The Millionaire Next Door: Discussion

It's a book based on the classic confusion people have with causation and correlation. It's a fun read and interesting stories, but if you walk away thinking you need to act in conformity with the "millionaires" in the book, then you've fallen prey to a classic statistical lie.

Try to do both. They are not mutually exclusive.

As an academic, so I appreciate the late Dr. Stanley's research-based approach.

The book changed my approach to personal finance. I do the same things, but I search for deals and apply logic over emotion to more purchases. Most people do it on big purchases like homes and cars, but there's more.

I needed some new dress shoes. I like J&M's Italian line. The normal price for the shoe I like is $275. At one point in my life, I would have jumped online or gone to the store and paid $275. But here is what I did.

1. I went to Raise.com and purchased a $250 gift card for $200.
2. I paid $3 for a coupon book that gave me 10% off of my purchase. Since the gift card is a payment method, I can stack the discount.
3. I waited until they ran a significant sale to make the purchase. They ran 30% off last week.

So, the $275 shoes cost me $192.50, then I saved 10 percent with the coupon minus the $3 I paid for the coupon book. I paid $176.25 for a pair of shoes I normally would have paid $275 for.

But wait, I had a $250 gift card for $200. After tax, I still have $64.62 remaining on the card.

So instead of paying $294.25 (original price plus tax), I paid $200, got the same shoes, and have $64.62 toward a future purchase. I also earned $4 in cash back via my credit card.

That $158.87 saved invested over 30 years at 7% return is over $1300. I make hundreds of these decisions every year. Some are $20 savings, some (like vacations) are $2000 savings. That's the takeaway of MND.

Its overly analytical and its not for everyone, but I enjoy it. You can live a great life and save money. I save about a third of my income.

the book has a ton of fallacies in it, but its an interesting read and has some good tips.

The wealth accumulator thing is a load of horseshite for a large portion of society, its really targeted for those in their late 40s. If you are younger than that, its always going to call you as under accumulator.

I can tell you one thing, one of the professions listed of a millionaire was "rice farmer". Bout laughed my arse off at that one.

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I am not finished with the book yet, but the idea of save everything and not spending it is unhealthy

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Indeed.
The millionaire next door does not "save everything and not spend it" either. The concept is understanding what retirement needs will be, and not living day-to-day to strip into those. That's basically it.

anc -- I buy a pair of Dockers shoes for $55 at Dillards every 2-3 years.

Watch cost $6 from Academy in 2003.

Wife cuts my hair. 2 pairs of pants for work, 4 white shirts and 2 blue (Jobs, Zuckerberg and Einstein wore the same clothes every day). I take a sandwich and orange for lunch.

Attend 3 Ole Miss games each year. Buy $20 tickets outside stadium 30 minutes to game time. Sit between the 40's on UM side.

Expect my cars to last 12 years - all 4 of them (kids drive 2). All were used, 50-70k miles when bought and all are white in color. Average price was $10,500. Tag is cheap, insurance is cheap.

Money made in the stock market and real estate. Thanks Merck, Wal-mart and Vanguard Health fund.