In my last Frugal Accomplishments post, I mentioned the book, Stop Acting Rich by Thomas Stanley. It was such an interesting and thought-provoking read (or, in my case, “listen”). I'm just going to jump in with some thoughts.
In this book, he put “rich people” into several categories:
1. Aspirationals: typically people who earn a lot of money, and spend it on status symbols and lifestyle purchases. They might look rich, but they’re not actually millionaires. You and I probably know a LOT more aspirationals than those who are truly wealthy.
2. Next-Door Millionaires: people who don’t seem particularly rich, but they have more than a million dollars in non-house assets. I know the term “millionaire” has come to mean less and less because of inflation, and also since many people include home value in their net worth. On Dave Ramsey’s “millionaire theme hour” he often interviews millionaires who have just one or two million in assets, half a million of that is in their house, and many of them are in their 60s and 70’s. I don’t think that is the kind of millionaire that Mr. Stanley is talking about. He mentions a lot of decamillionaires (people with 10 million or more) in his next-door stories. About 2.5% of the U.S. population are millionaires (not including home value in their net worth).
3. The Glittering Rich: people who look like millionaires and ARE actually millionaires, because they earn vastly more than they can spend. This group of people earn in excess of 2 million per year, and have a net worth of over 20 million dollars.
Somewhere between the next-door millionaires and the glittering rich are people who ARE millionaires, but also buy status symbols because they feel a need to be recognized as special. Mr. Stanley said that salespeople in particular fall into this category (because they don’t have accomplishments to point back to, as would a business owner, author, etc.) as well as those who grew up poor and don’t want anything to do with “frugality”. These people are still rich (typically they work very hard), but not as efficient at producing wealth as the more frugal types. For example, the “Porsche millionaire” might earn $250k per year while the “Toyota millionaire” earns just $200k, but they both have the same net worth in dollars.
Here is the book’s main point: if you earn an average—or even higher than average—income, you can either ACT rich (by society's definition) or BE rich, but probably not both. Separating truth from myth makes me feel a whole lot better about being frugal, even “extreme” frugal. As we are continually saving and building wealth, sometimes I feel like we should be “acting our wage” as Dave Ramsey would put it. The question that Hubs and I face more often now is: when we should make an upgrade? Is it wise to buy a nicer car—something with no rust and a few less miles? Should I start shopping at Kohls instead of wearing thrift store picks and hand-me-downs? Should I start buying more organic food? Many people don’t have to ask these things because they just buy whatever they can afford, and that’s the end. But if you save more than you spend… then you have to decide what to do with the extra.
Stop Acting Rich has given me permission to just be myself, regardless of what I *could* be spending. And I really like being frugal. I would much rather grow organic kale and spinach and lettuce than buy it. I like putting together outfits with free hand-me-down clothes. I like our rusty car. It's comfy and warm in the winter. I like drinking water at restaurants. Chain restaurants. Of course I like nice things as well, but oftentimes the expensive stuff doesn’t make me any happier than the inexpensive (or free) stuff, and why not use extra dollars for a noble cause? Our church just put up an announcement last week about the popular Christmas “shoebox” gifts that go to poor kids around the world. I would far rather spend $20.00 or $30.00 on a shoebox than a new shirt from Kohls. OR, dump that money in a fund, forget about it, and in 10 years fill two shoeboxes!
I think what I love about this book most is, again, that it separates the truth from lies. Thomas Stanley uses statistics to build his argument, and statistics have a way of revealing the truth that fake news, or even personal experience, does not. Fake news would tell you that rich people aren’t paying their fair share of taxes. Fake news would tell you that rich people are stingy and greedy and mean. And while the affluent skew toward frugal, statistics say that a majority of wealthy people donate a much higher percentage of their wealth (10% or more) to charity than people who earn high incomes but wear, drive around, and live in their wealth (who give just 1% or less). Another interesting statistic is that most “next-door” millionaires live in Bible belt territory, not the more liberal east and west coast regions. The vast majority are married, and have been married to the same person for 30+ years. 50% of millionaire wives do not work outside the home, and of the half that do, most do not work full time. All of this information tells me that next-door millionaires are politically conservative, as a whole, and hold traditional values.
