Shopping Strategy Of Millionaires: Buy Used Or High Quality

Ordinarily I find “money tricks of millionaires” lists to be sort of annoying and unhelpful, but this one, found on the Dumb Little Man productivity blog, and based on a book called ‘The Millionaire Mind’ by Dr. Thomas J. Stanley, is an exception. It offers one bit of practical advice that I think everyone should at least consider.

Buy used. It’s fun! I buy used cars with cash, used furniture, used clothes. Whatever. If you are getting married, I will take your old cappuccino machine that is exactly like the new cappuccino machine I was going to buy, except that it’s cheap or even free. Who cares? Used stuff has character. If I don’t buy something that’s used, I buy something that’s high quality and will last a long time.

From Dumb Little Man:

Defensive Money Strategies from Real Millionaires

1. House Purchases. Real Millionaires do not get houses custom built, nor do they move into new developments. They live in clusters with each other in OLD neighborhoods, in OLD houses. Most are 15 years old and they often triple in price since their purchases.

2. Clothing Purchases. They aren’t going to buy really expensive clothes. They may frequent thrift shops or even Walmart to get their clothes. So don’t be embarrassed to go cheap, just think of it as acting like a millionaire. They will buy really expensive shoes, and resole them when necessary. Since they’ll wear them for a couple of decades the cost per wear will be marginal compared to constantly replacing a cheap pair.

3. Furniture Purchases. Real millionaires do not buy the latest styled furniture. They’ll go out and buy a $10,000 antique table made from REAL wood, not modern saw dust. They’ll repair and refinish this table when needed. They can keep it for a lifetime, pass it on to their children, and not worry about upgrading to the latest. Guess what? Antiques raise in value, so their net worth doesn’t take a hit at all! As far as other furniture goes, they re-upholster it a couple of times in their life time, which is way cheaper than buying new again.

4. Vehicle Purchases. Real millionaires will not buy the latest car while it’s still sitting on the lot. They’ll keep their cars well maintained for many years, and when it comes to make a new purchase they’ll find a used car that is in good condition. This way they can avoid that initial depreciation that comes with driving a brand new car off the lot.

4 Defense Strategies For Becoming A Millionaire [Dumb Little Man]
(Photo:Seth Tisue)

Comments

Edit Your Comment

  1. I’ve been doing this for years, and all anyone has ever called me is cheap. Bummer.
    (But seriously, good tips. Especially on the furniture & cars.)

  2. headhot says:

    Hmm. I do all these things, and I’, still not a millionaire. I wonder what is going wrong.

  3. sir_eccles says:

    Bottom line – just because they’re rich doesn’t mean that they spend frivolously.

  4. Aph says:

    As a kid who came from a high income neighbor hood that was universal amongst large household fathers. Totally loaded and totally cheap.

  5. Erwos says:

    @sir_eccles: More than that – they’re rich partially because they _don’t_ spend like that. At this point, I hardly ever buy stuff new besides food, clothing, and some electronics.

  6. Nick says:

    Although this is good advice, I doubt that all (or even most) “real millionaires” behave this way. This seems to describe a very specific type of millionaire–the kind that saved and scrimped their way to riches. There are plenty of wealthy folks out there who spend freely, always having the latest gadgets, furniture and clothing.

    • RichasB says:

      @schwnj: Yeah, but those types of people don’t stay rich long. I hate to bring it up, but look at Micheal Jackson. I think the guy made 50 million a year ALONE from the royalties from his ownership of the Beatles songs and he still tanked back in mid 2000s. I think the ideal behavior would have to be balance of both responsibility and fun, of course. You know, like having vintage furniture and a ’09 Rolls Royce Phantom in the garage 8-)

    • milqtost says:

      @schwnj: I disagree. Given how many “millionaires” there are in this country, I think the vast majority of them fly under the radar. A million dollars doesn’t go very far these days. The ones who spend lavishly are just the ones that get noticed – and as has been said before, a lot of them don’t stay millionaires.

  7. RandoX says:

    I don’t have $10,000 to spend on a table. Guess I’ll keep on buying what I can afford.

  8. Murph1908 says:

    My older brother was a manager at a Firestone. One day, my dad and I were waiting for him to get off work when a guy came to pick up his (recent year at the time) Cadillac. The guy questioned the cost of his $25 oil change.

    I said to my dad, “Why’s a guy who drives a new Caddie worried about a $25 oil change?”

    My dad responded without missing a beat, “Frugality is probably what led the guy to be able to afford a new Caddie.”

    Very true, dad. Now, had I only followed such advice.

  9. Coelacanth says:

    Reminds me of the Simpsons episode where Bill Gates buys out Homer’s internet startup.

    Bill Gates’ character: “I didn’t get rich by writing a lot of checks!”

  10. Redwraithvienna says:

    the house of my parents is full of old furniture (some 100+ years old and quite valuable). I hate that stuff …. its old … and well old … well maybe i ll never be a millionaire.

  11. cmdrsass says:

    I work with real millionaires all day long. All of the above statements are true. The people who chase status symbols like fancy cars, clothes, electronics, expensive vacations, or homes usually don’t get rich or stay rich long. I usually see this will airline pilots, attorneys, or people who inherit. The path to wealth is also mostly the same – working hard at a middle-class job or their own small business, regular (substantive) savings, and careful spending.

  12. MissTic says:

    So basically the Warren Buffet method.

    I notice that he calls it the “Millioniare Mind” which is accurate. Of course reality TV kind of blows the theory (The Fabulous Life of… and others).

  13. Pebble794 says:

    @schwnj: Those ‘wealthy folks’ who have all the latest and most expensive toys are up to their ears in credit card debt and home equity loans. Real millionaires are the people you least suspect who invest in quality.

  14. shari says:

    But of course the trick is to have the money to make those sensible, quality purchases in the first place. Terry Pratchett, author of the Discworld series, calls it the Captain Samuel Vimes ‘Boots’ theory of socio-economic unfairness. Here’s the quote:

    “The reason that the rich were so rich, Vimes reasoned, was because they manged to spend less money.

