Skip to comments.So you want to be a millionaire
Posted on 07/14/2006 5:50:11 AM PDT by libstripper
The day my husband and I became millionaires was a lot like any other day.
He went off to work, grumbling about the commute. I was fretting about our utility bill and decided to check our personal finance software to see how much more we were paying than the previous year. While I fiddled with the numbers, I told the software to update our account balances. Lo and behold, the net worth column showed seven figures where before there had been six.
There was no popping of champagne corks, no trips to the Continent, no quitting of jobs. The fact that the experience was so mundane speaks volumes, both about how millionaires are really created and what it means to be one. Looking for a loan? Check out MSN Money's Loan Center
(Excerpt) Read more at moneycentral.msn.com ...
Sounds like too much work....
I'm going over to the thread where buying gold cures all your ills.
When large numbers of people have managed to save large amounts of money congress will find a way to take it away.
If you are really smart, you will just marry a millionaire and skip all the hassle.
Or a millionaire's widow.
There's a lot of good, simple common sense in this article - but as the saying goes, common sense ain't so common.
One thing I'd add: she does warn people away from home equity loans, and I'd amend that a little. We did do a home equity loan, but we used it the way it was intended - to add on a room, update the kitchen and bathrooms, increase the value of the house. We did NOT use a home equity loan to pay off other debt, buy a car, take a vacation.
So, what should your response be? Not to save money at all, so you'll fool 'em? Yeah. Great idea. :)
I don't speak from experience, but I could not imagine a harder path to wealth than marrying for money.
I'm going to have much more than a million when that Nigerian feller comes through with my money. I just sent him another check for administrative purposes but just wait and see what he's gonna send me!
I.E. You can be worth a million and might not be able to pay your bills without spending the capital!
"Or a millionaire's widow."
Just ask Hanoi John Kerry.
He's married two rich widows already.
You can also make a lot of $$$ by replying to those Nigerian e-mails.
I've got a 7-digit bank account too!...
If you count the minus sign and the two decimal places. :)
If you're going to marry for money you need to have something to give in return.
It looks like all I need to do is go back in time a decade (or so.... cough, cough) to when I was 25, find a bank that will give a 25 year-old (that looks like a middle aged guy from the future) a savings account with a mere 8% !!!! interest rate, and invest about 62 THOUSAND dollars.
Well ... you really better know the details of his death first......
Maybe in California, but in Texas spending over $200k on real estate and you start to get into all the house most people ever want.
Besides, a million dollars isn't what most people think it is. It most certainly isn't so much wealth that you no longer have to worry about working -- nowhere near it in fact. It might be enough to retire on if you don't live too long.
You have two decimal places? There must be an embargo on decimal points where I live because they only dole them out one at a time here.
Land rich and cash poor. George Washington had that problem.
Making a million dollars is easy. Start with 20 million, and invest in some liberal causes like Air America.
That was a good one.
Now.. you say, "Steve.. what do I say to the tax man when he comes to my door and says, 'You.. have never paid taxes'?" Two simple words. Two simple words in the English language: "I forgot!" How many times do we let ourselves get into terrible situations because we don't say "I forgot"? Let's say you're on trial for armed robbery. You say to the judge, "I forgot armed robbery was illegal." Let's suppose he says back to you, "You have committed a foul crime. you have stolen hundreds and thousands of dollars from people at random, and you say, 'I forgot'?" Two simple words: Excuuuuuse me!!"
Allowing for inflation/cost of living increases not really a good strategy. Thirty-five years ago a well equipped upper end automobile cost around $6,000 . Today a comparable vehicle will cost at least $30,000.
Hitting the seven figure mark in net worth ain't what it use to be ... nice to have it, but not the prize it once was.
"Besides, a million dollars isn't what most people think it is. It most certainly isn't so much wealth that you no longer have to worry about working -- nowhere near it in fact. It might be enough to retire on if you don't live too long."
20 years ago, i read an article about the new millionaires........they are not business people, or lottery winners, but coupon clippers and savvy spenders / savers. Like my grandpa said, and my daddy said, save your money, pay cash for your major purchases ( if ya aint got the cash, ya don't really need it )and you will be able to retire early. Remember, your retirement account is a bill that has to be paid every month, just like your utilities and house payment. start when you are 25, and you will be able to retire at 50.
