My parents are very typical of the people in the book “The Millionaire Next Door”. They’ve managed to retire with quite a pile despite living on one income all their lives and sending us to college nearly loan-free.
Living beneath your means, fixing your own stuff, wearing stuff out and not being stupid with your money can leave you with quite a savings account if you’re consistent and self-disciplined.
I hope to follow in their footsteps.
LQ
That's what me and my wife did, although my wife dresses very nice. I would patch my jeans until there was no space for more; she hated that. But we're retired living the good life while many acquaintances who threw money around are deep in debt. Her brother just hit us up for a $100G loan to avoid bankruptcy, which she refused him because he only wanted to buy the best of things (on credit) like 1st-class plane seats. I always tell young people, live below your means and you will be just fine later on.
1. As ridiuclous as it sounds, competitively bid ever single purchase you make, no matter how small. Meaning shopping around for the small purchases, and letting the hungry vendors fight for your sale on the larger.
2. Investing. I will admit that I am not perfect, by 95% of my investments have done well through the years. 1st and formost, avoid things that seem to good to be true. That's how I missed the the dot com bust. Blend your investments in a manner where you can't loose. (Mix of metals, CD's, Bonds, Stocks, Real estate). As you get older gradually adjust that blend toward safer options.
3. Obsess with staying out of debt. This really should have been no. 1. One big key to success is making sure the cash flow is moving from finanical institutions to you, rather than vice versa.
4. Avoid high cost brokers. Once you work at this awhile, you will find you are just as good at it as they are.
5. Track peformance (monthly) of your investments, and gradually dump those with extended troughs.
6. Don't overreact to market losses. To me they can buying opportunites. During the bust of '08, I bought several blue chip stocks yielding near 10% (dividend alone).
7. Live poor, but don't deprive yourself of a few pleasures. Frugality is probably the biggest factor. Your guilty pleasures should never exceed 0.1% of your net worth on an annual basis. It is amazing how many people I see making great money, and are in debt. To a "T", you will see the majority with expensive hobbies, toys, or with a new car every year. My vehicle with 240K miles may look a little ragged, but it is an investment when you realize the cost avoidance of $20-40K capital invested, that in turn depreciates 10-15% driving it right off the lot.
8. Teach your kids not to want "things" as they grow up. This will save you money obviously, and it will help perpetuate your estate, with fiscally responisble descendants.
9. Prepare, and strictly adhere to a budget. (Captain Obvious' favorite).
10. Protect your assests. Proper manintenance of vehicles and home, have excellent returns of investment, by cost avoidance. But also don't forget to get an umbrella policy once your net worth moves up the ladder. Tragically, in our litigious society, one mishap can wipe you out.
11. Keep wealth dispersing liberals out of power. I know that may be a stretch at the federal and state level, but you will be surprised how much you may be able to accomplish few a few friends, and a well planned advocacy effort.
12. Keep healthy. I cringe, even when I have to pay the co-pay.
13. Watch for inflation. Increase mix of metals and commodaties by 10% for each 5% increase in inflation.
14. Garage Sales, Estate Sales and GoodWill. You will be surprised how many people dump good things that you may find at 5% of it's real value.
15. Complain about price increases where applicable. You will also be surprised how many services will freeze their price to you, if you threaten to leave.
This isn't all of it, but kind of my story of success.