10 ms·

Millionaires Who Are Frugal When They Don't Have to Be

78 points by m-i-l 11y ago

sehugg 11y ago
Note also that in several states, the average full-career government employee receives a pension worth over $1 million. It's just that we don't commonly use the term "millionaire" when the payment is in the form of an annuity. http://www.wsj.com/articles/SB10001424052702304360704579415173512940990 http://www.wsj.com/articles/SB100014240527023043607045794151...
drpgq 11y ago
The Millionaire Next Door is a good read related to this although it is getting a bid dated.
- hliyan 11y ago
  I highly recommend How Much is Enough? by Robert & Edward Skidelsky.
- mark_l_watson 11y ago
  That book had a large effect on my views of money, not being ostentatious, etc. Some people need to be flashy with their money, but probably not a good idea. I have a friend who usually drives a fairly new model Porsche while I think I have more wealth than he does and I have a 1998 Toyota Corolla. That said, it would be a more boring world if we were all the same!
comrade1 11y ago
The farther you are in life in your job, personal life, friends, the easier it is to live enjoyably with spending less money through work trips to fabulous cities, automobile perqs, subsidized meals, work home-buying perqs, etc. I'm not sure how much these people are struggling with their low spending.
- Nrsolis 11y ago
  As a person who travels regularly for work I can say you have quite a romantic view of business travel. The reality is that I usually see (in this order) an airport, a taxi, a conference room, a hotel dining room and/or bar, a hotel room, a taxi, an airport. The idea that there is much downtime on a business trip is a fantasy of those who don't travel for work.
  - cushychicken 11y ago
    I have a coworker who has a saying for this: "You can travel to all the exotic locales for work that you want, but it doesn't change the fact that every hotel room looks the same inside."
  - whiddershins 11y ago
    This is absolutely true. Then again do you ever schedule a day or two off before or after a business trip? Mini-vacation with free airfare!
    - cpkscpks 11y ago
      I did this before I had a family. Now, it's the first flight out. Sometimes I'll fly in a day early to get over jet lag, but that's usually working in a hotel room.
    - walshemj 11y ago
      You need to plan it I spent a month for work in Edinburgh once and didn't come back so I had 4 weekend breaks staying in the Balmoral (most expensive hotel in town). Unfortunately my plan to do the same for the Edinburgh fringe did not work out
    - jbuzbee 11y ago
      Most of my business trips are airport/hotel/work/airport, but occasionally, I'll use accumulated frequent-flier miles to have my wife join me and extend the trip. We've done Australia twice this way. When you're that far away, it makes a lot of sense to take advantage of it!
UK-AL 11y ago
Is this a surprise? People who have lots of money, are good with spending money? and knowing the value of things? I don't think they're cheapskates, they just know what ACUTALLY brings value to their life's. They probably wouldn't mind spending, if they get more or equal value from the thing they are purchasing. Fancy Cars in general are terrible value, for the enjoyment they bring you. Unless say its your hobby.
- phlyingpenguin 11y ago
  Fancy Cars in general are terrible value, for the enjoyment they bring you. Unless say its your hobby. Buying a brand new fancy car is a terrible investment for the enjoyment, but that doesn't need stop you from having one. The article makes the point that there are plenty of ways to have "nice" things without breaking the bank, even if you don't have $$Texas.
salmonet 11y ago
Sometimes I wonder if people do things like darn their own socks just to show off how frugal they are. I have a hard time believing that a multi millionaire values his time low enough to darn socks to save sock money.
- casion 11y ago
  Maybe he enjoys doing it? Perhaps it's something from childhood or early adulthood with fond memories, or just simply a task he enjoys the process of? I'm sure most people here can understand the idea that sometimes fixing your own stuff can be fun, even if it's cheaper to replace it.
  - salmonet 11y ago
    I get that it can be fun to fix things instead of replace them even if replacing them is cheaper. I just don't think it is frugal.
- SlipperySlope 11y ago
  Frugality is easiest to practice as a habit. E.g. rather than regard entertainment as an expense, frugal folks make simple errands and tasks into their entertainment. Also frugality is not about showing off, except among frugal friends comparing notes. Another factor its that not advertising one's wealth is an inexpensive form of household security.
DanAndersen 11y ago