    Take boots, for example. He earned thirty-eight dollars a month plus allowances. A really good pair of leather boots cost fifty dollars. But an affordable pair of boots, where they were sort of OK for a season or two and then leaked like hell when the carboard gave out, cost about ten dollars. Those were the kinds of boot Vimes always bought, and wore until the soles were so thin that he could tell where he was in Ankh-Morpork on a foggy night by the feel of the cobbles.

    But the thing was that good boots lasted for years and years. A man who could afford fifty dollars had a pair of boots that’d still be keeping his feet dry in ten years time, while a poor man who could only afford cheap boots would have spent a hundred dollars on boots in the same time and would still have wet feet.

    This was the Captain Samuel Vimes ‘Boots’ theory of socio-economic unfairness.”
    –Terry Pratchett, Men At Arms, pg 35

  15. RickinStHelen says:

    Oddly enough, I was thinking about this myself this morning. Nearly all of the furniture in my home is second hand, excepting a small table and rocker from Wal-Mart, both my vehicles were purchased used, from a dealership that provided a warranty, and much of my clothing , especially for my daughters comes from Goodwill or thrift shops. The only thing I didn’t do, was on the house. I purchased a new home in a new development. Not because it was fancy, but because I travel for work, and cannot be there to fix old things that break for my wife. I also had rented in older homes for most of the past 25 years, and to be frank, was tired of them. I do plan to stay in the house for many years though.

    So what the author calls a millionaires mindset, I call the child of an Okie’s mindset. Don’t pay too much, make it last, or let some one else take the depreciation first.

  16. unklegwar says:

    The odd thing is that this seems to be oriented toward mindless accumulation of money. But to what end? Is the objective just to have lots of money when you die?

    What if my objective IS to have a very specific custom house built?

    • treimel says:

      @unklegwar:

      Some of us call having “lots of money when you die” the ability to bequest a legacy.

    • milqtost says:

      @unklegwar: To some degree having the extra money is like a safety net. Let’s say I earn $50000 a year but live like I make $25000. In two years I save $50000. But then I am laid off and make nothing. Without changing my lifestyle AT ALL, I can go for 2 years without worrying. If I adjust my spending, I can go for longer. It may seem overly cautious but in this economy it takes a lot of stress off a person.

      And yes, I know my number are gross exaggerations, but they demonstrate the point.

  17. MissPinkKate says:

    I wouldn’t consider furniture to count toward someone’s “net worth”.

    • YardanCabaret says:

      @MissPinkKate: Why not? If it has value and can be sold fairly easily for that value would it not add to their net worth the same as stocks or precious metals? Of course this only applies to things that generally hold value, specifically antique furniture, which is what they are talking about in the article. IKEA furniture, not so much.

    • treimel says:

      @MissPinkKate:

      And you’d be wrong–some furniture is worth six and even seven figures. It’s like paintings in that respect–just because the ones hanging on my wall don’t materially contribute to my net worth is no evidence that the category of paintings as a whole is somehow incapable of being a significant part of a person’s assets.

    • tcolberg says:

      @MissPinkKate: Consider them illiquid assets. If push came to shove, they’ll sell quite easily at an auction.

  18. qwickone says:

    @RandoX: I think the point is save until you can afford a 10K table and then you never have to replace it.

  19. lemur says:

    Ok, so the advice given in the OP is good: if you want to save money you better avoid buying brand new stuff.

    However, I don’t accept the notion that this kind of behavior is in any way especially linked with the status of “being a millionaire”. Of course, the OP does not merely say “millionaire” but “real millionaire”. (Well, the OP is actually not consistent about this.) This is convenient because any counter-example can be dismissed with the claim that the millionaire in the example is not a “real” millionaire.

  20. “They will buy really expensive shoes, and resole them when necessary. Since they’ll wear them for a couple of decades the cost per wear will be marginal compared to constantly replacing a cheap pair.”

    I am always telling people this. My friends are often horrified by what I’ll spend on a pair of work shoes (and we’re not talking Sex and the City shoe money here, just high-quality plain black leather heels), but those shoes last me TEN YEARS. And when I go to get the heels repaired, it costs me $2, while they’re spending another $40 on cheap dress shoes b/c the heels wore out.

    “As far as other furniture goes, they re-upholster it a couple of times in their life time, which is way cheaper than buying new again.”

    This is not always true. I have a couch I love but that desperately needs re-upholstering. (Like fabric is disappearing from wear needs it.) We’ve looked into the cost, and reupholstering is right about the same as a new couch. I looked into taking a community rec class and learning to do it myself so I didn’t have to pay for labor, and it’s STILL ridiculously expensive because the fabric costs so much.

  21. LostDog says:

    @schwnj:

    There is a very big difference between true millionaires and people who spend like millionaires. Once you really boil it down to assets / debts that is where you see who is ahead. Some of the wealthiest people I know live in small, older houses (most paid off) and drive good quality but used cars.

    Compare that to their neighbors with the three new cars, a boat in the driveway and over sized house with a large mortgage and see who is the true millionaire. When you boil it down, many people who live the “millionaire” lifestyle would be penniless if all their debts were called.

  22. RandoX says:

    @qwickone: I’m not good at saving. I’ll just start shopping like a millionaire now and put in on the card.

  23. AMetamorphosis says:

    Jeeze … my Parental Units must be worth a lot more than I thought :-)

  24. Wormfather says:

    Speaking of cars…I’ve been waiting months to get my new (used) car. Why? Because I was waiting for my fiancee to be ready to get her new car. I’m going to love having the whole, well, “you’re about to loose two sales” sitting in my back pocket.

  25. redhelix says:

    I’m not so sure about the used cars part. I know buying a brand new car is generally scoffed at here, but you’ve got to keep in mind that when you spend the extra ~$5k for a new car over a used one, the money covers a lot more than simply “newer hardware.”

  26. ARP says:

    @shari: Agreed, but I think having a certain amount of money at the beginning has a more profound effect on longer term wealth than the pure monetary value.

    For example, you own a car free/clear while a poorer person does not. Think of all the advantages and magnifying effect you will have for having that initial bump. You can commute to work and take a wider variety (and better paying) jobs. You can go to stores that offer better values rather than the local convenient stores. You can attend a wider variety of schools. You can have your kids at a different daycares. Yes, public transportation may be available, but it costs more and means more of their day is taken up taking buses/trains to where they need to go. It also likely require them to live in major cities (which often cost more money) That time can be used for school or work. It also means that they have less money to save for a car.

