Financial Security The 12 Secrets of Self-Made Multi-Millionaires (12 Lessons)
Don’t Spend More Than You Earn Secret 8
Secret Eight: Multi-millionaires live frugally, beneath their means. There’s a saying that “new” money is flaunted more garishly than old money. That’s because a lot of new millionaires have curb appeal and an extravagant standard of living. While the more mature multi-millionaires know that when you have the real thing, you don’t have to flaunt a loud imitation.
If you read the New York times bestseller, “The Millionaire Next Door”, by Thomas Stanley and William Danko, you learned that common threads among America’s wealthiest individuals are that they live below their means, and that they don’t need to massage their egos by displaying high social status. Great examples of this have been the late Sam Walton, H. Ross Perot, Oprah Winfrey and Joan Kroc, the philanthropist widow of Ray Kroc, McDonald’s founder, to name a few. I’ll never forget the night I went to a party at a palatial estate owned by one of the best known new millionaires in our community.He chewed an oversized Cuban cigar, and was big, tall and formidable—the powerful type you can’t help but notice. His house was so big, mine looked like his parking lot toll station.
Another guest at the party was a farmer wearing a clean pair of jeans and a nice shirt, but hardly looking like he had been on a shopping spree on Rodeo Drive. What my host didn’t know was that this farmer had owned one of the most expensive pieces of real estate in Southern California, and had sold it for over $200 million cash, after taxes.
Our host had invited us all over to see the monument to his own progress, his mansion. The modestly dressed farmerjoined us as we all had to take the grand tour of the house, before we could have something to eat or drink. He could have bought and sold all of our companies and possessions, but you’d never know it. I asked around and people said, “He’s the nicest guy in the world. You’d never know he had all that money.”
Our last stop on the thirty-minute tour was our host’s wine cellar which had been re-created from a French Chateau by flying in the bricks and stone from a Paris suburb. He brought out a bottle of one of the most coveted red wines collected.
“This is one of the finest bottles of wine of its kind in the world,” our host gestured flamboyantly. That’s why it’s worth $20,000.”The farmer called his bluff, without hesitation: “ $20,000 huh, must be pretty good stuff, let’s pop that baby open.We’re thirsty and we’re worth it, that’s about $800 a glass for the 25 of us.But it’ll take more than one bottle! Let’s toast your newly acquired financial success!”Well, our host turned the color of Rosẻ and retorted, “This isn’t for drinking. It’s part of my collection.” The farmer looked him right back in the eye and said, “Well, I never invite people over to my house and show them my vittles unless I’m willing to share what I show them.
I figure if you’re going to show them some food or drink, you ought to let them sample it.” Of course, our host never opened the rare bottle of wine, but I learned a rare lesson that night:Anyone who has a lot of toys, “just for show” and isn’t willing to share with others still has a lot of growing up to do. What it means for this program is that most multi-millionaires live more modestly than people who are trying to act rich!They are more interested in having their investments work quietly for them, rather than seek high social status. Interestingly, they don’t buy new cars every year or two or lease one. Most of them own and keep their automobiles for a minimum of eight to ten years.
They don’t like to invest in depreciating assets.One of the most profoundly simple secrets of self-made multi-millionaires is that by living beneath their means, they always have money to invest in appreciating assets or emergencies, without liquidating an investment at an inappropriate time.One of the hardest choices we all need to make in life is forego the materialism in our status-hungry society and realize that superficial trappings attempt to tell the rest of the world how important we are;when in truth, the concentration on status symbols is more likely to say to others that we need to pump up our image to hide a lightly valued self inside. The person with strong self-respect can afford to project a modest image.Things that retain their value or increase in value, rather than things that are simply expensive and impressive, are what the authentic multi-millionaire has learned to possess. Always spend less than you earn, and realize that the most insidious thing about debt is that it must be repaid, usually long after the pleasure of the purchase has subsided.
Self-Test: Do you have high credit card debt or do you try to pay the balances off every month?Develop a plan wherein you receive interest for appreciating assets, instead of paying extremely high credit card interest for depreciating assets.
The Science of Getting Rich • The Richest Man in Babylon • Acres of Diamonds