The article is decent, though the headline is a little silly. In the sort of cases described in the article, it's the frugality of these millionaires that was a major contributor to how they got to be millionaires in the first place. Rather than letting falling to the all-too-common temptation to let luxury spending grow wildly with income, it's possible to set clear goals of financial independence, build habits that keep you on that path, and arrest the tendency to keep going on the hedonic treadmill. I've found value in resources like Mr Money Mustache's blog for quantifying what actions are helpful to work toward financial independence: http://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/ http://www.mrmoneymustache.com/2012/01/13/the-shockingly-sim...
SlipperySlope 11y ago
Its important to have a spouse who has a similar desire for sensible frugality. The level of income is less important than simply living below your means for your whole life. With prudent financial planning, compound interest and the passage of time achieves the level of wealth described in the article. Indeed car purchases are a good indicator. An omission of the article is that often frugal persons are generous to their loved ones and causes they care about.
- baldfat 11y ago
  I have a friend who is a school teacher. He is the most frugal person I know. He paid for his first home by the time he was 29 and than sold that and bought a awesome home that was paid off in 7 years. Most generous person I know. He would give the shirt off his back if need be. Drives his wife nuts :)
- briandear 11y ago
  Compound interest? Where? The interest rates are such that inflation would destroy whatever gain you have. Nearly all savings accounts are paying an annual yield of less than 1%! That means WITH compounding, you're looking at a 1% or lower gain. Inflation is typically between 1-4%, with 2% being the benchmark in terms of financial planning, though admittedly in April, we had slightly negative inflation, but that trend won't continue. Investing is the only way to build wealth. It's impossible to save your way to financial freedom. If you make an average of $100K per year from age 30-60, that's $3 million in income. Assuming about 35% in state, local and federal taxes, that leaves you with $65K per year. Now, you're saving 10% of that per year, that's $6,500 saved per year. With a 1% rate, at the end of 30 years, you have about $229K. Assuming you live to be 80, that's $229K that needs to earn enough to pay your bills. Even if you saved 20%, you'd still not even have $500K at the end of 30 years. With the same 20% savings rate and some reasonably smart investing (12% returns,) then you'd end up with over $3.5 million over the same period. If that investing is in real estate, you could potentially earn that gain tax free (or tax reduced) because building depreciation percentages can generally exceed the "profit" from real estate cashflow. On top of that, a 1031 exchange means you can keep selling and trading up to larger and larger real estate without paying a capital gains tax, which means you build even more net worth that can then be leveraged to buy more properties. Most millionaires get there because of property, very, very rarely because they save their way to it. A typical middle-class wage doesn't lend itself well to saving your way to millions. The math just doesn't work, the tax code also doesn't support it. Frugality isn't the key to success. The $30 you save by washing your own car is peanuts compared to the value of that time doing something more productive (like sourcing real estate or researching investments.) Frugality can actually cost you more money because of the time-value of money. But admittedly many of us have inherited our parents/grandparents' Depression Era, middle-class ethos. It's a classic example of Rich Dad Poor Dad.
beachstartup 11y ago
the people in this article have multiple or large houses, take expensive vacations, buy luxury goods... they don't sound overly frugal to me. wtf? am i taking crazy pills? my parents (in their 60s) have 2 lifetimes worth of savings and investments yet still do their own laundry, have a vegetable garden, mend their clothes.... but they drive nice cars, take expensive vacations, and buy tons of gadgets. they have a massive OLED TV that they watch stereotypical old-person shows on, yet still re-use their ziploc bags. this is not an either/or proposition. people are complex creatures, especially when it comes to money. in other words they're just normal people, not overly or underly frugal. this entire article is confused. older people with $millions today have a huge diversity of backgrounds, philosophies, and lifestyles. it's impossible to capture some kind of over-arching rule. spending habits are usually a mix of contemporary attitudes and early life values. if nobody spent any of their money our economy wouldn't work. the important thing is to be careful with your savings and investments - the goal isn't to be a complete cheapskate and die with every penny you ever earned. i can't think of a worse way to live.
- SlipperySlope 11y ago
