Engineers, professors and people with Scottish ancestry, taken separately, are among those who are significantly above average in transforming income into wealth. I have focused on these three groups in previous blogs. I wonder if someone who fit in all three of these categories would be especially good at accumulating wealth? The details of the following case certainly support this hypothesis.
Dr. Scott became wealthy on a professor’s salary before he was 50. He and his family are very frugal. As an example, what wattage light bulb does Dr. Scott use in his home? One-half are 60 watt; one-half are 40 watt. What is his thermostat turned to during the winter? 62 degrees! “What do you think sweaters and comforters are for?” He buys his suits at Sears on sale. How does Dr. Scott go about buying fresh meats for his family? “I dress down, like when I mow my lawn (used mower purchased at an estate sale) and then visit the local farmer’s market butcher shop on Saturday afternoon just before they close. I ask, ‘what do you have that won’t keep until Monday?”
What did Dr. Scott do with the money he saved on electricity and food and just about everything else? He set aside the maximum amount allowed under the law in his 403 B plan. Plus his regular pension plan was fully funded by the state. In addition each month he set aside at least 15% of his after tax income. Plus he had college funds for both of his children who attended fine Eastern private schools. Dr. Scott is a pound wise, penny frugal professor, engineer, and Scottish American.
I am all for being financially smart, looking for the best deal, and investing wisely, but what is the point of accumulating a fair amount of cash and living like a pauper? Life is to be enjoyed. I was not fond of the millionaire next door which basically said live below your means and buy at garage sales. I am a fan of Dave Ramsey and shun debt, but I also want to enjoy life. I have minimal debt ( house payment) so I can buy a better suit for my husband. Of course it was on sale! And pay for our children’s college funds. We also have enough to cover my engineer husband’s fascination with electronics. When I had to be real frugal I was. I don’t have to anymore. Andrea
Seems as though Doc made a full-time job out of frugality. A thought comes to mind about how awesome the wives of these frugal men must be. Women that can turn away from the constant want to spend money
Andrea, here’s my point of view: thanks to 2008 I have found that I won’t “need to be frugal anymore” when I know how many years I will remain on this planet and how much money I will need during these remaining years.
I know neither of these.
Meanwhile, emergencies–such as my sicknesses, a near-tornado, Hurricane Ike rains, and the financial meltdown–will probably continue to happen.
Because I live frugally and I accumulated a “fair amount of cash,” I was able to take care of business and didn’t need to wait for loans or pay interest on them.
Please be careful of thinking, “I don’t have to anymore.”
Andrea,
It’s a matter of degrees of financial success.
Debt ladden is one level.Â
No debt is another.Â
6 month savings is another.
But none of those – as good and necessary as they are will get you to being a millionaire. I’m a millionaire and I know maybe 5 others. All 5 fit the super frugal mold. And they’re all very satisfied with their lives.Â
Based on your comments you want to be (and probably are) comfortable but not wealthy. Comfortable is good. I would argue that the freedom of time and peace of mind that comes with being wealthy is worth the work.Â
Side note: It’s not all the penny pinching self sacrificing you’re perceiving either. I bought my avalon car, super thin laptop, half my clothes, and my high fidelity stereo all used but like new and for huge savings. I even got a house on the river which I’d wanted for years but only because I got it at a last second all cash deal and could sell it the next week for 50% more (which I won’t). It doesnt mean don’t have nice stuff and live like a pauper forever. Just have to be patient and hyper frugal if you want to go from comfortable to millionaire.Â
Someone commented that the Doc made a full time job out of frugality… growing up in a scottish family I can say that what he was doing is incredibly common place. From the thermostat, lights and suits on this was my reality growing up. Garage sales and simple living are the reason I went to a four year private school for my undergrad, and the reason my brother and I were always able to be involved in sports and activities growing up.
Very well said, Jared! I am only 23, but that is the plan I am following as well.