  27. runpete says:

    That Village Discount in the picture is like 2 blocks from where I live. Oh well, just felt like sharing and procrastinating from my actual work.

  28. bohemian says:

    I had to gloat, my old used oak dining room table I haggled for at a used furniture store for $50 was in the March issue of Elle Decor (one identical to mine). Getting new furniture dirt cheap can be equally effective as long as it is decent quality. But this requires tromping through big warehouses of scratch & dent mismatched furniture rather than those nice staged displays. I got a $700 chair for $117 last year. I do the same thing with clothes. The Macy’s 90% off rack can land some pretty nice clothes for the same price you would pay at Walmart for junk. The designer clothing consignment can too.

    These strategies do work.

  29. Amy Alkon000 says:

    At a party for the closing of the LA bookstore Dutton’s, a woman in head to toe expensive labels came up to me — a fashion magazine editor — to compliment on my outfit. She wanted to know the designers. I laughed.

    Fishtail taffeta skirt: Loehmann’s eveningwear, $69, worn as dayswear.
    Shirt: Salvation Army, $5
    Beaded cleopatra-like choker, $3 + $4.50 shipping, eBay
    Earrings, 14 eu, Mantua
    Boots, Nine West, bought in 1993 for $75, resoled probably 10 times. That works out to about $5.35 a year, plus about $15 for the resoling every couple of years, so my boots now cost me about $13/14 a year.
    Red patent leather handbag everyone is complimenting me on, 24 eu, from Etam, a cheapo Paris store on the level of Payless shoes, but with a variety of stuff.

    The only expensive thing on me: My bra, by Empreinte, $75, from Le Bon Marché department store, in Paris. If you have real boobs, you need a real bra. Of course, this bra is such high quality, I’ve had it for five years, and it’s still in beautiful shape.

    Betcha can’t say that about Victoria’s Secret crap.

    Also, I learned to shop from the French. If I don’t buy cheap staples or inexpensive but cool jewelry on eBay or at Goodwill or resale stores, I will buy one beautiful expensive thing (actually, sometimes from a resale store). The idea of walking into some mall store with ugly crap and paying $30 for a tee shirt is just ridiculous. Of course, you have to have your own style to be able to not follow “fashion” dictates like a little monkey.

  30. eckre says:

    It’s not from his “Millioniare Mind” book, it’s from “The Millionaire Next Door”. Excellent book, I highly recommend it.

  31. Amy Alkon000 says:

    She was the fashion mag editor, not me. Just to clarify.

  32. dorkins says:

    @headhot: me too. I buy a used car every two months and an antique table every three months, and I’m still not a millionare. What’s wrong?

  33. MissAnnThrope says:

    Based on the wealthy people I know, this list is true and false at the same time.

    Luxury cars such as Porsches are bought used. The minivan to haul the kids around is bought new.

    As far as housing, a number have sold off the “ancestral” homes and moved into condos or new gated developments. Why? Property taxes are out of control in a good bit of the country and condos and developments have much lower property taxes, much less maintenance, etc.

    Clothing… I don’t know one wealthy person that would be caught in clothes from Wal*Mart. Target, yes, but never Wal*Mart. Trunk sales are popular for the latest and greatest. I know some who are very superstitious about putting used clothes on their bodies. They might have belonged to a dead person! Trust me when I say while there might be cheap labels in the closet, there’s going to be just as much high end stuff in there too. As far as ball gowns for the charity events, one told me a story a few years ago about one of the women buying her gown at Goodwill. How did people know? It has been worn by one of them at another event a few years before. That woman was abused for that.

    Then there are the society dowagers who STILL buy new and leave the clothes in their closets for a few years, so people will think they shop in thrift stores. I don’t quite get that mentality, but it does exist.

    Furniture? I’ve been trying to get my one friend to give me her comfy leather chair for years, as she complains it’s too big for the room. I still don’t own it and it’s still in her living room, as she hasn’t found anything that sings to her yet. *sigh* I WANT that chair.

  34. eyeraw says:

    I think the valuable insight here is that one should always try to MAINTAIN your net worth across new possessions (the furniture example being the best IMHO) – so that they are still liquid assets that can be resold. So you don’t lose money.

    The clothing example, however, isn’t as relevant because, especially if you’re younger, there’s a style component involved. So that it’s actually better to buy 10 different pairs of shoes that are current rather than one super expensive pair that are kinda lame.

  35. Pinget says:

    Rich equals net worth, NOT cash flow. If you spend all you get, you’re making someone else rich. DUH.

  36. QuantumRiff says:

    @lemur: In my area, there is a huge difference between “real millionares” and the others. There is a billionare in town that lives a mile or two from me, Same house he bought in the 60’s, in a normal neighborhood. Until last year, he drove a beaten up Cherokee everyday to work, at the 15,000 employee company he owned. Then, there are the families that are not the “real millionares”. They sell their house every 2 years to “move to a nicer neighborhood” and use home equity loans to purchase $60,000 dollar brand new cars. (which is funny, cause there is no place in town to get the exotic ones worked on!) etc. They look and act like millionaires, and lately, have been the hardest hit by the mortgage market mess, meaning they are broke.

  37. Drowner says:

    @cmdrsass: I too work with the quite wealthy and that furniture comment is spot on. Half of the items in the office are antiques as is everything in her house. “Financial trouble? We’re sitting on a $100,000 sofa. We’ll be fine.”

  38. RogerDucky says:

    @MissTic: Not really. Those with big houses and ridiculously fancy items are of two categories:
    They’re either status-symbol people who want to appear rich (meaning they spend waaaay too much of their available money on stuff…) or they are rich enough that the items in question are bought with their “fun” money.

    That is to say — if they have a billion dollars in savings, then they can probably afford to spend a million a year for fun, since that’s just 1% of their savings and they get more than 1% interest on it.

  39. Juggernaut says:

    @Amy Alkon: Wow, do you need a ladder to get up on that high horse?

  40. FLConsumer says:

    Lostdog: You’ve got it. The trick is to get the most long-term value for your money. These people feel very secure in their financial status and don’t see the need to use it as a facade or to attract others. True wealth tends to find other true wealth.

