Consumer indulgences do not make one wealthy. In fact, they are substitutes of wealth, not complements. I once had an interesting experience while presenting these and related facts to a group of fund-raisers from colleges and universities, hospitals, youth groups, and a variety of eleemosynary organizations which were responsible for identifying prospective donors. I explained that many wealthy, prospective donors do not look wealthy! Thus, I suggested that these fund-raisers should prospect successful business owners of the “small hat, lots of cattle” variety, as opposed to the “big hat, no cattle” kind.
I could tell by the reaction of my audience that most were skeptical. They were used to prospecting for donors among the other variety of millionaires-the high society crowd who looked the part. I thought that I was not making any headway until a young woman raised her hand and asked if she could present her own case study. Three years earlier, she had given up a career in the corporate world. Now she is very successful in raising money for the Girl Scouts:
“I am responsible for prospecting the northern half of our state … apple country. I read what apple farmers read (i.e. The Apple Grower)… about apple farming and apple farmers. I identify prospective donors from articles about award-winning farmers. My first major success … [involved] an elderly farm couple [with] … no living heirs … [who were] written up in a trade journal …. [I] visited with them many times last year. They decided … the entire farm will be donated … a new Girl Scout camp in the making…. The property today is valued conservatively at over $4 million. You would never know that they were millionaires…certainly not from the simple farmhouse…not the twenty-year-old rust on the white pickup truck they drive. Most prospectors are all trying to mine the same vein…society people…. Personally, I have accomplished much more on the other side of the tracks.”
This farm couple never generated a net annual realized income of more than $70,000…only 1.75 percent of their approximate net worth. They lived frugally, mostly “off the land.” They borrowed money only to purchase more farmland. Is this couple all that unusual among the ranks of successful farmers? According to the IRS study of estate (wealth) data and income tax returns (conducted by C. Eugene Steuerle), this couple is pro forma. “When all nonwage income (from all assets) is treated as capital income, the income for all members of the sample is only 1.88 percent of their assets.” As discussed in my new book, Stop Acting Rich, farmers are among the most productive occupational groups when it comes to transforming income into wealth.