That's why owning your own home free and clear is so important. Even though you can't spend the value without mortgaging it, you protect most of your housing cost from inflation by freezing the equity and interest element of the cost at where it was when you bought the house and then eliminating that element entirely. Once the house is paid for all you have is insurance, maintenance, utilities, and real estate taxes, which, in my experience, amount to about a third of the equity/interest element of mortgage payments.
Sounds like Warren Buffett's advice on how to become a millionaire on airline stocks: "Start out as a billionaire".
here's a good one that will illustrate their way of thinking:
In March of '93 AlGore was on with Larry King. King threw him a "hardball"-for King anyway.
"Vice President Gore, when you and Bill Clinton were campaigning you said you were going to raise taxes on millionaires. But your tax increase is on people making $250,000"
Gore's response-I kid you not-
"Well Larry if you make $250,000 a year, in four years you are a millionaire"
I don't know what was more outrageous-the fact that Gore said it, or that King did not jump him for it.
I paid cash for my "second" home, and I'm still way under appraisal on this one. Now, if I can only get my wife to sell this one, life would be berry berry good.
It is usually a habit established as well, so once someone becomes a saver they continue with this sort of behavior and increase their wealth base. If you spend it--usually in anything other than certain types of real estate or invest it in yourself (i.e. trade school, certain types of higher education)--you have nothing and nothing and nothing--over and over again, unless one changes their habits.
People with money have a tendency toward saving and not overspending (especially as people with less money do. To look like they have more money than they do). People who are not used to wealth and/or see themselves as poor just spend the money thinking that hopelessly they will never have any. Sure enough it becomes a self fulfilling prophecy.
Excellent book! My husband and I both read it--I second your recommendation.
Secure retirement? You'll probably need to accumulate at least $2 or $3 million in liquid assets, depending on your desired lifestyle. Or, just get a gubbermint job with gold-plated pension and health insurance benefits....
If the interest is fixed, once could actually make a lot more money investing those dollars and while also paying down the house debt, rather than just paying down the debt and missing out on the steady acquisition/accumulation of money. The combination of the two overtime in my opinion (for what it is worth :-)is perfect.
This comes from my highly experienced financial advisors and they have shown this to be true.
Simply put,he worked like the dickens,lived below his means,and never bought anything (except houses) for which he couldn't pay cash.
He had the family homestead,located in an upper middle class suburb of Boston,paid off within 8 years of having bought it...all the while supporting 4 kids and my Mom,who never worked outside the home.
Don't know if this could work for kids starting out today,but "delayed gratification" is something all kids might be wise to consider for their long term security.
Sure...who wants to wait 40 years?
(kinda gives new meaning to the phrase 'fool's gold,' doesn't it?)
A very wealthy person once pointed out to me that there is a big difference between the person who signs a paycheck on the back and the person who signs it on the front.
I agree. I will retire a multimillionaire by retiring in the Philippines and converting my dollars into Pesos. That simple!! (for the serious minded; this is a joke)
Hopefully one of their investments is Long Term Care insurance, or the state might end up getting a lot of that money if one, or both, of them has to go the Medicaid route. Not to mention that the Deficit Reduction Act of 2005 disqualifies anyone from Medicaid who has home equity greater than $500,000 (though CA and few other states can set a higher limit). Note: I'm not involved in profiting from LTC insurance sales in any way. Just glad I bought it a few years back.
There's anohter way to look at pay9ing off the house note. The interest on the note usually exceeds the rate of returnon most fixed income investments. Thus, as an element of a diversified portfolio, paying off that note can make a lot of sense instead of putting the money into stocks.
Of course, todays 25 year olds will find that a million is what they will need to live on per year in 35 years.
Your financial advisor must be Ric Edelman.
So I must agree with you here. Conversely if there are other money making goals that are entwined with the need to pay down interest and principle, I think it would depend on how insulated the person is from risk, as well as how comfortable they are with risk, as well as what there short term needs are.
Delayed gratification . . . I swear this word has been erased from the English vocabulary, but you are so right. It is critical for any sound building of anything that is of true value or substance, I swear. No where is this most externally obvious then when it comes to money (maybe when it comes to food and exercise :-).
You were so blessed to have such a role model. Thanks for the reminder.
Yup,you're right.I don't know if you've ever heard the saying "the older I get,the smarter my Dad/Mom gets" but that certainly applies to both of my folks.
But then,I'm a big believer in the concept of "The Greatest Generation".I strongly believe that the hardships they endured...the Depression,WWII,Korea *and* the Cold War allowed them (or forced them) to develop a strength of character that's all-too-rare in Boomers and subsequent generations.
But that's just my opinion.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.