April 23rd, 2008 @ 7:13 am by: Marc
20 Things The Millionaire Next Door Does NOT Do
The millionaire next door does a lot to get ahead, but you can be pretty sure the list excludes the following 20 points.
The millionaire next door does NOT:
- Pay for Lawn Service – You could save $150 a month, get some healthy exercise and maybe even a bit of a tan just by mowing your own yard.
- Go to a Hair Stylist – Even the cheapest barber shops charge men $15 - $20 for a haircut these days. If you’re a woman, it may cost well over $50 a visit. Dying your hair? You’re broke!
- Use Time as a Measurement for Success – The millionaire next door measures success based on output quality, the results. The amount of time spent on something means nothing if the results do not meet the expectations.
- Buy Brand New Cars – Why would anyone pay the full retail price worth half a year’s salary for the fastest depreciating assent on Earth? We are brainwashed!
- Carry a Monthly Credit Card Balance – Carrying a monthly credit card balance only makes sense if you enjoy poverty. Monthly interest payments can add up to hundreds of dollars over the course of a year. Do not buy “stuff” right now that you cannot afford to pay for in cash right now!
- Eat Out on a Regular Basis – With the recent price increases in corn, wheat and dairy products, preparing your own food is already expensive enough. If you eat out you will pay triple the price. If done on a regular basis you will waste a few thousand dollars a year.
- Think He Knows It All – People who think they know it all stop learning and thus become unaware of new opportunities. Once you lose awareness, you lose.
- Socialize with People Who Waste Money – The people you socialize with influence your habits. It is impossible to save money if you constantly hang around people who blow it all.
- Desire Instant Gratification – You have to think long-term to attain long-term success. The millionaire next door desires long-term deferred compensation over instant gratification.
- Pay Retail for Name Brand Clothing – You can easily save hundreds of dollars a year on clothing purchases by waiting for sales or shopping at discount retailers like Marshalls. Better yet, avoid name brand clothing all together.
- Keep His Money in a Checking Account – If you want to increase your wealth you have to set your money up to make more money. Most checking accounts yield little to nothing in interest. Think long-term (5 years +). Invest in quality stocks, bonds and mutual funds, especially those with high yield dividends and interest. Or buy some land in an area with growth potential.
- Replace What is Not Broken – The millionaire next door fixes things. Fixing something is usually significantly cheaper than buying a brand new replacement, especially if you fix it yourself.
- Visit the Tanning Bed – $25 a month for skin cancer? Where do I sign up? If you want a tan, move to Florida. For those that live in Florida and still go to the tanning bed… WOW!
- Impulse Buy – Impulse buying wastes money and leads to a cluttered house full of “stuff” you don’t need or use. If you see something you like at the mall, walk away. Think on it for a day or two. If it still holds value in your mind, maybe it’s worth buying. Never buy something the first time you see it.
- Waste Time on Senseless Activities – They say time is money. In actuality, time is far more important than money. Time is your life. If you waste it, you will fail.
- Focus His Attention on Negative Obstacles – If you focus all your attention on negative obstacles, you will lose sight of the finish line. You can’t get there if you can’t see it.
- Bet The Farm – The millionaire next door takes evenly weighted, calculated risks on long term investments. If you go “all in”, your gambling, not investing.
- Fly First-class – Would you pay $400 to sit in a leather chair for a couple of hours? That’s exactly what you do when you fly first class. Huge waste of money!
- Rent – The millionaire next door has a long-term mindset. In the long-term, owning something is always more cost effective than renting it. The key is to purchase quality products for long-standing use.
- Earn Every Dollar He Makes at His Day Job – Two words: Passive Income. You can be sure the millionaire next door invests his money wisely. These investments create a solid passive income stream that grows over time. If your money isn’t making you more money, you’ll never be wealthy.
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13 Comments
April 23rd, 2008 at 8:25 am
Cool post, and amusingly written.
I’d say plenty of millionaires do the stuff on the list though, it’s just that maybe they didn’t while they were getting that first million or two.
http://www.reachingabetterplace.com
April 23rd, 2008 at 9:03 am
It sounds like Kiyosaki…but it’s all true! Especially the part about tanning bed - I don’t understand people, who act like if they have to go there. It’s sick and this disease has its name.
April 23rd, 2008 at 12:08 pm
Instant Gratification is the killer in America today, thats why credit card usage is at an all time high. The I want it and I want it now mentality is taking over and our finances are hurting. Good post, lets do what Millionaires do and live debt free. - Debt Free Hispanic
April 23rd, 2008 at 2:25 pm
How wonderful is this post?!
I’m a longtime lurker, delurking to say thank you for this. The essentials of keeping/earning money are so basic. I hope to be there one day myself.
