Author Topic: The death of the 'Millionaire Next Door' dream  (Read 35439 times)

Yokan

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RFAAOATB

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Re: The death of the 'Millionaire Next Door' dream
« Reply #1 on: March 10, 2015, 04:41:50 PM »
I liked the last paragraph:

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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?

WildJager

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Re: The death of the 'Millionaire Next Door' dream
« Reply #2 on: March 10, 2015, 04:46:54 PM »
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"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! 

Eric

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Re: The death of the 'Millionaire Next Door' dream
« Reply #3 on: March 10, 2015, 05:14:09 PM »
Yep, that last paragraph is a doozy.  But really, it should be split into two:

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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.

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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.

MgoSam

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Re: The death of the 'Millionaire Next Door' dream
« Reply #4 on: March 10, 2015, 06:09:04 PM »
 
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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.
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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.
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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.

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  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.'

RFAAOATB

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Re: The death of the 'Millionaire Next Door' dream
« Reply #5 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.


winterbike

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Re: The death of the 'Millionaire Next Door' dream
« Reply #6 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.

MoneyCat

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Re: The death of the 'Millionaire Next Door' dream
« Reply #7 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]

Vertical Mode

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Re: The death of the 'Millionaire Next Door' dream
« Reply #8 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.

jj20051

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Re: The death of the 'Millionaire Next Door' dream
« Reply #9 on: March 10, 2015, 09:08:23 PM »
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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".

NoraLenderbee

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Re: The death of the 'Millionaire Next Door' dream
« Reply #10 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.

partgypsy

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Re: The death of the 'Millionaire Next Door' dream
« Reply #11 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.

Yokan

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Re: The death of the 'Millionaire Next Door' dream
« Reply #12 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.

dude

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Re: The death of the 'Millionaire Next Door' dream
« Reply #13 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

MoneyCat

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Re: The death of the 'Millionaire Next Door' dream
« Reply #14 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.

bzzzt

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Re: The death of the 'Millionaire Next Door' dream
« Reply #15 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.

dios.del.sol

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Re: The death of the 'Millionaire Next Door' dream
« Reply #16 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!"

Little Benny

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Re: The death of the 'Millionaire Next Door' dream
« Reply #17 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.

Us2bCool

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Re: The death of the 'Millionaire Next Door' dream
« Reply #18 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.

Syonyk

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Re: The death of the 'Millionaire Next Door' dream
« Reply #19 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.

Tallgirl1204

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Re: The death of the 'Millionaire Next Door' dream
« Reply #20 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. 

mm1970

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Re: The death of the 'Millionaire Next Door' dream
« Reply #21 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.

mm1970

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Re: The death of the 'Millionaire Next Door' dream
« Reply #22 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.

Syonyk

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Re: The death of the 'Millionaire Next Door' dream
« Reply #23 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).

begood

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Re: The death of the 'Millionaire Next Door' dream
« Reply #24 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!

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Re: The death of the 'Millionaire Next Door' dream
« Reply #25 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.

MgoSam

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Re: The death of the 'Millionaire Next Door' dream
« Reply #26 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.

libertarian4321

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Re: The death of the 'Millionaire Next Door' dream
« Reply #27 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.

whydavid

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Re: The death of the 'Millionaire Next Door' dream
« Reply #28 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!

golden1

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Re: The death of the 'Millionaire Next Door' dream
« Reply #29 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.

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Re: The death of the 'Millionaire Next Door' dream
« Reply #30 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?  :(
« Last Edit: March 13, 2015, 09:40:50 AM by Kaspian »

dios.del.sol

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Re: The death of the 'Millionaire Next Door' dream
« Reply #31 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, 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.

RFAAOATB

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Re: The death of the 'Millionaire Next Door' dream
« Reply #32 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.  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. 
« Last Edit: March 13, 2015, 10:14:22 AM by RFAAOATB »

MrsPete

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Re: The death of the 'Millionaire Next Door' dream
« Reply #33 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. 
« Last Edit: March 14, 2015, 11:13:39 AM by MrsPete »

stlbrah

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Re: The death of the 'Millionaire Next Door' dream
« Reply #34 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

Joggernot

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Re: The death of the 'Millionaire Next Door' dream
« Reply #35 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.

arebelspy

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Re: The death of the 'Millionaire Next Door' dream
« Reply #36 on: March 14, 2015, 08:48:21 PM »
Yeah, I fundamentally disagree with this article, but laughed at winterbike's description of Taleb above.  :)
We are two former teachers who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and are now settled with three kids.
If you want to know more about us, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.

Syonyk

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Re: The death of the 'Millionaire Next Door' dream
« Reply #37 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. :)

nobody123

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Re: The death of the 'Millionaire Next Door' dream
« Reply #38 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.

MoneyCat

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Re: The death of the 'Millionaire Next Door' dream
« Reply #39 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.

MrsPete

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Re: The death of the 'Millionaire Next Door' dream
« Reply #40 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. 
« Last Edit: March 15, 2015, 03:59:21 PM by MrsPete »

zephyr911

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Re: The death of the 'Millionaire Next Door' dream
« Reply #41 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.

powersuitrecall

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Re: The death of the 'Millionaire Next Door' dream
« Reply #42 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 :)

kite

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Re: The death of the 'Millionaire Next Door' dream
« Reply #43 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.

slugline

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Re: The death of the 'Millionaire Next Door' dream
« Reply #44 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!

zephyr911

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Re: The death of the 'Millionaire Next Door' dream
« Reply #45 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

Tallgirl1204

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Re: The death of the 'Millionaire Next Door' dream
« Reply #46 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.   

darkadams00

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Re: The death of the 'Millionaire Next Door' dream
« Reply #47 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.

MgoSam

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Re: The death of the 'Millionaire Next Door' dream
« Reply #48 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.

kite

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Re: The death of the 'Millionaire Next Door' dream
« Reply #49 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.