Book Review: Stop Acting Rich and Start Living Like a Real Millionaire

I had to switch up my order of non-fiction reading because this book was due back to the library before Power Thoughts.  So, I stopped reading Power Thoughts, put it aside, and picked up Stop Acting Rich and Start Living Like a Real Millionaire by Thomas J. Stanley.

This was one of the most influential books I've read.  I'm seriously glad I read it.  If you recognize the author it's because he also wrote The Millionaire Next Door, which I have not read, although Erik has.

Stop Acting Rich is a statistical book that analyzes the purchasing trends of the millionaires and decamillionaires, and makes sense of what the majority of your average millionaires do for a living, do with their money, and where they live.

Would you believe that your average millionaire lives in a house worth less than $300,000?  I was shocked.  It turns out that millionaires have figured something very crucial out: live in a home below your means.  You see, when a person, whether a millionaire or not, lives in an affluent neighborhood (homes upwards of $600,000) there is a social pressure to keep up with the neighbors and their purchases, cars, activities, hobbies, etc.  The problem is that these neighborhoods attract the wannabes (Mr. Stanley uses a different name, I just can't remember it).  And the wannabes do not have the financial ability to responsibly keep up with the neighbors, so they either go into debt or they are stressed about life.  Average millionaires know that to live in affluence, you must continue to be affluent, and that only leads to less satisfaction.

Which leads to the main secret Mr. Stanley found average millionaires believe: to be happy in life, live below your means.

Genius.  How have I never gotten that?!?!

There is a three types of millionaires: the glittering rich, the investment rich, and the income rich.  The glittering rich make up about 1% of all millionaires and they do live below their means because their income is unbelievably high.   On the other hand, high income earners report very little satisfaction in life because they are constantly trying to keep up with their neighbors habits.  And still differently, the average millionaires, the ones with investments, report very high life satisfaction.  Satisfaction and dissatisfaction have everything to do with spending.  

Most millionaires surveyed do not have wine cellars, do not pay more than $10 a bottle on wine, do not own prestige brands of clothes or jewelry, and when they buy suits, they buy them from JC Penny's or Macy's.

The majority of the high-income wealthy have premium watches (several), the prestige cars (European), and typically talk about their purchases.  And they have very little investments and savings.

They are also the ones who have high stresses and low satisfaction in life.

What I've learned from this book is to be careful of the messages the brands are sending to me.  The premium brands are marketing to wannabes.  I consider myself a recovering wannabe, so this is an important lesson.  The prestige brands know that the average millionaires are far too sensible to buy $60 a bottle vodka and $5,000 watches.  Instead, they market to the people who think that owning these things will somehow bring wealth their way.  I can't believe I subliminally bought into that!

I also learned that it's entirely possible to become a millionaire.  I thought one had to strike it big in order to attain millionaire level, but that is not typical.  The average millionaire became a millionaire at about 45 years of age and while making about $110,000 in annual salaries.  And then continued to live at means well below the income.  While on the other hand, the high-income earners made average salaries above $500,000 a year and lived that way.

The key to becoming a millionaire is to live below your means, frugally, even after you have reached your millionaire status.  Then the occasional splurge can be justified.  

I highly recommend this book!  It was interesting, and not bogged down on stats, in case you're wondering.  The stats were enlightening and the pace was good.

 

Book Review: The Money Saving Mom's Budget

I recently finished The Money Saving Mom's Budget: Slash Your Spending, Pay Down Your Debt, Streamline Your Life, and Save Thousands a Year by Crystal Paine.  In keeping with my number one goal of living debt-free I decided this would be a great resource.  I have read MoneySavingMom.com for a couple of years, but mostly for the coupon advice.  I didn't really think I could be debt free.  I didn't really think I had it in me to slash our grocery budget.


But that was before 2012.  In combination with other books I've read, and this book, I don't just believe it's possible to be debt-free, I believe it's actually possible to live frugally and then be able to save and generously give.  I've seen the light, Praise the Lord, AMEN!


