Well everyone I’m officially on vacation from 3pm today until Jan 3rd. I will not be posting on Christmas and Boxing Day, but I will try to post after that as often as possible. Happy Holidays and have a great long weekend.
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I recent read the book, The Millionaire Next Door by: Thomas Stanley and William Danko, and I was a bit amazed by some of their findings. For example that fact that 80% of the millionaires in the US are first generation to their money was a bit of a wake up call. There are basically two types of a rich in the book: those that look rich (but actually have little assets) and those who don’t look rich (but have tons of assets).
If nothing else this book teachings you not to worry about what others think and just do your own thing when it comes to money. Just because you earn enough to have the big house in the best neighbourhood and two cars, doesn’t mean you have to spend it that way. I’ve always liked buying the worst house on the block in a decent neighbourhood and making sure I have a profit when I need/want to sell.
It also hammers home the idea that you are not what you drive. You have guys in the US who have a net worth of $10 million, but drive an old truck, because he likes to toss dead fish in the back seat after a trip to his best fishing spot.
So if your looking for some reading material over the holidays, I would suggest reading this book.
On my personal library shelf I have built up a small collection of some of my favorite retirement planning books. Out of all of these the one I like the best so far has been Stop Working – Start Living by Dianne Nahirny.
Dianne retired at age 36 and during her working life never made much of a salary (around $20,000/year), but she did make good money off a few house deals. She left the working world with a net worth of just $225,000. So the obvious question is with such a low net worth how is she financially independent? That is the lesson of the book: control your costs or they will control you.
Her book has two parts, the first part focuses on attitudes around money and how she came to her freedom day. More than anything what I was left with was the idea was to control your day to day spending and stop wasting money on things that don’t mean anything to you (ie: your power bill). That way you feel fine spending money on those luxury items you really want. In Dianne’s case, it was things like a antique gold locket, fur coat and a trip to Europe on the Concorde.
The second half of the book gets down to how to control your money. Some her examples are a bit extreme for my taste, but it proves the point. If your creative there is little no end in sight on ways to avoid costs and save money. The added bonus to her methods is you will be a kinder to the earth as you waste fewer resources. Which is exactly how I view it. I’m not saving the planet with low wattage light bulbs, I’m saving a few bucks and now have a $40/month power bill, so I’m taking that savings and building up to buy a new LCD TV.