So I wanted to comment some on the books "The Millionaire Next Door" and "The Millionaire Mind." Basically, these books purport to tell us how most of the "real' millionaires in the United States live their lives. According to the books, most of them do not live lives anywhere near the pop culture image of how a rich person lives their lives. Instead, most of them tend to live very modest lives, living in ordinary middle-class homes, in middle-class neighborhoods, driving older cars that they often bought used, using coupons, and so forth. The way in which most of these people achieved their wealth is through living this way. The book points out that many people (even most people?) living affluent-seeming lifestyles, i.e. big home in nice neighborhood, nice cars, clothes, etc...are oftentimes living at or beyond their means.
I had a few major problems with the books. One is their use of the word millionaire to essentially mean a "rich" person. To imply to the reader that most of America's rich do not live the pop culture stereotype of the rich person (private jets, yachts, mansions, luxury cars, etc...). The problem is that, people with a net worth of $1 to $2 million, who make up a large amount of the people referred to in the book, are not rich. $1 million in liquid wealth is not rich today, let alone $1 million or so in wealth that is tied up in assets such as a house for example. Thus a large amount of the book's people would have to be discounted. Truly "rich" people are those who can very comfortably afford an affluent or the "jet-set" lifestyle if you will. Which means that, even if they choose not to, they can easily afford to drive luxury cars, live in a large home in an expensive neighborhood, send their children to private school, take nice vacations, eat out at expensive restaurants, etc...if one cannot live like this comfortably, then one is not "rich" (and even living like this isn't so much rich as affluent---rich is when you can start affording a mansion, chartering yachts and private jets, taking expensive vacations, and so forth).
The second problem I had was the notion (at least this is how I took it) that people who live luxury lifestyles want them because to them it is all about status, looking good, and so forth, and that there is something inherently wrong with this, while living the frugal lifestyle is very moral and noble, even if one can easily afford to live the luxury lifestyle. The books never seem to entertain the notion that some people may have expensive tastes simply because the expensive stuff is just a lot nicer than the less-expensive stuff.
Not everyone wants to just live in a white picket fence home in a middle-class neighborhood. Not everyone wants to drive a ten year-old Toyota Camry. Not everyone wants to wear inexpensive clothing and shop at Cost Co and Wal-Mart and so forth. Now don't get me wrong. I fully understand the argument that one should not live beyond their means and that the person who earns $40K a year, but lives a modest lifestyle, doesn't live beyond their means, saves, and works hard, is living more wisely than the doctor making $700K a year, but who is living beyond his means, living in a very nice neighborhood, in an expensive home, driving luxury cars, etc...but the problem I have with these books is that they seem to think that if people want to live the way the doctor is living, that there is something wrong with this.
To me, there is nothing wrong with wanting to have nice things and live the nice lifestyle, even the jet-set lifestyle. The important thing is just to make sure that one can actually afford it. If you earn an income that let's you comfortably live like the doctor, then great! There's nothing bad about that. You just have more expensive tastes than some others. There are some very wealthy people who choose to live very modest lifestyles. An example could be the founder of ABC Supply, a roofing supply distributor whose owner was worth a few billion dollars. He died a few years ago though. Howso? He fell through his own roof. How does a multi-billionaire fall through his own roof? Because he lived in a middle-class home. That was just how he preferred to live. What was he doing up on the roof? Well he was having work done on the home and was up inspecting something and accidentally fell through!
There are also less extreme examples of the modest super-wealthy person, for example Warren Buffett. Much has been made about how Buffett still lives in the same home he bought years ago. Thing is, it's a 5,000+ square-foot home. No, not anything like a 30,000 square-foot mansion, but a 5,000 square-foot home is nothing small either. It's plenty comfortable. He also uses a private jet. He drives I think a Lincoln Town Car. He is a man who just is not that into material luxuries is all. But that doesn't mean he lives super-cheap either. If a 5,000 square-foot home, a Lincoln Town Car, and a private jet are all you desire in terms of material luxuries, that's fine. He is the epitomy of a wealthy person not living cheaply, but living to the level of luxury they desire.
But if you DO desire the expensive sports cars that cost half a million a piece, a private jet, a couple of 30,000 square-foot mansions, a yacht, etc...that's fine too. And if you want to live that lifestyle, there's nothing wrong in striving for it. All those people saying you need to live extremely frugally, well that isn't going to cut it there. What will happen is that you live very frugally, then one day far in the future, when you are in your 50s or 60s, and your youth is behind you, you are now worth a few million dollars. Well if you have no problem living frugally that's fine. But if you want to live the luxury lifestyle, it is a problem. Because even with a few million, it's not nearly enough money, and even if it was, who wants to have to work hard, living very frugally until their old age, to be wealthy? You want to be able to produce sizable wealth while you're still young (by "young," I mean age 20 to 45).
