Is the millionaire next door outdated? (2024)

I just started reading the book, The millionaire next door and the first few pages, make me feel, it is outdated. This book was written in 1996, I wonder if America has changed quite a lot since then.
Consider this:

-8-
MEET THE MILLIONAIRE NEXT DOOR

Who is the prototypical American millionaire? What would he tell you
about himself?)l-

[Content in excess of copyright fair use removed by admin LadyGeek]

Save, don't spend, stop acting rich, don't drive a BMW. Advice still applies. It won't go out of date.

http://pilerats.com/news/how-to-live-li ... or-harris/

revhappy wrote: ↑Thu Aug 26, 2021 7:35 am... This book was written in 1996, I wonder if America has changed quite a lot since then...

Yes, many things have changed over 25 years. Saving more than you earn as a method to accumulate wealth isn't one of them.

ctfish wrote: ↑Thu Aug 26, 2021 7:40 amSave, don't spend, stop acting rich, don't drive a BMW. Advice still applies. It won't go out of date.

http://pilerats.com/news/how-to-live-li ... or-harris/

It's certainly "outdated". If I recall, the large majority of these "millionaires" were small business owners, now they're working in tech. Nonetheless, the principles still absolutely apply (more so to us not in Bay Area/Seattle tech).

ctfish wrote: ↑Thu Aug 26, 2021 7:40 amSave, don't spend, stop acting rich, don't drive a BMW. Advice still applies. It won't go out of date.

http://pilerats.com/news/how-to-live-li ... or-harris/

What's wrong with a BMW? A Toyota or Kia can be more expensive

ctfish wrote: ↑Thu Aug 26, 2021 7:40 amSave, don't spend, stop acting rich, don't drive a BMW. Advice still applies. It won't go out of date.

http://pilerats.com/news/how-to-live-li ... or-harris/

Agreed! It's very simple.

Really don't need a whole book but it's good to hear the anecdotes I suppose to help reinforce it.

It's sort of like the book How to Win Friends and Influence People. Published in the 1930's but full of nuggets that still apply!

smalliebigs wrote: ↑Thu Aug 26, 2021 7:49 am

ctfish wrote: ↑Thu Aug 26, 2021 7:40 amSave, don't spend, stop acting rich, don't drive a BMW. Advice still applies. It won't go out of date.

http://pilerats.com/news/how-to-live-li ... or-harris/

What's wrong with a BMW? A Toyota or Kia can be more expensive

Yes, it could be but on average a BMW will be more expensive. Anecdotally some people have BMWs that last without breaking but it's sort of like the unicorn I keep in my backyard!

smalliebigs wrote: ↑Thu Aug 26, 2021 7:49 am

ctfish wrote: ↑Thu Aug 26, 2021 7:40 amSave, don't spend, stop acting rich, don't drive a BMW. Advice still applies. It won't go out of date.

http://pilerats.com/news/how-to-live-li ... or-harris/

What's wrong with a BMW? A Toyota or Kia can be more expensive

I highly doubt there are comparable BMW and Kia vehicles at comparable prices or TCOs.

But the spirit of the statement was "don't waste money on luxury goods that don't do something for you."

smalliebigs wrote: ↑Thu Aug 26, 2021 7:49 am

ctfish wrote: ↑Thu Aug 26, 2021 7:40 amSave, don't spend, stop acting rich, don't drive a BMW. Advice still applies. It won't go out of date.

http://pilerats.com/news/how-to-live-li ... or-harris/

What's wrong with a BMW? A Toyota or Kia can be more expensive

"Can be" ... but that would generally be an exceptional situation.
According to this mechanic bloggers list of the 30 cars, "Which Car Brands Cost the Most to Maintain?"
https://www.yourmechanic.com/article/th ... ddy-martin
BMW was #1 , Toyota was #30

smalliebigs wrote: ↑Thu Aug 26, 2021 7:49 am

ctfish wrote: ↑Thu Aug 26, 2021 7:40 amSave, don't spend, stop acting rich, don't drive a BMW. Advice still applies. It won't go out of date.

http://pilerats.com/news/how-to-live-li ... or-harris/

What's wrong with a BMW? A Toyota or Kia can be more expensive

The cheapest gasoline BMW available is the compact sedan 228i sedan that starts at $36,695.

The most expensive gasoline Kia is the midsized performance Stinger that starts at $37,095.

The cheapest electric BMW is the subcompact i3 which starts at $45,445.

The most expensive Kia electric vehicle is the Niro EV SUB which starts at $40,135.

As you can imagine, the average cost of each manufacturer’s vehicles will largely diverge when the top and and the bottom end barely overlap.

Not that I want to derail this further, but linked is a Dependability Study for 2021 brands: https://www.jdpower.com/business/press- ... -study-vds.

