The Millionaire Next Door

Small Expenses Add Up

A newspaper article reported on a “low level employee” who has been accused of stealing from his employer.  His theft went unnoticed for more than two years.  And his crime was discovered only when an investigation outside the firm led to his arrest.  No, the fellow did not steal cash, coins, checks, motor vehicles, etc.  In just two years, he stole $376,000 worth of copy toner (ink cartridges) and resold it on the black market.  Nearby, another thief who worked for Memorial Sloan-Kettering Cancer Center was convicted of stealing “more than $1.5 million worth of printing toner cartridges from the hospital.”  As part of this man’s deal with prosecutors, “he had to forfeit his BMW, two laptops, a digital camera, an iPod, two jewel-encrusted watches and four Louis Vuitton bags.”


Even some of the best run businesses in America are encountering undetected internal pilferage.  An ink cartridge by itself isn’t something that needs to be locked up in a vault.  But the loss of thousands of them over time can add up to a considerable amount.


There is an analogy here in terms of running a household.  As an example, it is easy to underestimate or not estimate at all the long term cost of all those annoying service fees and “fines” from your credit card company and the like.  Also consider those frequently purchased incidental items such as a grande lunch from your favorite drive-in, a designer beer or vodka martini each afternoon at happy hour, and that all too frequent multi topped cup of yogart! 


In The Millionaire Next Door, I profiled Teddy J. Friend who told me that his parents were never rich because they never had a large income.  After my interview with him, I explained that there are many millionaire households that never had a six-figure income.  Teddy’s parents were both heavy smokers consuming about 3 packs of cigarettes a day for 46 years.  All toll that is 50,370 packs of cigarettes.   What if the couple had instead invested their cigarette money in shares of the tobacco company that produced their favorite brand?  With all dividends reinvested, the Friends would have had stock worth more than $1 million. “But the couple . . . never imagined that ‘small change could be transformed into significant wealth.'”


Most millionaires know how much they allocate each year to various products and services, large and small.  Do you?


 

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