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Around the Internet => Antimustachian Wall of Shame and Comedy => Topic started by: Yokan on March 10, 2015, 04:22:57 PM

Title: The death of the 'Millionaire Next Door' dream
Post by: Yokan on March 10, 2015, 04:22:57 PM
This is interesting:

http://www.latimes.com/business/hiltzik/la-fi-mh-the-death-of-the-millionaire-next-door-dream-20150310-column.html#page=1

Title: Re: The death of the 'Millionaire Next Door' dream
Post by: RFAAOATB on March 10, 2015, 04:41:50 PM
I liked the last paragraph:

Quote
For the rest of us, saving and investing is an act of deferred gratification -- by waiting, we have more to spend on goods and services that please us. "I see no special heroism in accumulating money," Taleb wrote, "particularly if, in addition, the person is foolish enough to not even try to derive any tangible benefit from the wealth.... I certainly do not see the point of becoming [a millionaire] if I were to adopt Spartan (even miserly) habits and live in my starter house."

Every so often I am tempted to march into the real estate agent's office and ask her to find me the biggest house I can afford.  That may set my financial independence back a few decades but fuck it, I am living way below my means.

Why am I going for delayed gratification, in effect saving a million dollars instead of spending an extra million dollars?  Sure it means I could cut down to a 40k lifestyle and quit my job, but what about my lavish reward of all inclusive cruises, the bigger house, the Rolex and the Lexus?  I figure after the security million, I will continue to work and divert all that money to luxury.

Eventually my net worth needs to mean more than numbers on a spreadsheet.  As it stands now I'm making more money than the poor, and in some cases living pooerer than the poor.  How are we sure the poor aren't living happier than us and aren't worried about credit card debt?
Title: Re: The death of the 'Millionaire Next Door' dream
Post by: WildJager on March 10, 2015, 04:46:54 PM
Quote
"I see no special heroism in accumulating money," Taleb wrote, "particularly if, in addition, the person is foolish enough to not even try to derive any tangible benefit from the wealth.... I certainly do not see the point of becoming [a millionaire] if I were to adopt Spartan (even miserly) habits and live in my starter house."

I think that last paragraph sums up the article pretty well right there.  I don't know why these critics don't get it, but it's frankly about getting joy in life outside of tangible assets.  My wealth gives me freedom.  I can't touch freedom... but in a few short years I sure as hell can touch a mountain I'm hiking instead of sitting in an office.  I can touch my bow when I'm hunting deer to feed my family.  I can touch the timber I cut and built my house with.  I can touch a family member's hand when they're sad, as I can shake a new friend's hand while I'm out and about exploring a new town.

Maybe I'll never touch a fancy corvette or golden cuff links... but at this point those offer no joy to me.  (Well, I will, and I have, because I have plenty of friends that blow money on that junk).  If those hold value do to you, that's fine and dandy, but don't espouse the "death" of a dream just because you are too weak minded to capitalize, or simply have different priorities.

Edit: RFAA beat me to it! 
Title: Re: The death of the 'Millionaire Next Door' dream
Post by: Eric on March 10, 2015, 05:14:09 PM
Yep, that last paragraph is a doozy.  But really, it should be split into two:

Quote
For the rest of us, saving and investing is an act of deferred gratification -- by waiting, we have more to spend on goods and services that please us. "I see no special heroism in accumulating money," Taleb wrote, "particularly if, in addition, the person is foolish enough to not even try to derive any tangible benefit from the wealth....

This is true.  Accumulating money just for the sake of accumulation is pointless.  You should attempt to derive tangible benefits from it, like say, I don't know, not going to work.

Quote
I certainly do not see the point of becoming [a millionaire] if I were to adopt Spartan (even miserly) habits and live in my starter house."

But as usual, the only way to derive these tangible benefits in the minds of most are to spend it on increasingly lavish items.  I mean, can you even imagine living in a "starter house" your whole life?  THE HORROR!!  I mean, it's hardly even a real house.  I hear they only have 3 walls.
Title: Re: The death of the 'Millionaire Next Door' dream
Post by: MgoSam on March 10, 2015, 06:09:04 PM
 
Quote
Fewer young people starting their careers today have had even the middle-class upbringing or family resources of so many of Stanley's quiet millionaires.
Um, has the writer even read his book? It describes so much about how parents' support is one of the worst things you can do.
Quote
in August 1979. Since then equities have been on a long-term tear; $100 invested at the start of that period would be worth $2,000 today.
I budget a 9% return, a dollar invested today will be worth $22.25. I don't know how revolutionary it's been since 1979, but in general if you put money into the market and leave it there, it will grow.
Quote
the neat irony that Stanley met his end while driving a Corvette, not normally a symbol of asceticism. 
What's your point? He wasn't preaching a religion, instead was writing about his research. He wasn't describing being a miser, regardless of what you may think, but rather about saving up money.

Quote
  I see no special heroism in accumulating money," Taleb wrote
Can you name a single person that thinks of themselves as a human for being frugal? What do you consider to be 'special heroism?'
This article is absolute horseshit. The author brings up a ton of critics, but didn't bring anyone else to rebutt anything. The book isn't a falsesafe method for getting rich, it was an explanation of his research into millionaires. Yes there is a survivor-bias, but you know what, if I want to learn how to live to being a 100, my guess is that my first step would be to interview as many 100 year-olds, and look for similarities. Nothing that Mr. Stanley said was rebutted, if you make X, spend less than that, and invest the difference, you will have a nest egg. Give it enough time, that little snowball might turn into an avalanch. What is Mr. Taleb's advice? My guess is that he would give similar advice, 'Live within your means, and invest it in the stock market.'
Title: Re: The death of the 'Millionaire Next Door' dream
Post by: RFAAOATB on March 10, 2015, 06:20:10 PM
But as usual, the only way to derive these tangible benefits in the minds of most are to spend it on increasingly lavish items.  I mean, can you even imagine living in a "starter house" your whole life?  THE HORROR!!  I mean, it's hardly even a real house.  I hear they only have 3 walls.

My starter house is a condo with three SHARED walls.  I got guys to the left, right, and below me.  It's like the God Damned Kowloon Walled City.  Now that is hardly even a real house.  Remove the neighbors, and you could stick the condo into the garage of a normal house and it would look like the normal house is giving birth.

Ugh such a tiny baby house that screams mediocrity of median wage.  Where's my McMansion?  I could be living there now instead of saving for financial independence.  I'm hoping the McMansion will taste sweeter afterwards, but if I'm wrong I will have lost those years of living in a big house.

Title: Re: The death of the 'Millionaire Next Door' dream
Post by: winterbike on March 10, 2015, 07:49:46 PM
Nassim Taleb has really interesting ideas, but in the end, he's an asshole. He speaks like one, he's one on the internet and a lot of people who met him say he's a big one in real life too. Whatever his personal opinion is on a matter, I'm pretty sure I'll be happier doing the opposite.
Title: Re: The death of the 'Millionaire Next Door' dream
Post by: MoneyCat on March 10, 2015, 08:02:14 PM
Well, I don't know about you guys, but that article convinced me.  I think I'll go buy a Keurig machine. [/sarcasm]
Title: Re: The death of the 'Millionaire Next Door' dream
Post by: Vertical Mode on March 10, 2015, 08:49:32 PM
What a useless litany of complaints and closed-mindedness. If the author has even read TMND, he clearly missed the point.

Dismissing Dr. Stanley's work in such a manner decreases the chances that these contributors will ever be "Millionaires Next Door" themselves. I can see the future excuses coming from a country mile away.
Title: Re: The death of the 'Millionaire Next Door' dream
Post by: jj20051 on March 10, 2015, 09:08:23 PM
Quote
I certainly do not see the point of becoming [a millionaire] if I were to adopt Spartan (even miserly) habits and live in my starter house."

This guy clearly has no idea what he needs. I feel sad for him that he feels having a bigger house will make his life better and that saving money will make him feel poorer.

Was this article sponsored by J.P. Morgan or Fannie Mae and Freddie Mac? I mean seriously it might as well be an ad for "the good life".
Title: Re: The death of the 'Millionaire Next Door' dream
Post by: NoraLenderbee on March 10, 2015, 10:16:32 PM
Nassim Taleb has really interesting ideas, but in the end, he's an asshole. He speaks like one, he's one on the internet and a lot of people who met him say he's a big one in real life too. Whatever his personal opinion is on a matter, I'm pretty sure I'll be happier doing the opposite.

Yeah. I started one of his books, but I quit in the middle because he was just so full of himself, I couldn't take any more.
Title: Re: The death of the 'Millionaire Next Door' dream
Post by: partgypsy on March 11, 2015, 05:43:49 AM
I hate the term "starter home".

The US is a materialistic, comparison place (just look at both regular tv shows and also reality tv shows, and home improvement shows, the kind of places they show that are in no way representative of how the vast majority live) that is really skewed in showing us a regular versus an aspirational place to live.
I think it's not going to work, if someone feels constantly deprived.

In my case I don't desire a big house. My parents lived in a smaller house and were happy. When they moved to the big custom home house, marriage hit the rocks, so maybe that has something to do with it.  Also there was some traveling and seeing how people lived in other places, and then it makes you feel, living somewhere with an actual middle class and opportunity to not live in a slum, with electricity and running water and low crime, man you are WEALTHY.
So maybe you need some more comparisons. But it's all a matter of knowing yourself. For me, owning versus renting was a big quality of live issue. For other people it is the projects or the people they are involved in that is most important and place of living is secondary.
Title: Re: The death of the 'Millionaire Next Door' dream
Post by: Yokan on March 11, 2015, 07:51:32 AM
 I feel like most people I know share the author's point of view, out of all my friends and family, I have only been able to convert one person to the cult of Mustachiasm. All my other friends just consider me a greedy hoarder that is incapable of enjoying life. Even when I show them the math, they just stare at me and with a straight face say, "....but buying things make me happy." I don't think they'll actually "get it" until I actually quit the rat race and demonstrate to them first hand the most luxurious thing you can buy with money: Free time.
Title: Re: The death of the 'Millionaire Next Door' dream
Post by: dude on March 11, 2015, 07:59:36 AM
Yeah the author is spot on. I mean intangible benefits are of no value. Only tangible ones matter. I tell myself this everyday when I get up when I want, as I have my homemade morning coffee and breakfast in my starter house, as I ride my bike to the park to run the beautiful trails amongst the trees and flowers, before heading to the warm sunny beach to play volleyball,. I tell myself that only tangible benefits matter when I cross over the freeway overpass every morning on my bike and see the long line of fancy cars and SUV's sitting in stopped bumper to bumper traffic everyday, twice a day, all year long, for years. I know that I should end my Spartan(a) and miserly ways and join those people at a job for many more years so that I too can derive joy from the tangible benefits since my life of intangibles is obviously so sucky.

^^^
THIS
Title: Re: The death of the 'Millionaire Next Door' dream
Post by: MoneyCat on March 11, 2015, 08:13:36 AM
People like this author remind me of a recent article I read about how much people in NJ are paying for natural gas heating per month.  Apparently, it costs about $700-800 a month to heat the average anti-Mustachian McMansion around here.  Meanwhile, I paid $155 to heat my "starter house" that meets all my family's needs in the dead of winter last month (and I still considered that to be rather high.). I have no idea why someone would want to trade their freedom -- their ability to say "no" -- in return for something that gives them no actual benefit.
Title: Re: The death of the 'Millionaire Next Door' dream
Post by: bzzzt on March 11, 2015, 10:32:51 AM
People like this author remind me of a recent article I read about how much people in NJ are paying for natural gas heating per month.  Apparently, it costs about $700-800 a month to heat the average anti-Mustachian McMansion around here.  Meanwhile, I paid $155 to heat my "starter house" that meets all my family's needs in the dead of winter last month (and I still considered that to be rather high.). I have no idea why someone would want to trade their freedom -- their ability to say "no" -- in return for something that gives them no actual benefit.

Agreed. Living within my means has allowed me to stress a lot less about money than most of my friends. My all-in (PITI, utilities, etc) cost of housing on a 15 year mortgage is less than most of my friends 30-year mortgages (principal/interest). My house is about half the size, but that means I need less than half the "crap" (furniture, decorations, time cleaning, etc.) and it leaves me more time to do things I love to do.

It's amazing how many people told me I wouldn't have time for my hobbies once I bought a house and another big chunk who said I wouldn't have time after my son was born. Both have taken time away, but I still have chunks of time where I can do the things I love to do. I think a lot of people don't have this due to the time they have to spend trying to maintain their pristine McMansions and facades of "rich" lives.
Title: Re: The death of the 'Millionaire Next Door' dream
Post by: dios.del.sol on March 11, 2015, 10:56:07 AM
Nassim Taleb has really interesting ideas, but in the end, he's an asshole. He speaks like one, he's one on the internet and a lot of people who met him say he's a big one in real life too. Whatever his personal opinion is on a matter, I'm pretty sure I'll be happier doing the opposite.