  Its clear to me that the article's family are still living well below their means. Multiple homes make sense for those who are frugal enough to restrict vacations mostly to the second home, which if well-located can appreciate in value faster than inflation. Frugal families often have such assets that appreciate, rather than expenses or possessions that depreciate.
  - beachstartup 11y ago
    > Frugal families often have such assets that appreciate, rather than expenses or possessions that depreciate. i'll repeat myself. the people in this article have both, like most successful people in general. it's not a mutually exclusive choice. this article is basically not making any kind of point whatsoever. what's the thesis of the article? that most successful people don't blow all their money on bullshit like some poor people do? wow, what a revelation. these people drive cars and take vacations and buy cartier watches. truly 'frugal' people usually don't do any of this stuff. for example, you don't have to look far on HN to find cheapskates that make professional salaries yet shun cars, live in tiny apartments, shop at garage sales, don't vacation, and live on dry foodstuffs. in fact i was poking fun at them in a comment i made just yesterday. i called it the 'cheapskate olympics'. i think that kind of lifestyle is absurd if you can afford to live a bit better than that.
jasode 11y ago
The millionaires at $1m to $10m absolutely DO have to be "frugal" if we use define "frugal" to be about "smart spending" as opposed to fishing pennies out of public fountains. The word "million" is deceptive because it is an amount beyond what 99% have. It makes it seem like some mind boggling amount of money but mathematically, it really isn't that much. A person classified as "millionaire" could be tagged that because of total net assets and not the liquid cash in a bank account. E.g. a $500k house + $500k IRA/401k + $25k car is a "millionaire". But let's say you have a multi-millionaire (e.g. 2 million dollars). That might be $1 million in cash in the bank. That's still not much money because: - it's not enough to park $1 million of principal into risk-free US T-Bills and live off the current interest rates of < 1%. That's only $10k income per year which is less than minimum wage. - if your child gets an expensive health problem like leukemia or spouse gets cancer, your medical bills could blow past the lifetime cap of the health insurance policy and therefore, you have to drain your savings to pay for expensive treatments. - non-Ivy League schools can cost $50k per year. If you have 2 children and you want to give them the gift of college education without being burdened with student debt, that's at least $400k. And to stay at $400k, it would require the parents to be "cheapskates" and not fund any extracurricular trips like ski vacations and Spring Break parties down in Mexico. The millionaires that have less than $10 million definitely have to be "frugal" and watch their money. Consider than NBA star Allen Iverson earned $200 million and blew it all away. At $100+ million, one can start getting frivolous and maybe buy a Ferrari. However, $2 million is not enough cushion to live off interest income and be 100% worry-free from unexpected life events. One would still have to work somewhere to keep adding to the nest egg.
- deleted 11y ago
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- hobo_mark 11y ago
  Agreed on everything but this line > it would require the parents to be "cheapskates" and not fund any extracurricular trips like ski vacations and Spring Break parties down in Mexico One would assume a 'frugal' household knows better than that and would want to pass their value system on to the next generation too. Want to get wasted in Mexico? Find a way to make it happen yourself.
crimsonalucard 11y ago
Please note that although we respect frugality over lavishness. Frugality among rich people is one of the primary reasons behind wealth inequality. Sitting on top of an perverse amount of wealth and not doing anything with it is bad for the economy. Wealth needs to be redeployed back into the economy and it must be done in following a method that doesn't grow the wealth in an unnatural compounding way.
- DanAndersen 11y ago
  In cases like those in the article, these savings aren't stowed away in gold bars under rich people's mattresses, they're mainly in investments that continue to yield dividends. Those investments are going to various companies that are actually doing something with that money, so it's still circulating through the economy. Is there something I'm missing? I admit I'm not as well-versed in economics as I'd like to be.
  - crimsonalucard 11y ago