WARNING: Political thoughts ahead!
I think these statistics are interesting when compared with the current FIRE (Financial Independence, Early Retirement) movement that has popped up in the last ten years or so. This movement closely mimics what it takes to become a next-door millionaire: you earn way more than the general population, and spend far less. For many people, this means working for about ten years and saving at least a million dollars, thereby becoming a millionaire by age 30 or so. What’s interesting? The FIRE demographic is pretty much opposite of the next-door millionaires’. There are a lot of childless, liberal millenials stashing cash in order to become rich and travel the world. But the movement seems to be losing a lot of steam. I don’t think it’s the numbers that are causing the problem. I think statistics alone will tell you that being liberal and being rich are often mutually exclusive.
Why? Statistically, Democrats have a higher yearly income, but don’t give as much or keep as much as Republicans. The author makes a point here that higher education could somehow correlate to why liberals aren’t as wealthy. In my opinion, divorce and broken family relationships could play a role. Republicans are more likely to stay married—and happily married—than Democrats. One could argue that Republicans report more happiness and give more money because they HAVE more money. But why do they have more? Thomas Stanley gives us the truth, via statistics. While I’m not saying that ALL Democrats are this and ALL Republicans are that, I’m saying that you can pull objective truth from statistics and come to your own conclusion. Kudos to Mr. Stanley for blowing the top off of fake news.
Well, that’s the end of my brief book review! I hope you feel inspired to read a good book, yourself. These colder months are a great time to cuddle up with a book, blanket and cup of tea. Recently I listened to a great podcast about how to read a book. I gleaned a lot from it, and I hope you can too.
If you want to read or listen to a lot of books for just a little money, use my referral link to get yourself a Scribd subscription. It’s something like $9.00 per month. You can read or listen to all of the books you want, and share the subscription with your spouse (so, just over $1.00 per week per person, for multiple ebooks and audiobooks!). If you want a free way to read Stop Acting Rich and almost any other book, use your library’s interloan system. It will take a while and you won’t have access to thousands of books at a time, but… FREE. There’s a lot of stuff you can do with $9.00 if you’re not a voracious reader.
In this book, he put “rich people” into several categories:
1. Aspirationals: typically people who earn a lot of money, and spend it on status symbols and lifestyle purchases. They might look rich, but they’re not actually millionaires. You and I probably know a LOT more aspirationals than those who are truly wealthy.
2. Next-Door Millionaires: people who don’t seem particularly rich, but they have more than a million dollars in non-house assets. I know the term “millionaire” has come to mean less and less because of inflation, and also since many people include home value in their net worth. On Dave Ramsey’s “millionaire theme hour” he often interviews millionaires who have just one or two million in assets, half a million of that is in their house, and many of them are in their 60s and 70’s. I don’t think that is the kind of millionaire that Mr. Stanley is talking about. He mentions a lot of decamillionaires (people with 10 million or more) in his next-door stories. About 2.5% of the U.S. population are millionaires (not including home value in their net worth).
3. The Glittering Rich: people who look like millionaires and ARE actually millionaires, because they earn vastly more than they can spend. This group of people earn in excess of 2 million per year, and have a net worth of over 20 million dollars.
Somewhere between the next-door millionaires and the glittering rich are people who ARE millionaires, but also buy status symbols because they feel a need to be recognized as special. Mr. Stanley said that salespeople in particular fall into this category (because they don’t have accomplishments to point back to, as would a business owner, author, etc.) as well as those who grew up poor and don’t want anything to do with “frugality”. These people are still rich (typically they work very hard), but not as efficient at producing wealth as the more frugal types. For example, the “Porsche millionaire” might earn $250k per year while the “Toyota millionaire” earns just $200k, but they both have the same net worth in dollars.