Yeah. I started one of his books, but I quit in the middle because he was just so full of himself, I couldn't take any more.
This is one of those cases where it's best just to grin and bear it. The man's writing is arrogant and wordy, and he's not nearly as witty as he thinks he is. Nonetheless, his intuition on uncertainty is brilliant and worth digesting. In the words of the Dude: "You're not wrong, Walter, you're just an asshole!"
Title: Re: The death of the 'Millionaire Next Door' dream
Post by: Little Benny on March 11, 2015, 12:54:32 PM
Saw this article today and immediately thought of this forum.  Had to read it just to get my laughs in for the day.
Title: Re: The death of the 'Millionaire Next Door' dream
Post by: Us2bCool on March 11, 2015, 01:28:08 PM
This article made no sense to me until I took in the context that there's no way the author actually read the book.
Title: Re: The death of the 'Millionaire Next Door' dream
Post by: Syonyk on March 11, 2015, 01:45:20 PM
I tell myself this everyday when I get up when I want, as I have my homemade morning coffee and breakfast in my starter house, as I ride my bike to the park to run the beautiful trails amongst the trees and flowers, before heading to the warm sunny beach to play volleyball.

... you make your own coffee and breakfast instead of going to Starbucks?  Are you poor or something? :p  I mean, you certainly *sound* unemployed...

(sounds wonderful, and my wife & I should be there in a few years, or at least working a lot less)

In my case I don't desire a big house. My parents lived in a smaller house and were happy.

My wife & I have been house shopping lately (mostly looking at manufactured homes for where we're planning to live).  We toured a bunch, and it was really interesting.  We're planning on 2 kids, so want space for them, but we found a 1200 sq ft place that would actually work!  It would be tight, but for $55k... certainly an option.  We'll probably end up with something closer to 1800 sq ft (and then some outbuildings for my office space/etc, so effectively more), but neither of us want something huge.  We looked at a few triple wides that were 2500+ sq ft, and both of us felt it was too much space - we'd need to buy stuff to put in it, then clean it, and... that just doesn't sound fun.  Certainly not in keeping with our desire to spend a lot of time in the mountains hiking and camping.

There's also a whole movement about small houses ("The not-so-big house" and such came out a decade and change ago), which is pretty cool to see, though some of those end up being just as expensive as a larger house (still cheaper to heat/cool, though).

I just don't get the whole "You have to have a huge house!" thing I see so frequently.
Title: Re: The death of the 'Millionaire Next Door' dream
Post by: Tallgirl1204 on March 11, 2015, 02:54:58 PM

My wife & I have been house shopping lately (mostly looking at manufactured homes for where we're planning to live).  We toured a bunch, and it was really interesting.  We're planning on 2 kids, so want space for them, but we found a 1200 sq ft place that would actually work!  It would be tight, but for $55k... certainly an option.  We'll probably end up with something closer to 1800 sq ft (and then some outbuildings for my office space/etc, so effectively more), but neither of us want something huge.  We looked at a few triple wides that were 2500+ sq ft, and both of us felt it was too much space - we'd need to buy stuff to put in it, then clean it, and... that just doesn't sound fun.  Certainly not in keeping with our desire to spend a lot of time in the mountains hiking and camping.

There's also a whole movement about small houses ("The not-so-big house" and such came out a decade and change ago), which is pretty cool to see, though some of those end up being just as expensive as a larger house (still cheaper to heat/cool, though).

I just don't get the whole "You have to have a huge house!" thing I see so frequently.

Not ragging on you-- because good for you, thinking about a small house-- but 1800 s.f. sounds huge to me.  We (family of 3) live in about 1200 s.f. house and it seems pretty big, except for the lack of a garage (which we converted into a rental apartment, so there's that).  We are working on remodeling a different house that is maybe 1300 s.f. but has both a garage and a space for a rental apartment attached. 

Just something else to think about-- I understand that manufactured homes don't hold their value as well as traditionally built homes, and don't tend to maintain their condition over time.  The plumbing and fixtures tend to be less than dependable (maybe you can upgrade them at the beginning?  I don't know-- I'm speaking from personal experience as a former tenant of what is likely the lower end).  You might want to consider the life-cycle costs of buying a manufactured home vs. constructed, including the re-sale value at the end of your use. 

But again-- good for you for thinking about home size as a bell curve of satisfaction, not a linear state of bigger-is-better. 
Title: Re: The death of the 'Millionaire Next Door' dream
Post by: mm1970 on March 11, 2015, 03:18:56 PM
Yep, that last paragraph is a doozy.  But really, it should be split into two:

Quote
For the rest of us, saving and investing is an act of deferred gratification -- by waiting, we have more to spend on goods and services that please us. "I see no special heroism in accumulating money," Taleb wrote, "particularly if, in addition, the person is foolish enough to not even try to derive any tangible benefit from the wealth....

This is true.  Accumulating money just for the sake of accumulation is pointless.  You should attempt to derive tangible benefits from it, like say, I don't know, not going to work.

Quote
I certainly do not see the point of becoming [a millionaire] if I were to adopt Spartan (even miserly) habits and live in my starter house."

But as usual, the only way to derive these tangible benefits in the minds of most are to spend it on increasingly lavish items.  I mean, can you even imagine living in a "starter house" your whole life?  THE HORROR!!  I mean, it's hardly even a real house.  I hear they only have 3 walls.
Goodness. I will probably retire in my starter house.  My son complains about how small it is.  Ah well, he'll survive.
Title: Re: The death of the 'Millionaire Next Door' dream
Post by: mm1970 on March 11, 2015, 03:22:46 PM

My wife & I have been house shopping lately (mostly looking at manufactured homes for where we're planning to live).  We toured a bunch, and it was really interesting.  We're planning on 2 kids, so want space for them, but we found a 1200 sq ft place that would actually work!  It would be tight, but for $55k... certainly an option.  We'll probably end up with something closer to 1800 sq ft (and then some outbuildings for my office space/etc, so effectively more), but neither of us want something huge.  We looked at a few triple wides that were 2500+ sq ft, and both of us felt it was too much space - we'd need to buy stuff to put in it, then clean it, and... that just doesn't sound fun.  Certainly not in keeping with our desire to spend a lot of time in the mountains hiking and camping.

There's also a whole movement about small houses ("The not-so-big house" and such came out a decade and change ago), which is pretty cool to see, though some of those end up being just as expensive as a larger house (still cheaper to heat/cool, though).

I just don't get the whole "You have to have a huge house!" thing I see so frequently.

Not ragging on you-- because good for you, thinking about a small house-- but 1800 s.f. sounds huge to me.  We (family of 3) live in about 1200 s.f. house and it seems pretty big, except for the lack of a garage (which we converted into a rental apartment, so there's that).  We are working on remodeling a different house that is maybe 1300 s.f. but has both a garage and a space for a rental apartment attached. 

Just something else to think about-- I understand that manufactured homes don't hold their value as well as traditionally built homes, and don't tend to maintain their condition over time.  The plumbing and fixtures tend to be less than dependable (maybe you can upgrade them at the beginning?  I don't know-- I'm speaking from personal experience as a former tenant of what is likely the lower end).  You might want to consider the life-cycle costs of buying a manufactured home vs. constructed, including the re-sale value at the end of your use. 

But again-- good for you for thinking about home size as a bell curve of satisfaction, not a linear state of bigger-is-better.
Manufactured homes are fine if you can fix them up.  And of course, they come in a variety of finishes (my BIL used to make them, and I have family and friends who live in them).

So my sister and her husband's double-wide is probably 20+ years old now.  Built on a basement foundation with a deck and all.  And over the years, they've replaced the walls with drywall and replaced some of the plumbing, etc.  It's pretty much a real house by now.
Title: Re: The death of the 'Millionaire Next Door' dream
Post by: Syonyk on March 11, 2015, 03:48:39 PM
Not ragging on you-- because good for you, thinking about a small house-- but 1800 s.f. sounds huge to me.  We (family of 3) live in about 1200 s.f. house and it seems pretty big, except for the lack of a garage (which we converted into a rental apartment, so there's that).  We are working on remodeling a different house that is maybe 1300 s.f. but has both a garage and a space for a rental apartment attached.

We'll see.  We haven't decided on anything yet, and there wasn't much on display in the size range between 1200 (which seemed a bit small, if entirely doable) and 1800-2000 (which seemed a little bit large, but had nice kitchens and pantries, which we want).  Hopefully this summer we'll start making more specific decisions about what we want, and can figure out the tradeoffs involved.  I personally think 1500-1600 sq ft would be about ideal, but we'll see where we end up.  There were definitely some wasteful uses of space in some of the homes we looked at (hallway zigs that were literally useless space but probably 80 sq ft used), and we want to minimize those space wastes.  It's also easy to add a room to the end of most of the homes which could be used as a playroom or general utility space.  I really don't think we'll end up beyond 2000 sq ft, and probably will settle in a good bit below that.

Some of the space is going to a nice kitchen.  My wife cooks pretty much everything from scratch, and we're planning on a decent garden, so having a larger kitchen with a lot of space to work (also pantry space) is important to us.

However, this also doesn't count office space.  I'm planning to retrofit a shipping container or two as office space/lab space, since I'll be working from home most of the time, and need places for some development hardware racks.  I don't really count that in home square feet, though.

Quote
Just something else to think about-- I understand that manufactured homes don't hold their value as well as traditionally built homes, and don't tend to maintain their condition over time.  The plumbing and fixtures tend to be less than dependable (maybe you can upgrade them at the beginning?  I don't know-- I'm speaking from personal experience as a former tenant of what is likely the lower end).  You might want to consider the life-cycle costs of buying a manufactured home vs. constructed, including the re-sale value at the end of your use.

"I don't care." :)  We don't intend to resell it, and if we get nothing out of it after 30 years, I'm fine with that (we wouldn't be paying that much for it to begin with).  We have an opportunity to move onto a corner of my wife's parent's property (17 acres in rural Idaho), and pretty much just pay for the structure and some upgrades (the septic system is 40+ years old, so that will need some work).  We'll have a lot more land for kids to run around on, grandparents up the hill, and other family in the immediate area, vs where we are now with none of that.  It's much better suited to our desired lifestyle than suburbs.

Also, newer manufactured homes are rather nice.  2x6 construction, heavily insulated, drywall, nice counters if you care, etc.  They're not a 1970s trailer that most people think of, and we'd be putting it on a proper foundation (possibly with a basement - haven't decided on that yet, depends on cost since we'd be putting it on the side of a hill).  Manufactured homes are rather common out in Idaho, and on most of them, you really can't tell the difference between it and a stickbuilt house without paying close attention.  They do tend to be more square, missing all sorts of weird angles that leak heat, though.

As far as maintaining them in decent condition, you can certainly let one fall apart, but I've yet to be convinced that they will fall apart no matter what you do.  If it does start having problems in 20-30 years, well... kids will be in college, and we can build something out of shipping containers for my wife & I. :)

Manufactured homes are fine if you can fix them up.  And of course, they come in a variety of finishes (my BIL used to make them, and I have family and friends who live in them).

So my sister and her husband's double-wide is probably 20+ years old now.  Built on a basement foundation with a deck and all.  And over the years, they've replaced the walls with drywall and replaced some of the plumbing, etc.  It's pretty much a real house by now.

The new ones can come from the factory with drywall, and once they put it together and tape it up, you really can't tell the difference.  We plan to go with a foundation, and probably a deck at some point.  I'm also planning to play with solar heating and cooling, and a bunch of other fun low tech solutions, so having something modifiable is useful to me.  DIY solar radiant heating, perhaps? :)

It's an unusual approach, but we've thought it through and are convinced it's the best option for how we want to live life and raise our kids (close to family, in a rural area, somewhat self sufficient, free to travel and explore).
Title: Re: The death of the 'Millionaire Next Door' dream
Post by: begood on March 11, 2015, 04:53:43 PM
We kept the blueprints of our "starter home" - one-level, 3 BR, 2BA, 1500 sf - so we could build it again if we wanted to in retirement. We couldn't just stay in it - we've moved four times since that house - but it was so sweet, so liveable, bright and cheery and perfect. I would love to live in it again someday!
Title: Re: The death of the 'Millionaire Next Door' dream
Post by: One Noisy Cat on March 11, 2015, 08:33:42 PM
    Assuming he actually read the "Death of Equities" article in an August, 1979 "Business Week" issue, he didn't understand. BW was not saying buy equities because they were undervalued. They were saying only old people held stock because they could not see how smart it was to own gold (negative real returns last 35 years) and other commodities. It doubted that politicians could bring down inflation. Surprise-they did. Gold fell, commodities resumed their long trend of decline, stocks went on a bull market in 1982, politicians
set up 401(k) and IRA to replace declining pensions, CDs fell so people like me moved to stocks, baby boomers starting to work in economy contributing to it instead of needing book larnin' and taking away from it.

    From what I read about the millionaire gas station attendant, he seemed like a happy, likeable, decent human being and step father.  Has anyone found any major holes in his story as to how he became rich, like a massive inheritance or lottery winner?

    If you keep saying it can't be done, then it won't get done.
Title: Re: The death of the 'Millionaire Next Door' dream
Post by: MgoSam on March 11, 2015, 11:02:57 PM
own gold (negative real returns last 35 years) and other commodities. It doubted that politicians could bring down inflation. Surprise-they did. Gold fell, commodities resumed their long trend of decline, stocks went on a bull market in 1982

This feels like the CW after the housing collapse a few years ago. I know a TON of people that went out and bought gold thinking it would hit $2000, unfortunately for them I don't think any walked out with any gains.
Title: Re: The death of the 'Millionaire Next Door' dream
Post by: libertarian4321 on March 12, 2015, 04:15:26 AM
This is interesting:

http://www.latimes.com/business/hiltzik/la-fi-mh-the-death-of-the-millionaire-next-door-dream-20150310-column.html#page=1

Maybe not a lot of janitors will become "millionaire next door" types.  But middle class people are still becoming millionaires every day, even as this LA Times Doofus, er, author claims it can't be done.