BMW is not at the top, but still well above average.

revhappy wrote: ↑Thu Aug 26, 2021 7:35 amI just started reading the book, The millionaire next door and the first few pages, make me feel, it is outdated. This book was written in 1996, I wonder if America has changed quite a lot since then.
Consider this:

-8-
MEET THE MILLIONAIRE NEXT DOOR

Who is the prototypical American millionaire? What would he tell you
about himself?)l-

[Content in excess of copyright fair use removed by admin LadyGeek]

Well, yes outdated maybe based on it's original publication but the basic principles still and will always apply. Take from it what you will. It's been one of my all time favorites and always makes me wonder about people who seem to have it all but likely don't.

Most of the stats from the millionaire next door are understandably 25 years out of date.

That said the whole book really boils down to spend less than you make, invest wisely, live a level below what your income could afford you, and avoid spoiling your children.

I re-read it semi-recently and it definitely felt creaky. The "2021 US millionaire next door" feels much less boot straps and more "right time, right place, start on 3rd base."

A more typical millionaire next door now: has a wealthy family that paid for appropriate tutoring/support and sent them to college with little/no debt, got a job in one of the few industries with monopoly power (megatech, finance, medical) and had someone give them a down payment for a house (or buy it outright), etc. Basically "to be a millionaire next door, start with a million dollars'

So although I do agree the general advice stands, I do not think anyone should bother reading the book as it will likely make them laugh out loud at how inapplicable most of it is and possibly be discouraged.

fortunefavored wrote: ↑Thu Aug 26, 2021 8:11 amI re-read it semi-recently and it definitely felt creaky. The "2021 US millionaire next door" feels much less boot straps and more "right time, right place, start on 3rd base."

A more typical millionaire next door now: has a wealthy family that paid for appropriate tutoring/support and sent them to college with little/no debt, got a job in one of the few industries with monopoly power (megatech, finance, medical) and had someone give them a down payment for a house (or buy it outright), etc. Basically "to be a millionaire next door, start with a million dollars'

So although I do agree the general advice stands, I do not think anyone should bother reading the book as it will likely make them laugh out loud at how inapplicable most of it is and possibly be discouraged.

Your imagined "2021 Millionaire Next Door" has always been the imagined case, and is what the books data was meant to expose as not being the case for most. Lots of people have done quite well over the past decade+ spending less, and diligently saving in average investments like a home and the stock market.

fortunefavored wrote: ↑Thu Aug 26, 2021 8:11 amI re-read it semi-recently and it definitely felt creaky. The "2021 US millionaire next door" feels much less boot straps and more "right time, right place, start on 3rd base."

A more typical millionaire next door now: has a wealthy family that paid for appropriate tutoring/support and sent them to college with little/no debt, got a job in one of the few industries with monopoly power (megatech, finance, medical) and had someone give them a down payment for a house (or buy it outright), etc. Basically "to be a millionaire next door, start with a million dollars'

So although I do agree the general advice stands, I do not think anyone should bother reading the book as it will likely make them laugh out loud at how inapplicable most of it is and possibly be discouraged.

Do you actually have any data to support that contention?? Perhaps that is the case in your particular culture, community or industry, but I don't believe that holds true for most of America.

While many of the examples in the book may be dated, the principles are as true today as they were when Thomas Stanley wrote the book.

• Live well below your means

• Spend your time and money in ways conducive to building wealth (e.g.low-cost index funds)

• Avoid the temptation to match "lifestyle" purchases to your income...expensive house, cars, watches and so on

• Maximize your personal capital...wisely choose educational and occupational opportunities

• Prioritize financial independence over social status

fortunefavored wrote: ↑Thu Aug 26, 2021 8:11 amI re-read it semi-recently and it definitely felt creaky. The "2021 US millionaire next door" feels much less boot straps and more "right time, right place, start on 3rd base."

A more typical millionaire next door now: has a wealthy family that paid for appropriate tutoring/support and sent them to college with little/no debt, got a job in one of the few industries with monopoly power (megatech, finance, medical) and had someone give them a down payment for a house (or buy it outright), etc. Basically "to be a millionaire next door, start with a million dollars'

So although I do agree the general advice stands, I do not think anyone should bother reading the book as it will likely make them laugh out loud at how inapplicable most of it is and possibly be discouraged.

Agreed with JoMoney above. There are certainly plenty of folks like you imagine however they certainly make up a very slim percentage of the millionaires I know personally, or hear about online. I suspect these are closer to the 0.1% than the 1%. This board right here has a very large group of millionaires, and I've read very few comments from members who come from the background you describe. The whole point of the original book was that the millionaire next door is unlikely to be noticed as such.

fortunefavored wrote: ↑Thu Aug 26, 2021 8:11 amI re-read it semi-recently and it definitely felt creaky. The "2021 US millionaire next door" feels much less boot straps and more "right time, right place, start on 3rd base."

