In my research over the past 30 years, I have discovered why the millionaire next door types are so productive in transforming their income into wealth. Much of what I have found is succinctly summarized in the following communication I recently received.
I am not a millionaire. At the age of 38 I am about 1/2 way there on a household income that has never exceeded $85000. I’ve done this via the usual: saving at least 15% each year, modest home (still in my first house), used cars and furniture, shopping wisely, etc. I still drive my first car, a 1976 Monte Carlo and just bought a “new” truck for working around the house. The “new” truck is a 1993 Ford.
And I married a spouse that surpasses me in frugality. Even buys her clothes at [g]oodwill. By your books we are very average penny pinchers in the “Millionaire Next Door” vein. But we have some great role models. We are both children of Millionaire Next Door households. Growing up my parents started with nothing. Daughter of a small time farmer, my mother’s home didn’t have indoor plumbing until she was six. Dad was the son of a railroader, a business he followed his father into. As I grew-up mom patched our clothes and cut our hair. Cars were always bought used, and coupons were common. House temperatures were kept comfortably high in the summer (in the homes that had AC) and comfortably low in the winter. Now that they are retired, they enjoy their wealth by purchasing art and occasional new cars. They also give philanthropically. My parents weren’t super frugal, but lived well within their means.
The real frugal role-models are my in-laws. They also started with very little. She worked for a time as a teacher, and several other part-time jobs while my wife grew-up. But mostly she was and is a homemaker. My father-in-law is a retired engineer who co-founded his own firm. Self-made multi-millionaires, they still keep their expenses around $70k a year. They are prodigious savers of potentially useful items. Waste not want not. Yet their house never looks cluttered.
When their first grandchild was born we found out just how prodigious. They brought over a truckload of boxes for us. In it were all the clothing from when my wife was a baby through age three. They had kept all of it, and most of her toys. Picture our baby in 2002 dressed in the polyester and paisleys of the early 70s! He drove a 1978 Honda Civic to work daily at the firm he owned. Kept it until he retired in the late 90s.
They live in the 2000sf super energy efficient house they built by hand in the 1980s. He does all home repairs himself. He has also built much of their household furniture. Their cars are all at least five years old. Some nearer 20. He does most of his own car repairs. He recently attempted to fix his $10 KMART watch when it broke. His favorite saying? “Any idiot can pay full price.” Like my parents, in retirement they give very generously of their time, talents and money to several worthy causes.
I am not a millionaire. Yet. But I have great role models.
DK from Idaho