NastyWoman
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Post by NastyWoman on Mar 11, 2015 13:58:35 GMT -5
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yogiii
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Post by yogiii on Mar 11, 2015 14:05:09 GMT -5
So I shouldn't bother saving even though I'm already a quarter of the way to where I want to be? Good advice!
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ArchietheDragon
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Post by ArchietheDragon on Mar 11, 2015 14:11:43 GMT -5
The main focus of the article, Ronald Read, was NOT the ideal millionaire next door as the article claims. The millionaire next door is not about being able to amass a multimillion dollar estate on minimum wage. That is extremely hard to do and probably not part of an overall healthy existence. The millionare next door said you didn't have to have a glamorous wall street job to be a millionaire, but that most were small business owners, doctors, lawyers, other professionals.
The article is not complete crap, but it is not that great.
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HoneyBBQ
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Post by HoneyBBQ on Mar 11, 2015 14:14:11 GMT -5
I don't really agree with the article at all.
*shrug*
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beergut
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Post by beergut on Mar 11, 2015 14:30:15 GMT -5
I think many of the skeptics are justifying their lifestyle to themselves.
I heard the same, "Oh, he caught the asset bubble" excuse when Read died. I think people want to justify their own failure to get their financial life in order, and any excuse they can make to marginalize a model is ideal.
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Tiny
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Post by Tiny on Mar 11, 2015 14:30:42 GMT -5
I don't think the 'dream' is dead - nor is it dying. I think the ultimate issue is that young people (and I think I'm safe to say that young people thru out time) want 'it' NOW. Not later. Not after giving up some suff. they want it NOW.
I think people who overcome the "I want it NOW!" or maybe who can channel the "I want it NOW!" into something productive (mental/emotional/physical) eventaully do Ok and get to live some part of the "dream". The one's who cope with "I want it NOW!" by opting for the easy stuff they can get NOW! live some part of the 'dream' but for a shorter time.
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midjd
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Post by midjd on Mar 11, 2015 14:33:41 GMT -5
Apples and oranges.
And I haven't read TMND, but I think the last paragraph really mischaracterizes its message... I don't think Thomas Stanley was advocating people live "miserly" existences in their starter homes so they can die with $10M in the bank.
I see the same snark here from posters who proudly proclaim themselves to be "non YM," as if the only two choices in life are to live beyond your means or spend your days washing out baggies and driving around to find the cheapest gas.
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haapai
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Post by haapai on Mar 11, 2015 14:36:21 GMT -5
I wish it were a longer article. I've been looking for an article that talked more about Read's Fortune and this isn't it. I've yet to read a convincing analysis of how he did what he did. This article mentions that he definitely caught a good wave but I also have to wonder if an inheritance early in life played a part. (Anyone wanna post any interesting links about that? I'd welcome them.)
I haven't read Stanley's work, so I don't know how to interpret the criticism. I comes off as very snarky. I'd prefer more numbers, more facts, and just plain more.
Taleb's comment about living in one's starter home struck me in a particularly sour way. I don't think today's potential millionaire next door manages to stay in their starter house but the reason why they trade up is usually for the schools, not a nicer house.
I loved the survivor bias bit.
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justme
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Post by justme on Mar 11, 2015 14:41:56 GMT -5
All this article does is make me antsy enough so I can get my savings to a point where I'm ok with throwing half in the stock market while the other half is used for big vacations or something.
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souldoubt
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Post by souldoubt on Mar 11, 2015 14:52:49 GMT -5
I agree with Tiny. I think technology compounds the "I want it now" mentality because these days instant gratification or having damn near anything you want at your fingertips is a way of life. These days as a society we're infatuated with things being the best ever or the greatest of all time (see professional sports) because people focus too much on the present. When it comes to finances most young people don't listen as is and they're even less likely to listen to someone who will tell them a boring story of how they saved and invested for 3-4 decades to build a nice nest egg. I graduated high school in 2000 and had someone talked to me and most of my classmates about long term investing it would have put us to sleep. It would have been completely forgotten when the following 5-6 years saw the local real estate market exploded during which time some people made ridiculous money. Obviously that was followed by a major recession but talk to people who were making money during that time and like previous generations most lived like the good times would never end.
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Bonny
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Post by Bonny on Mar 11, 2015 14:53:03 GMT -5
I think it's BS too.
DH and I were not great 401k savers; started late, DH was capped to a small amount and retired at 52, I quit work at age 40, and we still have about $850k in retirement accounts. Imagine had we tried!
