If you were asked what it meant to live the American Dream, how would you answer?
Most would likely include a list with the following qualifiers:
- Own a nice, big house in a vibrant neighborhood
- Send your kids to good schools
- Have a high-paying job
- Take nice vacations (to Disney World or a national park)
There’s certainly nothing wrong with wanting to own a house, have a good-paying job, and good college for your kids. Occasional trips to Disney World seem like a just reward for all that hard work and financial discipline.
On the surface, these fairly modest expectations don’t raise any eyebrows. But it’s not easy to achieve this dream without hard work and a little deferred gratification. More and more, finding affordable housing in neighborhoods with decent public schools has become a quest for the holy grail. College tuition continues to soar, and even Disney World costs a mint nowadays.
Evolution of the American Dream
In reality, there’s a new version of “How to Live the American Dream” that’s taken over the collective consciousness. It’s less about owning a home anymore, especially since the housing crash of 2008. Getting a college degree is even coming into question. Instead of trips to Disney World, we might yearn for a week-long camping trip at the nearest national park. Heck, you might even choose to home-school your kids.
Scaling back is fine, but there are plenty of people who are downright suffering. For them, the American Dream is a complete myth. There’s a serious problem emerging in this country. An ever-growing disparity of wealth is leading to a shockingly brutal level of poverty and homelessness in the world’s most affluent nation.
The reality is, that expectations of the American Dream are diminished. Mainly because of a few key factors: The global economy is shaking up the order of commerce that dominated the 20th century. Coal and fossil fuel-powered industries can’t sustain themselves the way they had before. Technology is becoming a common denominator for success. Our jobs are becoming more sophisticated.
Oh, and the bar has been raised quite a bit too. Raj Chetty, a highly respected economist notes that it’s easier to attain an “American Dream” growing up in Canada, mainly because there’s “less distance (economically speaking) to travel” from the bottom to the top. In the U.S., our bottom is deep, and our top is stratospheric.
The Millionaire Next Door Formula
An eye-opening read when first published, The Millionaire Next Door, is often cited as a guide-book for making it big. Simply follow in the footsteps of your stealthy-wealthy neighbors.
I don’t believe a simple book can solve the disparities faced by our society. But it may be a helpful source of inspiration for some who find it harder and harder to achieve their American Dream.
I’m curious to see if those twenty-year-old concepts still hold water. Here’s what I found… (List courtesy of Kiplinger.com)
1. Don’t Spend Beyond Your Means
Well here’s a “duh!” one to start with, right?!? There really should be no aspect of the American Dream that requires you to spend money to appear as if you’ve made it. And yet, we see it all the time. The power of marketing compels us to buy the latest smartphone or tablet. That same marketing pull keeps us driving shiny new cars.
And now that we know how important life experiences are, we can’t help but get on a jet plane to zip around the world to show off selfies on our Facebook feed. Sweet Jesus.
Can we live the “American Dream” by spending within our means? Absolutely. The Cubert family drives two fully paid-off vehicles that are approaching their ten-year-old birthdays and 100K miles each.
We live in a relatively small house (1,400 finished square feet) for our family of four. A vice from before our quest to early retirement no longer plagues us – we still usefully functioning Apple products c. 2013.
I’ve written about this ad nauseam on this blog: Live a small footprint and avoid the “big three” to have a fighting chance at early retirement. Early Retirement just so happens to be my American Dream, in case any of you newer readers didn’t know. And it is highly achievable regardless of many circumstances.
2. Get Yourself an Education
So here’s an interesting concept – Instead of expecting everyone else to educate you, you take the bull by the horns and educate yourself. I took advantage of a workplace tuition reimbursement program to pay for half of my MBA. Before having kids, I read for pleasure, and often non-fiction.
The key is to keep an inquisitive mind on a variety of topics. You simply never know where you’ll learn the next valuable life hack.
Reading a book like The Millionaire Next Door is an obvious example of educating yourself. You don’t have to get an advanced degree on how to live the American Dream. But if you achieve your MBA, master’s, or Ph.D., it’s a fair barometer of your thirst for self-improvement. Get thirsty, and stay thirsty, I always say. Even when I don’t drink beer.
I’d also argue that keeping a healthy circle of friends and acquaintances is a solid form of self-education. Who you choose to associate with often is a reflection of what your ambitions are. I have friends that are good for a laugh, and laughter is healthy. But I also have friends who know a LOT about real estate, and that friendship has proven to be very fruitful.