  41. Eric1285 says:

    Yep, that’s how you do it. My Grandmother has lived her life this way for decades. When they buy big things like cars and televisions, they’ll spend more to get quality.

  42. bjarmson says:

    It’s ironic that we live in a consumer society and so few actually know how to make it work for them. Fashion, keeping-up-with-the Joneses, conspicuous consumerism, and maxing out your credit are what matter most. I’ve never had much money, but have been following these “millionaire” precepts for decades. I have a closet full of cashmere and silk sweaters, $100 dollar shirts, expensive pants which were all bought at resale stores for mere pennies on the dollar. I buy expensive items used so I save similarly, but still own lots of high quality items that usually last much longer than the throw away items pushed everywhere today. This frugality allows me to buy better quality food (which I prepare at home). I also have a large vegetable garden during the summer that provides extra-high quality tomatoes, peppers, green beans, garlic, raspberries, etc (better than is available at any but the highest quality farmer’s markets at a premium price). Much of what I don’t immediately eat is frozen, canned, or dried, which allows me to eat great quality food during the winter months. I never buy fad items of any variety (clothes, shoes, electronics, food). Eating out is limited to several times a month, but usually at a better, if not trendy, restaurant. My wife takes lunches from home to her work (and is often envied for what she has to eat). We limit our unnecessary driving and try to take care of several things at the same time when we do.Our combined income barely pushes us above what is considered poverty level for two people. Yet we have money in the bank and no debts. We live better than many people we know that earn 2/3 times or more than us. It’s not hard, it just takes shifting ones expectations, finding alternatives, and not “buying” into the vacuousness of consumer society.

  43. ShadowFalls says:

    There is a general policy, there are simply some things you should buy new and some things you can buy used. Used car parts, no problem. an old used playstation 2, don’t kid yourself.

    Also, my house is older than 15 years, so beat that.

  44. madanthony says:

    Hmmm. I paid $13 for my coffee table and $35 for my dining room table (another $60 on chairs). Both tables were from the Ikea as-is section.

    I would have to replace them a whole lot of times before they would equal $10,000. And unlike the 10 grand table, I won’t take a hit to my net worth if the cat decides to claw the legs.

  45. Anonymous says:

    I know several wealthy people that live in the biggest houses, drive the newest cars, don’t shop at thrift stores, and are not ‘hurting’ because the housing market is bad. Not every millionaire lives like the article describes. I’m not sure the above list, while useful, could be described as ‘strategies for becoming a millionaire’.

    If all you had to do was drive junk cars and shop at Goodwill there would be a lot more millionaires walking around.

  46. nardo218 says:

    @shari: This is exactly what I was thinking of. :) And yet, after he Married Money, he still bought cheap boots and scavenged cardboard from the alleys. Oh, Sam.

  47. Comms says:

    @shari: “But of course the trick is to have the money to make those sensible, quality purchases in the first place.”

    That’s not really true. During the summer my wife and I regularly go for drives out in the country looking for garage sales and antique stores. The key is to find a sale where the people are selling off their grandmother’s furniture, silver and so on. My wife knows her furniture and she’s able to home in on the really quality stuff that these people practically give away because it’s “old”. The other place to hit is the barn antique shops. It’s usually run by a retired couple. They’ll have a barn full of antiques and they’re generally priced WAY below their value.

    For cars it’s easy too. Don’t buy what’s popular, buy what’s good. Also don’t limit yourself to your immediate surroundings. When my wife and I shop for a car it takes us months to find what we want.

    It takes alot more work to do but you end up with much higher quality things for a fraction of the cost. My wife and I are not rich, not even close, but we have alot of nice antiques.

  48. nardo218 says:

    @unklegwar: To accumulate money towards more important things than goods. Education, travel, expensive but rewarding hobbies, greasing the palms of various politicians… Money means power and independence.

  49. Parting says:

    A shoe does NOT LAST COUPLE DECADES! (thou I wish it would). Even, if well takes care of, and resoled (that cost 120$ for your information, at cheapest).

    Good quality shoes will (when worn regularly) will last 3 years max.

    And Walmart clothing is DISPOSABLE, usually after 2 washes it looks ruined. And it’s not less expensive than a better quality stuff in some boutiques.

  50. ltlbbynthn says:

    You know what that is all so very true about furniture. We bought a lot of stuff from Ikea a few years back, and the only thing we still have is a dining room table. I’d love to afford something nice enough to keep forever. I disagree with shopping at Wal-Mart, however, since their clothes are so cheap they never last. I spend money on expensive clothes, and I also try to get cheap clothes, and the stuff I felt like I was overpaying for years ago is still in my closet, while the cheap stuff has already gotten raggedy. You just can’t think of things as disposable.

  51. nardo218 says:

    @Comms: Do you ever go to demolition sales? My parents are big on that, they have a beach house in one of those horrid NJ towns where the big industry is building expensive houses, selling them, and then knocking them down and building new ones. It’s revolting, but you can get, like, shelves or doors, or furniture or anythign in the world that used to be in a house.

  52. ltlbbynthn says:

    @Victo: “Good quality shoes will (when worn regularly) will last 3 years max.”

    I have a pair of Doc Martens I used to wear to work every single day at Starbucks, and various other walking-around jobs. They are eight years old, and still look BRAND NEW.

  53. Parting says:

    And re-upholster is no way cheaper than buying new, unless your furniture is worth 10K in the first place.

  54. Comms says:

    @nardo218: No, but I’ll have to check that out now :)

    Another thing I do is check the local craigslist “free” listings. Depending on the city, some places charge alot to dump/recycle so people, rather than throwing away old furniture, will give them away. It’s a great place to find vintage stuff.

  55. nardo218 says:

    @Eyebrows McGee: I was talking to a woman in the crafts section at walmart, she said reupholstering yourself is a lot easier than you’d think. “If you can wrap a present, you can do it.” And fabric at walmart is like $1 a yard.

  56. nardo218 says:

    @ltlbbynthn: My docs are 12 years old, they’re perfect except some toe rubs.