A more typical millionaire next door now: has a wealthy family that paid for appropriate tutoring/support and sent them to college with little/no debt, got a job in one of the few industries with monopoly power (megatech, finance, medical) and had someone give them a down payment for a house (or buy it outright), etc. Basically "to be a millionaire next door, start with a million dollars'

So although I do agree the general advice stands, I do not think anyone should bother reading the book as it will likely make them laugh out loud at how inapplicable most of it is and possibly be discouraged.

The assumptions that people make about people next door are still around, I see.
The principles in millionaire next door have not changed. The examples are dated.
One of the notions of a millionaire next is the person/family next door *seem* middle class/humble and are unpretentious. However, they are millionaires. I believe that to still be true regardless of jealousy wrapped in stereotypes.

It's been a while since I read the book, but I think one statistic he leaves out is average age. The older I get the more I realize time in the market is the largest driver of wealth.

Generally, the premise still holds, but the examples are dated IMO.

Also, I think it's a 5 millionaire today.

JoMoney wrote: ↑Thu Aug 26, 2021 8:17 am

fortunefavored wrote: ↑Thu Aug 26, 2021 8:11 amI re-read it semi-recently and it definitely felt creaky. The "2021 US millionaire next door" feels much less boot straps and more "right time, right place, start on 3rd base."

A more typical millionaire next door now: has a wealthy family that paid for appropriate tutoring/support and sent them to college with little/no debt, got a job in one of the few industries with monopoly power (megatech, finance, medical) and had someone give them a down payment for a house (or buy it outright), etc. Basically "to be a millionaire next door, start with a million dollars'

So although I do agree the general advice stands, I do not think anyone should bother reading the book as it will likely make them laugh out loud at how inapplicable most of it is and possibly be discouraged.

Your imagined "2021 Millionaire Next Door" has always been the imagined case, and is what the books data was meant to expose as not being the case for most. Lots of people have done quite well over the past decade+ spending less, and diligently saving in average investments like a home and the stock market.

Yes, there are a lot of people sitting on a lot of money.. but the mechanism that got them there seems rarer for new/aspiring millionaires than the one I outlined. Unfortunately I don't know how that data can be sliced up. Maybe someone else's new book opportunity.

I don't personally know anyone in my age range (35-50ish) who is a multi-millionaire (call it $2.5M+) who fits the original millionaire next door profile. You could say "that's too young" - but those are the future 60+ multi-millionaires who will populate future surveys.

Oh, I could also add to my list: Had bought/held real estate in the 2010 range. Again, more luck than strategy.

JoMoney wrote: ↑Thu Aug 26, 2021 7:42 am

revhappy wrote: ↑Thu Aug 26, 2021 7:35 am... This book was written in 1996, I wonder if America has changed quite a lot since then...

Yes, many things have changed over 25 years. Saving more than you earn as a method to accumulate wealth isn't one of them.

How does one save more than they earn?

revhappy wrote: ↑Thu Aug 26, 2021 7:35 amI just started reading the book, The millionaire next door and the first few pages, make me feel, it is outdated. This book was written in 1996, I wonder if America has changed quite a lot since then.
Consider this:

-8-
MEET THE MILLIONAIRE NEXT DOOR

Who is the prototypical American millionaire? What would he tell you
about himself?)l-

[Content in excess of copyright fair use removed by admin LadyGeek]

It still remains a must read. I would suggest coupling it with a more recent book that has up to date research written by Chris Hogan entitled Everyday Millionaires (and the subsequent research PDF as well). When you combine Hogan's book (and research document) with Stanley's book - it covers a good cross section of millionaires.

CyclingDuo

I think today’s millionaires next door are close enough to the book. But I can’t imagine the kids coming out of school with huge debt and/or facing ridiculous real estate prices will fit the profile until much later in life. What’s also true is that a millionaire in 1996 was really well off if not financially independent. $1m today doesn’t get you nearly as far.

The different circ*mstances for folks just starting out make any 50-60yr old talking about “how to be financially successful” rightfully susceptible to eye-rolls and accusations of being out of touch.

Maybe remote work will help. Spending 3k a month on rent while making 60k isn’t a good path, but pre Covid was required in places.

TJat wrote: ↑Thu Aug 26, 2021 8:41 amI think today’s millionaires next door are close enough to the book. But I can’t imagine the kids coming out of school with huge debt and/or facing ridiculous real estate prices will fit the profile until much later in life. What’s also true is that a millionaire in 1996 was really well off if not financially independent. $1m today doesn’t get you nearly as far.

$1m in 1996 appears to be equivalent to about $1.7m today.

TJat wrote: ↑Thu Aug 26, 2021 8:41 amI think today’s millionaires next door are close enough to the book. But I can’t imagine the kids coming out of school with huge debt and/or facing ridiculous real estate prices will fit the profile until much later in life. What’s also true is that a millionaire in 1996 was really well off if not financially independent. $1m today doesn’t get you nearly as far.