It seems that those who say something can't be done are usually those who fail.  Those who believe it can be done are far more likely to succeed.
Title: Re: The death of the 'Millionaire Next Door' dream
Post by: whydavid on March 12, 2015, 05:44:59 PM
Nassim Taleb has really interesting ideas, but in the end, he's an asshole. He speaks like one, he's one on the internet and a lot of people who met him say he's a big one in real life too. Whatever his personal opinion is on a matter, I'm pretty sure I'll be happier doing the opposite.

Yeah. I started one of his books, but I quit in the middle because he was just so full of himself, I couldn't take any more.
This is one of those cases where it's best just to grin and bear it. The man's writing is arrogant and wordy, and he's not nearly as witty as he thinks he is. Nonetheless, his intuition on uncertainty is brilliant and worth digesting. In the words of the Dude: "You're not wrong, Walter, you're just an asshole!"

He does have some brilliant insights into uncertainty...insights he has used to amass a decent fortune.  Unfortunately, at some point he got the idea that he was actually contributing something to society, which couldn't be more false.  He found a flaw in how options were priced that he could take advantage of, and he did so, and was rewarded for it.  Aside from a small handful he has employed, no one in the world is better off because Taleb was in it, and I suspect that will always remain the case.  But, he does have all that money!
Title: Re: The death of the 'Millionaire Next Door' dream
Post by: golden1 on March 13, 2015, 08:47:09 AM
That article made me sadder for the writer than it did for the subject of the article.  Happiness isn't found in accumulating things.

That being said, there are people who are miserly to the point of seeming self-hatred just like there are people who are driving themselves into an early grave with overspending, overwork and oversonsumption.
Title: Re: The death of the 'Millionaire Next Door' dream
Post by: Kaspian on March 13, 2015, 09:34:43 AM
I hate the term "starter home". ...


Amen!  I also hate "forever home".  Usually when people use one of these terms it's to justify a bad decision.  "Your forever home"?  Really?  I'm going to put my money on the house being there long after you're gone. 

Anyway, why do these articles focus on denial?  Most of the people here are more concerned about being mindful consumers and not being wasteful, gluttonous pigs of the world's resources.  It's well known that not everyone on earth can live the way the average Westerner does.  The earth would be destroyed in years.  ...So what does that make the majority of people on the planet who don't live high on the hog?  Losers?  :(
Title: Re: The death of the 'Millionaire Next Door' dream
Post by: dios.del.sol on March 13, 2015, 09:49:43 AM
Nassim Taleb has really interesting ideas, but in the end, he's an asshole. He speaks like one, he's one on the internet and a lot of people who met him say he's a big one in real life too. Whatever his personal opinion is on a matter, I'm pretty sure I'll be happier doing the opposite.

Yeah. I started one of his books, but I quit in the middle because he was just so full of himself, I couldn't take any more.
This is one of those cases where it's best just to grin and bear it. The man's writing is arrogant and wordy, and he's not nearly as witty as he thinks he is. Nonetheless, his intuition on uncertainty is brilliant and worth digesting. In the words of the Dude: "You're not wrong, Walter, you're just an asshole!"

He does have some brilliant insights into uncertainty...insights he has used to amass a decent fortune.  Unfortunately, at some point he got the idea that he was actually contributing something to society, which couldn't be more false.  He found a flaw in how options were priced that he could take advantage of, and he did so, and was rewarded for it.  Aside from a small handful he has employed, no one in the world is better off because Taleb was in it, and I suspect that will always remain the case.  But, he does have all that money!
Taleb has popularized an important idea on the fundamental unknowability of much of the future. Most of us here agree with that, e.g. don't try to time the market, narratives behind market movements are all B.S., etc. MMM has even addressed this in one of his articles (http://www.mrmoneymustache.com/2013/07/10/if-i-woke-up-broke/), in which he muses about what he would do if he woke up broke (a truly unpredictable and unanticipated event with major consequences - a Black Swan). Recognizing that there are events outside our power to anticipate is important. It counters a hubristic attitude in our day that given enough time and computational power everything can be known and modeled, and that our path to success in life is better modeling and more knowledge.  I would definitely claim the popularization of this philosophical viewpoint as a contribution.
Title: Re: The death of the 'Millionaire Next Door' dream
Post by: RFAAOATB on March 13, 2015, 10:12:22 AM
Amen!  I also hate "forever home".  Usually when people use one of these terms it's to justify a bad decision.  "Your forever home"?  Really?  I'm going to put my money on the house being there long after you're gone. 

I just watched a documentry on the forever home where Downtown Abbey is filmed: Highclere Castle (http://en.wikipedia.org/wiki/Highclere_Castle).  My forever home idea is something similar.  Amass a fortune and build a castle.  Set up its inheritance to last centuries.  I'm not sure if I want to build it out in the country or in the heart of a mid sized city.  If compound interest is really that powerful, I'm surprised more people haven't done it. 
Title: Re: The death of the 'Millionaire Next Door' dream
Post by: MrsPete on March 14, 2015, 11:10:32 AM
Well, my husband and I are from a middle-class family and a lower-class family ... but we've lived much like the people described in the Millionaire Next Door, and -- yeah -- it works.  It's not a dead dream.  The keys are to start early and spend thoughtfully. 
quote author=MgoSam link=topic=33202.msg585306#msg585306 date=1426032544]
Um, has the writer even read his book? It describes so much about how parents' support is one of the worst things you can do.
Quote
Not really.  A whole lot of people on this board LOVE that chapter, but would do well to re-read it.  It discusses college tuition (good) and inflation of adult children's lifestyle (bad).
Well, I don't know about you guys, but that article convinced me.  I think I'll go buy a Keurig machine. [/sarcasm]
I gave my husband a Keurig machine for Christmas, and he loves it.  Of course, it was a refurbished machine that cost $50.  He's the only coffee drinker in the house, and he wants only one cup per day -- he's the ideal Keurig customer.
I feel like most people I know share the author's point of view, out of all my friends and family, I have only been able to convert one person to the cult of Mustachiasm. All my other friends just consider me a greedy hoarder that is incapable of enjoying life. Even when I show them the math, they just stare at me and with a straight face say, "....but buying things make me happy." I don't think they'll actually "get it" until I actually quit the rat race and demonstrate to them first hand the most luxurious thing you can buy with money: Free time.
Why bother?  Why care about whether people approve of your financial choices?
My wife & I have been house shopping lately (mostly looking at manufactured homes for where we're planning to live).  We toured a bunch, and it was really interesting.  We're planning on 2 kids, so want space for them, but we found a 1200 sq ft place that would actually work! . . .

Just something else to think about-- I understand that manufactured homes don't hold their value as well as traditionally built homes, and don't tend to maintain their condition over time.
Yeah, we're planning to build a home after our youngest graduates from high school ... and we've decided to build because we want something small (starter-house size), but we want certain upscale amentities -- walk-in pantry, large handicapped accessible shower, small office, and some upscale finishes -- that don't typically "pair up" with small houses.   

Manufacturered homes; AKA, trailers -- no thanks.  Insurance is higher, long-term prognosis is worse.  I wouldn't go that direction. 
Title: Re: The death of the 'Millionaire Next Door' dream
Post by: stlbrah on March 14, 2015, 12:22:25 PM
still don't understand how spending money == happiness. I buy everything that I want (wear the clothes I want, travel, hobby equipment, etc) and none of it really costs that much - usually a few thousand per year on such spending.

These people just need to hit the gym, take up a sport, hobby, draw, read/write, travel, bike, hike, do stuff with their kids if they have them, etc
Title: Re: The death of the 'Millionaire Next Door' dream
Post by: Joggernot on March 14, 2015, 04:34:47 PM
I'm the guy next door.  We lived frugally until I retired with good savings, but no pension (changed jobs every 5 years or so).  At retirement (62) we moved to the town of our choice, paid cash for the house, paid for low maintenance landscaping front and back, had a workshop the size of a large single-car garage built with full insulation, water, and heat/AC, and had the old car painted for the first time.  We're enjoying our "hobbies" of pottery and wood carving in the workshop.  I'm still living well and still have lots of savings.  It's worth it, folks.  Keep the faith.

Had the old car painted again this year as the paint was burning off in the Texas sun.
Title: Re: The death of the 'Millionaire Next Door' dream
Post by: arebelspy on March 14, 2015, 08:48:21 PM
Yeah, I fundamentally disagree with this article, but laughed at winterbike's description of Taleb above.  :)
Title: Re: The death of the 'Millionaire Next Door' dream
Post by: Syonyk on March 14, 2015, 09:44:50 PM
Manufacturered homes; AKA, trailers -- no thanks.  Insurance is higher, long-term prognosis is worse.  I wouldn't go that direction.

They're quite nice now... they're not the stuff people think of from the 70s. :)
Title: Re: The death of the 'Millionaire Next Door' dream
Post by: nobody123 on March 14, 2015, 09:52:54 PM
"To sum up, we should admire Read for living in a style that suited him and that would eventually benefit at least two deserving nonprofit institutions in his community."

This.

I don't get why people want to tell other people how to spend their money.  He used his accumulated wealth as a security blanket when alive, and to benefit society when dead.  Obviously those were the choices that made him happy.

Personally, I would probably make different choices with that level of wealth, but I don't begrudge him for doing what he thought was best.
Title: Re: The death of the 'Millionaire Next Door' dream
Post by: MoneyCat on March 15, 2015, 07:50:27 AM
My brother was just going off about the impossibility of retiring based on an NPR article he found online, so I showed him the math that if he invested only $10,000 a year for 30 years, he would end up with over $1 million in retirement savings.  He then said it was impossible to save $10,000 a year on $40,000 in earnings per year.  I told him that if he cut back on eating out, buying new cars, going on expensive vacations, etc., it really wasn't that hard but he laughed in my face.  You can lead a horse to water but you can't make it drink.  People would rather cry and complain and hope to win the lottery/have government fix everything for them than be inconvenienced temporarily in return for their complete freedom.

Meanwhile, I am saving 61% of my earnings right now.  (I can't save more because I live in a high COL state.)  Apparently, what I am doing is impossible.
Title: Re: The death of the 'Millionaire Next Door' dream
Post by: MrsPete on March 15, 2015, 03:50:36 PM
Manufacturered homes; AKA, trailers -- no thanks.  Insurance is higher, long-term prognosis is worse.  I wouldn't go that direction.

They're quite nice now... they're not the stuff people think of from the 70s. :)
Yeah, I know they're different -- still not up to par with a good stick-built house.  I have a good friend who lives in one -- less than 10 years old.  Total crap, in spite of sporting up-to-date colors, a kitchen island and a garden tub.  Even with the addition of a front porch, a deck and a garage, it's still quite obviously a trailer.  Doesn't feel solid underfoot.  Thin walls, those "lines" on the wall where the wall pieces fit together.  Still can burn down in minutes. 
Title: Re: The death of the 'Millionaire Next Door' dream
Post by: zephyr911 on March 18, 2015, 11:45:32 AM
The starter home thing kills me. I lived alone or sometimes with a roommate in a 2300sf palace a decade ago, and was lonely and depressed. Our latest buy is 1100sf, and by any metric - price, size, location - it is firmly in the "starter" category. And I have never been so goddamned excited about a house in all my life. Every time I come home, I'm filled with joy at the choice we made. The amount of awesome shit I'm going to be able to do with is tremendously inspiring. The cost savings and ensuing abundance brought about by this change of residence has already dramatically increased our quality of life and will do so increasingly over time.

Quality over quantity, I say. Starter home for life? Everyone should be so lucky.
Title: Re: The death of the 'Millionaire Next Door' dream
Post by: powersuitrecall on March 18, 2015, 03:05:32 PM
still don't understand how spending money == happiness. I buy everything that I want (wear the clothes I want, travel, hobby equipment, etc) and none of it really costs that much - usually a few thousand per year on such spending.

These people just need to hit the gym, take up a sport, hobby, draw, read/write, travel, bike, hike, do stuff with their kids if they have them, etc

Totally agree with this.  I found that as soon as we had kids we started saving a TON.  No more expensive nights out or travel.  Some would think couples would resent that. Maybe some do, but we love it.  We spend entire weekends exploring parks, going to museums.  Plus we have another reason to RE.  More time with them :)
Title: Re: The death of the 'Millionaire Next Door' dream
Post by: kite on March 23, 2015, 07:30:53 AM
Nassim Taleb has really interesting ideas, but in the end, he's an asshole. He speaks like one, he's one on the internet and a lot of people who met him say he's a big one in real life too. Whatever his personal opinion is on a matter, I'm pretty sure I'll be happier doing the opposite.