3. Avoid a Draining Career
Funny. I figured I’d go off and become a rock star Urban Planner. At least, I spent a full five years of undergraduate studies with that in mind. And yet here I am, leading large-scale technology programs in a completely non-civic sector of the economy. Dang you, Sim City. I had dreams of rows upon rows of skyscrapers in the vast urban stretches of Cubicle Land.
This one is tricky. As an example, if you have a passion for directly helping others, you could go into the nonprofit sector. Or, you could go into medicine. Both are very meaningful and directly help people in need. But you earn a lot more as a physician, nurse, or similarly licensed health care professional.
I would argue that you can choose a field that you’re passionate about, so long as you recognize the limitations you might face on the income side of the equation. If you love to write, you may need to make significant sacrifices to save and avoid debt.
And that’s okay. Be prepared though, to have a roommate or two, bike to work, and avoid weekend brunch like a Millennial gone wild.
I give credit to those who take action to change course in their career life. Taking bold steps to opt out of a job you’re not happy with to focus on a passion project or two can lead to lucrative and happy places.
4. You must Save and Invest in Early
This is where so many of us get into trouble. We find that life throws us curveballs and the only way to dodge them is to whip out a credit card. What if you get sick and you have a terrible health insurance plan or no insurance at all? What if the condom broke? Divorce?
The point is, that life can deal you a lot of variables. All you can do is try as hard as possible to minimize the odds of those variables happening to YOU. Worried about your health? Cut the sugar, meat, and alcohol intake by half and call me in the morning. Worried about the cost of kids? Consider the impact of overpopulation on our finite ball of dirt called Earth and get a vasectomy. I did.
It turns out that having the foresight to save income at a young age is THE single most important factor if you want to achieve any form of the American Dream. I didn’t know anything about saving for retirement when first presented with a 401k plan option back in the mid-90s, fresh out of college. All I knew was that retirement would eventually happen.
Over the years I’ve managed to bump up my 401k contribution to 10%, then 15%. I’m now contributing a whopping 6% because I don’t get a company match after that. Also, when you get about $300K socked in your 401k by 40, you’ve pretty much met your “old man money” target. The rest of your dough can go into sexy things like real estate.
I honestly don’t know that I’d be writing to you now from any blog if I hadn’t realized the importance of saving via 401k right out of college. I had student loans to pay.
And I had a brand new car loan to pay as well. But the materials from Fidelity registered enough with me back then, that 8% of my $27,500 annual salary (as a rookie technical call center agent) would form the core of my wealth snowball today.
5. Avoid Taking Huge Uninformed Risks (or Gambling)
In other words, ignore that Bitcoin nonsense. Besides Bitcoin, this lesson applies to anything considered “high risk.” Think about gambling, day trading, investing all your 401K into just one company, etc. It all sounds great if you end up on the winning side. But sadly, the odds are not stacked in your favor.
I’ve come to believe that the best approach is the least exciting one. Investing in low-fee index funds. Sexy, huh?
And here’s the thing when it comes to “low fees”: if you can avoid the temptation to hire a financial planner, and invest directly with, say, Vanguard, you’ll end up with a lot more money in the end. Here’s a handy chart showing the difference between Vanguard’s 0.04% fees for VTSAX (a popular S&P 500 index fund) vs. Joe Planner’s standard 1.5% “advisory” fee:
All this isn’t to say you can’t or shouldn’t take risks. But there is a big difference between taking an ill-informed risk (i.e., high, dangerous) vs. a well-informed one (i.e., low, reasonably predictable.)
Take for instance Real Estate. I took money out of our home equity to make the down payment on each of our five rental properties. Of course, we paid off the HELOC in full before targeting the next rental. What endeavored low risk was a few key factors:
- We had a friend already successful in the space to guide us
- We knew the area we’d be investing in and were well aware of the trend towards moving back to the city (Minneapolis)
- And of course, we read up before we dove in
Each of these three falls under the “Educate Yourself” category we covered earlier. Want to start a small business? Read up on it first. Find others who have struck out and found success, but also those who have failed. That way you can learn from wins and fails alike.
All this helps to lower the risk, so you’re not having to swing for the fences.
6. Be Insured
Insurance. You usually hate having to pay the bills. Until something really bad happens of course.