Yeah, $1M just is not what it used to be. But just using a basic inflation calcualtor, $1M in 1996 is now equivalent to over $1.7M, which is still a lot of money today.

fortunefavored wrote: ↑Thu Aug 26, 2021 8:34 am
Yes, there are a lot of people sitting on a lot of money.. but the mechanism that got them there seems rarer for new/aspiring millionaires than the one I outlined. Unfortunately I don't know how that data can be sliced up. Maybe someone else's new book opportunity.

I don't personally know anyone in my age range (35-50ish) who is a multi-millionaire (call it $2.5M+) who fits the original millionaire next door profile. You could say "that's too young" - but those are the future 60+ multi-millionaires who will populate future surveys.

Oh, I could also add to my list: Had bought/held real estate in the 2010 range. Again, more luck than strategy.

Many of us here on this board fit this description to a T.

onourway wrote: ↑Thu Aug 26, 2021 8:44 am

TJat wrote: ↑Thu Aug 26, 2021 8:41 amI think today’s millionaires next door are close enough to the book. But I can’t imagine the kids coming out of school with huge debt and/or facing ridiculous real estate prices will fit the profile until much later in life. What’s also true is that a millionaire in 1996 was really well off if not financially independent. $1m today doesn’t get you nearly as far.

$1m in 1996 appears to be equivalent to about $1.7m today.

Using “inflation” metrics, yes. Throw in college costs, housing, food, LTC risk…”

Also flip it around. In today’s dollars, the title of the book would be “the person with 580k next door, including real estate”. Big whoop

mikejuss wrote: ↑Thu Aug 26, 2021 8:37 am

JoMoney wrote: ↑Thu Aug 26, 2021 7:42 am

revhappy wrote: ↑Thu Aug 26, 2021 7:35 am... This book was written in 1996, I wonder if America has changed quite a lot since then...

Yes, many things have changed over 25 years. Saving more than you earn as a method to accumulate wealth isn't one of them.

How does one save more than they earn?

Pre-tax 401k giving an above the line tax-deduction relative to what your take home would be after-tax, + employer matching, + lower marginal tax rate in withdrawal

BillWalters wrote: ↑Thu Aug 26, 2021 8:36 amIn my opinion, this forum focuses way too much time on saving and not enough on earning. The easiest way to save more money is to make more money.

Not necessarily! While one who earns more money has more money to save, whether it is "easier" to save that extra income depends upon whether the higher-earner is disciplined about saving and investing. Some who earn more spend more and thus don't realize the investment potential of that additional income.

But as I mentioned in my post above, one should maximize their personal capital by wisely choose educational and occupational opportunities. If they do that AND live well below their means....they are two-thirds of the way there. Add investing like a Boglehead....and now you have a recipe for success!

revhappy wrote: ↑Thu Aug 26, 2021 7:35 amI just started reading the book, The millionaire next door and the first few pages, make me feel, it is outdated. This book was written in 1996, I wonder if America has changed quite a lot since then.

Can you please list 5 financial principles the book recommends that are now outdated?

fortunefavored wrote: ↑Thu Aug 26, 2021 8:34 am

JoMoney wrote: ↑Thu Aug 26, 2021 8:17 am

fortunefavored wrote: ↑Thu Aug 26, 2021 8:11 amI re-read it semi-recently and it definitely felt creaky. The "2021 US millionaire next door" feels much less boot straps and more "right time, right place, start on 3rd base."

A more typical millionaire next door now: has a wealthy family that paid for appropriate tutoring/support and sent them to college with little/no debt, got a job in one of the few industries with monopoly power (megatech, finance, medical) and had someone give them a down payment for a house (or buy it outright), etc. Basically "to be a millionaire next door, start with a million dollars'

So although I do agree the general advice stands, I do not think anyone should bother reading the book as it will likely make them laugh out loud at how inapplicable most of it is and possibly be discouraged.

Your imagined "2021 Millionaire Next Door" has always been the imagined case, and is what the books data was meant to expose as not being the case for most. Lots of people have done quite well over the past decade+ spending less, and diligently saving in average investments like a home and the stock market.

Yes, there are a lot of people sitting on a lot of money.. but the mechanism that got them there seems rarer for new/aspiring millionaires than the one I outlined. Unfortunately I don't know how that data can be sliced up. Maybe someone else's new book opportunity.

I don't personally know anyone in my age range (35-50ish) who is a multi-millionaire (call it $2.5M+) who fits the original millionaire next door profile. You could say "that's too young" - but those are the future 60+ multi-millionaires who will populate future surveys.

Oh, I could also add to my list: Had bought/held real estate in the 2010 range. Again, more luck than strategy.