    Unless it's an ipo an "investment" or exchange of stocks for money on a stock market is simply just a trade among shareholders that generates zero GDP. It does go back into the economy and thus circulates. Dividends is wealth generated by laborers and taken by shareholder owners. Sitting on stocks and eating up dividends while contributing no work of your own does not cause money to circulate through the economy in a good way. What it does is it causes your own wealth to grow unfairly, further increasing wealth inequality.
    - walshemj 11y ago
      mm tried to run a business with out access to capital. Your being very naïve.
      - crimsonalucard 11y ago
        Good for you. How does you running a business without access to capital make me naive? Doesn't that make you niave?
massysett 11y ago
"And while they own three homes — condominiums in Naples and Boca Raton, Fla., and a house in Lebanon, Pa., where they grew up, none of them are huge. One splurge is an annual trip to Italy." Frugal? Is this a joke?
- adekok 11y ago
  I think "frugal" in this context means "spending within their abilities". In contrast, many lottery winners are bankrupt within 5 years. Why? They're "rich"! They can spend money like it's water! And they do... Then they run out. As other commenters point out, a million dollars is money, but you still have to be careful. You probably still have to work. You can go out for dinner three times a week at a reasonable restaurant and not worry about it. You can buy a decent car without it impacting your budget too much. They're not penny-pinching. They're not part of the 47% of americans who'd have trouble raising $400 for an emergency expense. But care-free? Nope. One trip a year to Italy is probably $5K for two people. In comparison, that's like $50 for someone with $10K to their name. It's money, you likely have to plan for it, but it's do-able.
- reagency 11y ago
  Those three properties together cost less than a starter house in Silicon Valley.
11thEarlOfMar 11y ago
The Millionaire bar is lowered each year at the rate of inflation. So to see how I'm really doing vs. my generation, I factor in inflation since my birth date, and that is the number I need to achieve 'Millionaire' status. It's somewhat arbitrary, but for me, that's about $6,000,000 in 2015 dollars....
- drpgq 11y ago
  Yeah when they made the film How to Marry a Millionaire in 1953 with Marilyn Monroe, a million really meant something.
mmrasheed 11y ago
When I read this article few minutes ago I found the following phrases and quotes defining the characters of these people and justifying their acts- ...“It’s (money) an important tool. They don’t neglect it, but they also don’t worship it.”... ...“Part of this pressure to keep going is less about greed and more about insecurity that might be self-imposed,” ... ...“It’s about paying attention to what makes you happy and not just doing what our society tells us to do,” ... ... he and his wife simply didn’t care that much about material possessions... ... “We like to travel, and we’ll spend the money for that because it’s worth it having a real experience together.” ... And when I went through the comments here, I found none so far discussing on any of the points above.
- deleted 11y ago
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- Retra 11y ago
  Every one of those quotes is portraying selfishness. Why should anyone discuss those points? They don't have long-term value to anyone else.
  - crgt 11y ago
    Hm. Not caring about material possessions is selfish? Not sure I follow that logic...
    - Retra 11y ago
      A drug addict isn't chasing material possessions, either. "Selfish" doesn't imply any concern for material possessions.
  - mmrasheed 11y ago
    I would very much like to know how not-worshipping-money, less-greed, less-materialism are the elements of selfishness rather than of selflessness?
    - 11y ago
reagency 11y ago
Another NYTimes article by a millenial amazed by the completely ordinary lives led by their parents' friends.
reagency 11y ago
Another NYTimes article by a millenial amazed by the completely ordinary lives led by their parents' friends.
secretmillion 11y ago
I'm a "frugal millionaire" with liquid, investible assets of approx 1.2m USD (does not include my home, car, etc.) I saved and invested my way to this after about about 15 years of working. My highest yearly income was approximately 160K while my lowest was around 50K. I drive a 10 year old car (which I bought new, in cash) and my mortgage is fully paid off. I still go to work everyday (unfortunately.) I'd rather work part time, 2-3 days a week as a contractor/consultant, then work on my own projects the rest of the time. I often wonder how many others out there are like me... "working millionaires."
- ckib16 11y ago
  I'm curious - how did you amass your 1.2m USD? I have a similar background and have done well but have not reached your level. Was it thru regular investing? Or did you have some "high payout" one-time events like making a lot of money on house appreciation, sale of a company, etc. In any case, nice work!
  - secretmillion 11y ago
    It was through regular savings and investing. I never had a high payout event.

