Frugal couple accumulate large nest egg by choosing not to live beyond means

Seattle Times ^ | 01/04/04 | Kathleen Lynn

[Alouette]

If he dies without a WILL, then the money should go to the next of kin. If parents are deceased, then it goes to his siblings...:~)

He probably has it all stashed in offshore accounts (hmm, those cost money to maintain that he wouldn't want to spend) or in his mattress at the homeless shelter.

At every family get-together we sit around and talk about my brother-in-law's legendary cheapness. He makes Jack Benny look like the greatest philanthropist. You remember that Seinfeld episode, where Kramer saves all his cans and bottles and drive to Michigan to cash in at 10¢ each. Well, brother-in-law did that in real life.

This guy goes to unbelievable extremes to save a nickel. He once had HIS OWN MOTHER push him in a wheelchair to the bus stop so that she could get on the bus with a "senior" discount and he could ride free as a "handicapped."

[Gunslingr3]

I wonder what exactly they are saving all this money for, if they have no kids, have no mortgage.

because you never know what might happen, or what medical expenses you might incur. Not easy to hop back in the job market at 70 years old if you want the money, unless you want Wal-Mart's money.

[jackbill]

My brother in law has no kids, he is a millionaire, fanatically frugal and UNCLE SAM is getting all his money after he assumes room temperature.

Have you tried to convince him to write a will donating his estate to a good charity? They're a hell of a lot more efficient that Uncle Sam. Hell, he can even get his name memorialized forever with the right kind of donation.

[been_lurking]

My parents have four college graduates out of six children. They didn't pay a penny in tuition for any of them. They did provide the necessary motivation and discipline to ensure their children understood the value of hardwork, persistence, and dedication.

Paying college tuition isn't a substitute for real parenting.

[mrfixit514]

If they really think they "own" their home, let them try not paying their property tax. They are only renting from the government.

[dalereed]

"Compared to these $20,000 weddings which are very common (and insane!), its quite cheap"

When we got married in 1958 my father in law offered us $5,000 to go to Vegas and get married but my wife wouldn't hear of it and had to have 350 guests and the country club reception.

It took me almost 8 years to save the $7000 for 20% down on our home! After a complete remodel and addition it's now worth $800k but we could have bought it when we got married, put down 20% and had money left over with the $5000!

[Fee]

I did not follow the formula in the book exactly, but I am still able to accumulate large amounts of wealth. After I got married, I brought a home (one of the largest personal investments one makes) that can be supported by my salary. My wife's take home pay is 100 percent saved, mine is used to pay for all the expenses of a family of four. My assets is 50 percent of what the book requires for my current combined income and age. My savings should accelerate because we just paid our home off in 2003. It can be done if we remember to use common sense, live within our means, plan, and think long term. The book the Millionaire Next Door is required reading for my son. It is a good book and every American should read it to get an accurate assessment of what is a wealthy person. They are not evil greedy bastards that got wealthy by cheating, scheming, lobbying and etc. Most do it the old fashion way, hardwork, planning and frugality. Wealthy people are not disproportionately Jewish or WASP's. One will be surprised who the ethnic groups that produce the disproportionate amounts of millionares.

[dalereed]

"what about the ten bucks you owed me for lunch 16 years ago?...... Forget about it."

I've never borrowed money for lunch let alone spent that much on lunch! I wouldn't ever let a supplier buy my lunch.

[goodnesswins]

Many of today's "young'uns" could save LOTS more if they did one thing:

Make the MAJORITY of their meals HOME COOKED (including lunch.) It is NOT that difficult. It's healthier, and it saves gobs of money. Not to mention cutting back on the everyday Latte's. (I'm near Seattle, where some people CHARGE their latte's.)

[Burn24]

Artic, what a great story! It should be a movie!

[ambrose]

Owning a house free and clear isn't a terribly smart move, at least in asset protection terms. If some kid scales your wall and drowns in your swimming pool, your home insurance policy limits could be blown off and the deceased kid's parents would end up owning your house. Homestead exemption doesn't apply past 100k.

[Eaker]

"The book gives the following yardstick for measuring assets: You should have an amount equal to your age times your annual income, divided by 10. So, for example, a 40-year-old couple with $100,000 income should have net worth of $400,000 — not including home equity.

So this couple was making $100,000 since birth? Or they made a slowly increasing income and yet the formula is based on their most recent income?

If one worked full time from after college at 22yo to 40 they would have to save $22,000 per year. To bank $22,000 at 80's and 90's tax rates they would have had to gross $35,000 per year and bank every penny with zero expenses.

Didn't happen. In the world that I live in everybody has expenses and did not pop out of college in the early 80's making $35,000 per year.

[Lucy Lake]

What is a program car?

[ironman]

You may find this article interesting.

Never Own Your Own Home Outright
http://www.ricedelman.com/planning/home/rule21.asp

[NittanyLion]

Yep. That formula seems to make more sense as people age, but it's terribly inaccurate for young folks. Example: a 25 year old earning 60K would need a net worth of $150K. Assuming this person graduated college at 22 with a net worth of $0, and earned $60K for three years, a net worth of $150K is simply impossible when taxes are considered.

[ambrose]

By this formula, a 25 year-old making 50k out of college should have a nest egg of $125,000. That does not compute.

[ironman]

Why not include home equity in the equation for wealth?

If this couple is doing so well, how come he will be working until he is 66? I'll be long retired by then from corporate life.

[Rainmist]

They are childless, so it doesn't count !!!!!! lol

[Eaker]

Don't buy a new car every 3-4 years, and when you do buy a car, don't buy more car than you need. Don't buy anything with a credit card. always pay cash. Max out your employer's 401k or 403b plan.

I'll take it a step further .....

Make sure that you make over a 100k, don't have any kids and never lose your job, have an accident, let someone fall on your porch, have a pipe break and flood your home, get a cavity, get sick, the list goes on and on.

PS: I almost forgot. Don't live on a planet that has taxes of any kind.

[ambrose]

ha. had the same thought...