Insurance is a necessary evil. Not necessarily because insurance companies are evil. They do employ a good share of respectable friends and neighbors after all.
The key is to avoid giving insurance companies more than they deserve in the form of premiums. Said another way, if you can afford the minimal mishaps, save insurance for the biggies you CAN’T afford.
The American Dream can be achieved by minimizing the bad variables. But when the dice roll doesn’t land your way, insurance is a safeguard that should help you recover.
No, insurance can’t restore lost limbs. It can’t replace heirlooms lost in a fire. And it can’t bring back a loved one. But it can help you avoid serious financial disasters.
Don’t forego term life insurance unless you are certain your significant other can get by without your income. Don’t forego supplemental health insurance in your later years unless you have rock-solid health.
Do ditch the comprehensive and collision coverage. Because you’re not driving a BMW, Audi, or some other bullsh*t waste of money vehicle.
7. Be Smart With those Occasional Windfalls
I’ve learned the hard way with this one. You know the drill: Get a raise, run out and buy a fancy watch. Get a bonus, put in that dream pool. Fortunately, I learned my lesson early enough that it didn’t squash my ability to pursue early retirement.
Though we almost short-circuited “the plan” when we were expecting twins a few years back. We were within a heartbeat of acquiring our very own unnecessary $500K home. Thank goodness the lender didn’t approve our loan back then.
If you’re fortunate enough to get a nice raise or bonus, consider your lonely debts first. Consider your kids’ 529 plans. Instead of booking a trip to Disney ($$$), treat yourself to a weekend at Wisconsin Dells. Or better yet, go visit friends and family via a fun road trip.
Think of this as the “MC Hammer Lesson.” That guy had so much money from the success of “Please Hammer, Don’t Hurt ’em!” that he could have funded a thousand of our early retirements.
Instead, he blew it all, and he blew it fast. The only “Hammer Time” for you is to hammer those student loans and credit card debts!
And yes, I owned the tape. Legit.
8. Pay Off Your Car and House
I probably don’t need to spend a lot of time on this one. Any of you who’ve followed this or similar blogs already know that the key to financial freedom is avoiding blowing your wad on worthless cars and needlessly expensive real estate.
Your best bet is to stay in that starter home and hone your DIY skills to make it better. That’s what we’re doing. Yes, you can make a basement a very livable space.
As for cars? What can I say that already hasn’t been said? I’d suggest though that you kick it up a notch and fit bicycling into your routine. Choose to live closer to amenities so you can bike to get your groceries. We are fortunate to live within walking distance of our basic needs.
I sound like a broken record because I feel like I’ve typed that a dozen times before here. I’d figure we save hundreds if not over a grand each year by choosing to live near work and other frequent destinations.
Bonus tip: Hang onto your clothes too. Buy durable and timeless pieces. Maintain your shoes with shoe trees.
Double bonus: Hang onto your spouse. Divorce wreaks havoc not only on your personal life but especially on your finances. Be a good listener, show appreciation, and embrace changes.
9. Avoid Debt
Last but not least, the big “D” word makes our list. It’s easier said than done. In my view, you have to incur some debt at some point in life. Pretty hard to avoid it entirely, unless you’re a trust fund kid.
There’s such a thing as good debt. When you leverage low-interest loans to achieve a college degree is a great example. Another is using other people’s money (i.e., a mortgage from the Bank) to obtain rental properties. Of course, you should work to pay off the student loans as soon as possible. The rental debt you can let ride.
Mainly, don’t look for ways to add debt to your ledger. If you need a car, look for one you can afford to pay for in cash. If you need a car and don’t have the cash, at least avoid anything over $20K, and PLEASE consider used.
When searching for your first home, be sure you can afford the mortgage. You may need to rent for a while, especially if you live in a crazy expensive part of the country, like D.C., San Francisco, New York, Seattle, etc. Even Minneapolis is getting out of control.
When it comes to paying for your kids’ education, don’t shy away from making them work for their fair share. That includes working hard in school to be eligible for scholarships. It also means summer jobs and maybe them taking on a little student loan debt themselves.
10. Ultimately, It’s About Your Relationships
The American Dream means something different to every one of us. For MC Hammer, it meant a giant house with helicopters, private jets, and two swimming pools. For others, it’s all about financial freedom.
