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How to Live Like a Real Millionaire

By Thomas J. Stanley on Oct 8th, 2009 in Millionaire Next Door Stories

Case studies are a critical part of my research on millionaires and the affluent. Below is the first part of a Millionaire Next Door story I received last month from a “scientist of wealth.”  As you will see, you do not have to have a seven figure income to become a millionaire.

A Letter from a Scientist of Wealth 

September 2009

Dear Professor Stanley,

I have read your books through and through, and so many of the traits you outline in your studies just jump out at me, because I see myself on every page! I am a 55 year-old multimillionaire living in a mid-size city in the Southwest. I am at the low end of people you study, with a conservative net worth of only $2.4 million. I came from a large family, and things always seemed economically tight growing up (now I’m thinking my parents might have been PAWS, too).  

I got my B.S. from a good school in 36 months with a 3.05 average. I was married at 23 while in college; still happily married today. My wife worked as a clerical assistant when we were married; I contributed my GI Bill stipend and my salary as teaching assistant. I worked for my first corporation for 16 years, another corporation for 10 years, and a third for 3 years. In 1999, I crossed the million dollar net worth threshhold with an income of “only” $78,000. My wife made about $25K that year. During all that time, I applied the “Peter Principle” to avoid being promoted into any kind of management. I preferred to be the “expert” within our company; had no desire to manage anyone. This is pretty typical of many scientists, I think. People are going to find my economic policy really hard to believe, because most corporate employees think the only way to “make it” is to go into management. I have always believed in balance, and 99% of my workdays started at 8AM and ended at 5PM. The only sources of income we have ever had were from my steady job, and my wife’s intermittent one. 

During all our employed years, we have always contributed the maximum to our 401K plans, IRA’s, and any Roth plans (in the years we were eligible), always saving 20-30% per year. All our wealth was aquired by saving, dollar-cost averaging, and slow and steady investing mainly in mutual funds. In 1995 I was transferred to my present city. We bought a low-end spec house in the best school district in town. We do have the distinct advantage that housing prices are cheap in the area of the country we live in. Then again, maybe we are not just lucky; maybe we just avoided moving to a high-cost area in the first place! In 1997 my corporation wanted to transfer me to an undesirable (and higher-priced) city. I declined to make the move, quit my job, and used some profits from the sale of stock (booming at the time) to pay off our house at the age of 44 (the one we still live in). The home is currently valued at only $200,000, but $200K is well above average in this city. Our home is surrounded by much more expensive homes (average about $500K), in one of the two zip codes in town that are considered desirable.

More to come soon from the Scientist of Wealth in Part II.

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