The other thing to keep in mind is that money doesn't buy happiness, so don't think the material items will make you happy. The problems I see are the people who try to live the luxury lifestyle but who can't really afford it. Don't do that. And also the people who only want to live the luxury lifestyle solely for status. Now if you can afford it and want the status, well fine, but don't live beyond your means solely to maintain status.
I really wish the authors of the book could have found a couple of truly wealthy people, but ones who were self-made and, while living what would be defined by most people as a luxury lifestyle, are still living within their means (just they have very large means!). So for example, a guy worth $300 million, but who is totally self-made, started with nothing, worked hard, and while he lives in a mansion and has luxury cars, doesn't try to live beyond his means (yes, rich people worth hundreds of millions can end up living beyond their means, as there is always someone else who is richer).
Some people I have read say that when you live frugally in order to build wealth, that by the time you get the wealth built, you have lived frugally for so long that you no longer desire the luxuries you once wanted now that you can afford them. This always makes me feel like launching a tirade, because, while they may not mean it, it just comes across as a form of condescension, basically saying that desiring wealth is pointless, because you (supposedly) won't want the stuff once you can afford it. Well personally, I really think that depends on the person.
Usually, people who say this kind of stuff I think are the people who have had the opportunity to live said lifestyle for awhile, before tiring of it, and deciding they want to revert to a simpler lifestyle. If that's what they desire, then fine by them. But don't tell someone who hasn't had such luxuries that they won't desire them if they work hard and productively enough to be able to afford them. That's like a man who regularly has slept with stunningly beautiful women saying to a guy who hasn't had access to such women but who has a decent sex drive, "You know man, sex with beautiful women really isn't all it's cracked up to be. You find that what you really desire is to find a nice, decent gal who will like you for who you are, and you don't focus so much on looks..." yes, you'd feel like slapping the guy. Sure, he can feel that way, because he's had the opportunity to have sex with all those beautiful women!
It's like a person criticizing the First World standard-of-living to a person living in Third World poverty, saying that the First World "isn't all it's cracked up to be." There are quite a few people I'll bet that very much desire to live the luxury lifestyle, and when they can afford it, they will live that way. If they then tire of it and decide later on to live a "simpler," cheaper lifestyle, then so be it.
As for those who desire luxuries that they have never had, but live frugally, work hard, then by the time they are able to afford said luxuries, they find out that they no longer desire them, well good for them, but that doesn't mean that is how other people will be. Many people could desire luxuries, but be willing to live a life of poverty for a decade to build their fortune, so that they can then live a much nicer lifestyle. It depends on the person. I think what is more realistic is simply that a person who lives frugally while building a fortune, that once they acquire said fortune, they will not just suddenly become careless with money. They may not clip coupons or shop at Wal-Mart anymore, but they aren't going to just throw money down the toilet either. They will be the type of rich person for example where they will not purchase a vacation home that will sit empty for the majority of the year while costing them money. To justify another home, it must be one they use quite often. And so forth.
Technically, at the end of the day, everyone desires to live a wealthy lifestyle. The question is, just how wealthy? Because aside form the homeless, almost all First World standards of living, by historical and global standards, are wealthy. If you live in a trailer somewhere but have a working vehicle with power windows, door locks, heater, air conditioning, radio, etc...a refrigerator, freezer, air conditioning, heating, shower, hot and cold water, toilet, Internet, flat-screen television, cable, computer, etc...with access to all restaurants, movies, supermarkets, and all the other innumerable goodies in our society, then by Third World society standards, you're rich! No one living in true poverty who works hard to reach a middle-class standard of living (rich to them), is going to say, "Eh, this middle-class standard of living isn't all it's cracked up to be, I think I'll just go back to the Third World standard with no clean water, no electricity, no basic sanitation, no decent quality food, etc..." That's not going to happen!
So the question really is, just how rich does one desire to be? For some, First World middle-class is all the wealth they require. As long as they have a nice home, in a decent okay neighborhood, working vehicle, the basic appliances, and financial security, then they are happy. Others, however, desire a more lavish lifestyle. And again, nothing wrong with this, so long as one is willing to work for it, one recognizes that material items do not bring happiness by themselves, and one makes sure that they can truly afford said lifestyle as opposed to being one of those 30K millionaires*.
* "30K Millionaire refers to a person who is not wealthy or even affluent, but uses all sorts of ways to leverage themselves to the hilt so as to be able to look wealthy to others
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