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Big House Only After Big Wealth!

By Thomas J. Stanley on Sep 26th, 2012 in Studying the Wealthy

The Millionaire Mind contains a chapter entitled “The Home.”  The millionaires (733) in the book represent a fraction of the top 1% of wealth in America.  On average their homes have a market value of approximately $1.4M (or about 2.5 times the original purchase price 12 years earlier).  Their average net worth is $9.2M.


About 4 in 10 (39.9%) have no outstanding mortgage balance.  Fully 2 of 3 (66.0%) have a mortgage balance under $300,000.  The median number of bedrooms is four; baths, 3.5. What do most of these millionaires have in common?  They, like the couple presented below, purchased their homes after they became wealthy.  Most people (non millionaires), as detailed in Stop Acting Rich, who purchase expensive homes never become rich. “It takes the equivalent of 100 high income producing homeowners who live in pricey homes to produce just 65 millionaires. But . . . [for]. . . those who reside in homes in the less than $300,000 market value range. . . it took the equivalent of only 100 high income homeowners to produce 211 millionaires.” 


After reading your book [The Millionaire Mind] we are convinced that we would definitely be described as “Balance Sheet Affluent.” Where can we start with our story? We are a teacher and engineer vice-president.


As documented in Stop Acting Rich, engineers and educators are significantly more productive than the norm in transforming dollars of income into dollars of wealth.


We never had children (our choice) and are now aged 42 and 51. We paid off our first home ($165,000) within the first three years of our marriage. After that we kept a bowl on the coffee table which we placed glass beads in, one representing each $1000 we saved. Our goal? To be financially secure, have the home of our dreams and never have to worry about money again. As years went by our constant goal was to add beads to that bowl.


We rarely went out for dinner or had take-out. All of our books, movie DVDs and magazines came from our local library. Each week our grocery shopping began at the 50% off rack and we basically learned to eat and appreciate what was on sale. Should we even admit that one of us even keeps a teabag on a trivet to be used for exactly one week?


We’ve been married for 20 years now and live in a 1.8 million dollar home which we paid cash for. We have no credit card debt and have enviable cars also paid for in cash. My wife, a teacher, is 7 years away from retiring and receiving her full 1.3 million dollar teaching pension. 


While we probably, at this time, have now reached our initial goal of living well there are still some habits we cannot seem to break. We only go out for coffee, meals or movies if we can use gift certificates from my wife’s students. Our favourite book store is still the library and we buy most clothing and household items on sale only.


Our friends and colleagues laugh at us and describe us as being cheap. Thanks to your book, however, our response to them is that we are not thrifty, but that we simply “have the millionaire mind”. We do, however, have one small confession to make. We never paid full-price for your book. In fact we didn’t pay for it at all as it came from our favourite bookstore – the library!


. . .our beautiful home situated in [a] prestigious subdivision. We may not have the biggest home there, but it is completely paid for! We are not interested in impressing others because secretly we know that we have one of the most valuable possessions of all: The Millionaire Mind!

10 responses to “Big House Only After Big Wealth!”

  1. mochiandmacarons says:

    This made absolutely no sense to me. They ate near rotten sale rack food, and drank diluted tea for 20 years, only to show off in the most conventional way possible by buying a McMansion in a nice neighborhood, and to drive around in their fancy cars.

    To me, that’s a poor lifestyle, not a rich one.

  2. Dennis says:

    There are only two of us in our household. Therefore, we are able to live in a typical middle class neighborhood when our income is greater than the value of our home. If we had a larger home we might have to hire a housekeeper and the extra space would be an unnecessary waste. I think we have a nice, well kept home and no need for anything larger.

  3. Mike says:

    @mochiandmacarons – I have to agree. That isn’t frugal – its penurious.

  4. Diana Welsch says:

    This post is a joke, right? 1.3 million dollar teaching pension? Used teabags???

  5. Sandra says:

    On the contrary, what the last commentor has is not true.
    The produce on the 50% off rack is not rotten or near rotten. I buy that stuff sometimes, too. I also buy day old meat if I can.

    You’re only living poor if you feel that way.

  6. Bob says:

    Unlike Big House, we cannot see the value of such an expenditure. Like ‘Dennis’, we live in a home with a value less than our income. We provide a solid college education for each of our children (2)and save to ensure a comfortable retirement for ourselves. In agreement with ‘mochiandmacarons’ that after living so frugally, why the switch to a big house & fancy cars (conspicuous consumption) … it doesn’t make sense. Tough times are still ahead and will require living below one’s means (and maybe not by choice).

  7. Mark says:

    I actually approve of the new big house. Theirs seems to be a story of a couple living frugally and focusing on saving, particularly during the early years. Then, when they have achieved financial security and have the means, they spend some of their money on the good things in life.

    The people I shake my head about are those who live in the same small house, have never gone on a vacation, don’t enjoy a nice meal at a restaurant occasionally, etc., and then die with a sizable fortune. Perhaps there is balance that can be reached between making yourself financial secure and enjoying the ride a bit as well.

    I think the message with this couple is that it is because of the early years recycling tea bags and borrowing books from the library (ie, living below their means), that they were able to be in a position to stretch their wings a bit later in life.

  8. Danyael says:

    If you can’t see the value in their lifestyle, then you likely are not possessed of the millionaire mind. It’s about sacrificing to reach goals. These particular people place value in owning a nice home and quality cars. They are prodigious accumulators of wealth, so they can easily afford the house and the car.

    The term McMansion refers specifically to houses purchased by people who were income-statement wealthy not balance-sheet affluent. As soon as their income goes away their jumbo-mortgage bankrupts them. Not really an issue for this couple. And since they don’t have to pay for a kids college, they can spend their wealth on quality items they value.

  9. readerone says:

    While I thumb up being frugal and all – I certainly don’t share exact the same value in the aforementioned lifestyle.
    As someone else noted earlier, why bother at all buying such seemingly an excessive house when there are only two people living in it, even if they can afford it with much ease. I would much rather being able to enjoy “some” nice things that life has to offer on “occasions”, and living in a modest home, and driving a modest car while saving and investing well.
    I guess the morale of this story is not value anything that is perishable. Eating out, taking vacations and such..all don’t have any return on investment.

  10. […] of us see education as a profession with low pay, but Thomas Stanley found that this profession was one of the best (along with engineers) at converting their incomes […]

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