At the end of the day, is your time, money, and effort being put towards something purposeful, like helping others? Are you striving for material wealth and symbols of that wealth, or stronger, healthier relationships?
Fancy houses, fancy cars, and fancy trips are interesting. But ultimately, the things we look back at with contentment and joy are the bonds we’ve made with friends, family, those we’ve helped, and those who’ve helped us. If someone asks you how to live the American Dream, answer with that.
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Busy Mom says
I felt like you were talking to me. And I am currently reading Millionaire Next Door – I know it has been around for a while, and I have heard of it often, but had never read it.
We have been saving passively for a while now, and had been following most of the practices unknowing. We just took the big leap of deciding to commit to early retirement. I have started blogging about it, please stop by and take a look if you have the time.
Hey there, Busy Mom! I’m glad you stopped by! The book definitely resonates still today. There are updates every so often but the original crux still applies.
I’m excited you’ve taken the big leap for an early retirement. Talk about a goal to get excited about! Will definitely check out your blog. Cheers!
Mr Defined Sight says
Very insightful man! The American Dream can still be achieved but a person has to avoid the pitfalls that you mentioned above. Especially in the early years after high school. So many kids get in over their heads with school loans, vehicles, and credit cards. And then later the mortgage. If you can be sensible on those items, you have half a chance to live a happy life it seems.
Why, thank you! Yes sir, those early years, right after school are the ones that really count. You can always recover, but you have to work infinitely harder to play catch up.
Accidental Fire says
MC Hammer might have had the helicopter, but Mike Tyson had the tiger. And then a face tatoo.
Tyson for the win!
Good stuff. As you mentioned about cars, “what can I say that hasn’t been said?” Well… apparently us ‘car-woke’ personal finance bloggers are going to have to keep saying this over and over because the average price of a vehicle purchased in America keeps going up. And I don’t see America’s deep love for all-things-car going away anytime soon. The latest trends say that Millenials are changing this, but wait till they get in their thirties. I’ll believe it when I see it.
I would always bet on Tyson. And man, he made enough money to outlast even his own extravagance, right?
That is news to me about the average purchase price of cars going up. Sigh. Some good news here in Minneapolis – the rate of cycle/walker commuters has increased in the last 10 years. I’ll hang my hat on that but a lot more work to do…
Dang Millennial says
Haha love that MC hammer some how made it into a post about the millionaire next door! The American Dream is for sure different for everyone. My american dream would be to have a paid off home that I love here in my native Colorado! On top of that 200K in passive income would be amazing…anything over this would be complete excess. I like people with ambitious goals but I do not want my whole life to revolved around money. My American Dream is to have a healthy income to selfishly live an amazing lifestyle and find ways to give back to my friends, family and local community. I can die a happy man without the helicopter.
Hammer was the knucklehead next door, taken to the extreme. You know the type – they always pull into the driveway with a fancy new car. They’re often off on exotic vacations. They have a pool in the backyard (in Minnesota!)
Your goals are splendid, Dang Millennial. Who needs a helicopter, anyhow?
Hello! I just discovered your blog and love this article. It’s so true and I hope many read it and take it to heart. My husband and I are late 30s and one year ago we were in a suburb of a big city having just purchased our million dollar 5 acre 7,000 square foot dream home and gave it up! We relocated to a southern city, negotiated to keep our jobs with the same income, and are now raising our 3 kids in a 2000 sq foot house, kids in public school, and savings 6 figures a year. We’ve bought 5 rental properties in the last twelve months and are hoping to both give up the corporate life in under 5 years to do work we really love. I’m so glad we opened our eyes and realized it’s not about the “stuff.” Love your blog. Preach on!
Wow – Five Rentals!!! Tell me more! Are they single family homes? Curious too about what kind of work you really love that you’ll pick up, after the corporate life ends?
Thanks for stopping by and sharing a bit about your journey – you’ve made some really sound financial moves!!
Well done Cubert!! Great article, I’ll be waiting for this one to be featured on Rockstar. There are so many good points here. One that caught my attention early was the idea that its easier to make it in Canada because the spread between rich and poor is smaller? Is that true? I had always read that statistic as that there structural reasons its easier to make it in Canada. This one is a bit disappointing.
Of course I loved that back splash you installed 😉 and the following quote “Your best bet is to stay in that starter home and hone your DIY skills to make it better. ” Yay for DIY – you forgot to mention how good it feels to look at that back splash – every single time! I’m kidding of course.