People want to blame the "system" and not their lack of effort.
That said there truly are folks who really do have the deck stacked against them from a health perspective and I have lots of empathy for them. But the folks I personally know who whine the system are basically lazy.
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Angel!
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Post by Angel! on Mar 11, 2015 14:57:37 GMT -5
Agree with others that it totally mischaracterizes TMND. It isn't about low-income laborers becoming millionaires. It doesn't advocate living miserly.
IMO the book simply shows that the appearance of wealth doesn't always follow wealth. That many with the huge houses & fancy cars are simply "big hat, no cattle" folks in debt up to their eyeballs. It shows that many millionaires are small-business owners living an simply middle-class lifestyle.
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beergut
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Post by beergut on Mar 11, 2015 14:59:15 GMT -5
The main focus of the article, Ronald Read, was NOT the ideal millionaire next door as the article claims. The millionaire next door is not about being able to amass a multimillion dollar estate on minimum wage. That is extremely hard to do and probably not part of an overall healthy existence. The millionare next door said you didn't have to have a glamorous wall street job to be a millionaire, but that most were small business owners, doctors, lawyers, other professionals. The article is not complete crap, but it is not that great. Actually, Stanley often points out that doctors and lawyers, high net worth individuals, are usually NOT millionaires, because they are hyper-consumers, which stunts your ability to build wealth. Stanley wasn't advocating a spartan existence, he was advocating living below your means. I think the author of this article didn't read Stanley's work, or if he did, failed to comprehend his real message. Stanley driving a Corvette is not ironic, if he bought it using earnings from wealth he made writing his books.
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milee
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Post by milee on Mar 11, 2015 15:15:12 GMT -5
Actually, Stanley often points out that doctors and lawyers, high net worth individuals, are usually NOT millionaires, because they are hyper-consumers, which stunts your ability to build wealth. Stanley wasn't advocating a spartan existence, he was advocating living below your means. I think the author of this article didn't read Stanley's work, or if he did, failed to comprehend his real message. Stanley driving a Corvette is not ironic, if he bought it using earnings from wealth he made writing his books. No joke. Among the high net worth crowd, Corvettes are considered the cheapie sports cars because they're so inexpensive. Depending on his wealth level, Stanley could easily drive a Corvette and be living well below his means... just like TMND outlines.
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Angel!
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Post by Angel! on Mar 11, 2015 15:18:13 GMT -5
I think the author of this article didn't read Stanley's work, or if he did, failed to comprehend his real message. The whole time I was reading the article I was thinking there is no way this guy read the book. I don't think you can find the 'live miserly' and 'become a millionaire on minimum wage' anywhere in that book.
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haapai
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Post by haapai on Mar 11, 2015 15:29:25 GMT -5
What I don't understand about articles about Read is the blind acceptance that he built his fortune from his earnings alone. A fairly small inheritance early in life, not necessarily from parents, seems like a better explanation. He seems to have outlived anyone who could point out that he had relatives who did quite well during Prohibition, or that he lived at home and walked to work until he married at 38, or that he repaired cars for cash, or any number of other factors that would explain his ability to sock away an amazing percentage of his apparent income.
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ArchietheDragon
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Post by ArchietheDragon on Mar 11, 2015 15:34:01 GMT -5
I recently reread TMND and my impression is that it is targeted at either people with high incomes or people who already have a pretty good net worth. Most of the sections seem to be about not getting on a consumption treadmill, the relationship between spending, taxes and NW and how not to screw up your kids with your money. Not a lot of it was how to get there. If you read between the lines he talks about most millionaire next door types working in decent paying jobs or owning small businesses. That's how you get there. Get the income first, then don't blow it all on consumer spending creep. That advice still seems pretty solid to me. However, it's not something you can do as a school janitor for life without some pretty extreme frugality. agreed, but you don't even need to read between the lines. In the introduction of his book he has 7 factors that will lead to becoming a millionaire. number 7 is "choose the right occupation" .
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souldoubt
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Post by souldoubt on Mar 11, 2015 15:34:15 GMT -5
I took it to be geared more towards younger earners but that's probably because I read it in my 20's. To me the main point it was hammering home to an almost annoying degree is that the people you see with big houses, a new car every few years, etc. aren't necessarily wealthy. I've met people like this through work who in some cases make incomes that would put them in the top 1% in the country but they're counting on that paycheck every 2 weeks just to make ends meet. Admittedly though I'm a fan of long term index investing and I kind of grouped some of those lessons with the spending lessons from TMND.