As a funny aside, we just returned from a vaca to Mexico (given to us as a gift so it was essentially free) and on every single flight we had to walk past those snooty first class passengers and instead of thinking, “I’m envious…” I just thought, “How stupid to pay for first class on a 90 minute flight.”
I really like your blog guys.
Stepher
April 23rd, 2008 at 4:39 pm
You mean… 20 Things The Self Made Millionaire Next Door Does NOT Do.
April 23rd, 2008 at 9:40 pm
@Richard:
Good point. At a certain level of wealth, I assume you’re right… some self-made millionaires will probably begin to give in to temptation.
@Wesoły:
It all traces back to the worlds unfortunate, endless obsession with superficial appearance.
@Stepher:
Thanks for the kind remarks. It’s great to hear from a regular reader.
April 24th, 2008 at 1:57 am
As a frequent poster I must add that:
The one thing that you forgot to mention about folks who sit in first class is that the majority of them are sitting there due to upgrades and not people wasting extra cash…
And one can use the upgrades still rather easily…I do 30 to 40 trips per year so that qualifies for the upper echelon of upgrades…so I pay coach fare (no matter what level of coach to include Internet fares) and can upgrade with U.S. Airways 3 to 5 days in advance…Example: My last trip I paid $310 round trip and sat in first class…sounds nice and frugal but had extra space comfy seat and free booze…when you fly to the Left Coast you even get real meals…
Most of our politicians due the same thing I frequently fly from DC to Orlando and sit next to Senators Mel Martinez or Bill Nelson…most Congressmen are still sitting in steerage but if you dedicate yourself to a airline they will reward you…whether a low level worker bee who travels all the time or a U.S. Senator. The other benefits that rich due by this dedication lead to discounts at the airport clubs (have seen Newt Gingrich, Bill Bennet and Joe Liberman in the US Airways club at Reagan…saw Teddy Kennedy at Logan many years ago going into the Delta Club)…
But I agree that paying First Class rates up front is both snobbish and unnecessary…if you don’t get upgraded get your seat booked in a exit row…it is only 3 inches less leg room the first class…and only $5 a drink…cheaper then the airport bar.
Very few millionaires choose to mow their lawns…if they can be using that time for additional activities the $150 worth of their time is worth the sacrifice…think about how much your time is worth and you could be doing with it…really calculate how much you make to how much more beneficial the lawn guy needs that revenue…I digress..
If you are using that time to take a MBA course, start another business, work on your investments…seems that unless you can make more hours in the day then you time is more valuable then mowing the lawn…plus as a smiling joking comment isn’t that what gyms are for???
p.s. One way to eliminate revolving credit…get a American Express card
April 24th, 2008 at 7:32 am
In todays “money from thin air” economy this is not how millionaires are made.
1. Most millionaires are born in a particular tribe which runs the banks. (Shhh…. don’t tell anyone!)
2. Go to bank run by own tribe, borrow lots of money. Bank will give a large cheque book with lots of pages.
3. Write cheques and buy assets, “invest” or start business. If the venture succeeds pay back the loans else bank will write it off.
4. Do all the stuff the blogger says millionaires don’t do, enjoy life!
April 25th, 2008 at 2:48 pm
@Duck and Tinfoilz:
You guys seem to be confusing the main subject of this article with a millionaire who inherited his or her money. “The Millionaire Next Door” refers to self made millionaires who save diligently, invest wisely and create long term financial success on their own. Most of these people are very frugal, and thus spend their money only when they must.
@Tinfoilz:
Your final comment suggesting that you should waste your money so you enjoy life is the exact mindset that gets people in serious financial debt.
Thanks for the comments guys.
April 27th, 2008 at 9:48 am
Great post.
It’s always good to get a good list to reflect on. And some of the examples are simple but sometimes over looked.
Keep up the great work!
Here’s to Your LifetoSuccess,
John Clark
http://www.lifetosuccess.com
http://www.habitbustingsystem.com
April 27th, 2008 at 3:01 pm
I’ll disagree with you about renting. It makes a lot of sense for single people like me to have the ability to move quickly for job changes, etc. When you don’t have kids, having a house isn’t as important.
My roommate has ultimately lost money and easier options by buying the house he was renting. He’s now thinking of renting the house out and moving into an apartment to spend more time with his kid.
April 27th, 2008 at 3:15 pm
Point 1. and 15. contradict each other.
April 28th, 2008 at 1:52 pm
@Stewart:
You’re right, there are situations where renting makes more sense than owning. There are exceptions to every rule. However, if you look at long term statistics over the course of 10-20 years, people who own typically come out ahead of people who rent (house, car, etc.).
@Stephan:
Only if you think getting exercise and fresh air while maintaining your property is a true waste of time. You could argue this either way, I suppose.
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