  57. milqtost says:

    @cunnij98: I think the general idea is that these people live beneath their means, not that live like they are in poverty. As an example, I could rush out and buy a new car OR I could buy a gently used car that’s a year or two old and has thus already depreciated (sometimes significantly depending on the car). I could buy a big fancy house with a $4000 a month payment or I might choose to only spend $1500 a month on a more modest house. For some people the freedom to not worry about their money is much more important than any perceived status.

    And if they people you know are really living that way without carrying enormous payments or debt, they are still living beneath their means. “Millionare” has a pretty wide connotation these days. Someone with $1,000,000 of net worth is far different from someone with $600,000,000 of net worth, yet both are millionaires.

  58. Daniels says:

    As far as ball gowns for the charity events, one told me a story a few years ago about one of the women buying her gown at Goodwill. How did people know? It has been worn by one of them at another event a few years before. That woman was abused for that.

    Charity events are dick-waving contests for rich people. They show up to them to be seen.

    Otherwise, explain the fact that someone’s spending a million dollars to put on the event when it could go to, you know, the actual charity.

  59. ARP says:

    @runpete: Do you live near where the Rainbow roller rink used to be? I think its way North on Clark.

  60. Orv says:

    @redhelix: I always buy used cars and always pay cash. I understand why people like the security of a warranty, but the fact is I’ve never had a repair job that cost more than what a few months of payments on a new car would cost. I budget for the occasional repair, so it’s not a big deal when it happens.

    You aren’t just saving depreciation when you drive a used car. You’re also saving finance charges, and you’re paying less for insurance. It adds up.

    Last year I tracked everything I spent on the 12-year-old beater I use for my daily commute. The total cost per mile was one third what AAA says it costs to drive a new car in the same size class.

  61. nardo218 says:

    @Comms: Craigslist ‘free’ listings do look v cool, but oyu kinda have to be in a big city. Doesn’t work as well out in the burbs where I am.

  62. Leohat says:

    I know several millionaires. Some Microsoft and some from a law firm, etc.

    They do NONE of these things.

    They drive Lexus, BMWs, and Audi’s. They trade in their leased cars every couple of years.

    They all had their homes custom designed and built. With high end appliances (subzero, etc)

    They buy clothes from Nortstroms or from high end clothing stores.

    They take long vacations/cruises several times a year

    They do NOT shop at Wal-Mart, more like Whole Foods.

    They do not shop a Value Village.

    They would not be caught dead at a lawn, garage, estate sale.

  63. Orv says:

    @Leohat: Do they work for a living, or are they the type who got lucky in the tech boom and now live off the interest on their investments? I think there’s probably a difference in attitude between those two groups.

  64. lpranal says:

    @milqtost: On the flip side of the coin, for many people, living below one’s means DOES mean living in poverty. And I’m talking about hard-working, intelligent people here too. Things get a little bit more murky when “living below your means” is a 15 year old car instead getting a “gently used” one. For the people this story was written by, it’s more like used BMW vs. Brand new Benz.

    The income gap is just that, a cliff-like curve in quality of life which plateaus well below what most of the upper income brackets make. So while the concepts may make sense, they lose their context when they’re written by someone whose biggest sacrifice (in this case) will be the loss of electronically cooled cupholders.

  65. rjhiggins says:

    @Daniels: You have $10,000. You could give it directly to a charity, or you could spend it to put on a charity auction (or whatever). You spend a good amount on free booze, which loosens people’s grips on their wallets. You can easily end up raising 10 times your initial outlay.

    If people get to have fun (and show off) in the process, so be it. But that’s how you raise money.

  66. Blinker says:

    Who cares if a car depreciates when you drive it off the lot, you’re SUPPOSED to keep it till it doesnt run anymore, not buy it for an investment to resell!

  67. weave says:

    I just bought a new Honda Fit for cash that I saved up. $17k. That’s about the price of a used “nicer” car. The reason I wanted a new car is because I am crap-dumb at understanding what’s wrong when a car breaks down, and I my time is worth a lot to me, so I want something I don’t have to worry about break downs (time consuming) and repairs (time consuming and potentially expensive) for a while.

    When the car gets to the point where I risk going out, having it not start one morning, and the shop telling me it will cost $2k to fix, I’ll sell it to someone who thinks used is a better value and go get another affordable new car.

  68. ChuckECheese says:

    @schwnj: The only millionaires I’ve met who acted like this were as messed up as the poor drones who acted like this. Besides being intolerably cheap, they have bad skin, hate bright lights, and can’t get a 2nd date. Wearing Kleenex boxes for shoes is optional. Also, I’ve noticed that the people who scrooge out always have a weakness or two, like for BMWs (why is it BMWs or Porsches?) and expensive sports equipment.

    These days it takes an hour’s (minimum) wages to buy a gallon of milk, 2 loaves of bread or 2 lbs of hamburger. Give me a break. Truly poor people don’t have money to save/invest in anything–including Bally shoes from Nordstrom, investment-grade furniture, or houses in the best neighborhoods. This post reminds me of one in the NYT several days ago, where they talked about “middle-class” families–with average household incomes of about $300K– moving back to the city from the suburbs. $300K is not middle class. Here in El Paso, the thrift stores are completely picked over by shoppers from Juaritos–there’s no reason to even stop in them.

    @Leohat: Your friends are what are known as “arrivistes.”

  69. milqtost says:

    @lpranal: I agree that for many people it’s not an option to live beneath their means. But I don’t think the article meant that people in the the lower class could do these things and become millionaires (since at $20k a year, a person would have to spend nothing and still work for 50 years just to reach that million mark, not counting taxes). The Millionaire Next Door book is all about middle class Americans (depending on whom you believe earn between about $25-70k) who become millionaires through their lifestyle choices. These people are not your rock star, athlete or Fortune 500 CEO millionaires, they are people who are typically over 50 and have saved (or rather accumulated) all their lives.

  70. lpranal says:

    @milqtost: Well said, I was more or less saying that it was kind of an Ivory tower argument. Not everything scales down well… But I do remember reading about the owner / founder of Ikea and his penny-pinching ways, down to driving a 20-year old volvo. But everyone reaches a point where there aren’t any more corners left to cut without eating boiled shoe leather and living in a crackhouse. I’m just getting tired of people saying that it’s “easy” to get rich. With the way things are, you can follow all the rules, work hard, be smart, and still not get very far ahead. Is it not time then, to do something to correct the situation, rather than the people?

