More from our millionaire next door in the Southwest – Part II of the Millionaire Next Door story I received last month. We read in Part I that our “scientist of wealth” became a millionaire while his annual income was $78,000 and now has a net worth of $2.4 million. He and his wife did not/do not act rich, and continue to enjoy the freedom that comes from living below their means.
A Letter from a Scientist of Wealth, continued
…Paying off the mortgage was about the smartest move we ever made, because it allowed us to save that money, too. Whenever we got a windfall in our married years (for example, not having to pay mortgage money every month) we didn’t go to Vegas, we put it in the bank. OK, we went to Vegas once, it was pretty disgusting. Live and learn. Over the years, we have thoroughly enjoyed traveling. We have been to virtually every state, also to Mexico, Canada, England (3 times), France, Greece, Italy, Spain, Egypt, and Turkey. When our child was young, we camped out a lot in National Parks. We don’t do that any more, but when we travel we use a “Rick Steves” approach, and I feel we can spend less on two weeks in Paris than most families spend in one week at Disney World.
I purchase only new cars (except for a couple bought for teenagers), selecting exclusively from Consumer Report’s “High-Reliability” models, and I keep the cars about 10 years. $21,000 is the most I ever paid for a new car. Most of our cars have gone the full ten years without anything other than the most basic, routine maintenance.
I think I paid $67 for a pair of shoes once, and my watch is a Timex. We have a houseful of furniture that is comfortable to us (and even gets some nice reviews). By not being drawn into corporate management, I have avoided the purchase of $500 suits and luxury cars. A little-known benefit of avoiding corporate management is that I don’t have to lie in my line of work. My wife has shopped at thrift stores for many years, and uses coupons extensively. I generally won’t order a pizza without a coupon. We eat out twice a week, once at a “sit-down take-your-time” place, and once at McDonald’s or Burger King! We have a health-club memebership and a nice yard. Since we have chosen to live somewhat below our means, it is not as hard to keep up with the Joneses in our neighborhood. We don’t have any granite countertops, and some of our floors are VINYL. There are some UAW’s on our street, one of them has a $50,000 boat and 5 luxury cars. Since I’m not a lawyer or doctor, I don’t work 80-90 hours per week. So time is NOT ALWAYS money with me, as it is with many of your millionaires. Things I don’t do: Paint the exterior of the house Go up on the roof Overhaul my transmission Buy things on the phone Return the phone calls from stockbrokers We paid all the expenses of our child’s undergraduate school, but she was on her own for her graduate degree (which she has happily completed in record time).
We crossed over the million-dollar mark in 1999; let me point out that we sprang for FRENCH champagne, the first bottle we ever had. For the mortgage pay-off, we used a California “Sparking” wine”. 🙂
We lost about 25% in the recent meltdown, not as bad as many people due to mostly proper diversification for our age. But still very scary. We’ve probably gotten 15% back in the last year’s runup. During the downturn, we continued to invest, heavily at times.
I enjoy your books, please bring forth some more. Maybe one on “poor” millionaires like us….under $5 million; gained through working-man wages only??? I think that book would have a very wide appeal.