Everyone is an asshole on the internet.  Taleb is annoying because he punctured the myth that Stanley & Danko were peddling.   It's like being told to check your privilege.  And it's uncomfortable for those who are wedded to the notion of a meritocracy.    Those who were profiled in the MND performed a certain set of steps plus got lucky.  You can only repeat their success If you are also lucky.  What's disturbing is how ingrained the MND mythology is in our culture more than 14 years after it was debunked,  it is discussed as though it were legitimate.  It is to finance what homeopathy is to medicine.
Title: Re: The death of the 'Millionaire Next Door' dream
Post by: slugline on March 23, 2015, 07:51:36 AM
What's disturbing is how ingrained the MND mythology is in our culture more than 14 years after it was debunked,  it is discussed as though it were legitimate.

Ingrained? Even more than consumerism is ingrained in our culture? Point me to citations!
Title: Re: The death of the 'Millionaire Next Door' dream
Post by: zephyr911 on March 23, 2015, 08:17:34 AM
Eventually my net worth needs to mean more than numbers on a spreadsheet.  As it stands now I'm making more money than the poor, and in some cases living pooerer than the poor.  How are we sure the poor aren't living happier than us and aren't worried about credit card debt?
To quote the founder of this website and forum:
"The bottom line is this: by focusing on happiness itself, you can lead a much better life than those who focus on convenience, luxury, and following the lead of the financially illiterate herd that is the TV-ad-absorbing Middle Class of the United States today (and most of the other rich countries)."
http://www.mrmoneymustache.com/2013/02/22/getting-rich-from-zero-to-hero-in-one-blog-post/
To paraphrase: neither high SR nor high net worth implies happiness. Rather, a deeper understanding of the fundamental nature of happiness allows us to pursue it more effectively, with a high SR and ultimately a large 'Stash as natural consequences that flow directly from the ensuing shift in behavior.
 
Also related:
If You Think This is About Extreme Frugality, You’re Missing The Point (http://www.mrmoneymustache.com/2014/11/23/not-extreme-frugality/)
Title: Re: The death of the 'Millionaire Next Door' dream
Post by: Tallgirl1204 on March 23, 2015, 05:43:11 PM
[ Those who were profiled in the MND performed a certain set of steps plus got lucky.  You can only repeat their success If you are also lucky.  What's disturbing is how ingrained the MND mythology is in our culture more than 14 years after it was debunked,  it is discussed as though it were legitimate. 

I'm not sure what you mean.  Mr. Stanley did seem to skew toward people who owned their own businesses (and is that what you're saying is flawed?).  But does that mean his whole analysis was completely wrong?  Are you saying that the millionaire who lives quietly and without ostentation, who does not "flash his/her cash" and whose own neighbors have no idea that their dream of financial security is already being lived right next door-- are you saying that's a myth?

I realize that anecdotal evidence is only that, but I can name a number of my friends and neighbors who are living this dream right now-- quietly and below the radar.  If you saw them on the street, or met them at a social function, you would not be impressed by their apparent financial status.  But they have the financial freedom and security that many people wish for, without being martyrs to frugality-- like MMM, they have simply chosen other priorities.   
Title: Re: The death of the 'Millionaire Next Door' dream
Post by: darkadams00 on March 24, 2015, 10:34:52 AM
Taleb is annoying because he punctured the myth that Stanley & Danko were peddling.   It's like being told to check your privilege.  And it's uncomfortable for those who are wedded to the notion of a meritocracy.    Those who were profiled in the MND performed a certain set of steps plus got lucky.  You can only repeat their success If you are also lucky. What's disturbing is how ingrained the MND mythology is in our culture more than 14 years after it was debunked,  it is discussed as though it were legitimate.  It is to finance what homeopathy is to medicine.

I agree with the first comment I noted. Most of those profiled in MND as a MND did have a somewhat homogeneous profile--primarily that they became "the man" after they spent years working for "the man." They learned the trade and then expanded that knowledge into a profitable (and time-consuming and risk-assuming) endeavor. Most successful, non-franchised businesses start out this way. Some fail quickly. Some last for a decade or so. Some last for the long term and bring about great profits for the owner. The more successful owners I know are more conservative and are as protective of their business/livelihood as they are of their home/family. The ones that fail often overreach or fail to plan for downturns and difficulties. Yes, there are certain broad steps that are taken, but the paths can be varied somewhat. And now we have the higher-earning middle class (software folks, engineers, consultants, etc). That leads to its own path with its set of steps as well. This is not rocket science. It's the personal math and home economics that was taught in public schools in the 60s and 70s.

I don't agree with the second comment I noted. What luck? That I wasn't born a crack baby? That my dad didn't spend my childhood in prison? That I was born with functioning limbs? Here's my luck. My dad was the youngest of six kids born to an illiterate 43-year old mother. He was the only one of the six to finish high school. He raised my family to live within our means, period. Growing up I never saw him swipe a credit card one time. Work hard, spend what you need, and give charitably were the lessons I learned. Was that my luck? That I was the first person on my dad's side of the family to go to college (I paid for it!)? That I chose to maximize my opportunities by carefully selecting my major and two related minors? That I chose to go to grad school? That I spent my time working a job or studying and not partying? What is the luck to which you refer? That I didn't have a life-altering problem along the way? Your post sounds like sour grapes about your own choices that have morphed into a life philosophy. Some with worse backgrounds than mine have been more successful financially. Many who had a "better" background have fared worse. I posit that luck had little to do with it.
Title: Re: The death of the 'Millionaire Next Door' dream
Post by: MgoSam on March 26, 2015, 03:07:15 AM
[ MND mythology is in our culture more than 14 years after it was debunked,  it is discussed as though it were legitimate.  It is to finance what homeopathy is to medicine.

Debunked? Please indicate anywhere with statistics or evidence. I would be very interested to read this.
Title: Re: The death of the 'Millionaire Next Door' dream
Post by: kite on March 27, 2015, 07:16:18 AM
[ MND mythology is in our culture more than 14 years after it was debunked,  it is discussed as though it were legitimate.  It is to finance what homeopathy is to medicine.

Debunked? Please indicate anywhere with statistics or evidence. I would be very interested to read this.

Selection bias undermines the entire analysis.   This bias was pointed out in 2001.   

I enjoyed the book, it was quite entertaining.   But it is only a story, and not a very relevant one at that.   Most farmers and entrepreneurs who lived below their means,  shopped at JC Penny and drank Budweiser did not become millionaires.   Most went bust. 
These are not sour grapes as was suggested by someone upthread.  I am rich and I also live modestly.   But I'm not rich because I'm frugal,  I'm rich for a series of random things that worked in my favor.  In contrast,  most frugal people who live below their means are poor and they stay poor.  This has been true since the beginning of time, and it is true today. 
Title: Re: The death of the 'Millionaire Next Door' dream
Post by: zephyr911 on March 27, 2015, 07:36:48 AM
Selection bias undermines the entire analysis.   This bias was pointed out in 2001.   

I enjoyed the book, it was quite entertaining.   But it is only a story, and not a very relevant one at that.   Most farmers and entrepreneurs who lived below their means,  shopped at JC Penny and drank Budweiser did not become millionaires.   Most went bust. 
These are not sour grapes as was suggested by someone upthread.  I am rich and I also live modestly.   But I'm not rich because I'm frugal,  I'm rich for a series of random things that worked in my favor.  In contrast,  most frugal people who live below their means are poor and they stay poor.  This has been true since the beginning of time, and it is true today.
So you feel that spending plays no role whatsoever in reaching FI?
I don't think anyone denies that earnings are important to the accumulation of wealth. But the idea that what you do with the money once you have it doesn't matter is sort of the opposite of why we're all here.
Title: Re: The death of the 'Millionaire Next Door' dream
Post by: arebelspy on March 27, 2015, 08:03:40 AM
[ MND mythology is in our culture more than 14 years after it was debunked,  it is discussed as though it were legitimate.  It is to finance what homeopathy is to medicine.

Debunked? Please indicate anywhere with statistics or evidence. I would be very interested to read this.

Selection bias undermines the entire analysis.   This bias was pointed out in 2001.   

I enjoyed the book, it was quite entertaining.   But it is only a story, and not a very relevant one at that.   Most farmers and entrepreneurs who lived below their means,  shopped at JC Penny and drank Budweiser did not become millionaires.   Most went bust. 
These are not sour grapes as was suggested by someone upthread.  I am rich and I also live modestly.   But I'm not rich because I'm frugal,  I'm rich for a series of random things that worked in my favor.  In contrast,  most frugal people who live below their means are poor and they stay poor.  This has been true since the beginning of time, and it is true today.

We'll have to agree to disagree.

What you state is not fact.
Title: Re: The death of the 'Millionaire Next Door' dream
Post by: Candace on March 27, 2015, 08:08:20 AM
My brother was just going off about the impossibility of retiring based on an NPR article he found online, so I showed him the math that if he invested only $10,000 a year for 30 years, he would end up with over $1 million in retirement savings.  He then said it was impossible to save $10,000 a year on $40,000 in earnings per year.  I told him that if he cut back on eating out, buying new cars, going on expensive vacations, etc., it really wasn't that hard but he laughed in my face.  You can lead a horse to water but you can't make it drink. 

This is what I find the most frustrating. My friends' mindset is that going out to eat, going to expensive balls, and taking international vacations is "necessary". They just stare blankly at me if I ever bring up the possibility of retiring before 65. I really hate how people refuse to take responsibility for themselves. They just figure they'll declare bankruptcy if they get too far behind.

I've read "The Black Swan" and loved it. Yes, Taleb is probably an asshole, but he has good points to make that are useful and wrapped up in a fun to read book. I'll just pretend not to recognize him if I ever see him, which is not likely.
Title: Re: The death of the 'Millionaire Next Door' dream
Post by: whydavid on March 29, 2015, 03:21:07 AM
[ MND mythology is in our culture more than 14 years after it was debunked,  it is discussed as though it were legitimate.  It is to finance what homeopathy is to medicine.

Debunked? Please indicate anywhere with statistics or evidence. I would be very interested to read this.

Selection bias undermines the entire analysis.   This bias was pointed out in 2001.   

I enjoyed the book, it was quite entertaining.   But it is only a story, and not a very relevant one at that.   Most farmers and entrepreneurs who lived below their means,  shopped at JC Penny and drank Budweiser did not become millionaires.   Most went bust. 
These are not sour grapes as was suggested by someone upthread.  I am rich and I also live modestly.   But I'm not rich because I'm frugal,  I'm rich for a series of random things that worked in my favor.  In contrast,  most frugal people who live below their means are poor and they stay poor.  This has been true since the beginning of time, and it is true today.

Abraham Wald studied the damage dealt to bombers in WWII.  Others analyzing the same data had concluded that because planes returning to battle rarely had damaged engines, they need not worry about protecting the engines better.  Wald realized the sample of surviving planes was biased -- those with engine damage usually crashed -- and concluded that it was actually vital to protect the engines even though they appeared to be taking the least damage.  If the MND folks had written a book about these planes, they would have undoubtedly included a chapter about "not having bullet holes in your engine" in their first edition of "Still-Breathing Aircraft Pilot Next Door"

What Taleb points out in his criticism of MND isn't that any of the conclusions in MND are necessarily wrong (much of it is common sense financial advice like avoiding market timing and not spending all of the money you make, as I'm sure you know), but that they aren't sufficient alone to breed millionaires -- and more generally, that this type of study will never be able to distinguish necessary vs. sufficient.  In other words, "not getting shot in the engine" might be a key to surviving battle, but it alone is not sufficient: your wing might be taken off, the cockpit might get shot up, etc.  This is where the luck comes in.  He is not saying, "doesn't matter where you put the armor, it's all luck", or as you might say: " I'm not rich because I'm frugal,  I'm rich for a series of random things that worked in my favor."

So, Taleb is right...the study design is very weak if you are trying to prove that the steps laid out within cause people to become millionaires.  It can say "Most millionaires did X and avoided Y" but it can't say "If you do X and avoid Y, you will become a millionaire."

Then again, most PF books are full of hucksterism based on little or no real data.  So, while people may have overstated the power of the MND dataset, it is still a lot better than most in that regard.

Personally, I thought the book was horrifically boring, but that's besides the point.


Title: Re: The death of the 'Millionaire Next Door' dream
Post by: Syonyk on March 29, 2015, 09:30:06 AM
The book was a bit dry, yes...

At least when I read it a decade or so ago, the biggest thing I got out of it was, "Your net worth is not how flashy you are."  I was a college student at the time, and without having spent any real effort on money, I'd absorbed the "If you have more money, you drive nicer cars/have a bigger house/have a nicer watch" stuff that our culture seems to believe.

Hearing that there were lots of high net worth people who didn't look like it, and arguably were high net worth simply *because* they didn't spend everything coming in, was a big shift for me to think about.
Title: Re: The death of the 'Millionaire Next Door' dream
Post by: deborah on March 29, 2015, 01:42:55 PM
I know a number of high net worth people. Some are flashy, but most are not.
Title: Re: The death of the 'Millionaire Next Door' dream
Post by: kite on March 29, 2015, 04:34:43 PM
Selection bias undermines the entire analysis.   This bias was pointed out in 2001.   