78 points by m-i-l 11y ago

Note also that in several states, the average full-career government employee receives a pension worth over $1 million. It's just that we don't commonly use the term "millionaire" when the payment is in the form of an annuity. http://www.wsj.com/articles/SB10001424052702304360704579415173512940990 http://www.wsj.com/articles/SB100014240527023043607045794151...

drpgq 11y ago

The Millionaire Next Door is a good read related to this although it is getting a bid dated.

hliyan 11y ago
I highly recommend How Much is Enough? by Robert & Edward Skidelsky.
mark_l_watson 11y ago
That book had a large effect on my views of money, not being ostentatious, etc. Some people need to be flashy with their money, but probably not a good idea. I have a friend who usually drives a fairly new model Porsche while I think I have more wealth than he does and I have a 1998 Toyota Corolla. That said, it would be a more boring world if we were all the same!

comrade1 11y ago

The farther you are in life in your job, personal life, friends, the easier it is to live enjoyably with spending less money through work trips to fabulous cities, automobile perqs, subsidized meals, work home-buying perqs, etc. I'm not sure how much these people are struggling with their low spending.

Nrsolis 11y ago
As a person who travels regularly for work I can say you have quite a romantic view of business travel. The reality is that I usually see (in this order) an airport, a taxi, a conference room, a hotel dining room and/or bar, a hotel room, a taxi, an airport. The idea that there is much downtime on a business trip is a fantasy of those who don't travel for work.
- cushychicken 11y ago
  I have a coworker who has a saying for this: "You can travel to all the exotic locales for work that you want, but it doesn't change the fact that every hotel room looks the same inside."
- whiddershins 11y ago
  This is absolutely true. Then again do you ever schedule a day or two off before or after a business trip? Mini-vacation with free airfare!
  - cpkscpks 11y ago
    I did this before I had a family. Now, it's the first flight out. Sometimes I'll fly in a day early to get over jet lag, but that's usually working in a hotel room.
  - walshemj 11y ago
    You need to plan it I spent a month for work in Edinburgh once and didn't come back so I had 4 weekend breaks staying in the Balmoral (most expensive hotel in town). Unfortunately my plan to do the same for the Edinburgh fringe did not work out
  - jbuzbee 11y ago
    Most of my business trips are airport/hotel/work/airport, but occasionally, I'll use accumulated frequent-flier miles to have my wife join me and extend the trip. We've done Australia twice this way. When you're that far away, it makes a lot of sense to take advantage of it!

UK-AL 11y ago

Is this a surprise? People who have lots of money, are good with spending money? and knowing the value of things? I don't think they're cheapskates, they just know what ACUTALLY brings value to their life's. They probably wouldn't mind spending, if they get more or equal value from the thing they are purchasing. Fancy Cars in general are terrible value, for the enjoyment they bring you. Unless say its your hobby.

phlyingpenguin 11y ago
Fancy Cars in general are terrible value, for the enjoyment they bring you. Unless say its your hobby. Buying a brand new fancy car is a terrible investment for the enjoyment, but that doesn't need stop you from having one. The article makes the point that there are plenty of ways to have "nice" things without breaking the bank, even if you don't have $$Texas.

salmonet 11y ago

Sometimes I wonder if people do things like darn their own socks just to show off how frugal they are. I have a hard time believing that a multi millionaire values his time low enough to darn socks to save sock money.

casion 11y ago
Maybe he enjoys doing it? Perhaps it's something from childhood or early adulthood with fond memories, or just simply a task he enjoys the process of? I'm sure most people here can understand the idea that sometimes fixing your own stuff can be fun, even if it's cheaper to replace it.
- salmonet 11y ago
  I get that it can be fun to fix things instead of replace them even if replacing them is cheaper. I just don't think it is frugal.
SlipperySlope 11y ago
Frugality is easiest to practice as a habit. E.g. rather than regard entertainment as an expense, frugal folks make simple errands and tasks into their entertainment. Also frugality is not about showing off, except among frugal friends comparing notes. Another factor its that not advertising one's wealth is an inexpensive form of household security.