  71. @Victo: “A shoe does NOT LAST COUPLE DECADES!”

    You’re buying the wrong shoes.

    (Although, it depends if you’re commuting on foot, and the type of shoe. Some just last longer than others.)

    Today I wore a pair of sandals I’ve been wearing almost every day, every summer since I was fourteen and bought them at the Michigan City outlets. (I’m 30.) Not much traction left on the soles, though, so they’re getting a little more exciting than I’d like.

    @nardo218: “And fabric at walmart is like $1 a yard.”

    The trouble is the stuff that lasts and holds up to the heard wear an everyday sofa gets is NOT $1/yard. And it takes like 25 yards to reupholster a sofa of this style. $1 fabric is quilting fabric, not upholstery fabric. $20 to $30/yard is more realistic for quality upholstery fabric. (And while I kept a sharp eye out for sales, if you’re going to be sitting on it for 20 years, ugly fabric on sale isn’t a good cost/benefit trade-off, at least to me. And it was the ugly stuff or the 10-yard remnants that made it on sale.)

    The current fabric on this couch has lasted 16 years. $1/yard fabric doesn’t get you that kind of wear. ($8/yard fabric probably won’t get you that kind of wear.)

    (And I have reupholstered before, incidentally; this couch is just beyond my level of competence to make look good and requires some specialized skills.)

  72. @lpranal: “Things get a little bit more murky when “living below your means” is a 15 year old car instead getting a “gently used” one. For the people this story was written by, it’s more like used BMW vs. Brand new Benz.”

    I think you obviously have a point, but chances are the millionaires driving 15-year-old cars you just don’t know are millionaires. :) If cars aren’t important to you, and you have a good sturdy one that runs, why would a 15-year-old car be a serious hardship?

    I think the point is more that they don’t buy for status, they shop their values, and when they do decide to spend, they spend for quality, not fads.

  73. GearheadGeek says:

    @redhelix: If you’re totally clueless about cars and are risk-averse, there’s the “certified used” option that’s now available for domestic makes (it was previously mostly for expensive cars because people wanted them who couldn’t afford new ones.) Certified-used cars from a dealer don’t have as much of a discount as a 3rd-party sale or an off-lease car without a long warranty, but offer most of the peace-of-mind advantages of new without as much depreciation or initial cost.

    If you know a bit about cars and aren’t terrified that a not-new car is going to suddenly collapse into a pile of parts, you can save WAY more than $5k over the price of a similar new car while still getting a very decent car.

  74. camille_javal says:

    Has no one mentioned Hetty Green yet? I remembered this woman from the Guinness Book of World Records when I was younger – the one who tried to home-treat her son’s broken leg, supposedly because she didn’t want to pay the doctors, and it had to be amputated.

  75. Grrrrrrr, now with two buns made of bacon. says:

    Sounds like common sense. In many cases, a used but quality item is a much better deal than buying the same cheap version at Crap-Mart and having to buy it again every 2 or 3 years. Same thing with a car…buying a 2-year old car with 30,000 miles on it could save you a heap of cash, especially since all cars end up being worth absolutely nothing in the end.

    The only problem I see here is that it’s a lot easier to get financing on new items than having to come up with cash for used ones. But, then again, maybe if you can’t come up with the cash, you shouldn’t be buying it.

    I seriously doubt many millionaires are THAT careful…I mean, come on, if you had a million in the bank, you’re not going to screw with used car lots and flea markets unless you really get off on getting a bargain. Call it thrifty, call it cheap…some people are, some people aren’t.

  76. jackjackson says:

    I have a boss who has millions and is generally quite frugal. He has three cars and changes them about every three years, one for his wife, one for him, and a fun car (Viper, Vet, XKE are a few I have seen him with). For the two practical cars, he leases, and argues the benefits of leasing. From his perspective, leasing is a better way, and for him I agree. Let’s say you are looking at a 50K Car, and you have the 50K to just buy it outright. You would be better off leasing it, because you can invest the 50K into something that you can hopefully get a better return on. I do not have the money to buy even a cheap car outright, so I buy used pay it off quickly.

  77. Orv says:

    Some people just prioritize differently, too. I once watched a guy drive up to a local general aviation airport in a 20-year-old Oldsmobile, unlock the hangar doors, and wheel out his personal airplane. He had a certain amount of money to spend, and he decided he’d rather own a used airplane than a new luxury car. I respect a man who knows what he wants in life. Most people don’t have a clue and just blunder along without any particular goals.

  78. Orv says:

    @jackjackson: Leasing vs. buying isn’t always that simple. It also depends on how far you drive. If you drive more than 10-15K/year you’ll get socked with massive mileage fees, or end up renting a car so you don’t go over the limit on your lease.

  79. redx says:

    Theres two ways to get wealthier: save money or make money. I prefer the latter if its within my ability. It sounds tough but there are plenty of ways to do it as long as you sit down and think about it (and maybe take a few risks).

  80. @Grrrrrrrrr: “I seriously doubt many millionaires are THAT careful…I mean, come on, if you had a million in the bank, you’re not going to screw with used car lots and flea markets unless you really get off on getting a bargain.”

    I know some middle- and upper-middle class millionaires, and it really is just an issue of aligning their purchasing with their values. There are some folks who never spend a dime they don’t have to, and enjoy it. But most people I know who are comfortably wealthy made carefully-considered decisions about what mattered and what didn’t, did not buy for appearances, bought quality to last, didn’t fad follow, etc.

    For example, I know one couple who sent four children to private colleges with no loans on a SINGLE salary that was only in the five figures (starting in the fairly low five figures, but rising over time) until they were quite close to retirement. They drove dull-but-sturdy cars, maintained them well, bought classic clothes (and maintained them well), didn’t give in to fad-following or allow their children to fad-follow, and were careful with money when buying groceries, etc. Never really ate out. But the wife spent a reasonable amount of money on furniture because it was important to her to have a pleasant home.

    The question they always asked was “will these Nikes further my values and goals?” The answer was typically “no, not really.” “Will this end table further my values and goals?” “Yes, because having a pleasant home is important to me.” “Will it further them $1500?” “No, because sending my children to college is MORE important to me.”