Great job and I’ll be forwarding this one to my friends.
Glad you enjoyed it, HM! I wasn’t surprised about the Canadian comparison. It helps that the analysis is empirical, not political based. Sad but true – you give people an even playing field to start with, and the results shockingly turn out better.
Thanks for the back-splash compliments! It was a laborious one – used too much grout and it took FOREVER to wipe it off. Appreciate your forwarding this on!
Tom from Dividends Diversify says
Well said. I read the Millionaire Next Door many years ago and it had a profound and lasting impact on my life. Timeless concepts to live your life by if you choose to. Tom
Thanks, Tom! I’m glad you stopped by to comment. One point the book makes that didn’t end up on the list: don’t let your kids treat you like a welfare state (e.g., they move OUT at 18, or pay rent, and they also get to pay for their first house down-payment after THEY pay off their student loans.)
Josh hastings says
Well done !!! I think this book should be a required read for all high school seniors! I’m currently writing a similar post (essentially a book review) so people would get the main points. Biggest point for my generation- avoid debt & no new cars !!!
Thanks, Josh! Agree – Replace the advanced trig class with Personal Finance 101. Start em early!
Tread Lightly, Retire Early says
Wise about windfalls is definitely a huge one, and one that’s a huge trap for people who have grown up poor. I’ve seen it with friends of ours who grew up with very little means, and any extra cash is like winning the lottery, and they spend it as such. The big thing that isn’t really touched on is the emotional and mental parts that come from growing up on a shoestring budget that color (bad) decisions as an adult. I don’t have an answer here, but I see that as the #1 problem – the rest of these fall into line if you can meet that first hurdle.
Hey there, TLRE! Not that I’ve seen all that many windfalls in my life… Mainly it’s those surprise checks you get many months after submitting a class action lawsuit claim. Stuff like that – a few hundred here or there.
The lottery will never happen since I don’t play – but boy would it be nice to win that PowerBall.
Tread Lightly, Retire Early says
Those are actually exactly what I mean – the small surprise checks that could be integral into setting up a positive future that seem to evaporate into thin air when my friends do see them. I think a lot is the scarcity mindset they grew up with, but I wish there was a way I could change their feast or famine mindset.
Ahh, yes. The “hey look what I got in the mail – let’s go celebrate!” checks? Know what you mean. Having grown up in a very blue collar household, I’ve had to overcome those tendencies to seek instant gratification. It’s a journey for many of us. (Many of my friends are no different!)
Tread Lightly, Retire Early says
Thankfully I didn’t grow up in a household like that so I had less of that to overcome. I can definitely see how hard it is when you come from that to pull yourself to think about money from a different perspective. What do you think got you there?
Honestly, part of it was a desire to be “successful” so there’s a tendency of mine to “compare up” among peers. I dunno. Even though I got to a “successful” life, before I stumbled across MrMoneyMustache.com, I was pretty down about the prospects of another 20 years sitting at a cubicle. MMM is my salvation.
Mrs. Adventure Rich says
I think you just outlined my goals 🙂 Awesome post!
Thanks, Mrs. Rich! Appreciate that! I’ll be following your blog that much more closely to make sure you stay on top of things. 🙂
Miguel (The Rich Miser) says
Cubert, don’t get me started on Disney World. The rides are fun, but I can’t stand the lines! I just don’t understand the concept of paying hundreds of dollars for tickets, only to stand in lines for hours (probably over 50% of your time in the park). Though it is only a 3.5 hour drive from where I live and I have family that loves it, so I wind up there every so often…
Anyways, I like what you say about windfalls. I learned about this on my job, because a large part of my income is bonuses and commissions (some years, over 50% of my pay). So I learned really quickly to save them, because spending them would mean risking running out of money before the next one came. Also, I learned to set aside about a fourth of each for taxes (it’s better to have money left over in April than to be short).
All solid advice, as always.
Oh, that’s right! You’re just a stone’s throw away, so you get to partake that much easier in DW. I’m familiar with those lines. I’ve been there once as a high schooler and thought it wasn’t anything that special. Just especially high prices… Gulp.
Nice work on those windfalls. We’ll have to see how the new tax bill affects us come April. A very postworthy topic there.