I enjoyed the book, it was quite entertaining.   But it is only a story, and not a very relevant one at that.   Most farmers and entrepreneurs who lived below their means,  shopped at JC Penny and drank Budweiser did not become millionaires.   Most went bust. 
These are not sour grapes as was suggested by someone upthread.  I am rich and I also live modestly.   But I'm not rich because I'm frugal,  I'm rich for a series of random things that worked in my favor.  In contrast,  most frugal people who live below their means are poor and they stay poor.  This has been true since the beginning of time, and it is true today.
So you feel that spending plays no role whatsoever in reaching FI?
I don't think anyone denies that earnings are important to the accumulation of wealth. But the idea that what you do with the money once you have it doesn't matter is sort of the opposite of why we're all here.

We're all here because is satisfies our smug sense of superiority to read posts on the Antimustachian Wall of shame&comedy. 
Whydavid above gets it, re: Wald and the planes that didn't come back.  The evidence isn't limited to only what's in front of you, but also includes what is missing and why it's missing.   
What was missing from MND?  Blacks, Latinos,  Asian Americans and women who are something other than dutiful,  coupon clipping wives who may have worked as teachers.   If the authors were attuned to who was absent from their interview subjects,  they'd have recognized that their selection bias skewed towards a group that was far more fortunate than the population at large: straight,  white men born into the baby boom.  In the case of those who were farmers, (a frequent profession noted in their sample) they are the guys who had a II-C status, granting them deferment from a tour in Vietnam.  It should be clear that there were a few other differentiating characteristics that can't be attributed to thrift. 
Most of us here were born on third; we didn't hit a triple. 

Title: Re: The death of the 'Millionaire Next Door' dream
Post by: deborah on March 29, 2015, 04:45:27 PM
Most of their sample were not baby boomers - they were too young to be included
Title: Re: The death of the 'Millionaire Next Door' dream
Post by: a1smith on March 29, 2015, 05:56:00 PM
Here's my luck. ... the lessons I learned. ... maximize my opportunities by carefully selecting my major and two related minors ... grad school ... Some with worse backgrounds than mine have been more successful financially. Many who had a "better" background have fared worse. I posit that luck had little to do with it.

I like your "luck" examples.  Many people confuse good luck with hard work to be prepared for an opportunity when it presents itself and then having the foresight to pursue it.

I also paid for college (undergrad and grad) myself by GI bill, working jobs, and getting merit based scholarships and fellowships.  Not only did I graduate debt free but my wife and I had saved the down payment for our first house (she was working.)  I just finished a 2nd master's degree and my employer paid for that one.  And I am FI right now and have chosen to keep working; using MMM's term I am in the SWAMI, not FIRE category.

So, it is disappointing to me to see that people are writing that the MND dream is dead.  As mentioned above, there are many different paths to get there and it is still possible!!!
Title: Re: The death of the 'Millionaire Next Door' dream
Post by: Ambergris on March 29, 2015, 07:46:04 PM
 
I enjoyed the book, it was quite entertaining.   But it is only a story, and not a very relevant one at that.   Most farmers and entrepreneurs who lived below their means,  shopped at JC Penny and drank Budweiser did not become millionaires.   Most went bust. 
These are not sour grapes as was suggested by someone upthread.  I am rich and I also live modestly.   But I'm not rich because I'm frugal,  I'm rich for a series of random things that worked in my favor.  In contrast,  most frugal people who live below their means are poor and they stay poor.  This has been true since the beginning of time, and it is true today.

Abraham Wald studied the damage dealt to bombers in WWII.  Others analyzing the same data had concluded that because planes returning to battle rarely had damaged engines, they need not worry about protecting the engines better.  Wald realized the sample of surviving planes was biased -- those with engine damage usually crashed -- and concluded that it was actually vital to protect the engines even though they appeared to be taking the least damage.  If the MND folks had written a book about these planes, they would have undoubtedly included a chapter about "not having bullet holes in your engine" in their first edition of "Still-Breathing Aircraft Pilot Next Door"

What Taleb points out in his criticism of MND isn't that any of the conclusions in MND are necessarily wrong (much of it is common sense financial advice like avoiding market timing and not spending all of the money you make, as I'm sure you know), but that they aren't sufficient alone to breed millionaires -- and more generally, that this type of study will never be able to distinguish necessary vs. sufficient.  In other words, "not getting shot in the engine" might be a key to surviving battle, but it alone is not sufficient: your wing might be taken off, the cockpit might get shot up, etc.  This is where the luck comes in.  He is not saying, "doesn't matter where you put the armor, it's all luck", or as you might say: " I'm not rich because I'm frugal,  I'm rich for a series of random things that worked in my favor."

So, Taleb is right...the study design is very weak if you are trying to prove that the steps laid out within cause people to become millionaires.  It can say "Most millionaires did X and avoided Y" but it can't say "If you do X and avoid Y, you will become a millionaire."

Then again, most PF books are full of hucksterism based on little or no real data.  So, while people may have overstated the power of the MND dataset, it is still a lot better than most in that regard.

Personally, I thought the book was horrifically boring, but that's besides the point.

If I remember rightly, Stanley also helped himself to another dose of selection bias by sending the questionnaire out and offering something like a $100 reward for answering it. By doing this, he was in effect selecting for those extremely rich people who are cheap enough to spend the time filling out a questionnaire for $100.
Title: Re: The death of the 'Millionaire Next Door' dream
Post by: arebelspy on March 29, 2015, 10:02:08 PM
http://www.mrmoneymustache.com/2011/10/07/how-to-tell-if-youre-a-complainypants/
Title: Re: The death of the 'Millionaire Next Door' dream
Post by: kite on March 30, 2015, 07:19:32 AM
http://www.mrmoneymustache.com/2011/10/07/how-to-tell-if-youre-a-complainypants/

This is a funnier retort than you realize.   It isn't those who can see the flaws in MND who are defensive.   It's those who consider the book to be a sacred text of personal finance who are defensive.   They are the sore winners.   But that's unsurprising.   People tend not to like criticism of their religion. 

Like I said,  I'm rich.   Not because it took any particular discipline to save or because I worked all that hard.  I'm humble enough and observant enough to recognize how much the outcomes I enjoy have to do with my random good fortune.   I may have earned good grades and earned my wages, but I didn't earn the IQ that made them possible.   Random sperm met egg, and this conferred advantages to me that are incalculable.   On the flip side, I didn't save my money out of a disciplined program of avoiding hookers & cocaine, as it wasn't in my nature to want those things.  So, again, I'm not reigning in my wants at all.  There's little to do with my excess earnings but invest, and lo & behold,  I've lived during stable sociopolitical times in a long running bull market.   That's the trifecta right there.  No complaints on my part. 

Here's a tip:  when someone points out inequalities in life, don't reply by calling them "complainypants."  Racism & sexism are relevant and have consequences.  Consequences persist for generations.   Physical & mental health are taken for granted by those who have them, but their absence is costly to those who suffer.   For all that is great about the ACA, it doesn't close the gap.  You can disagree and call names.  But I think you'd do well to take a broader view of history. 
Title: Re: The death of the 'Millionaire Next Door' dream
Post by: arebelspy on March 30, 2015, 09:50:47 AM
Oh, I agree that the people in MND had large benefits that got them there, and there are many systemic problems for many minority groups.

That doesn't mean there aren't significant lessons to take from it, and that doing nothing but complaining about how he selected his interviewees gets anyone anywhere.

How would you suggest people who want a comfortable life (say, 1-2MM banked up) live, if not frugally ala MND?

In other words, rather than complain, I'd love a solution.  As I stated earlier, MND has a selection problem, in that all the failures aren't counted.  But the successes still had those things in common, so doing them is more likely to get you there than other methods, even if it's not a guarantee or even if you're still more likely to fail.

But if you disagree, what's your solution that people can implement?
Title: Re: The death of the 'Millionaire Next Door' dream
Post by: velocistar237 on March 30, 2015, 10:34:19 AM
These articles are claiming that the stories in MND have become irrelevant because it's just too hard to do that anymore, but then they make claims that are at least as problematic as their critiques. For example, they suggest that it's impossible for someone to accumulate $1 million because it's unlikely for a janitor to accumulate $8 million. In another article (http://www.thebaffler.com/blog/millionaire-next-door/), the writer pointed to statistics that "around a third of Baby Boomers worth more than $3 million claim to have grown up in a lower middle class home, versus 18 percent of Generation Xers, and 12 percent of Millennials." It's not surprising that it takes longer for someone who comes from a lower income home to reach $3 million, or that someone from a lower income home would stop before $3 million. These writers just don't have any quality data to back themselves up.

I'll agree that there's a selection bias, mostly about the survival of small businesses. What happens when you correct that bias? Does anyone have any better data on millionaires than MND? If better statistics continue to reflect MND profiles, then the argument is moo. Also, the results of a high savings rate are pretty mechanical.

The fact is, despite its flaws, MND shows that a lot of people became well off by earning enough and not wasting their money. That's a very valuable message, and a lot of people would benefit immensely by paying attention to these MND stories, even if they never achieve high earnings.

http://www.mrmoneymustache.com/2011/10/07/how-to-tell-if-youre-a-complainypants/

This is a funnier retort than you realize.   It isn't those who can see the flaws in MND who are defensive.   It's those who consider the book to be a sacred text of personal finance who are defensive.   They are the sore winners.   But that's unsurprising.   People tend not to like criticism of their religion.

I don't know, did you read the complainypants article? It talks about people who are critical of examples of success when the examples don't apply to all cases or take everything into account. Why would you call MND "not a very relevant" story when it illustrates the absolute best way to do well financially, absent very improbable scenarios? To boot, it catches people's attention because it talks about being rich.

The death of the MND is greatly exaggerated, and these authors are doing people a disservice to say otherwise.
Title: Re: The death of the 'Millionaire Next Door' dream
Post by: MgoSam on March 30, 2015, 10:38:47 AM
It's been a few years since I've read MND and it was on audio cd so I listened to it while driving so I may not have paid as much attention but I didn't take MND as

Do A, add B, subtract C=MILLIONAIRE!

To me it was more of a guideline towards living below my means and looking for opportunities to build wealth. It described how many of the wealthy don't outwardly show it. My goal isn't to be rich or poor, but to have enough and not need to worry about money.
Title: Re: The death of the 'Millionaire Next Door' dream
Post by: MoneyCat on March 30, 2015, 10:45:03 AM
I know that MND is gospel truth because I read a bunch of Horatio Alger stories.  Bootstraps! [/sarcasm]
Title: Re: The death of the 'Millionaire Next Door' dream
Post by: ash7962 on March 30, 2015, 10:55:22 AM
...
Like I said,  I'm rich.   Not because it took any particular discipline to save or because I worked all that hard.  I'm humble enough and observant enough to recognize how much the outcomes I enjoy have to do with my random good fortune.   I may have earned good grades and earned my wages, but I didn't earn the IQ that made them possible.   Random sperm met egg, and this conferred advantages to me that are incalculable.   On the flip side, I didn't save my money out of a disciplined program of avoiding hookers & cocaine, as it wasn't in my nature to want those things.  So, again, I'm not reigning in my wants at all.  There's little to do with my excess earnings but invest, and lo & behold,  I've lived during stable sociopolitical times in a long running bull market.   That's the trifecta right there.  No complaints on my part. 

...

To address the paragraph in your comment, I think you're right that there is a luck factor in whether you end up rich or not, and some people are just not born in a position to reach that status.  Its still possible probably with a lot of luck, but the cards are stacked against them.  I just finished MND less than a week ago, and I feel like you have to keep in mind that their book is not a guide for becoming a millionaire or anything.  Their book is just a look at current millionaires (high income, affluent people) vs the high earners who are not millionaires (high income, not affluent).  I think you have to consider their intended audience as people who could be millionaires, as in they have the income to become one, but have not because of their spending decisions.  I'd argue that because the authors are comparing millionaires vs high income non millionaires then luck is not a significant factor since everyone they included has already proven "lucky" enough to have a high income.  As people have said, this book does not do any justice to scenarios where people are going 0 to hero, but I don't think that's what the book is trying to do anyway.

Also, I don't understand how not interviewing people who failed at business would be relevant to their book.  All the example scenarios I remember from the book compared a millionaire with another high income person who was not a millionaire which I feel was the whole premise.  Why would including low income, low wealth individuals (people with failed businesses) be relevant?  On the other hand, there are plenty of people in this country who are high income but are not wealthy, and I think anyone who is in the MMM forums would agree.  These are the people who the MND dream is still alive for, myself included.
Title: Re: The death of the 'Millionaire Next Door' dream
Post by: zephyr911 on March 31, 2015, 09:38:13 AM
I've only read excerpts and commentary, so by all means facepunch me if I'm wrong.

The basic premise is to highlight ways in which people can, and do, increase their odds of becoming millionaires, as indicated by studies of actual millionaires.

I don't take it as a prescription, and I don't see it as a premise that is in any way undercut by the existence of external factors. Isn't the point of MMM, or MND, or any self-actualization advice, to do what you can about the things you can?
Title: Re: The death of the 'Millionaire Next Door' dream
Post by: arebelspy on March 31, 2015, 10:05:17 AM
The basic premise is to highlight ways in which people can, and do, increase their odds of becoming millionaires, as indicated by studies of actual millionaires.

Right.  So the failure cases, while relevant in that "this won't work every time" are irrelevant if it's still the most reliable way compared to others.