Anyways, The Money Saving Mom's Budget was one of the books I thought I would read to kick off 2012 the right way.  I'm so glad I did read it.


The book covers everything from the necessity of organization to how to play the drugstore game.  The author believes that being organized is one of the most important steps to becoming financially responsible.  If you're going to buy something, then you should probably know if you already have one, or it's a waste of time and money.


I really appreciated her views on going plastic-free.  Plastic as in debit and credit cards.  I do not use my credit card, but my debit card is another story.  Often I will use my debit card to fill in the gap between my purchases and my cash.  And look at where I am!  So, I understand that it's a great thing to leave the debit card at home.  Now if I can only make myself do it.  I'm working on that one.


I also really liked the encouragement to live frugally.  For the first time I finally saw the beauty of frugality.  I had always equated frugality with cheapness.  But I understand it differently now.  It is not cheap to be able to help a neighbor out with groceries because my spending is under control.  It is not cheap to have the cash to give to someone in need.  Frugality frees up money to be able to BLESS PEOPLE!  How wonderful.  I always thought we just needed to make more money in order to be more generous.  I had it all wrong.  I need to live responsibly so that we can give more of what we have now.


Yes, most of what I read in the book I could have read on her blog.  But I think I read and retain better with a book format.  If that's you, and you need a good financial and frugal living advice book, I highly recommend this book.

Smart Girl Talks Corporate Taxes

I was at Bunco last week when my friend the Queen called me smart. This occurred because one of our friends was surprised that I didn't like Barrack Obama.

After the Queen's compliment, I basically biffed the rest of the conversation. I was horribly inarticulate about why Barrack Obama is a terrible President. And I was even less convincing about my single most passionate issue: the beauty of free-markets! I hung my head in shame. I only have a few moments like those to attempt to convince someone of the truth.

But do I? Don't I have a blog? Why, if free market economic principles are so interesting and important, don't I talk about them more often?

I think I should commemorate this tongue-tied occurrence with a weekly post about capitalism, free-markets and how it relates to current events. I'm going to call it, "Capitalizing on Tuesday" or "Capitalism Tuesday", or "Free-Market Tuesday". Do you have a suggestion? I'm terrible with names.

So, today's topic is about how awesome it would be if Arizona slashed it's Corporate Tax Rate. Currently, we have one of larger corporate tax rates. According to the Tax Foundation, Arizona's corporate tax rate is 6.9% on all moneys earned. Whether you earn $1 or $1,000,000, you have to pay the state 6.9%.

I'm bringing this up because couple of weeks ago, California enacted the California Internet Sales Tax. All online purchases, irregardless of if the vendor has a brick-and-mortar store, is now subject to sales tax in the state of California. This is a hit for online merchants based in California. The article ended with an interview, "One affiliate, Ken Rockwell of San Diego, the owner of a 12-year-old photography website, said he planned to move out of state.

"Will it be Las Vegas or Scottsdale or Ensenada?" he said. "It's a question of where, not if."

Dear State of Arizona, I have a few suggestions.

1. Start recruiting businesses from California. They want to move! Arizona is the perfect place for businesses to start over. We have very few natural disasters and shipping interruptions. We are very accessible internationally. Yes, it's a tad hot for a few months. So what? Instead of paying higher taxes, you can afford to take vacations!

2. Slash the corporate tax rate to below 5% . This will entice the businesses. They will bring their existing customers, their employees, and hopefully, they will start hiring new people once their business grows.

3. Watch businesses grow! Arizona's unemployment rate is, preliminary, at 9.1%. (Expect that to be adjusted upwards. That rate has been adjusted upwards for the past 2 years.) The real unemployment is probably at 9.5%. Well, the easy fix for this is bring in more businesses for our people to work in. More jobs available means more people working and lower unemployment.

Anyways, if you know your state reps, I would pass along this information. Encourage them to try and find a way to lower the corporate tax rate. Capitalize on California's idiocy.