DanAndersen 11y ago

The article is decent, though the headline is a little silly. In the sort of cases described in the article, it's the frugality of these millionaires that was a major contributor to how they got to be millionaires in the first place. Rather than letting falling to the all-too-common temptation to let luxury spending grow wildly with income, it's possible to set clear goals of financial independence, build habits that keep you on that path, and arrest the tendency to keep going on the hedonic treadmill. I've found value in resources like Mr Money Mustache's blog for quantifying what actions are helpful to work toward financial independence: http://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/ http://www.mrmoneymustache.com/2012/01/13/the-shockingly-sim...

SlipperySlope 11y ago

Its important to have a spouse who has a similar desire for sensible frugality. The level of income is less important than simply living below your means for your whole life. With prudent financial planning, compound interest and the passage of time achieves the level of wealth described in the article. Indeed car purchases are a good indicator. An omission of the article is that often frugal persons are generous to their loved ones and causes they care about.

baldfat 11y ago
I have a friend who is a school teacher. He is the most frugal person I know. He paid for his first home by the time he was 29 and than sold that and bought a awesome home that was paid off in 7 years. Most generous person I know. He would give the shirt off his back if need be. Drives his wife nuts :)
briandear 11y ago
Compound interest? Where? The interest rates are such that inflation would destroy whatever gain you have. Nearly all savings accounts are paying an annual yield of less than 1%! That means WITH compounding, you're looking at a 1% or lower gain. Inflation is typically between 1-4%, with 2% being the benchmark in terms of financial planning, though admittedly in April, we had slightly negative inflation, but that trend won't continue. Investing is the only way to build wealth. It's impossible to save your way to financial freedom. If you make an average of $100K per year from age 30-60, that's $3 million in income. Assuming about 35% in state, local and federal taxes, that leaves you with $65K per year. Now, you're saving 10% of that per year, that's $6,500 saved per year. With a 1% rate, at the end of 30 years, you have about $229K. Assuming you live to be 80, that's $229K that needs to earn enough to pay your bills. Even if you saved 20%, you'd still not even have $500K at the end of 30 years. With the same 20% savings rate and some reasonably smart investing (12% returns,) then you'd end up with over $3.5 million over the same period. If that investing is in real estate, you could potentially earn that gain tax free (or tax reduced) because building depreciation percentages can generally exceed the "profit" from real estate cashflow. On top of that, a 1031 exchange means you can keep selling and trading up to larger and larger real estate without paying a capital gains tax, which means you build even more net worth that can then be leveraged to buy more properties. Most millionaires get there because of property, very, very rarely because they save their way to it. A typical middle-class wage doesn't lend itself well to saving your way to millions. The math just doesn't work, the tax code also doesn't support it. Frugality isn't the key to success. The $30 you save by washing your own car is peanuts compared to the value of that time doing something more productive (like sourcing real estate or researching investments.) Frugality can actually cost you more money because of the time-value of money. But admittedly many of us have inherited our parents/grandparents' Depression Era, middle-class ethos. It's a classic example of Rich Dad Poor Dad.

beachstartup 11y ago

the people in this article have multiple or large houses, take expensive vacations, buy luxury goods... they don't sound overly frugal to me. wtf? am i taking crazy pills? my parents (in their 60s) have 2 lifetimes worth of savings and investments yet still do their own laundry, have a vegetable garden, mend their clothes.... but they drive nice cars, take expensive vacations, and buy tons of gadgets. they have a massive OLED TV that they watch stereotypical old-person shows on, yet still re-use their ziploc bags. this is not an either/or proposition. people are complex creatures, especially when it comes to money. in other words they're just normal people, not overly or underly frugal. this entire article is confused. older people with $millions today have a huge diversity of backgrounds, philosophies, and lifestyles. it's impossible to capture some kind of over-arching rule. spending habits are usually a mix of contemporary attitudes and early life values. if nobody spent any of their money our economy wouldn't work. the important thing is to be careful with your savings and investments - the goal isn't to be a complete cheapskate and die with every penny you ever earned. i can't think of a worse way to live.

