The Millionaire Next Door

This book is about Millionaires, and it tells us how regular people like you and me can become millionaires.

The author conducted extensive research on millionaires in the USA and they found that Millionaires are frugal, live well below their means, do alot of financial planning, spend money on financial advisers (after a vigorous interview/ background check), CPAs, and less on chattels.

PAWs – prodigious accumulators of wealth

To be a PAW you need to have this much save up:

The society that you live in will influence you. USA is a consumption based society. The longer you live here, the less likely you will be rich.
Also, when you buy one expensive item, you are more incline to buy more expensive items, because that one expensive thing needs to match everything else in your life.
A good dress shirt, needs a good dress pant, and that needs a good haircut, good shoes, good jacket etc. etc.

Self employment is the # 1 path to riches.
To be rich you want:
-self imposed environment of scarcity
-early entry into the labor market

Good Questions to Ask::
`Does your household operate on an annual budget?
`Do you know how much your family spend each year on food, clothing, shelter
`Do you have clearly defined set of daily, weekly, monthly, annually, and lifetime goals?
`Do you spend alot of time planning your financial future
“spend hours each month planning future investment decisions

Prudent: careful in providing for the future
DONT spend time buying stuff, time wasted.
PAW have less worries, and with less worries = more time and energy to do other stuff.

Habits of a millionaire: on top of the planning and the execution listed above.. millionaires hunt for a bargain. They are good at negotiating a cheaper price. For example when a PAW is buying a car, he will look for a seller that is selling because of financial obligations and during the negotiation he will hint at the defects on the car to get a cheaper price.

Individuals who are impatient have higher chances of dementia, and other diseases. Also, the government can take advantage of these individuals by buying out their pension.

People who expect gifts and endowments from their parents are less likely to work hard or be productive. Gifts and endowments dampen productively and initiatives.
This idea also holds true in the workplace. ! Living at home is a gift. Doing chores is a gift.
Parents provide support in exchange for being overbearing/ controlling.

There is limited data on the following statement, but the book suggested that sons and daughters of the affluent who become wealthy tend to be distant in terms of both interaction and distance.

For the future, when you have a will or estate and cash to give away, it is best to assign someone outside of the family to carry out the will. Otherwise there will be disputes.
Estate tax- tax levied on the net value of the estate of a deceased person before distribution to the heirs.


Let us reverse engineer the other end –UAW- under accumulator of wealth-
UAW live an expensive lifestyle, and maybe because they tell their children that they are wealthy, they have to keep up with that image/ lifestyle.

This quote was in my notes. We need to really think about this quote, after thinking about it, we shouldn’t say yes to everyone, but to those that are close to us, maybe we should say yes to them before they ask.

“ask permission even when giving advice.”
Another quote in my notes, which is amazing. I still don’t understand how that is a habit of millionaires. What I’ve learned over the years is that even when people ask for advice, they might not really want it. Because giving advice means that you are better than them, and most people don’t like to be think someone is superior to them.

More habits of Millionaires.
Millionaires and the affluent own dull businesses and have multiple sources of income.


Ending it with some cool cool words…

Recuse: to withdraw from a position of judging so as to avoid any semblance of partiality or bias.

Semblance: outward aspect or appearance

Advent: a coming into place, view, or being

Amend: to make better

Bylaws: rules made by corporations or local government.

Impetuous: of relating to, characterized by sudden or rash action/ emotion

Inculcate: to implant by repeat statement or admonition

Admonition: to caution, advise, or counsel against something

Exude: to project or display conspicuously or abundantly

Surrogate: a person appointed to act for another; a substitute

Predicate (verb): to found or derive; base

Adversary: a person, group that is an opponent in a contest

Coercion- the act of coercing; use of force or intimidation to obtain compliance

Appease: to bring to a state of peace, quiet, ease, calm

Diametrically (adjective): in direct opposition; being at opposite extremes

Precarious: dependent on circumstances beyond one’s control

Encapsulate: to summarize or condense

Subterfuge: an artifice or expedient used to evade a rule, escape a consequence, hide something, etc.


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