There's always a certain amount of luck involved, but there's also consistently been a fairly consistent method where otherwise average people have been able to accumulate modestly large amounts of wealth if they can manage to avoid the "bad luck". Saving a large percentage of your money won't save you from cancer, but it will save you from depending on living paycheck to paycheck.

TJat wrote: ↑Thu Aug 26, 2021 8:41 amI think today’s millionaires next door are close enough to the book. But I can’t imagine the kids coming out of school with huge debt and/or facing ridiculous real estate prices will fit the profile until much later in life. What’s also true is that a millionaire in 1996 was really well off if not financially independent. $1m today doesn’t get you nearly as far.

The different circ*mstances for folks just starting out make any 50-60yr old talking about “how to be financially successful” rightfully susceptible to eye-rolls and accusations of being out of touch.

Maybe remote work will help. Spending 3k a month on rent while making 60k isn’t a good path, but pre Covid was required in places.

Plenty of young people aren’t saddled with much school debt. They go to affordable state schools, possibly with a year or two of community college first. I know a bright young woman graduating now with great career prospects in STEM that did just that. And she lived at home.

ctfish wrote: ↑Thu Aug 26, 2021 7:40 amSave, don't spend, stop acting rich, don't drive a BMW. Advice still applies. It won't go out of date.

That's the kind of narrow though, just IMO. I never read the book because the actually good advice is indeed only a sentence long and doesn't arbitrarily exclude a lot of people with any real chance of becoming rich: if you want to accumulate assets that are relatively large compared to your personal earning power, spend significantly (or a lot, your choice of degree) less than you earn. Stuff like prohibiting particular consumer brands cuts out many or maybe most people who actually accumulate significant assets, because they have very good jobs (or own successful businesses) and can drive BMW's and still be living well below their means. As to successful people nowadays being more likely to have gotten socioeconomic 'head starts' that might be true but also the kind of thing where pop perception can be hard to actually prove statistically, and can also be obscured by social and economic 'scientists' who are looking for 'proof' of what they already believe for political reasons, again just IMO. It's also true that a large proportion of people who reach real financial success without reaching a handful of C-suite positions in a big company in any industry, or the owner, do so in relatively few industries with a lot of pricing power. But if you take finance, medicine and big tech I think it's less clear all three are easier roads (once you get your foot in the door to the high end of them, definitely not easy) to financial success now than in 1996. Maybe tech is, I don't think the other two are particularly.

Another thing that has changed though is asset pricing is distinctly richer, expected returns lower than in 1996. Again I think my simple sentence is the key though, the way to accumulate relatively large assets compare to the value of your labor in the market (which you can also work on increasing, which I think should get more emphasis actually) is spend less than you make. Many times pop finance books seem to try to inspire people to save based on past examples or projection of really good asset returns. That's kind of a sleight of hand IMO, since there's no necessary logic by which you'd spend more now if you revised your estimate of expected returns downward. But 'if you saved that extra $500 this year it would become almost $9k in 30 yrs at 10%!' still seems a common rhetorical gambit among low end personal finance gurus. If you more realistically assumed 60/40 had real after tax return of 1.5% (my estimate for planning purposes) it would only be $800. But it would still have grown in real terms, and moreover you might need that $800.

JoMoney wrote: ↑Thu Aug 26, 2021 7:56 am

smalliebigs wrote: ↑Thu Aug 26, 2021 7:49 am

ctfish wrote: ↑Thu Aug 26, 2021 7:40 amSave, don't spend, stop acting rich, don't drive a BMW. Advice still applies. It won't go out of date.

http://pilerats.com/news/how-to-live-li ... or-harris/

What's wrong with a BMW? A Toyota or Kia can be more expensive

"Can be" ... but that would generally be an exceptional situation.
According to this mechanic bloggers list of the 30 cars, "Which Car Brands Cost the Most to Maintain?"
https://www.yourmechanic.com/article/th ... ddy-martin
BMW was #1 , Toyota was #30

I have friends that insist on buying/leasing these things. They're always in the shop.

fortunefavored wrote: ↑Thu Aug 26, 2021 8:34 am

JoMoney wrote: ↑Thu Aug 26, 2021 8:17 am

fortunefavored wrote: ↑Thu Aug 26, 2021 8:11 amI re-read it semi-recently and it definitely felt creaky. The "2021 US millionaire next door" feels much less boot straps and more "right time, right place, start on 3rd base."

A more typical millionaire next door now: has a wealthy family that paid for appropriate tutoring/support and sent them to college with little/no debt, got a job in one of the few industries with monopoly power (megatech, finance, medical) and had someone give them a down payment for a house (or buy it outright), etc. Basically "to be a millionaire next door, start with a million dollars'

So although I do agree the general advice stands, I do not think anyone should bother reading the book as it will likely make them laugh out loud at how inapplicable most of it is and possibly be discouraged.