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Bonny
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Post by Bonny on Mar 11, 2015 15:42:08 GMT -5
I recently reread TMND and my impression is that it is targeted at either people with high incomes or people who already have a pretty good net worth. Most of the sections seem to be about not getting on a consumption treadmill, the relationship between spending, taxes and NW and how not to screw up your kids with your money. Not a lot of it was how to get there. If you read between the lines he talks about most millionaire next door types working in decent paying jobs or owning small businesses. That's how you get there. Get the income first, then don't blow it all on consumer spending creep. That advice still seems pretty solid to me. However, it's not something you can do as a school janitor for life without some pretty extreme frugality. I don't know. I have the strong feeling that the school janitor who lived around the corner from my folks probably had a higher net worth than my folks. Modest house, wife worked outside the home as a secretary and he had a pension. If all he did was pay off his house he'd be doing pretty well. Zillow is currently estimating his house at $680k.
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Deleted
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Post by Deleted on Mar 11, 2015 15:44:49 GMT -5
College janitors make a lot here and the kids can go to school tuition free!
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haapai
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Post by haapai on Mar 11, 2015 15:48:11 GMT -5
Actually, you might be able to do it as a school janitor if you had no housing or transportation expenses and minimal food expenses. You might even be able to do that today.
I'm also wondering why none of the articles on Read mention transaction costs. I may be getting this wrong, but I'm under the impression that brokers charged some pretty hefty fees until quite recently and to minimize transaction costs, people tended to buy and sell in lots of at least 100 as smaller lots sold at a painful discount. Was there a way of avoiding these costs by buying stock directly from the company?
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ArchietheDragon
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Post by ArchietheDragon on Mar 11, 2015 15:48:50 GMT -5
Actually, you might be able to do it as a school janitor if you had no housing or transportation expenses and minimal food expenses. You might even be able to do that today. I'm also wondering why none of the articles on Read mention transaction costs. I may be getting this wrong, but I'm under the impression that brokers charged some pretty hefty fees until quite recently and to minimize transaction costs, people tended to buy and sell in lots of at least 100 as smaller lots sold at a painful discount. Was there a way of avoiding these costs by buying stock directly from the company? DRIPS
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Bonny
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Post by Bonny on Mar 11, 2015 15:57:54 GMT -5
These articles seem set out to dissuade people from saving. I wish they would focus more on the magic of compound interest and how it works for everyone - even janitors! For example if you started saving $150 a month at 25 and did that for forty years until retiring at 65 then: According to my Phil Script, a monthly investment of $150.00 bearing an annualized return of 11% with gains compounded monthly could grow to $1,108,693.03 in 40 years! You can quibble about inflation and whether or not you can afford $150 a month but it is realistic to put aside a healthy sum of money if you start early enough. EXACTLY my point.
I don't think you need to be a genius to do well. In fact I think some people would be much better off if they weren't so "smart".
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dannylion
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Post by dannylion on Mar 11, 2015 16:05:37 GMT -5
These articles seem set out to dissuade people from saving. I wish they would focus more on the magic of compound interest and how it works for everyone - even janitors!
For example if you started saving $150 a month at 25 and did that for forty years until retiring at 65 then: According to my Phil Script, a monthly investment of $150.00 bearing an annualized return of 11% with gains compounded monthly could grow to $1,108,693.03 in 40 years! You can quibble about inflation and whether or not you can afford $150 a month but it is realistic to put aside a healthy sum of money if you start early enough. I had the same thought. It really seemed like the subtext of this article was "Wah, I don't want to make the effort Mr. Read did, and I don't want to give up any of my toys or wait for compound interest to work its magic or do anything hard, so I'm going to say it can't be done."
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Angel!
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Post by Angel! on Mar 11, 2015 16:21:30 GMT -5
I do like the point that investing just $300 a month and never touching it would get the guy his millions, but that's not actually what he did. $300 a month six decades ago was a shitload of money. Too many investment articles ignore inflation like that and make it sound easier than it is. Absolutely right. But they are also using 8% returns. If you look back from the 1940s to today, the market returned over 11%. If he started in his early 20s, then he would have only needed $50/month to make the amount he has now. $300/month was a shitload back then. But how about only $50? Or probably less because you have to figure he increased his investment amount over time.
