Congratulations to R.S. He stopped acting rich. It is often difficult to cast off the habits of the hyper consuming, income statement affluent [those who have high realized incomes but little accumulated wealth]. It is especially hard to do if you were raised in that kind of environment. He accomplished this change by going almost cold turkey. Here are some of his thoughts and revelations which may be useful to those big spenders out there who genuinely want to adopt the ways and means of the millionaire next door types.
Thomas Stanley Ruined My Thinking
I’m writing to thank you, for you may have saved my financial life. Let me explain. . .
It seems that things that used to impress me, like nice cars and big houses, now turn my stomach. Just the other day I found myself alongside a beautiful new Ferrari on the freeway. When I caught myself thinking, “What a waste, I could buy 3 cash flowing rental properties for the price of that car,” I knew I had crossed a threshold in my life. Indeed, all that glitters is not gold.
Growing up I thought we were rich. It turns out that my dad was just good at maneuvering the apostles. Dad’s now age 60, broke, still working, and living in a place he doesn’t own, with nothing planned for retirement. Needless to say, I took a lot of my spending cues from him. Like many people, I bore a lot of detrimental consumption habits that were brought to light with the latest recession. “What do you mean I can’t use my house as an ATM?
I’ve read Millionaire Next Door. I’ve read Millionaire Mind. But Stop Acting Rich compelled me to read it 3 times, almost consecutively. It really spoke to me and the way I had been living my financial life. Stop Acting Rich was a wake up call for me.
In it, you asked a very profound question: “What happens when the badge [status products] becomes the achievement?” A question that caused me to give serious consideration to what I needed to do to not end up like my dad, someone who still thinks badges of success are important.
I thought I had made significant progress when I opted for the $49 Timex instead of the $13,000 Breitling I thought I had to have. I was also proud when I decided not to trade in my 7 year old Toyota 4-Runner, which has over 100,000 miles on it, for a Porsche. “If it’s good enough for Stanley, it’s good enough for me” became my motto.
Now in just 18 months I’ve gone from negative net worth to over $300,000. For age 37, I’m still way behind your WQ [Wealth Index: actual over predicted net worth given one’s age and income, see p. 18 in Stop Acting Rich], but I know I’m headed in the right direction. I’ve stopped acting rich and started living like a real millionaire.
great post, thanks for sharing. Yeah, I’d rather have $100,000 in an investment portfolio and drive a beater than have a $100,000 car in the driveway and no cash. 5yrs ago I couldn’t say that. It’s all about change in thought process. Stop Acting Rich is a must read for anyone who wants to develop millionaire mentality.
I read Stop Acting Rich last year and it’s helped me a lot. I’m still driving my 8 year old honda civic with 170,000 miles on it. I want to drive that thing into the ground.
We’re on baby step 4 and 5 right now on the Dave Ramsey plan.
While I’ve always been frugal and years ago stopped using my credit cards cold turkey (I use CCs, just pay them off each month), I still had some “misthinking” that Stop Acting Rich fixed. In particular, I still had a notion that I should buy the most expensive house I could afford (I didn’t but it bothered me, thinking I was missing a good investment). Another was that buying a BMW/Mercedes was a good value (great quality that was worth the premium price when one could afford it). Instead, I bought Hondas, but again was thinking I should take the plunge and “invest” in a higher quality car. Finally, the book made me realize that “dressing like one is already successful” was just another mistaken belief, probably driven by life long advertising campaigns.
Strangely, I never did any of these things, only worried that I was missing out on opportunities by not following them. “Rich” got rid of those inner doubts and showed me that my own reasoning worked pretty well and I should continue to follow it (and read more of TJS – um, which I check out at the library – OK, I’m pretty cheap!).
Charlie Chang’s comment, above, points out an outstanding tool for helping us “get out of Jonesville” (who can tell me the page number of “Stop Acting Rich” where Dr. Stanley gives us that sage advice!): Dave Ramsey’s “Baby Step” plan for turning around your financial life. Ramsey’s “Total Money Makeover” book is the perfect companion to “Stop Acting Rich.”