    The point was really that they ASKED these questions and acted on the answers. No impulse purchasing or recreational shopping, and really the effect was that they really enjoyed the things they DID buy … and were able to send four children to private colleges on their dime, and have a full-time at-home parent, and save enough for a very comfortable retirement.

    Now that they’re near retirement there’s a little more spending on toys (iPods, crackberries), but now they’re empty-nesters they’re focusing on traveling together and doing a little grandparental-style spoiling.

    I know a lot of people thought they were deprived (or not making enough money) back in the day when other folks were buying flashy cars and Air Jordans and whatnot, but they just didn’t care because they didn’t let others dictate their values. That’s a fairly common story of the middle-class millionaires I know, that they decided what was important (financial security + car, kids, travel, music, whatever) and pursued THAT no matter what external social pressures were.

  81. SpecialEd says:

    These are things that I have always done. I realized early on that you can drive ANY car you want if you save the money and buy it used enough. I buy really good clothes at the thrift store. My last furniture purchase was a beautiful Howard Miller grandfather clock that I gave $500 and traded some computer work for. It would have been $3500 for a new one. Used is almost always the way to go. Let the money wasters take the hit on depreciation.

  82. MrEvil says:

    This is what I’ve been saying for years. Wealthy people are much less likely to spend money than poor people. They live in the older neighborhoods and drive used cars.

    I don’t know how many dentists I know that live in 50+ year old homes, drive used cars, and buy nothing but antique furniture.

    The people that buy the McMansions, shop at The Gap, Aeropostale, A&F, wear skechers shoes, and buy a brand new Mercedes as often as the rest of us change oil, all have debt up to their eyeballs that not even their estate will be able to pay off.

    Millionaires got to where they are by “SURPRISE” not spending money.

  83. RISwampyankee says:

    The author does not make a distinction between new and old money. They are, I would argue, are very different. Old money will spend but the money is spent on things that hold value; antiques, art work, persian rugs, swiss watches that have been or will be passed down. New money brags about how much money they won/lost in Vegas. Old money *never* talks about money and they never touch the principal.

  84. runpete says:

    @ARP: I do. I live near Clark/Lawrence. It’s becoming quite a nice little neighborhood over here.

    I love walking up to Village Discount. It’s very hit or miss there. They usually don’t have any good house hold stuff. However, I can walk to Howard Brown a few blocks up in Andersonville. They’ve got a nice collection of things there.

  85. not2techy says:

    @milqtost nailed it:

    >”Millionare” has a pretty wide connotation these days.

    One of the criticisms that has been made of the Millionaire Next Door/Millionaire Mindset books is that they really are focused towards upper-middle class (the “mere millionaires”) and not the seriously rich. So the books can give a perhaps false impression of how the super-rich live, since the books really aren’t about them.

    But even with that criticism in mind, the advice the books give seems pretty sound, and we’re probably better off when we don’t worry about keeping up with the Joneses.

  86. archer117 says:

    What’s the point of being a “millionaire” if you’re driving around a second-hand car?

  87. gStein_*|bringing starpipe back|* says:

    @milqtost, not2techy: i couldn
    t have said it better myself.
    this is talking about the ‘low’ millionaires, the ones people whose net worth is less than $25 million- Billionaires (see: Bill Gates) DO go for that multi-million dollar custom-built house

  88. doormat says:

    I know a guy who is worth at least 5M dollars, more likely over 10M. He drives a $20,000 Kia minivan. No CLK/SLK, G37, or whatever. A minivan.

  89. LUV2CattleCall says:

    Was in the market for a new car… my dream car has always been a BMW 7 series but a new 750 Li with the options I’d like is pushing $90k (I had a 1998 740 that I bought used for a killer deal…and I like the build quality and driving caractheristics…it’s not the name on the badge I’m after). However, my budget was more in the Toyota Avalon range. Solution? I got a 7 series with all the options I wanted (actually, a few extras) that had 45k miles and 2.5 years on it for about $35,000. It really made me wonder why so many people insist on buying new cars! Some people have pointed out that “yeah, you got a good deal, but what if something goes wrong?” Well, 1) unless $55,000 in stuff breaks, I’m coming out ahead and 2) The 1996 one is still running strong, and I’ve only spent $3,500 or so on unscheduled repairs over the past 10 years.

    In the market for a new Camry? Buy a Certified pre-pwned Lexus…you’ll even get the peace of mind of a warranty in that case. In the market for a new Suburban? Why not a used Escalade? In the market for a new Kia? I hear Toys”r”us has a sale on Huffys going on…

  90. Pixel says:

    I’ve been using this method more and more in my life, and while I am far from a millionaire it has allowed me to have some nice things I wouldn’t be able to afford otherwise.

    I have a set of Ethan Allen burgundy leather wingback chairs and matching ottoman. For which I paid all of $375 for the set. How? I scour the craigslist furniture section and found them from a couple who were replacing them with some antiques they’d inherited. The set is as old as I am, but have been lovingly maintained for 30years, and the bit of wear they have just adds to the beauty. I had a replacement appraisal done for my insurance, and it would cost over $4200 to buy them new. I nearly passed out.

    Most of the rest of my furniture is a combination of nice older stuff and cheap junk I was given or bought for pennies at tag sales. As the cheap junk wears out I am slowly replacing it with hand-picked antiques I pick up at yard sales, craigslist, etc. It brings up the look of my place far more than a new piece of cheap furniture would.

    I drive a three year old Scion xB I paid $6,600 for, despite them selling for over $10K on average. How? I scoured a 5-state area and eventually found one with higher than average miles that a dealership just wanted to offload for what they’d paid for it.

    I don’t do it in everything though. I buy nearly all my clothes new, because I wear them hard and keep them for as long as possible. So it is worth it to me to get the full lifespan out of them. But even then I’ve shopped around until I found the best durability/price ratio.

  91. AMetamorphosis says:

    @bjarmson:

    You said is SO well !

    I follow about 90% of what you do.
    Many of my friends and neighbors think I am well off because I can afford to travel regularly & wear beautiful clothes and drive a convertible & motorhome.

    The truth is ” Wealth is a state of mind ” and I’ve been very blessed as a result of watching my parents. There is a real difference between being frugal and just being cheap.