SlipperySlope 11y ago
Its clear to me that the article's family are still living well below their means. Multiple homes make sense for those who are frugal enough to restrict vacations mostly to the second home, which if well-located can appreciate in value faster than inflation. Frugal families often have such assets that appreciate, rather than expenses or possessions that depreciate.
- beachstartup 11y ago
  > Frugal families often have such assets that appreciate, rather than expenses or possessions that depreciate. i'll repeat myself. the people in this article have both, like most successful people in general. it's not a mutually exclusive choice. this article is basically not making any kind of point whatsoever. what's the thesis of the article? that most successful people don't blow all their money on bullshit like some poor people do? wow, what a revelation. these people drive cars and take vacations and buy cartier watches. truly 'frugal' people usually don't do any of this stuff. for example, you don't have to look far on HN to find cheapskates that make professional salaries yet shun cars, live in tiny apartments, shop at garage sales, don't vacation, and live on dry foodstuffs. in fact i was poking fun at them in a comment i made just yesterday. i called it the 'cheapskate olympics'. i think that kind of lifestyle is absurd if you can afford to live a bit better than that.

jasode 11y ago

The millionaires at $1m to $10m absolutely DO have to be "frugal" if we use define "frugal" to be about "smart spending" as opposed to fishing pennies out of public fountains. The word "million" is deceptive because it is an amount beyond what 99% have. It makes it seem like some mind boggling amount of money but mathematically, it really isn't that much. A person classified as "millionaire" could be tagged that because of total net assets and not the liquid cash in a bank account. E.g. a $500k house + $500k IRA/401k + $25k car is a "millionaire". But let's say you have a multi-millionaire (e.g. 2 million dollars). That might be $1 million in cash in the bank. That's still not much money because: - it's not enough to park $1 million of principal into risk-free US T-Bills and live off the current interest rates of < 1%. That's only $10k income per year which is less than minimum wage. - if your child gets an expensive health problem like leukemia or spouse gets cancer, your medical bills could blow past the lifetime cap of the health insurance policy and therefore, you have to drain your savings to pay for expensive treatments. - non-Ivy League schools can cost $50k per year. If you have 2 children and you want to give them the gift of college education without being burdened with student debt, that's at least $400k. And to stay at $400k, it would require the parents to be "cheapskates" and not fund any extracurricular trips like ski vacations and Spring Break parties down in Mexico. The millionaires that have less than $10 million definitely have to be "frugal" and watch their money. Consider than NBA star Allen Iverson earned $200 million and blew it all away. At $100+ million, one can start getting frivolous and maybe buy a Ferrari. However, $2 million is not enough cushion to live off interest income and be 100% worry-free from unexpected life events. One would still have to work somewhere to keep adding to the nest egg.

deleted 11y ago
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hobo_mark 11y ago
Agreed on everything but this line > it would require the parents to be "cheapskates" and not fund any extracurricular trips like ski vacations and Spring Break parties down in Mexico One would assume a 'frugal' household knows better than that and would want to pass their value system on to the next generation too. Want to get wasted in Mexico? Find a way to make it happen yourself.

crimsonalucard 11y ago

Please note that although we respect frugality over lavishness. Frugality among rich people is one of the primary reasons behind wealth inequality. Sitting on top of an perverse amount of wealth and not doing anything with it is bad for the economy. Wealth needs to be redeployed back into the economy and it must be done in following a method that doesn't grow the wealth in an unnatural compounding way.

DanAndersen 11y ago
In cases like those in the article, these savings aren't stowed away in gold bars under rich people's mattresses, they're mainly in investments that continue to yield dividends. Those investments are going to various companies that are actually doing something with that money, so it's still circulating through the economy. Is there something I'm missing? I admit I'm not as well-versed in economics as I'd like to be.
- crimsonalucard 11y ago
  Unless it's an ipo an "investment" or exchange of stocks for money on a stock market is simply just a trade among shareholders that generates zero GDP. It does go back into the economy and thus circulates. Dividends is wealth generated by laborers and taken by shareholder owners. Sitting on stocks and eating up dividends while contributing no work of your own does not cause money to circulate through the economy in a good way. What it does is it causes your own wealth to grow unfairly, further increasing wealth inequality.
  - walshemj 11y ago
    mm tried to run a business with out access to capital. Your being very naïve.
    - crimsonalucard 11y ago
      Good for you. How does you running a business without access to capital make me naive? Doesn't that make you niave?

