Dad. If this is a controversy, it has been laid to rest with the yeas winning.

Any claims to the contrary are now plainly trolling.

Ha

Mostly I think that after 150+ posts the relevant question is, "Who gives a squink?"

 

[clifp]

We know a family who made millions from a start up but didn't have a LBYM lifestyle and the money is all gone. It just went the way of lottery winners.

TMND may not be a complete picture of millionaires, but if you draw a Venn diagram of sets of millionaires from the book and people who never were millionaires, there are insights to be gleaned, survivorship bias or not. The traits the TMNDs all had in common were living below their means (whatever their means were) and being the Joneses, not trying to keep up with them. This doesn't mean everyone who lives below their means will become a millionaire or stay one, but it is hard to do without those particular traits. And the surveys of jobs or businesses owned by millionires was interesting to me. It does seem to take a relatively high income to become a millionaire. There were not a lot of low wage jobs listed as occupations, despite the news stories of janitors leaving endowment funds.

We take it for granted now, but at the time the book came out most people didn't realize the inverse relationship between purchases of luxury items and consumer goods could have to savings and net worth. The old image of a millionaire was Thurstan Howell, III, not a rice farmer or scrap metal dealer.

I think you hit on the head. LBYM is necessary but not sufficient condition to become a millionaire for most people. That piece of insight seems blindly obvious to most of us, but it isn't to the general population, and wasn't at all obvious back 20 years ago.

I need to look and act successful to be successful was a guiding principal for plenty of books/magazines in the 60s-90s. E.g. Dress for success, the whole Playboy, GQ, Esquire lifestyle.

One of the first things in Better Call Saul, that the sleazy lawyers does when he get some money, is spent most of it on expensive custom made suit while inventing excuse why his car is a piece of crap. There is a plenty of people who thing that is intelligence thing to do if you get a windfall.

 

[clifp]

"The plural of anecdote is not data."

We have 28K members on the forum. IIRC last poll had about 1/3 were millionaire, and the number would be higher if we included home equity. Now you can argue the number should be 1.5 million and the poll is self-selecting.

Certainly the average household family income is above 50K, but there hundreds if not thousand of members on the forum, who have become millionaire where nobody in the family made over $100K a year.

Fred, at what point would this become data?

 

[Gumby]

It appears we cross-posted, so I'm reposting the edit to my last post

Upon reflection, I think you're entitled to a better answer than that. So let's approach it this way. The Census Bureau says that the median household income in 2013 was $51,939 (source -- http://www.census.gov/content/dam/Ce...mo/p60-249.pdf). Now, let's assume that the household really buckles down and saves 10% of their income, which would be savings of approximately $5194 per year or $433 per month. Let's assume that they earn a 4% real return on their investments. Using this calculator Savings Calculator we see that after 40 years (say, ages 22-62) of saving, they will have amassed only $511,789. They would either need to save 20% of their income to become millionaires, or earn 6.6% in real returns to amass a million, or some combination of greater savings and higher return (15% savings and 5.1% real return would work). It would indeed be difficult, but maybe possible for a few.

To further flesh out this calculation, the annualized rate of return for Vanguard Wellington since its inception in 1929 has been about 8.28% (source Vanguard Wellington? Fund Investor Shares - NYTimes.com ). Over that period, inflation, as measured by the CPI deflator, has been running at 3.07% (source http://www.bls.gov/cpi/cpid1501.pdf), meaning that our hypothetical median household simply buying VWELX could expect a real return of approximately 5.2%, and that they therefore would need to save 14.4% of their income to hit a million at 62. Around here, saving that much of a $52k income would be quite difficult. In fact, the United Way recently conducted a study of ALICE households in Connecticut (Asset Limited, Income Constrained, Employed) and determined that a basic survival budget for a family of 4 here is $64,689 annually. (source http://alice.ctunitedway.org/files/2014/11/14UW-ALICE-Report_CT.pdf)