And frugality and LBYM seems to me to be that way.
Title: Re: The death of the 'Millionaire Next Door' dream
Post by: DecD on March 31, 2015, 10:12:16 AM
The basic premise is to highlight ways in which people can, and do, increase their odds of becoming millionaires, as indicated by studies of actual millionaires.

Right.  So the failure cases, while relevant in that "this won't work every time" are irrelevant if it's still the most reliable way compared to others.

And frugality and LBYM seems to me to be that way.

Right.  Regardless of my past luck/circumstances/choices, given my current situation, I can highlight two paths:

1.  Spend 95% of my income on cars, vacations, clothes, electronics, housing and invest 5%.
2.  Spend 40% of my income and invest 60%.

One path will lead to higher net worth than the other. 
Title: Re: The death of the 'Millionaire Next Door' dream
Post by: Cathy on March 31, 2015, 10:15:30 AM
... most frugal people who live below their means are poor and they stay poor.  This has been true since the beginning of time, and it is true today.

Forgetting about everything else you said, this specific claim is a bit silly. The economic environment at "the beginning of time" has pretty much zero connection to life in modern times in a developed country. It's important to remember that capitalism is a relatively recent invention. Historically, control of assets and land was based on war. Between wars, ownership was based on a grant from the local king or other authority. Capitalism may not have completely extinguished either of those systems, but it's certainly a big step forward.

It's patently silly to make a point about modern times based on a claim about the ability to accumulate assets through frugality at "the beginning of time", or indeed any time before the advent of modern free market capitalism.

Under capitalism, it's pretty obvious that if you don't spend money, it will accumulate. Where else would it go that would force you to stay poor? Is it just going to evaporate? In pre-capitalist societies, you have to worry about arbitrary government confiscation, rogue gangs and other forms of outlaw violence, and various other threats. Under capitalism, however, your money doesn't just disappear if you don't spend it. It accumulates. This certainly was not true at the beginning of time, but it is very true today, assuming you live in the US or Canada.

No one will disagree with you that there are various challenges in life that different people face. But your core claim -- that if you don't spend money, it will somehow disappear and prevent you from accumulating assets -- is pretty much complainypants.
Title: Re: The death of the 'Millionaire Next Door' dream
Post by: zephyr911 on March 31, 2015, 10:29:21 AM
^^Yes.
I don't dispute for a second that there are unique challenges to rising above the very bottom strata for income.
Exhibit A (https://www.google.com/?gws_rd=ssl#q=the+cost+of+being+poor")
We as a society should at least ensure a level playing field.
But, level field or no, most people do have options. I have a friend who gets by on around a grand a month between SSI, food stamps, and the occasional help from his parents, who spends more on convenience/luxury food than I do. To be truly powerless is one thing; to take your limitations as an excuse for making no effort whatsoever is another.
Title: Re: The death of the 'Millionaire Next Door' dream
Post by: vivophoenix on March 31, 2015, 10:41:48 AM
has this topic seriously devolved into a debate about the use of the phrase "since the beginning of time"?

 poor people remain poor, its true.  everyone can't be rich, everyone can't be in the middle. there are tons of factors. i think we can all agree that spending less than you earn is helpful.

but it is also true that racism, sexism, and classism and other 'isms' hold people back. people want to pretend that they "boot-strapped" themselves up, in particular, people  in America. IN particular people, in America,  in these forums.

if hard work made millionaires, brown female blue collar laborers would be millionaires.

guess what,  if you are a white male in America,  you are standing here on generations of brown people and women.

and saying its complainy pants is a bs cop out.

 its easy to call people whiners, when your people weren't systematically screwed over at every turn.

and sure,  some white guy is gonna turn up after my post, talking about how poor his family was, and how he was the first in his generation to do x, y, and z. and thanks to his hard work and scrimping and saving, he's the man he was today. and someone is gonna whine about how the "Irish", "polish", "insert white immigrant here" had it hard too at some point.

but seriously,  is it so hard for you to just acknowledge that you received the advantage of looking exactly like the people that run the system!?

 from the job interviewer, to the teacher at your school, to review board of what ever college you attended, to the boss you work for,
the person who rents or sells to you. the person that makes the banking decisions for your loans.

redlining is real
Title: Re: The death of the 'Millionaire Next Door' dream
Post by: Cathy on March 31, 2015, 10:48:35 AM
It always amuses me how pro-capitalist posts on this forum attract invitations to play the Oppression Olympics. As usual, I will decline.

I like capitalism. And I don't think that is inconsistent with feminism, or with any other social justice ideal. But unfortunately I don't know whether to consider myself a feminist these days, because most feminists I know are socialists, and I don't fit in well with them. I consider it somewhat unfortunate that a hatred of capitalism among some feminists is expelling people who would otherwise be allies.
Title: Re: The death of the 'Millionaire Next Door' dream
Post by: odput on March 31, 2015, 10:49:36 AM
poor people remain poor, its true.  everyone can't be rich, everyone can't be in the middle. there are tons of factors. i think we can all agree that spending less than you earn is helpful.

"Everyone can't be rich" is only true is you measure "rich" against everyone else.  So while it is true that everyone can't be a 1%er, in first world countries it is absolutely false that everyone can't be rich, since in many ways rich means all your basic needs are met and you have friends and family to make your life fulfilling.

ETA: before we get into a silly side argument, let's not conflate that everyone CAN be rich in this sense with everyone IS rich in this sense in first world countries.  I'm not naive enough to think that homeless people in the US are rich, but more I'm pointing out that everyone CAN be rich in this construct.
Title: Re: The death of the 'Millionaire Next Door' dream
Post by: zephyr911 on March 31, 2015, 10:57:41 AM
poor people remain poor, its true.  everyone can't be rich, everyone can't be in the middle. there are tons of factors. i think we can all agree that spending less than you earn is helpful.

"Everyone can't be rich" is only true is you measure "rich" against everyone else.  So while it is true that everyone can't be a 1%er, in first world countries it is absolutely false that everyone can't be rich, since in many ways rich means all your basic needs are met and you have friends and family to make your life fulfilling.

I'm not sure what is meant by "poor people remain poor" if you're talking about actual quality of life.
Entire nations and socieites quite clearly can and do, at times, raise the standard of living for even the poorest of the poor.
There is nothing preventing everyone from living better, regardless of your percentile. Most of the world has been on that trajectory pretty consistently, starting with the invention of tools, proceeding through the Agricultural and Industrial Revolutions up through today. The average human being is much higher on Maslow's hierarchy of needs than we were as hunter-gatherers.
Of course, whether the average human is actually happier as a result is a complex question, made more so by our obsession with comparing ourselves to each other. But we do have much longer, safer lives. Hell, in the US we have categorized certain material pleasures that ancient kings didn't have as basic human rights.
Title: Re: The death of the 'Millionaire Next Door' dream
Post by: kite on March 31, 2015, 01:53:04 PM
"The idea that the average guy can become rich via hard work and rigorously virtuous thrift is one of the compelling myths of the American experience.

But for the most part,  myth it is."

So begins the linked article.  This is the myth I'm talking about.   It's not close to complainypants to point out the problems with the myth.
  Far from it.  If you believe it, because of a best selling book based on decades old market research,  you have been misled by sampling bias and a nicely spun yarn with some colorful characters.
Even Stanley&Danko's own research doesn't support the hypothesis that thrift was the #1 contributing factor to their subject's wealth.   They (the millionaires) had median wage of 4 times the US median.  Dig further.   They saved around 20% of their income.   That's wonderful,  but it isn't especially thrifty.  In today's economy,  it's putting aside 40k on a 200k income.  I'd expect any hardcore mustachian to say, nice try, but what is wrong with you that you're still wasting another 100 grand?!?!?!?!?  The face punches would be flying.

The most significant differentiator between the MND profilees and regular guys is wages.   They were in the top 5% of all earners.   No chance that all, or even most of us can have top 5% earnings.   Even for white guys, this is rare. 

Implicit in the MND myth is that if you aren't rich,  it's because you weren't frugal enough or made some poor decisions along the way.   Far from it.  Despite best efforts,  most will fall short, no matter how frugal, because of that pesky wage problem.  But this thinking (that anyone could if they tried hard enough and sacrificed enough) pervades the electorate and it shapes public policy.   It's impact over the years may have factored into our current situation with polarizing inequality.   "The reason "they" have fallen so far behind must be something "they" have done wrong.  Me, I made my own luck, worked hard, scrimped and saved, yadda, yadda..."   Open your eyes.  It's all been random.
Why should any of my fellow capitalists actually care?  Because the race to the bottom threatens to undermine capitalism.   The very thing that keeps the equity markets humming along and delivers a modest return on your index funds requires capitalism that thrives.  This isn't an endorsement to spend unnecessarily,  but there isn't room for too much more packing of lunches and turning down thermostats in the average poor person's financial life.  Can the middle class do with a bit of belt tightening?   Certainly.  No argument there.  They'll be better off for having done so.  But they won't get rich.  This is the painful honesty that doesn't sell books. 
Title: Re: The death of the 'Millionaire Next Door' dream
Post by: odput on March 31, 2015, 02:35:25 PM
Me, I made my own luck, worked hard, scrimped and saved, yadda, yadda..."   Open your eyes.  It's all been random.

Why is it so hard to realize that we are saying that both of these factors are at play here, and that they aren't mutually exclusive.  Even people born on third have to run home, and to call the effort that it takes to get home (no matter how much less effort it is from third than from first) random is absurd.  People born on third get tagged out all the time...
Title: Re: The death of the 'Millionaire Next Door' dream
Post by: kite on March 31, 2015, 04:22:38 PM
^
Good job.
Here, have a cookie.
Title: Re: The death of the 'Millionaire Next Door' dream
Post by: velocistar237 on March 31, 2015, 05:35:16 PM
^
Good job.
Here, have a cookie.

No need to be patronizing. It was a decent response.
Title: Re: The death of the 'Millionaire Next Door' dream
Post by: One Noisy Cat on March 31, 2015, 08:36:53 PM
has this topic seriously devolved into a debate about the use of the phrase "since the beginning of time"?

 poor people remain poor, its true.  everyone can't be rich, everyone can't be in the middle. there are tons of factors. i think we can all agree that spending less than you earn is helpful.

but it is also true that racism, sexism, and classism and other 'isms' hold people back. people want to pretend that they "boot-strapped" themselves up, in particular, people  in America. IN particular people, in America,  in these forums.

if hard work made millionaires, brown female blue collar laborers would be millionaires.

guess what,  if you are a white male in America,  you are standing here on generations of brown people and women.

and saying its complainy pants is a bs cop out.

 its easy to call people whiners, when your people weren't systematically screwed over at every turn.

and sure,  some white guy is gonna turn up after my post, talking about how poor his family was, and how he was the first in his generation to do x, y, and z. and thanks to his hard work and scrimping and saving, he's the man he was today. and someone is gonna whine about how the "Irish", "polish", "insert white immigrant here" had it hard too at some point.

but seriously,  is it so hard for you to just acknowledge that you received the advantage of looking exactly like the people that run the system!?

 from the job interviewer, to the teacher at your school, to review board of what ever college you attended, to the boss you work for,
the person who rents or sells to you. the person that makes the banking decisions for your loans.

redlining is real

Of course for decades Asian Americans have had higher incomes than white Americans and now it's Desis (Indians). But sure as April follows March, you will scream "don't confuse me with the facts!".  And for almost 40 years since Bakke, it has been legal for colleges to discriminate based on race (which hurts Jews and Asians).  Of course the biggest factor in determining a child's future is both parents remaining together...something which in the Black community has declined dramatically the last half-century.
   Far better to whine and moan about racism and class fantasies.
Title: Re: The death of the 'Millionaire Next Door' dream
Post by: a1smith on March 31, 2015, 10:06:35 PM
What was missing from MND?  Blacks, Latinos,  Asian Americans and women who are something other than dutiful,  coupon clipping wives who may have worked as teachers.

Well, they might be missing in MND but they aren't missing in the people I know who are MND's.  One of my best friends at work is black and he is certainly a MND.  There is a high percentage of Asian Americans in my city and many of them are MND, one of which is a best friend.  Another friend of mine at work is from Brazil; he is younger so I don't think he is a MND yet but is certainly on that path.  My manager is a woman and she is also a MND.  These are just a few examples; I could list many more.

Want to know what I see in common with all of these people?  They came from stable families which, as mentioned above, is a big indicator of future success.  Also, they all have advanced degrees (MS, PhD) which allow them to have a nice income.  The advanced degree is not an advantage they were born with on third base; they worked for it.  And there are lots of people who didn't have the advantage of having their whole education paid for either; there are many who have worked to pay for it or have loans that they need to pay off.