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Tiny
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Post by Tiny on Mar 11, 2015 16:25:43 GMT -5
Agree with others that it totally mischaracterizes TMND. It isn't about low-income laborers becoming millionaires. It doesn't advocate living miserly.
IMO the book simply shows that the appearance of wealth doesn't always follow wealth. That many with the huge houses & fancy cars are simply "big hat, no cattle" folks in debt up to their eyeballs. It shows that many millionaires are small-business owners living an simply middle-class lifestyle. The book also pointed out that the millionaires they were interviewing were older than 50 (I can't remember exactly - but I know they were 'retirement age' so probably more like in there 60's and 70's). Today's youth (at least my neices/nephews) seem to admire the 'rich' people under 40 - so celebrities, athletes, trustfund kids. They want to be rich - but they want it NOW! and they don't want to have to do a lot to get rich. They'll work a so so job - but still expect to have $$ to spend on all sorts of disposable stuff - lots and lots of disposable stuff. TMND did discuss this mindset - and pointed out that the people who were millionaires in their old age - were the ones who didn't spend every penny and then some on lots and lots of stuff during their early life, or mid life, or even their old age for that matter. They did spend money on stuff that would INCREASE their wealth stuff which usually isn't disposable.
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Angel!
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Post by Angel! on Mar 11, 2015 16:27:26 GMT -5
FWIW, if you read a bit about him....he became a janitor after he retired in his late 50's. He found retirement boring & decided to get it as a part-time job. Before that he was a gas station attendant (so that might not be any different income wise) & prior to that he was in the military during WWII.
I also found out his wife died of cancer. Granted that was probably before skyrocketing healthcare costs, but I think it still takes a little away from the point in the article that had he suffered from health issues, then he could not have amassed this amount.
I think it is totally plausible he saved it all. You read about him & he was the type of guy that would park several blocks away to avoid paying the meter & he held his coat together with safety pins. Frugal to the extreme. Considering he grew up in a poor family & was in his teens during the depression, that may not be surprising.
ETA - also consider he married very late in life & had no kids of his own & did not go through a divorce. He basically avoided every costly life choice that many of us make.
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Tiny
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Post by Tiny on Mar 11, 2015 16:34:58 GMT -5
I recently reread TMND and my impression is that it is targeted at either people with high incomes or people who already have a pretty good net worth. Most of the sections seem to be about not getting on a consumption treadmill, the relationship between spending, taxes and NW and how not to screw up your kids with your money. Not a lot of it was how to get there. If you read between the lines he talks about most millionaire next door types working in decent paying jobs or owning small businesses. That's how you get there. Get the income first, then don't blow it all on consumer spending creep. That advice still seems pretty solid to me. However, it's not something you can do as a school janitor for life without some pretty extreme frugality. LOL! I get what you're saying but: IDK - school janitor could have been a pretty sweet finanical deal. The janitors in my city use to be part of the Teachers Union. They had a pension. And you couldn't fire them no matter what. Of course all this started changing in the last 15 years or so - the one's who are grandfathered into the old plan though have a sweet deal. Maybe, non-owner/non family member gas station cashier (or cashier at a Qwiky Mart) would be a better example for how hard it is to get rich by living a life of extreme frugality in today's economy? I think they are pretty much minimum wage with no benefits (they work for the franchise and aren't related to the owner) I know there's quite a bit of nepotism at small businesses (or fanchises) since it easier to get relatives to work crappy hours and do work that's above and beyond their crappy job for little pay, etc for the "good of the family". So, I'd think that the family member in such a situation ultimately benefits from this 'hardship' via their Family Fortune.
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NastyWoman
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Post by NastyWoman on Mar 11, 2015 16:56:19 GMT -5
I don't know how true this statement is. For instance, 33 years ago when I gave birth to DS2 my out of pocket payments were a grand total of $2 (yes you read that right two dollar) for the entire pregnancy. One for the first OBGYN visit and one for the hospital admittance. When DS2 and DIL became parent January 2014 it cost them (and I quote DS2) "$2,000 to spring the kid from the hospital". That was just the birth part so it did not include any of the regular prenatal visits, tests, etc. DGS is awfully cute though...
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Phoenix84
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Post by Phoenix84 on Mar 11, 2015 17:09:35 GMT -5
I think it's still very possible to be a "millionaire next door" especially now since inflation has seen that $1 million isn't what it used to be.
Even relatively modest investments early on and throughout a typical career can get you to $1 million.
I concur that if you're making minimum, or close to minimum wage your entire career, it will be pretty hard, but most people make above minimum wage.
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