massysett 11y ago

"And while they own three homes — condominiums in Naples and Boca Raton, Fla., and a house in Lebanon, Pa., where they grew up, none of them are huge. One splurge is an annual trip to Italy." Frugal? Is this a joke?

adekok 11y ago
I think "frugal" in this context means "spending within their abilities". In contrast, many lottery winners are bankrupt within 5 years. Why? They're "rich"! They can spend money like it's water! And they do... Then they run out. As other commenters point out, a million dollars is money, but you still have to be careful. You probably still have to work. You can go out for dinner three times a week at a reasonable restaurant and not worry about it. You can buy a decent car without it impacting your budget too much. They're not penny-pinching. They're not part of the 47% of americans who'd have trouble raising $400 for an emergency expense. But care-free? Nope. One trip a year to Italy is probably $5K for two people. In comparison, that's like $50 for someone with $10K to their name. It's money, you likely have to plan for it, but it's do-able.
reagency 11y ago
Those three properties together cost less than a starter house in Silicon Valley.

11thEarlOfMar 11y ago

The Millionaire bar is lowered each year at the rate of inflation. So to see how I'm really doing vs. my generation, I factor in inflation since my birth date, and that is the number I need to achieve 'Millionaire' status. It's somewhat arbitrary, but for me, that's about $6,000,000 in 2015 dollars....

drpgq 11y ago
Yeah when they made the film How to Marry a Millionaire in 1953 with Marilyn Monroe, a million really meant something.

mmrasheed 11y ago

When I read this article few minutes ago I found the following phrases and quotes defining the characters of these people and justifying their acts- ...“It’s (money) an important tool. They don’t neglect it, but they also don’t worship it.”... ...“Part of this pressure to keep going is less about greed and more about insecurity that might be self-imposed,” ... ...“It’s about paying attention to what makes you happy and not just doing what our society tells us to do,” ... ... he and his wife simply didn’t care that much about material possessions... ... “We like to travel, and we’ll spend the money for that because it’s worth it having a real experience together.” ... And when I went through the comments here, I found none so far discussing on any of the points above.

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Retra 11y ago
Every one of those quotes is portraying selfishness. Why should anyone discuss those points? They don't have long-term value to anyone else.
- crgt 11y ago
  Hm. Not caring about material possessions is selfish? Not sure I follow that logic...
  - Retra 11y ago
    A drug addict isn't chasing material possessions, either. "Selfish" doesn't imply any concern for material possessions.
- mmrasheed 11y ago
  I would very much like to know how not-worshipping-money, less-greed, less-materialism are the elements of selfishness rather than of selflessness?
  - 11y ago

reagency 11y ago

Another NYTimes article by a millenial amazed by the completely ordinary lives led by their parents' friends.

reagency 11y ago

Another NYTimes article by a millenial amazed by the completely ordinary lives led by their parents' friends.

secretmillion 11y ago

I'm a "frugal millionaire" with liquid, investible assets of approx 1.2m USD (does not include my home, car, etc.) I saved and invested my way to this after about about 15 years of working. My highest yearly income was approximately 160K while my lowest was around 50K. I drive a 10 year old car (which I bought new, in cash) and my mortgage is fully paid off. I still go to work everyday (unfortunately.) I'd rather work part time, 2-3 days a week as a contractor/consultant, then work on my own projects the rest of the time. I often wonder how many others out there are like me... "working millionaires."

ckib16 11y ago
I'm curious - how did you amass your 1.2m USD? I have a similar background and have done well but have not reached your level. Was it thru regular investing? Or did you have some "high payout" one-time events like making a lot of money on house appreciation, sale of a company, etc. In any case, nice work!
- secretmillion 11y ago
  It was through regular savings and investing. I never had a high payout event.