The Millionaire Next Door

Millionaire in the Making

In my research over the past 30 years, I have discovered why the millionaire next door types are so productive in transforming their income into wealth. Much of what I have found is succinctly summarized in the following communication I recently received. 

I am not a millionaire. At the age of 38 I am about 1/2 way there on a household income that has never exceeded $85000. I’ve done this via the usual: saving at least 15% each year, modest home (still in my first house), used cars and furniture, shopping wisely, etc. I still drive my first car, a 1976 Monte Carlo and just bought a “new” truck for working around the house. The “new” truck is a 1993 Ford.

 And I married a spouse that surpasses me in frugality. Even buys her clothes at [g]oodwill. By your books we are very average penny pinchers in the “Millionaire Next Door” vein. But we have some great role models. We are both children of Millionaire Next Door households. Growing up my parents started with nothing. Daughter of a small time farmer, my mother’s home didn’t have indoor plumbing until she was six. Dad was the son of a railroader, a business he followed his father into. As I grew-up mom patched our clothes and cut our hair. Cars were always bought used, and coupons were common. House temperatures were kept comfortably high in the summer (in the homes that had AC) and comfortably low in the winter. Now that they are retired, they enjoy their wealth by purchasing art and occasional new cars. They also give philanthropically. My parents weren’t super frugal, but lived well within their means.

The real frugal role-models are my in-laws. They also started with very little. She worked for a time as a teacher, and several other part-time jobs while my wife grew-up. But mostly she was and is a homemaker. My father-in-law is a retired engineer who co-founded his own firm. Self-made multi-millionaires, they still keep their expenses around $70k a year. They are prodigious savers of potentially useful items. Waste not want not. Yet their house never looks cluttered.

 When their first grandchild was born we found out just how prodigious. They brought over a truckload of boxes for us. In it were all the clothing from when my wife was a baby through age three. They had kept all of it, and most of her toys. Picture our baby in 2002 dressed in the polyester and paisleys of the early 70s! He drove a 1978 Honda Civic to work daily at the firm he owned. Kept it until he retired in the late 90s.

They live in the 2000sf super energy efficient house they built by hand in the 1980s. He does all home repairs himself. He has also built much of their household furniture. Their cars are all at least five years old. Some nearer 20. He does most of his own car repairs. He recently attempted to fix his $10 KMART watch when it broke. His favorite saying? “Any idiot can pay full price.” Like my parents, in retirement they give very generously of their time, talents and money to several worthy causes.

I am not a millionaire. Yet. But I have great role models.

DK from Idaho

4 thoughts on “Millionaire in the Making”

  1. My father-in-law is a font of stories in this area:

    Upon reading a chapter of my copy of the Millionaire Next Door he commented “The author has it right. But I don’t see why anyone would make a book about this. It’s all common sense.”

    Upon hearing of his daughter’s engagement he took her aside and said “I’ll give you $4000 to elope.” We didn’t, but took that as an unstated budget for the wedding. (My parents, similarly thrifty, gave us a small amount to “help with the honeymoon.” We booked an even thriftier honeymoon and pocketed the difference.)

    His neighborhood association decided to pave their gravel road. He and his 2 neighbors thought that was a waste, and argued it would cost more in upkeep over the years. The pavement stops at his property line.

    The engineering firm he cofounded? It was housed in an office he co-owned, helped build and did most of the maintenance on. I wish I could have seen the looks on his staff’s faces as their boss pulled up in his 78 Civic to fix the plumbing they broke, or cut the grass.

    I could go on.

    He is a great guy, and I don’t think he has any idea just how special he is.

  2. Another great story! I really like how you have debunked the myth that most millionaires are “old money”. In fact most millionaires started with nothing!
    My parents follow a very similar example. They immigrated here in 1971 with nothing. They live in the same modest house they bought in 1977, and have always driven cars “till the wheels fall off”. It has been 10 years since they have bought a car. They became millionaires by living frugally and investing over a long period of time. They don’t care about looking rich, they enjoy being rich.

  3. Even after reading your Millionaire Next Door and the Millionaire Mind, I’m still highly suspicious of this “started with nothing” business. they may have started without money, but I doubt they truly “started with nothing”. I would love to see a study on the qualitative or social capital and its affect on wealth development in these frugal dynasties.

    For example, during a recent bout of unemployment, I had family that let me move in and assisted in supporting me. Now I’m employed and saving (and paying back my family’s support), but I certainly can’t say I had “nothing”. I may not have had money, but I had available resources: a good education, educated family support, and business networks. Which is not nothing.

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