Posted on 03/07/2015 3:16:45 PM PST by 2ndDivisionVet
I have a client I'll call Linda Loaded. When making coffee, she is so frugal that she puts less coffee into the coffeemaker than she should and compensates by, when the coffee is ready, squeezing the filter with the hot grounds in her hand to get the concentrated coffee into her cup, incurring a bit of pain. To save a few pennies.
She is worth $10 million dollars.
Not surprisingly, I asked her why she does it.
LL: Being not wasteful is core to who I am, why I'm worth $10 million, and why I'm able to live a life with far fewer compromises than most people have to make.
I made every dollar myself, never more than an upper-middle class income, but I invested it prudently, bought things prudently, use my time prudently, and have a healthy respect for the power of thrift.
MN: Do you consider yourself a cheapskate?
LL: Not at all. When something is worth the money, I spend it without a second thought...although I must admit I make time-effective efforts to get a good price.
MN: Can you give me an example?
I've changed the specifics in her answer to this and some subsequent questions to protect her anonymity.
LL: Well, I decided to replace the window in my breakfast room with a big bow window. Prices ranged from $2000 to $4,000. I chose the $4,000 one because it is far more energy efficient, beautiful, with a far narrower frame so the view is less obstructed. Oh, but I took a half hour to compare a half dozen vendors, negotiated with the lowest-cost one, who wanted $3,600 and I got it for $3,000.
MN: So even though you're worth $10,000,000, it's worth the time and stress to check out a half dozen vendors and negotiate?
LL: The day I think it's not worth a half hour of my time to save $600 is the day they'll need to put me in a home.
MN: What about the notion that the window dealer is poorer than you and the money is cosmically better off in his pocket than yours.
LL: I don't believe it for a minute. He's probably making a good living. So that extra $600 will probably go toward niceties: jewelry, furniture, vacations, crap like that. I have set up an operating foundation that gives money to people whose lives will really improve as a result of that $600. Just last week, my foundation gave $5,000 to a guy who wants to do by-phone mentoring for kids who are feeling ignored in school and at home.
MN: What do you tell your son about money, frugality, and so on?
LL: I tell him the things I'm telling you but I don't think that's what changes people. If he ends up adopting my values, it's because he always sees me walking the talk.
MN: You sound like most of the millionaires in that book, The Millionaire Next Door.
LL: Yes except that I'm the Ten-Millionaire Next Door.
Yes, I do agree with everything u said, especially about owning being better than renting in the long run.
Good points I agree with!!
Now they're in their 30s and 40s, while their peers who partied in their younger years are going through tough times.
I totally agree and in this country it used to be that way before the federal government started taking everything over for our own good. A lot is said about the robber barons to the negative but they put in high tech transportation in places where they dominated, they built roads and built infrastructure as well as employed people. Some just don’t realize that the world operated just fine with a tenth of the size of the government and it didn’t result in rampant death and dismemberment. Kids were educated, we fought and won wars, and managed to build wonderful technologies all driven primarily by the private sector not DARPA or some government agency.
If anything government involvement slows problem solving down. People get in the mindset of waiting for government to rescue them even when they have the means to rescue themselves. I still remember all those flooded school buses in New Orleans. The local government had the means get citizens out of the city but did nothing. This is happening on a micro level in so many lives as they seemingly expect government to provide training and find them a job while they set and watch reality tv and play video games.
This lady is a breath of fresh air and I’d rather she not pay a dime in taxes than have the money go to DC for them to piss away.
oil magnate J. Paul Getty, now dead, had a pay telephone in his house.
I’m not anywhere near Getty’s league but I also have a pay phone and a pay washer and a pay dryer in my home. This mad money builds up fast and after several months it’s like an unexpected bonus.
Key is, as someone else here stated, separate needs from wants.
What would you guys do with $60,000 presently invested in stocks; Walmart, GE and Proctor and Gamble?
(no, it’s not me :) )
I always try to warn my younger friends that no one ever got rich by spending money.
Depends on what you mean by spend, right?
I mean above and beyond their means, ie, no budget, no saving, no investing.
Some people want a 30 year mortgage because there are tax advantages and because they can pay back the mortgage over the years with less valuable dollars. They may have more than enough to pay cash but choose not to do that.
Every situation is different. I have a home with a 30 year mortgage. I pay 650 on the mortgage and rent it for 1100.
I’ll stay with it for now.
Classic examples are instant millionaire lottery winners. Many are broke again in no time.
That's not frugal, that's neurotic.
I was the bar manager for 10 years at the top country club in our city. You could always tell new money from old. The guys with old money would break their fingernails picking a dime up off the bar. We had a built in 15% gratuity.
“What would you guys do with $60,000 presently invested in stocks; Walmart, GE and Proctor and Gamble?”
These are blue chips, so if it were me and I didn’t need the cash, and I had some cash stashed, I’d let let it ride.
Oh, I’d dump the GE (I think it’s a terrible stock, I just sold my small amount of shares after many years of it doing nothing and making miniscule dividends) and buy something different, say a utility or an oil company—Exxon Mobil for instance—or even Halliburton, or Altria.
Are you defining old money as the people who built it up slowly over a lifetime, AKA the millionaire next door?
Old money is typically thought of as being literally old, multigenerational, going back to a time before living memory or close to it.
Computers, smart phones, cars, clothes etc.
They are not designed to last or hold their value (cars can do such but they must be treated with kid gloves to do so and that usually means you don't drive them much)
So we always buy at wholesale prices buying these things or buy used at much lower prices.
Kind of sort of. You could always tell the ones who had worked their butts off for their money vs. the ones it was just handed to.
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