Your imagined "2021 Millionaire Next Door" has always been the imagined case, and is what the books data was meant to expose as not being the case for most. Lots of people have done quite well over the past decade+ spending less, and diligently saving in average investments like a home and the stock market.

Yes, there are a lot of people sitting on a lot of money.. but the mechanism that got them there seems rarer for new/aspiring millionaires than the one I outlined. Unfortunately I don't know how that data can be sliced up. Maybe someone else's new book opportunity.

I don't personally know anyone in my age range (35-50ish) who is a multi-millionaire (call it $2.5M+) who fits the original millionaire next door profile. You could say "that's too young" - but those are the future 60+ multi-millionaires who will populate future surveys.

Oh, I could also add to my list: Had bought/held real estate in the 2010 range. Again, more luck than strategy.

That’s because that’s not your peer group. My peer group includes my friends from high school who all went to elite colleges and then got good jobs. They typically married others who have spouses who have good jobs. I’m also one of the few with a child - just born at the ages of 35/36. I married someone who wasn’t a big earner so it’s unlikely I’ll ever catch up to them. But you get 2 people each earning $150k for 10+ years, invest wisely, and the money just starts to pile up.

JoMoney wrote: ↑Thu Aug 26, 2021 8:46 am

mikejuss wrote: ↑Thu Aug 26, 2021 8:37 am

JoMoney wrote: ↑Thu Aug 26, 2021 7:42 am

revhappy wrote: ↑Thu Aug 26, 2021 7:35 am... This book was written in 1996, I wonder if America has changed quite a lot since then...

Yes, many things have changed over 25 years. Saving more than you earn as a method to accumulate wealth isn't one of them.

How does one save more than they earn?

Pre-tax 401k giving an above the line tax-deduction relative to what your take home would be after-tax, + employer matching, + lower marginal tax rate in withdrawal

How does one who earns, say, $100,000 a year save $100,001 a year? I think you mean "Save more than you spend."

Jags4186 wrote: ↑Thu Aug 26, 2021 9:14 am

fortunefavored wrote: ↑Thu Aug 26, 2021 8:34 am

JoMoney wrote: ↑Thu Aug 26, 2021 8:17 am

fortunefavored wrote: ↑Thu Aug 26, 2021 8:11 amI re-read it semi-recently and it definitely felt creaky. The "2021 US millionaire next door" feels much less boot straps and more "right time, right place, start on 3rd base."

A more typical millionaire next door now: has a wealthy family that paid for appropriate tutoring/support and sent them to college with little/no debt, got a job in one of the few industries with monopoly power (megatech, finance, medical) and had someone give them a down payment for a house (or buy it outright), etc. Basically "to be a millionaire next door, start with a million dollars'

So although I do agree the general advice stands, I do not think anyone should bother reading the book as it will likely make them laugh out loud at how inapplicable most of it is and possibly be discouraged.

Your imagined "2021 Millionaire Next Door" has always been the imagined case, and is what the books data was meant to expose as not being the case for most. Lots of people have done quite well over the past decade+ spending less, and diligently saving in average investments like a home and the stock market.

Yes, there are a lot of people sitting on a lot of money.. but the mechanism that got them there seems rarer for new/aspiring millionaires than the one I outlined. Unfortunately I don't know how that data can be sliced up. Maybe someone else's new book opportunity.

I don't personally know anyone in my age range (35-50ish) who is a multi-millionaire (call it $2.5M+) who fits the original millionaire next door profile. You could say "that's too young" - but those are the future 60+ multi-millionaires who will populate future surveys.

Oh, I could also add to my list: Had bought/held real estate in the 2010 range. Again, more luck than strategy.

That’s because that’s not your peer group. My peer group includes my friends from high school who all went to elite colleges and then got good jobs. They typically married others who have spouses who have good jobs. I’m also one of the few with a child - just born at the ages of 35/36. I married someone who wasn’t a big earner so it’s unlikely I’ll ever catch up to them. But you get 2 people each earning $150k for 10+ years, invest wisely, and the money just starts to pile up.

Two professional jobs with full 401k contributions and some form of company match gets a couple to millionaire status prior to or around 40. At least in post-tech bubble market.

That was case for my wife and I. Mid-40s and our 401ks between us are multi-millionaire.

JoMoney wrote: ↑Thu Aug 26, 2021 7:42 am

revhappy wrote: ↑Thu Aug 26, 2021 7:35 am... This book was written in 1996, I wonder if America has changed quite a lot since then...

Yes, many things have changed over 25 years. Saving more than you earn (emphasis mine) as a method to accumulate wealth isn't one of them.

I am having difficulty parsing your second sentence (maybe because I missed part of the OP, which has now been stricken off record?) - how could anyone ever save more than he/she earned?