    Oh, and I’m not above clipping coupons, closing off rooms in the house I’m not using or using off brand consumables.

    I have to laugh when people tell me they paid X for something and are PROUD of spending that amount. Perhaps I’m goofy but I get much more satisfaction being able to purchase the same things and pay 50 – 75% off.

  92. Orv says:

    @archer117: I’m not a millionaire, but I do drive old used cars when I theoretically could afford new ones. The savings are a factor, as well as my desire to stay out of debt. But to be honest, a lot of it is that I *like* old cars and find their styling more appealing than most new models. Also, it’s a way of driving cars of a quality level that I couldn’t afford otherwise; for example, I could afford a 20 year old Mercedes, but there’s no way I could have afforded a brand new one.

  93. GearheadGeek says:

    @not2techy: I’m sure that’s been a criticism of these books, but that seems to be the central point. It’s much more useful to middle-class people to see that there’s a reasonable way for them to accumulate a comfortable amount of wealth without winning the lotto if they can just skip that new BMW every 3 years and live in a reasonably-sized house and make some other relatively painless lifestyle choices. The Bill Gates and professional athletes don’t need quite the same mindset to accumulate great wealth (though it seems that many celebrities could use a bit of help KEEPING some of their wealth.)

  94. stre says:

    “real millionaire” this and “real millionaire” that. where’s the data to back it up? is what he’s saying true? probably, since having a net worth of $1,000,000 isn’t all that unusual these days (more than 1 in 15 households do, i believe…at least prior to recent financial trouble). i don’t want the secret of a millionaire. if i just put away a small percentage of my paycheck into my 401k i’ll be at a million in no time. it’s not a secret anymore. teach me the actual secrets of the 11-figure-net-worth people. we’ve been aiming for ten figures for decades. shouldn’t inflation have moved us up to giong for the next order of magnitude by now? $10,000,000 is where i want to be.

  95. BrianU says:

    The one glitch in this thinking is “quality.” We are now largely in a disposable goods society where most everything is imported from third world sweatshops. That includes products from companies once known for true quality, but now aren’t better than the knock-off made in the same hut. So when you’re not paying a premium for the “quality” label, the real cost jump to something finely made makes getting on the first rung of “millionair ladder” mighty difficult. The loss of cash to a lower earner that finds and buys quality may very well not be worth the sacrifice that will for quite sometime lower their spending and life style options with no definite returns as the article emphasizes. When you need to sell your possessions, that’s usually when everyone else doesn’t have spear money lying around either, and won’t appreciate the quality that your now old and used item has. At best, a two edged sword when budgeting. It may just as well be better to get the cheapest thing possible and hope your income increases enough to worry about more than making it to the end of the month.

  96. gibbersome says:

    Nice comments here. For me it’s about decreasing the monthly costs as much as possible and reinvesting the money saved. Make my money work for me so to speak.

    That’s why I very much prefer a Toyota Corolla to a BMW or a Mercedes. Better mileage, cheaper repair costs and much cheaper insurance. No cable or satellite TV, internet is more entertaining and productive. No land line, just a cell phone, all about minimizing the monthly costs as much as possible.

  97. Jandek says:

    As far as furniture goes, buying brand new furniture is a joke. Popular mechanics did an expose on a bed sold by Crate & Barrel for 1000$+. they sawed through it and found out that the bed was made of particle board, and would probably last only five years. What a great deal!

  98. darkryd says:

    “They will buy really expensive shoes, and resole them when necessary. Since they’ll wear them for a couple of decades the cost per wear will be marginal compared to constantly replacing a cheap pair.”

    —Are we talking about reclusive hermit millionaires who live in junk filled old houses?

    How many people, let alone millionaires wear the same pair of shoes for 20 years straight?

  99. Stephanie Yuhas says:

    Talk to me about this shoe re-souling. Is it really worth it? I am a strange size (10-1/2 womens) and I have thought about buying $400 shoes if I knew for SURE they would last a few years. At the moment, if I find a damned pair of $50-$60 shoes that fit, I buy 4 pairs of them. I would really rather just have one damned pair of shoes that actually looks good..but what brands will actually last and come in a 10-1/2?

  100. crashfrog says:

    I’m dubious on the wisdom of buying a used car.

    1) All the best years of a car’s life happen at the beginning; expensive mechanical problems are back-loaded. Why should someone else get to own my car during it’s best years? Buying used means buying a car with more expensive maintenance or a shorter operational lifetime, or both. Is that a sound purchase? Only if the depreciation discount exceeds the increased costs of maintenance.

    2) If you had just bought a car, would you turn around and loan it to a complete and total stranger? No? Then why would you do it before you buy the car?

    3) If this particular used car is so great, then why did the previous owner sell it? Sure, there’s people that buy new cars every year, people that buy a car and then get laid off and need some of the money back, etc – but do you really believe there’s enough of those kinds of people to completely supply the used car market? Isn’t it much more likely that the previous owner was someone just like you, someone who realized that they had spent a lot of money on what turned out to be a lemon? And, therefore, isn’t that exactly what you’re going to find out, too?

    Sure, you save money in the short term. I’m not convinced you save enough to make up for the costs and downsides of buying a used car, if you’re buying with an eye towards long-term ownership. And shouldn’t you be?

  101. bitsnbytes says:

    Why not go all the way and buy used shoes? :-)

  102. chao says:

    “They’ll go out and buy a $10,000 antique table”

    Uhhhhh we don’t buy “designer” tables from Ikea because we LIKE sawdust, we buy them because 1000-10000$ tables are out of our range. Millionaires are incredibly stupid about how the rest of the country lives.

    “They may frequent thrift shops or even Walmart to get their clothes. So don’t be embarrassed to go cheap, just think of it as acting like a millionaire.”

    If I was a secure millionaire, I’d also not care so much about the way I looked. Seeing as I don’t have much other options but to peacock a little and wear nice things to make me feel better when I go out, it’s not “frugal” like shopping at wal-mart for everything, but I don’t like looking like a tent, and looks *can* be more important in the lower-tiers of the corporation when it comes to getting a job and moving up in rank. CEOs can look like slobs, but god help you if you’re not exec-level.