Someone else mentioned IQ as an advantage that you are born with.  I was an undergraduate teaching intern and in the classes where I was the TA the "smartest" person did not always get the best grade.  The person that got the best grade is the one who studied (worked) the most and applied themselves.
Title: Re: The death of the 'Millionaire Next Door' dream
Post by: a1smith on April 01, 2015, 12:47:32 PM
Here's a nice article describing a couple who are MND's.  She's a Taiwanese woman who wasn't a teacher and the article didn't mention any coupon clipping!  :-D

http://www.msn.com/en-us/money/news/how-this-couple-retired-in-their-30s-to-travel-the-world/ar-AAacOgr (http://www.msn.com/en-us/money/news/how-this-couple-retired-in-their-30s-to-travel-the-world/ar-AAacOgr)

A classic story of two people who did many of the things discussed in this forum and elsewhere and succeeded.  Sounds like they are having a great time.
Title: Re: The death of the 'Millionaire Next Door' dream
Post by: MgoSam on April 01, 2015, 12:55:14 PM
Here's a nice article describing a couple who are MND's.  She's a Taiwanese woman who wasn't a teacher and the article didn't mention any coupon clipping!  :-D

http://www.msn.com/en-us/money/news/how-this-couple-retired-in-their-30s-to-travel-the-world/ar-AAacOgr (http://www.msn.com/en-us/money/news/how-this-couple-retired-in-their-30s-to-travel-the-world/ar-AAacOgr)

A classic story of two people who did many of the things discussed in this forum and elsewhere and succeeded.  Sounds like they are having a great time.

A friend of mine just emailed me that article and I loved it! This friend thinks of my plan to retire in 8 years (age of 35) is ridiculous but I think that she may be coming aboard.
Title: Re: The death of the 'Millionaire Next Door' dream
Post by: Luck12 on April 01, 2015, 01:08:01 PM
Want to know what I see in common with all of these people?  They came from stable families which, as mentioned above, is a big indicator of future success.  Also, they all have advanced degrees (MS, PhD) which allow them to have a nice income.  The advanced degree is not an advantage they were born with on third base; they worked for it.  And there are lots of people who didn't have the advantage of having their whole education paid for either; there are many who have worked to pay for it or have loans that they need to pay off.

Oh please, both of these things can be considered luck.  Nobody controls what type of family they are born into and the type of intelligence needed to get MS or PHD in something like engineering, medicine, etc is largely inborn.     

I think Kite covered much of what I was going to post.   Basically, MMND is classic necessary, but far from sufficient. 

Just look at this forum: I bet the vast majority here come from at least a middle class, stable background and/or have at least slightly above average IQ. 
Title: Re: The death of the 'Millionaire Next Door' dream
Post by: a1smith on April 01, 2015, 01:36:42 PM
MMM's 4/1 blog post is a great response to this thread!

Early Retirement is an Impossible Dream for Most

http://www.mrmoneymustache.com/2015/04/01/impossible-dream/
Title: Re: The death of the 'Millionaire Next Door' dream
Post by: a1smith on April 01, 2015, 02:29:53 PM
Want to know what I see in common with all of these people?  They came from stable families which, as mentioned above, is a big indicator of future success.  Also, they all have advanced degrees (MS, PhD) which allow them to have a nice income.  The advanced degree is not an advantage they were born with on third base; they worked for it.  And there are lots of people who didn't have the advantage of having their whole education paid for either; there are many who have worked to pay for it or have loans that they need to pay off.

Oh please, both of these things can be considered luck.  Nobody controls what type of family they are born into and the type of intelligence needed to get MS or PHD in something like engineering, medicine, etc is largely inborn.     

I think Kite covered much of what I was going to post.   Basically, MMND is classic necessary, but far from sufficient. 

Just look at this forum: I bet the vast majority here come from at least a middle class, stable background and/or have at least slightly above average IQ.

The main point of my post was to provide examples of MND people I know from groups of people that kite says are missing in the book.  He is implying that those groups of people are not MND's and thus there was selection bias.

My other point was to show some common traits in my friends/acquaintances that were helpful for MND status without any mention of whether those traits were necessary, sufficient, or neither.

An MS or PhD is certainly helpful but absolutely not necessary to succeed.  However, hard work is!!  In fact, google "too many university graduates" for some interesting reading.  There are many careers where you can make a great living that do not require an advanced degree, or even a bachelor's degree.  Just to cite one example, there is a shortage of welders right now (especially in TX) and they can have annual salaries over $100K in the oil industry after trade school and some experience.

Being on this forum is not a necessary condition for MND status, nor is it sufficient.  I'm sure there are plenty of successful business owners out there who have never even been on this forum.  An advanced degree is also not a requirement for owning a business; it is neither necessary nor sufficient. From www.census.gov/econ/sbo/02/cbosof.html (http://www.census.gov/econ/sbo/02/cbosof.html) , "Just under 1-in-4 of all owners of employer firms had a high school education or less, compared to 28 percent of the owners of nonemployer firms."

My comments in this thread are not specifically addressing the book, per se, but the general idea of being able to become a millionaire.  The MND book is only one source of information for that.  My opinion is that the "dream" of being able to become a millionaire (a MND) is far from dead.



Title: Re: The death of the 'Millionaire Next Door' dream
Post by: a1smith on April 01, 2015, 03:08:30 PM
One comment about all of this necessity and sufficiency discussion:

It seems to me that the ONE and ONLY necessary and sufficient condition for MND is that your net worth is greater than or equal to $1M.

Can anyone else think of another condition which is both necessary and sufficient?  If not, then why so much heartache about conditions which are necessary but not sufficient?  If you know they are necessary to get there, then why not just start doing them?  Who cares if you are not guaranteed to get there?  Is that going to stop you from trying?  I hope not!

For anyone wanting a refresher on necessity and sufficiency see  this primer. (http://en.wikipedia.org/wiki/Necessity_and_sufficiency)
Title: Re: The death of the 'Millionaire Next Door' dream
Post by: Tallgirl1204 on April 01, 2015, 03:45:43 PM
I read the MND many years ago, and perhaps there are some flaws in the research.  But here is my take-away that the book gave me, and I think it holds: 

People who spend below their means, and who do not aspire to "look" wealthy, are more likely to pile up a nice cache (or 'stache) than people who spend more than they make, in the pursuit of appearing wealthy. 

I'm not sure how this is "luck."  Maybe a person never reaches the magic million dollars.  But surely a person who lives below his/her means is going to be better off in the long run than one who doesn't.  In what universe does that math not work?   

Yes, there is always the situation (and I've been in it) where every penny goes to keeping one's head above water.  And if one is in that situation and reaches for a credit card to make that situation more comfortable, the water is only going to get deeper and more turbulent.  I spent years wearing second-hand clothes and considering Taco Bell a high-end restaurant.  Even if this was where I had spent my career and life, I would still be better off than the person who digs that credit card hole deeper and deeper, or has to spend every penny to show off his/her wealth.  When social security time kicked in, I would already know how to pinch a nickel until it pooped a dime.   

This was what I took from MND when I read it in my twenties. 

Now that I am approaching retirement, I recognize that what 'stache I accumulated (not a million, but probably enough) was thanks to embracing a moderately (not extremely) frugal mindset.  How is that luck? 
Title: Re: The death of the 'Millionaire Next Door' dream
Post by: darkadams00 on April 01, 2015, 07:26:09 PM
"Redlining is real," "whites make it/made it on the backs of minorities," "if someone is successful, it was luck/random chance." This is not pointing out flaws. It's repeating the same themes as Al Sharpton et al. No matter what evidence to the contrary, if I demonstrate  100 cases of mixed races, sexes, backgrounds, education achievement matched to a positive outcome, and then do the same with 100  who have a negative outcome, does that not even make a person think about it?

My grad department had fellowships for minority and female students--white males need not apply. And more than one year, there was money unspent. My department at work is highly technical, over 50% female and minorities, not all Asian by a long shot. Of the nine managers in my dept, only 3 were born as English-speaking white Americans. My first landlord back in the day was an African American who owned seven homes. I live in a neighborhood of mixed ethnicities and incomes.

We don't pick our ethnicity, our family, our childhood financial status, our health, our abilities etc. If that's the luck described, that was my original post response. The first base/third base analogy was good. Some of these other posts are just complaineypants not matter how it's spun.
Title: Re: The death of the 'Millionaire Next Door' dream
Post by: a1smith on April 01, 2015, 09:21:45 PM
Speaking of redlining, here is an interesting article:

LA Times (2/21/2015) - For Asian Americans, a changing landscape on college admissions. (http://www.latimes.com/local/california/la-me-adv-asian-race-tutoring-20150222-story.html#page=1)

Here is a table highlighting the main point of discussion in the article.  I guess redlining is occurring, just not where most people think it is.

Princeton University admissions SAT score "bonus"
Race/Ethnicity   Bonus
Black+230
Latino+185
Asian-50
Title: Re: The death of the 'Millionaire Next Door' dream
Post by: Luck12 on April 01, 2015, 11:20:04 PM
By no means do I think the MND dream is dying or was ever dead, and of course, many squander their high income on useless junk thereby setting themselves up for economic hardships, but let me illustrate why I think a lot of this has to do with luck.  I'll use myself as an example.

I grew up a little below middle class, but in a loving, two parent, economically stable home, with parents who were frugal and set a good example.  Parents pushed us to excel academically.    Not to brag, but I was always naturally good at academics, particularly at math, and we all know being really good at math makes it a lot easier to pursue a lucrative career.   I have always been naturally good at saving money and understanding investing/personal finance.  This shit just came easily. 

I know not everybody who is MND/MMM comes from this type of background, but I have to admit I had a lot of intrinsic advantages that many others did not have.  It's not like I necessarily worked that much harder than other people, I am and was the recipient of a lot of luck.   Becoming an MND/MMM type is just a lot easier when you have certain privileges.   

Basically, our genetic traits (including propensity to save and invest wisely) and family backgrounds control our outcomes in life to a much larger degree  than many on this thread and forum believe. 
Title: Re: The death of the 'Millionaire Next Door' dream
Post by: velocistar237 on April 02, 2015, 07:28:50 AM
It sounds like our disagreements lie at the margins. Yes, the ovarian lottery exists. The people profiled in MND had some big advantages (living is the USA being the biggest one, but also being most likely a white male with a stable background). No, that doesn't discount the fact that wherever you start, you should make good decisions and you have to work hard to go far. MND does a good job dispelling the myth that most rich people spend a lot of money. Does anyone disagree with any of this?

These points don't pertain to OP's article, though, which said that MND may have been possible 20-30 years ago but no longer. They just don't have the data to back themselves up. They didn't bring up the ovarian lottery factor at all, maybe because discussions about it just aren't that fruitful. Even if everyone on the board took a moment to ponder how lucky they are to have been born in their circumstances, how would it change our discussion about personal finance?
Title: Re: The death of the 'Millionaire Next Door' dream
Post by: slugline on April 02, 2015, 07:41:11 AM
What's laughable about people that think they've "debunked" TMND is that they seem to conveniently ignore that Stanley and Danko actually rolled up their sleeves and did their  research. When someone writes another book on how the wealthy get wealthy after getting out there and collecting an even more comprehensive dataset from the field, I'll be happy to read it. I don't believe that TMND will be the last/best word on this subject, but if you're going to assert that it's flawed by selection bias, then someone needs to step up and do better.
Title: Re: The death of the 'Millionaire Next Door' dream
Post by: MgoSam on April 02, 2015, 07:59:05 AM
Speaking of redlining, here is an interesting article:

LA Times (2/21/2015) - For Asian Americans, a changing landscape on college admissions. (http://www.latimes.com/local/california/la-me-adv-asian-race-tutoring-20150222-story.html#page=1)

Here is a table highlighting the main point of discussion in the article.  I guess redlining is occurring, just not where most people think it is.

Princeton University admissions SAT score "bonus"
Race/Ethnicity   Bonus
Black+230
Latino+185
Asian-50

Yeah it has to be tough for Asians and for schools in general. When I was studying accoutning, I heard something interesting about the Masters of Accountancy program. They received a TON of applications from a city in China (I believe it is Chendu). The students were qualified enough that they could fill the entire program with students from there, but of course they were unable and unwilling to do so.
Title: Re: The death of the 'Millionaire Next Door' dream
Post by: Luck12 on April 02, 2015, 09:28:44 AM
MND does a good job dispelling the myth that most rich people spend a lot of money. Does anyone disagree with any of this?

I read the book and I don't recall any mention of savings rates by income group in the book.  In fact, it is indeed true that rich people spend a lot of money, just look at savings rates by income group.  I know I've read that those making in top 1 to 10% of income save only 10-15% of their incomes, that's just pathetic.   The top 1% saves 30-40% which is easy when you make that much.     

Hell, the median income was $131K in MND and since this book was published 20 years ago, that's more like $200K today.  That is top 5% of household income.  So much for the "next door" part unless you live in some place like Georgetown or Upper East Side. 

The main issue I have with the thinking that anyone can become a millionaire aside from the fact that it's just false is that it makes for a convenient excuse to fuck over the poor and middle class.  It is catnip to the right wing/Ayn Rand/Horatio Alger types. 
http://www.financialsamurai.com/the-average-savings-rates-by-income-wealth-class/
Title: Re: The death of the 'Millionaire Next Door' dream
Post by: skunkfunk on April 02, 2015, 10:17:56 AM
Why am I going for delayed gratification, in effect saving a million dollars instead of spending an extra million dollars?  Sure it means I could cut down to a 40k lifestyle and quit my job, but what about my lavish reward of all inclusive cruises, the bigger house, the Rolex and the Lexus?  I figure after the security million, I will continue to work and divert all that money to luxury.

Eventually my net worth needs to mean more than numbers on a spreadsheet.  As it stands now I'm making more money than the poor, and in some cases living pooerer than the poor.  How are we sure the poor aren't living happier than us and aren't worried about credit card debt?