Here is the book’s main point: if you earn an average—or even higher than average—income, you can either ACT rich (by society's definition) or BE rich, but probably not both. Separating truth from myth makes me feel a whole lot better about being frugal, even “extreme” frugal. As we are continually saving and building wealth, sometimes I feel like we should be “acting our wage” as Dave Ramsey would put it. The question that Hubs and I face more often now is: when we should make an upgrade? Is it wise to buy a nicer car—something with no rust and a few less miles? Should I start shopping at Kohls instead of wearing thrift store picks and hand-me-downs? Should I start buying more organic food? Many people don’t have to ask these things because they just buy whatever they can afford, and that’s the end. But if you save more than you spend… then you have to decide what to do with the extra.
Stop Acting Rich has given me permission to just be myself, regardless of what I *could* be spending. And I really like being frugal. I would much rather grow organic kale and spinach and lettuce than buy it. I like putting together outfits with free hand-me-down clothes. I like our rusty car. It's comfy and warm in the winter. I like drinking water at restaurants. Chain restaurants. Of course I like nice things as well, but oftentimes the expensive stuff doesn’t make me any happier than the inexpensive (or free) stuff, and why not use extra dollars for a noble cause? Our church just put up an announcement last week about the popular Christmas “shoebox” gifts that go to poor kids around the world. I would far rather spend $20.00 or $30.00 on a shoebox than a new shirt from Kohls. OR, dump that money in a fund, forget about it, and in 10 years fill two shoeboxes!
I think what I love about this book most is, again, that it separates the truth from lies. Thomas Stanley uses statistics to build his argument, and statistics have a way of revealing the truth that fake news, or even personal experience, does not. Fake news would tell you that rich people aren’t paying their fair share of taxes. Fake news would tell you that rich people are stingy and greedy and mean. And while the affluent skew toward frugal, statistics say that a majority of wealthy people donate a much higher percentage of their wealth (10% or more) to charity than people who earn high incomes but wear, drive around, and live in their wealth (who give just 1% or less). Another interesting statistic is that most “next-door” millionaires live in Bible belt territory, not the more liberal east and west coast regions. The vast majority are married, and have been married to the same person for 30+ years. 50% of millionaire wives do not work outside the home, and of the half that do, most do not work full time. All of this information tells me that next-door millionaires are politically conservative, as a whole, and hold traditional values.
WARNING: Political thoughts ahead!
I think these statistics are interesting when compared with the current FIRE (Financial Independence, Early Retirement) movement that has popped up in the last ten years or so. This movement closely mimics what it takes to become a next-door millionaire: you earn way more than the general population, and spend far less. For many people, this means working for about ten years and saving at least a million dollars, thereby becoming a millionaire by age 30 or so. What’s interesting? The FIRE demographic is pretty much opposite of the next-door millionaires’. There are a lot of childless, liberal millenials stashing cash in order to become rich and travel the world. But the movement seems to be losing a lot of steam. I don’t think it’s the numbers that are causing the problem. I think statistics alone will tell you that being liberal and being rich are often mutually exclusive.
Why? Statistically, Democrats have a higher yearly income, but don’t give as much or keep as much as Republicans. The author makes a point here that higher education could somehow correlate to why liberals aren’t as wealthy. In my opinion, divorce and broken family relationships could play a role. Republicans are more likely to stay married—and happily married—than Democrats. One could argue that Republicans report more happiness and give more money because they HAVE more money. But why do they have more? Thomas Stanley gives us the truth, via statistics. While I’m not saying that ALL Democrats are this and ALL Republicans are that, I’m saying that you can pull objective truth from statistics and come to your own conclusion. Kudos to Mr. Stanley for blowing the top off of fake news.
Well, that’s the end of my brief book review! I hope you feel inspired to read a good book, yourself. These colder months are a great time to cuddle up with a book, blanket and cup of tea. Recently I listened to a great podcast about how to read a book. I gleaned a lot from it, and I hope you can too.
If you want to read or listen to a lot of books for just a little money, use my referral link to get yourself a Scribd subscription. It’s something like $9.00 per month. You can read or listen to all of the books you want, and share the subscription with your spouse (so, just over $1.00 per week per person, for multiple ebooks and audiobooks!). If you want a free way to read Stop Acting Rich and almost any other book, use your library’s interloan system. It will take a while and you won’t have access to thousands of books at a time, but… FREE. There’s a lot of stuff you can do with $9.00 if you’re not a voracious reader.
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