Anyway, here is a joke I recently came across (though I might have mangled it a bit, the punch line is unchanged) which is similar to my confusion here

Person 1: my grandfather didn't take part in the first two world wars.
Person 2: well, he probably wasn't even around during the first world war.
Person 1: of course! when did I say that he participated in it?

fortunefavored wrote: ↑Thu Aug 26, 2021 8:34 am

JoMoney wrote: ↑Thu Aug 26, 2021 8:17 am

fortunefavored wrote: ↑Thu Aug 26, 2021 8:11 amI re-read it semi-recently and it definitely felt creaky. The "2021 US millionaire next door" feels much less boot straps and more "right time, right place, start on 3rd base."

A more typical millionaire next door now: has a wealthy family that paid for appropriate tutoring/support and sent them to college with little/no debt, got a job in one of the few industries with monopoly power (megatech, finance, medical) and had someone give them a down payment for a house (or buy it outright), etc. Basically "to be a millionaire next door, start with a million dollars'

So although I do agree the general advice stands, I do not think anyone should bother reading the book as it will likely make them laugh out loud at how inapplicable most of it is and possibly be discouraged.

Your imagined "2021 Millionaire Next Door" has always been the imagined case, and is what the books data was meant to expose as not being the case for most. Lots of people have done quite well over the past decade+ spending less, and diligently saving in average investments like a home and the stock market.

Yes, there are a lot of people sitting on a lot of money.. but the mechanism that got them there seems rarer for new/aspiring millionaires than the one I outlined. Unfortunately I don't know how that data can be sliced up. Maybe someone else's new book opportunity.

I don't personally know anyone in my age range (35-50ish) who is a multi-millionaire (call it $2.5M+) who fits the original millionaire next door profile. You could say "that's too young" - but those are the future 60+ multi-millionaires who will populate future surveys.

Oh, I could also add to my list: Had bought/held real estate in the 2010 range. Again, more luck than strategy.

I don't personally know anyone in my age range (35-50ish) who is a multi-millionaire (call it $2.5M+) who fits the original millionaire next door profile. You could say "that's too young" - but those are the future 60+ multi-millionaires who will populate future surveys."
Any number of combinations where each spouse of the couple has a job which has access to 2 or 3 of these ...pension/401K/457/403b and pays reasonably well can get to those numbers by 40-50. The possiblities I have seen include but are not limted to: teachers, police, nurses, firefighters, PT, school admin, local municipal workers, janitors, SLP, security, etc.

BillWalters wrote: ↑Thu Aug 26, 2021 8:36 amIn my opinion, this forum focuses way too much time on saving and not enough on earning. The easiest way to save more money is to make more money.

+1 (though easier said than done).

smitcat wrote: ↑Thu Aug 26, 2021 9:32 am

fortunefavored wrote: ↑Thu Aug 26, 2021 8:34 am

JoMoney wrote: ↑Thu Aug 26, 2021 8:17 am

fortunefavored wrote: ↑Thu Aug 26, 2021 8:11 amI re-read it semi-recently and it definitely felt creaky. The "2021 US millionaire next door" feels much less boot straps and more "right time, right place, start on 3rd base."

A more typical millionaire next door now: has a wealthy family that paid for appropriate tutoring/support and sent them to college with little/no debt, got a job in one of the few industries with monopoly power (megatech, finance, medical) and had someone give them a down payment for a house (or buy it outright), etc. Basically "to be a millionaire next door, start with a million dollars'

So although I do agree the general advice stands, I do not think anyone should bother reading the book as it will likely make them laugh out loud at how inapplicable most of it is and possibly be discouraged.

Your imagined "2021 Millionaire Next Door" has always been the imagined case, and is what the books data was meant to expose as not being the case for most. Lots of people have done quite well over the past decade+ spending less, and diligently saving in average investments like a home and the stock market.

Yes, there are a lot of people sitting on a lot of money.. but the mechanism that got them there seems rarer for new/aspiring millionaires than the one I outlined. Unfortunately I don't know how that data can be sliced up. Maybe someone else's new book opportunity.

I don't personally know anyone in my age range (35-50ish) who is a multi-millionaire (call it $2.5M+) who fits the original millionaire next door profile. You could say "that's too young" - but those are the future 60+ multi-millionaires who will populate future surveys.

Oh, I could also add to my list: Had bought/held real estate in the 2010 range. Again, more luck than strategy.

I don't personally know anyone in my age range (35-50ish) who is a multi-millionaire (call it $2.5M+) who fits the original millionaire next door profile. You could say "that's too young" - but those are the future 60+ multi-millionaires who will populate future surveys."
Any number of combinations where each spouse of the couple has a job which has access to 2 or 3 of these ...pension/401K/457/403b and pays reasonably well can get to those numbers by 40-50. The possiblities I have seen include but are not limted to: teachers, police, nurses, firefighters, PT, school admin, local municipal workers, janitors, SLP, security, etc.