Mr. Groovy says
Hey, Cubert. Thanks for the reminder that the tenets of The Millionaire Next Door still hold value. In the words of someone far smarter than me, “We are what we repeatedly do.” For those adults who have sound minds and bodies, and who are good, hard-working, and able to delay gratification, the American Dream is alive and well. For those adults, however, who have adopted a subprime culture, the American Dream is dead. Neither trickle-down economics nor trickle-down government is going to save them.
Mr. Groovy – the pleasure is all mine. Your comment would’ve actually made the perfect concluding paragraph for this post! Trickle-down government is an interesting concept. Is that where welfare and public services are supposed to eventually get to those in need, but have to pass through corrupt officials first?
The sad thing is that the common sense lessons about working hard, deferring gratification and a lifelong commitment to learning are best taught by parents and most people that eventually succeed had one or two committed parents who role modeled those traits. Kids from dysfunctional homes have such a hard road to learn the skills and attitudes that lead to success. I know my success is due to caring parents who had a plan for me before I was born. My heart goes out to those who struggle because they didn’t have that advantage.
Hi Steve! Always great to see you stop by. I couldn’t agree more. I’m lucky in that even though I grew up a child of divorce, my mom remarried to a traditional values 2nd husband. Without that, who knows what trouble I would’ve gotten into. I can’t fault single parenting for the circumstances, but I can empathize with how hard it is to raise kids in that situation.
Amy @ LifeZemplified says
Glorious back splash. 🙂 Great post, Cubert! It’s amazing how many of these concepts I’ve violated in the past. Thankfully I got my $hit together and now practice the stealth wealth way of life. Way more real fun.
Thanks, Amy! I will NEVER EVER EVER use matte-finish uneven stone like that for a backsplash again. Hurts just remembering the pain of having to wipe that grout off after letting it dry for too long.
Keep that $hit together now!
fin$avvypanda @ finsavvypanda.com says
(I love your website name btw haha)
Excellent write up here!
I have to say that The millionaire next door book taught me valuable stuff that school doesn’t teach. I’m so glad that I read it!!
I agree with you that it’s okay to use debt as a leverage as long as it’s used responsibly. It’s a double edge sword, but I really believe that borrowing other people’s money at a relatively low rate can help someone build wealth over time… just make sure we all have our basis covered 🙂
Well, I’m glad to hear that RE investing is working out for you!! I read on your “about us” page that you’re managing rental properties, so that must be doing great!
I enjoyed this post very much! Happy holidays to you… hope you had an awesome Christmas! Yay to 2018 now haha
Well, thank you, Fin$savvy! I was fortunate that name was around when I picked my domain name. Someone else had “Abandoned Cubicle Blog” or something on Blogger at the time, but that was the closest.
Glad you agree on the concept of good debt. If you’re cautious, planful, and willing to work hard, good debt is a fantastic tool for generating wealth. My accountant certainly agrees as well!
Happy Holidays to you as well. I look forward to checking out your site!
Sean @ FrugalMoneyMan.com says
That was 100% me signing up for the 20k brand new car loan out of college. I saw more money than I have ever seen, and all I knew what to do was through it in a savings account or spend it. Luckily I figured out quickly how much I hated giving my money away, so I paid it off quickly!
The 2 points I agree with most, in terms of becoming financially secure in today’s world are:
1. They save and invest early
2. They don’t swing for the fences
My fiancee and I are fortunate to be in a position in our mid 20’s to where we can max out my Roth 401k and both of our Roth IRA’s. We both understand what compound interest will do to those accounts over time and we also know that we don’t need to “swing for the fences.” I would rather fill my batting lineup with 9 people who can consistently hit singles and doubles every at bat, opposed to 9 people who swing for the fences. Over time those singles and doubles will compound at a much higher rate than those occasional home runs.
Hey Sean – You really nailed it with the 9 man lineup analogy. Compounding over time is the single most effective means to achieving wealth. One way to ratchet that up is in your career — that’s where it’s perfectly appropriate to swing for the fences and become a “home run hitter.” Save projects from failure, be a reliable and trustworthy partner, and raises/bonuses will follow.
The world is slightly different today than it was in 1996 when The MND was first published. However, the same practices that worked back then still work today. It is timeless wisdom. Live below your means, avoid debt, save, and don’t swing for home runs. Singles and doubles are all you need to win the ball game.