What? Do you read the blog? I think you may be in the wrong place, try the Ramsey forums.
Title: Re: The death of the 'Millionaire Next Door' dream
Post by: zephyr911 on April 02, 2015, 10:22:06 AM
Naysayers: you essentially claim that the differing propensity of various demographics to engage in economically successful behavior refutes generalizations about the results of that behavior.

No. Not just no, but hell no.

If we have an underlying social order that sabotages certain groups by making them less likely or less able to follow known steps toward wealth, that's a fucking tragedy. But it does not refute the mechanics of the approach in question. Arguing against known methods for success on the grounds that social injustice prevents people from exploiting those methods in an egalitarian fashion only muddies the waters and does not address the injustice.
Title: Re: The death of the 'Millionaire Next Door' dream
Post by: velocistar237 on April 02, 2015, 10:57:57 AM
I read the book and I don't recall any mention of savings rates by income group in the book.  In fact, it is indeed true that rich people spend a lot of money, just look at savings rates by income group.  I know I've read that those making in top 1 to 10% of income save only 10-15% of their incomes, that's just pathetic.   The top 1% saves 30-40% which is easy when you make that much.     

I don't remember savings rates either (kite said 20% (http://forum.mrmoneymustache.com/antimustachian-wall-of-shame-and-comedy/the-death-of-the-%27millionaire-next-door%27-dream/msg609997/#msg609997)), just all the statistics about low spending for suits, cars, shoes, etc., for a large percentage of the study population.

Hell, the median income was $131K in MND and since this book was published 20 years ago, that's more like $200K today.  That is top 5% of household income.  So much for the "next door" part unless you live in some place like Georgetown or Upper East Side. 

The authors themselves were surprised 20 years ago to find high earners in middle-income neighborhoods. We might be surprised by the current reality, too. We don't really have any data to show whether it's more or less likely today. We do know that a lot of us will be MsND one day.

The main issue I have with the thinking that anyone can become a millionaire aside from the fact that it's just false is that it makes for a convenient excuse to fuck over the poor and middle class.  It is catnip to the right wing/Ayn Rand/Horatio Alger types. 
http://www.financialsamurai.com/the-average-savings-rates-by-income-wealth-class/

I see your point. As a person who may someday become a MND, I value MND's small contribution to my understanding of how to succeed, and I think it would even help people who are worse off to see that you don't get rich by buying expensive stuff. Hopefully, people can reason out that a book showing that millionaires mostly fit into a particular demographic does not imply that anyone can become a millionaire.

I'm coming around to the idea that survivor bias is a significant problem with the book. Here's an Amazon review (http://www.amazon.com/review/R2QNV94ZW5VTZY/) that discusses it. MND got the mechanics of saving and investing right, but if it followed people who only saved about 20% of their income and then benefited from a very good market, then it's no different from the standard financial prescription. It's not very impressive that someone making a top-5% income becomes a millionaire by working their whole life and being born in the right year.

Fortunately, we know from YMOYL, ERE, and MMM that those MND mechanics applied to a greater degree is as good a recipe for financial success as you could get anywhere.
Title: Re: The death of the 'Millionaire Next Door' dream
Post by: RFAAOATB on April 02, 2015, 11:04:20 AM
What? Do you read the blog? I think you may be in the wrong place, try the Ramsey forums.

I believe in the math much more than the motivation or the end goal.  Not long after reading this blog I actually cancelled cable service like so many of you have.  I also make above median income.  Meanwhile I know a couple who make less than me with more people to take care of who finally just got cable television service.  Situations like these make it look like I'm living poorer than the poor.  If you have the ability to save a million in investments and retire in your forties, you could comfortably fade into obscurity like the Millionaires Next Door.  Of course I could always focus my efforts on something more interesting, like being a state representative, a lawyer, or buying a big house and luxurious items.  Sounds more fun than me recently waiting 5 months before begrudgingly spending $250 for a new video game console and games.
Title: Re: The death of the 'Millionaire Next Door' dream
Post by: zephyr911 on April 02, 2015, 11:21:38 AM
What? Do you read the blog? I think you may be in the wrong place, try the Ramsey forums.

I believe in the math much more than the motivation or the end goal.  Not long after reading this blog I actually cancelled cable service like so many of you have.  I also make above median income.  Meanwhile I know a couple who make less than me with more people to take care of who finally just got cable television service.  Situations like these make it look like I'm living poorer than the poor.  If you have the ability to save a million in investments and retire in your forties, you could comfortably fade into obscurity like the Millionaires Next Door.  Of course I could always focus my efforts on something more interesting, like being a state representative, a lawyer, or buying a big house and luxurious items.  Sounds more fun than me recently waiting 5 months before begrudgingly spending $250 for a new video game console and games.
If all you want is a pile of cool toys, why wait? If you're not interested in sprinting ahead of the curve by redefining popular needs/wants as unnecessary, it would seem you aren't being true to your own priorities. Don't let MMM or his cult-like following deter you, just get what you want right now.
Not joking/trolling. If that's what you'd prefer, then do it and by all means, good luck & more power to you.
I alone am pushing twice the median family income in my area and probably one of the few people on my street without cable. If that made me feel poor, I'd turn that shit back on in a heartbeat. Back to the heart of MMM and the fact that frugality is not intended as anything more than a side effect of stoicism - this was a decision that stemmed not just from crunching numbers but from a long and heartfelt consideration of what mattered most to me, and whether this particular recurring outlay actually made me any happier. I identified one possible aspect that I'd miss (live sports), made a backup plan to catch the games I cared most about, and I did it. I don't miss it.
I'm right with you on not fading into obscurity - I don't want independence just so I can wander off into the woods, or sit on my ass collecting dividends. I don't plan on running for office but I do actually have a friend who may, and FI is damn near vital for anyone who wants to run - or be on the think tank, without dragging down a marginally funded team with salary demands. On top of that, there are lots of nonprofit efforts I would love to be involved in. I want to leave a legacy of good things done and people helped for all the right reasons and nothing asked in return, just because I could.
Title: Re: The death of the 'Millionaire Next Door' dream
Post by: RFAAOATB on April 02, 2015, 11:47:25 AM
If all you want is a pile of cool toys, why wait? If you're not interested in sprinting ahead of the curve by redefining popular needs/wants as unnecessary, it would seem you aren't being true to your own priorities. Don't let MMM or his cult-like following deter you, just get what you want right now.
Not joking/trolling. If that's what you'd prefer, then do it and by all means, good luck & more power to you.
A few years ago I was spending more and making less and got my net worth $20k in the negative.  That has left me very risk averse, and so as I'm making more I'm cutting more to increase my safety margin. Even though my net worth is over 100k, if I lost my job I would be screwed.  Financial independence is important.  The cool toys are important too, but buying them now would be too risky.  I still believe there will be a Lexus and Rolex in my future, but they have to come after financial independence otherwise the toys become a trap.

What happens after you become financially independent is where the biggest philosophical split lies.  I'm surprised more people aren't planning for greatness considering this group typically has the intelligence and discipline to make it happen.
Title: Re: The death of the 'Millionaire Next Door' dream
Post by: zephyr911 on April 02, 2015, 12:02:31 PM
If all you want is a pile of cool toys, why wait? If you're not interested in sprinting ahead of the curve by redefining popular needs/wants as unnecessary, it would seem you aren't being true to your own priorities. Don't let MMM or his cult-like following deter you, just get what you want right now.
Not joking/trolling. If that's what you'd prefer, then do it and by all means, good luck & more power to you.
A few years ago I was spending more and making less and got my net worth $20k in the negative.  That has left me very risk averse, and so as I'm making more I'm cutting more to increase my safety margin. Even though my net worth is over 100k, if I lost my job I would be screwed.  Financial independence is important.  The cool toys are important too, but buying them now would be too risky.  I still believe there will be a Lexus and Rolex in my future, but they have to come after financial independence otherwise the toys become a trap.

What happens after you become financially independent is where the biggest philosophical split lies.  I'm surprised more people aren't planning for greatness considering this group typically has the intelligence and discipline to make it happen.
I really want a Tesla someday, and not just because they're hot shit, but because I do EV advocacy on a regular basis and it'd be the ultimate showpiece. I could finance it easily, and would have already if not for these "nags" facepunching me. ;)

As far as greatness goes, we each define and pursue it in our own way, to an extent. For some people, having everything you need to care for your immediate family for the rest of your life is greatness in itself. For others, maybe more like your examples, or mine. But I wonder if the question has really been asked here. Maybe an interesting topic for another thread. The immediate result of FIRE is to be able to do whatever you want; so, what is the "whatever" for everyone here?
Title: Re: The death of the 'Millionaire Next Door' dream
Post by: deborah on April 02, 2015, 02:00:45 PM
MND does a good job dispelling the myth that most rich people spend a lot of money. Does anyone disagree with any of this?

I read the book and I don't recall any mention of savings rates by income group in the book.  In fact, it is indeed true that rich people spend a lot of money, just look at savings rates by income group.  I know I've read that those making in top 1 to 10% of income save only 10-15% of their incomes, that's just pathetic.   The top 1% saves 30-40% which is easy when you make that much.     
So you are saying that the more you make, the greater percentage you save? I know that lifestyle creep really affects the rich (the ones I know collect things like immaculate vintage cars and holiday houses in just about every location), especially given the proliferation of very expensive holiday destination resorts, so I think these stats actually prove the point you are refuting.
Title: Re: The death of the 'Millionaire Next Door' dream
Post by: Luck12 on April 02, 2015, 02:35:42 PM
So you are saying that the more you make, the greater percentage you save? I know that lifestyle creep really affects the rich (the ones I know collect things like immaculate vintage cars and holiday houses in just about every location), especially given the proliferation of very expensive holiday destination resorts, so I think these stats actually prove the point you are refuting.

How so?  The hypothesis is rich people don't spend much.  I showed that they do.  They spend in a volcanicly wasteful manner in fact.  I'm tired of people lauding rich people's saving habits when their saving habits as a whole are not very good.   Obviously the top 1% can easily save bundles of money even if they are not particularly skillful at saving. 

It' the math, stupid.     
Title: Re: The death of the 'Millionaire Next Door' dream
Post by: CCCA on April 02, 2015, 05:21:48 PM
no doubt there is an uneven distribution of factors that will influence a person's ability to save money. 
Things like race/ethnicity, education, parental involvement, intelligence, physical disabilities, personality, disposition to obesity, etc. . . can all impact someone's ability to get a job, advance in that job, and amass a sizeable stash.  Many of these things are not factors that you have control over, so the extent to which you are given a hand (i.e. the mix of these attributes) that increases your chances, can be considered luck. 


However, I agree with other posters who say that acknowledging that luck plays a potentially large role doesn't mean that you can dismiss the mathematics that state that the more you save, the more likely you can save a million dollars.  Living below your means, especially well below your means can accelerate this.  If you can save 15,000/yr which is possible for people of many different salary levels (though obviously easier for high income folks), increase that savings level by 3%/yr, and then make a modest rate of return (3-8%) you can achieve a million dollars in your stash sometime between 21 and 28 years. 

I think this is what people here are arguing for. 
Title: Re: The death of the 'Millionaire Next Door' dream
Post by: skunkfunk on April 03, 2015, 07:59:58 AM
I'm surprised more people aren't planning for greatness considering this group typically has the intelligence and discipline to make it happen.

Greatness? I have everything I want. How would wearing a Rolex instead of a fossil make me greater? I am much more impressed with, say, a skillful trumpet solo (which, as is true for many skills, doesn't require a fancy trumpet - the best player in town here plays a $300 piece of shit he found in a pawn shop) than a Rolex.

I'd also be more taken with a car somebody saved from the scrapyard than a new Lexus, because again, I consider the skills required more "greatness" than a big purchase.

I'm just saying, learn a little stoicism and you won't need that Rolex to feel good about yourself.
Title: Re: The death of the 'Millionaire Next Door' dream
Post by: arebelspy on April 03, 2015, 08:18:20 AM
I'm surprised more people aren't planning for greatness considering this group typically has the intelligence and discipline to make it happen.

Greatness? I have everything I want. How would wearing a Rolex instead of a fossil make me greater?

Well said!

Besides the idea of greatness coming in many forms, one doesn't need consumerism trappings to do great things.  MND is about frugality, and Mustachianism is about happiness and enough.  Neither of those limit one's ability to do great things (whatever that means to the individual).

:)
Title: Re: The death of the 'Millionaire Next Door' dream
Post by: zephyr911 on April 03, 2015, 01:26:24 PM
So you are saying that the more you make, the greater percentage you save? I know that lifestyle creep really affects the rich (the ones I know collect things like immaculate vintage cars and holiday houses in just about every location), especially given the proliferation of very expensive holiday destination resorts, so I think these stats actually prove the point you are refuting.

How so?  The hypothesis is rich people don't spend much.  I showed that they do.  They spend in a volcanicly wasteful manner in fact.  I'm tired of people lauding rich people's saving habits when their saving habits as a whole are not very good.   Obviously the top 1% can easily save bundles of money even if they are not particularly skillful at saving. 

It' the math, stupid.   
The more interesting question, and the more relevant question to the thesis of MND, is what they do while they're in the process of getting rich, isn't it?
After all, the guy died driving a Corvette.