I suspect there are still lots of the 35-50 business owners out there’s that fit the original profile. If you run a crew or crews you can make a surprising amount of money — including in things like landscaping and concrete work. I knew multiple people in university that left hard sciences to go into concrete due to family connections. In their view hard science didn’t pay well enough. One even had a graduate degree.

fortunefavored wrote: ↑Thu Aug 26, 2021 8:11 amI re-read it semi-recently and it definitely felt creaky. The "2021 US millionaire next door" feels much less boot straps and more "right time, right place, start on 3rd base."

A more typical millionaire next door now: has a wealthy family that paid for appropriate tutoring/support and sent them to college with little/no debt, got a job in one of the few industries with monopoly power (megatech, finance, medical) and had someone give them a down payment for a house (or buy it outright), etc. Basically "to be a millionaire next door, start with a million dollars'

So although I do agree the general advice stands, I do not think anyone should bother reading the book as it will likely make them laugh out loud at how inapplicable most of it is and possibly be discouraged.

This attitude makes me sad.

You think life wasn't hard in 1996? Maybe you weren't there....I was and I remember it like it was yesterday. Nothing has changed. There have always been hurdles some people have had to face that others have not, since the dawn of time. It's the basis of the phrase "life is not fair." The healthy approach is to figure out how to obtain your own cows as opposed to wishing your neighbors cows were dead.

BillWalters wrote: ↑Thu Aug 26, 2021 8:36 amIn my opinion, this forum focuses way too much time on saving and not enough on earning. The easiest way to save more money is to make more money.

We do get the occasional "doctor or programmer at a FAANG company" thread.

Like this one : viewtopic.php?t=286885

And we do get the occasional "side hustle" thread.

But earning more tends to be more career focused (should I go into management? Should I pick up this certificate/skill?) and that isn't quite the focus of this board. I don't know of a bogleheads equivalent that focuses on making more money, though.

Jags4186 wrote: ↑Thu Aug 26, 2021 9:14 amMy peer group includes my friends from high school who all went to elite colleges and then got good jobs. They typically married others who have spouses who have good jobs.

That's a neat trick!

Firemenot wrote: ↑Thu Aug 26, 2021 9:42 am

smitcat wrote: ↑Thu Aug 26, 2021 9:32 am

fortunefavored wrote: ↑Thu Aug 26, 2021 8:34 am

JoMoney wrote: ↑Thu Aug 26, 2021 8:17 am

fortunefavored wrote: ↑Thu Aug 26, 2021 8:11 amI re-read it semi-recently and it definitely felt creaky. The "2021 US millionaire next door" feels much less boot straps and more "right time, right place, start on 3rd base."

A more typical millionaire next door now: has a wealthy family that paid for appropriate tutoring/support and sent them to college with little/no debt, got a job in one of the few industries with monopoly power (megatech, finance, medical) and had someone give them a down payment for a house (or buy it outright), etc. Basically "to be a millionaire next door, start with a million dollars'

So although I do agree the general advice stands, I do not think anyone should bother reading the book as it will likely make them laugh out loud at how inapplicable most of it is and possibly be discouraged.

Your imagined "2021 Millionaire Next Door" has always been the imagined case, and is what the books data was meant to expose as not being the case for most. Lots of people have done quite well over the past decade+ spending less, and diligently saving in average investments like a home and the stock market.

Yes, there are a lot of people sitting on a lot of money.. but the mechanism that got them there seems rarer for new/aspiring millionaires than the one I outlined. Unfortunately I don't know how that data can be sliced up. Maybe someone else's new book opportunity.

I don't personally know anyone in my age range (35-50ish) who is a multi-millionaire (call it $2.5M+) who fits the original millionaire next door profile. You could say "that's too young" - but those are the future 60+ multi-millionaires who will populate future surveys.

Oh, I could also add to my list: Had bought/held real estate in the 2010 range. Again, more luck than strategy.

I don't personally know anyone in my age range (35-50ish) who is a multi-millionaire (call it $2.5M+) who fits the original millionaire next door profile. You could say "that's too young" - but those are the future 60+ multi-millionaires who will populate future surveys."
Any number of combinations where each spouse of the couple has a job which has access to 2 or 3 of these ...pension/401K/457/403b and pays reasonably well can get to those numbers by 40-50. The possiblities I have seen include but are not limted to: teachers, police, nurses, firefighters, PT, school admin, local municipal workers, janitors, SLP, security, etc.

I suspect there are still lots of the 35-50 business owners out there’s that fit the original profile. If you run a crew or crews you can make a surprising amount of money — including in things like landscaping and concrete work. I knew multiple people in university that left hard sciences to go into concrete due to family connections. In their view hard science didn’t pay well enough. One even had a graduate degree.

We were small business owners later on - there are certainly many small business's out there.