Hey there, FJM! Couldn’t agree more. It’s odd though that such a popular book hasn’t resonated with more than just us financial freedom nerds. Imagine a society where we learn to live with “enough” in order to focus on what really matters, and have the financial security to travel, and do fun things as well. Radical.
Awesome summary of the important ideas from the MND.
They still work well. Looking back, they worked well for me and are timeless.
Hi there, Wealthy Doc! Thanks for stopping by! This is certainly one book I’ll reference often as the ideas are timeless, as you say.
Financial Imagineer says
Love this post, especially your pic about the Swiss Dream which I’m actually living already [I’m a Swiss – even though the real pictures look somewhat different from your footage ;o) feel free to visit one day if you’re available!]. The Millionaire Next Door might be a 20 year old book, however, its concepts don’t expire: So, today we opened the new book of 2018 with its 365 pages blank pages. We are going to put words on them ourselves, trying to write a great one, once again! The book is called opportunity and its first chapter is New Year’s Day. Happy New Year!!!
Hey there, FI! I love that picture. What a life – growing up in full view of the Eiger, farming on the edge of a mountain. Man. That was some really fun hiking.
Let’s do just as you suggest – start off the new year with a renewed focus on all fronts: health, wealth, relationships, and growth. Well-put! Happy New Year!
Mr. Groovy says
Haha! Sorry for the late reply, my friend. Yes, gluttonous bureaucrats and corrupt contractors certainly take a big bite out of our public services. But my beef regarding trickle-down government was more an observation than anything else. Our government has never been more “helpful,” and yet the number of people who need help seems to be growing and growing. In other words, bigger government isn’t making us more self-reliant (i.e., less dependent on coerced charity), it’s making us more dependent (i.e., helpless without a ton of coerced charity). Like you, I find the concept of trickle-down government very interesting. My goal is to study it more and see if it’s a real thing or just a figment of my twisted mind. The plot thickens, my friend.
I am going to keep tabs on this, Mr. Groovy. There is something to that concept. How is it that socialized nations (Denmark, Norway, Sweden) can make it work, while much of what we try fails? Is gridlock and divisive politics part of the problem? Maybe. Could also be that running a massively large country is inherently challenging. I dunno…
Adam | Minafi says
Awesome post! The Millionaire Next Door has such good info, and you’ve done a great job of expanding on it in this post. Relating it back to the American Dream and making it a realizable dream rather than a pipe dream is an awesome idea.
I think I’m in good shape because I only take out loans for insurance on my bitcoin investments. It’s OK though because I’ve read a lot about the subject and I’m planning on holding onto it until retirement. /s
Hi Adam! I’m glad you stopped by! And really appreciate the kind words. I’ll definitely be swinging by Minafi.com to check in on your Bitcoin exploits. Man, that stuff still just is too exotic for my blood! Best!
Really enjoyed this post… love that book. Seriously, take advantage of the CHEAP housing you guys have over there in America. Over here in Australia, we have what I think is the biggest housing bubble in the world, so an investment of $1M+ in a rental home in Melbourne is just a little too rich for my blood!
Hi Frogdancer (great name, btw!) Well, what once WAS cheap has gotten out of control once again. My most recent investment is an Airbnb condo, far away from the booming market here in Minneapolis. Bubbles will burst. The key is to be ready to pounce (and have your financial house in order to survive any ripple effects!)
Very nice article. I enjoyed your description of “old man money”, even though I’m not exactly sure what you mean. I’m guessing that because it’s before you are 40, you will have a ton by 59.5.
I love your name, abanconedcubicle. Excellent!
Hi Susan! I should definitely be more descriptive about that. Old Man Money is what you need from traditional retirement age and onward – say, 62 to 92? The idea is to set aside enough to live off during that stage first, then focus on how to produce cash flow for the years from early retirement up until 62.
Glad you like the name! I am happy my wife helped me land on that. Cheers!
My parents give scratch off lotto tickets for Christmas and I won! A whole $7. $2 & $5. I have no idea what I’ll do with my windfall yet. Happy New Year!
LOL! You cannot complain about the winners, right, Jacq?!? Happy New Year!
Jim | AFI says
HELOC for down payments is really interesting. That set off a light bulb for me, thanks 🙂
You bet, Jim. Some real estate investors take it up a notch and pull equity from existing rentals to make down-payments on the next and the next and so on. Maximizing leverage.