Message Font: Serif | Sans-Serif
 
UnThreaded | Threaded | Whole Thread (17) | Ignore Thread Prev Thread | Next Thread
Author: WhiskeyRiver Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 5069  
Subject: The Millionare Next Door Date: 8/15/2003 10:36 AM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
I was amazed at the lifestyles the majority of the people who were financially independent lived.

I truly thought tht my LW and I lived a pretty PAW lifestyle but I guess not after reading the book.

I do have a disagreement with one of the points however. I've always made it a habit (maybe mistakenly so) of buying the best vehicle I could afford then driving it forever. Now were not talking Mercedes here but Nissans and the like. I'm not sure I'd put my trust in a vehicle that was purchased from a private individual though these people sem to think it's a good way to do things.

We do however, live beneath our means and prefer to live that way for a while longer. Perhaps we could save a little more though...hmmmm.

-Whiskey

Print the post Back To Top
Author: cattleman22 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 417 of 5069
Subject: Re: The Millionare Next Door Date: 8/15/2003 12:17 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 1
{{I do have a disagreement with one of the points however. I've always made it a habit (maybe mistakenly so) of buying the best vehicle I could afford then driving it forever. Now were not talking Mercedes here but Nissans and the like. I'm not sure I'd put my trust in a vehicle that was purchased from a private individual though these people sem to think it's a good way to do things.}]

It really depends on the depreciation curve of the vehicle. For some foreign cars, the curve is almost linear so that buying a new car is not worse than buying a used one. However for many domestic models, in teh first few years, a large amount of depreciation occurs. For these cars, buying used makes sense.


c

Print the post Back To Top
Author: Mark0Young Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 419 of 5069
Subject: Re: The Millionare Next Door Date: 8/15/2003 12:53 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 2
It's been a very long time since I read The Millionaire Next Door, but my recollection is that many PAWs (maybe most) don't do everything on the list, but end up doing most of the things on the list. Even when various PAWs are profiled, the non-PAW action is mentioned along with the PAW actions, but it doesn't get highlighted.

Many PAWs have a particular "luxury" but live quite economically everywhere else.

I've always made it a habit (maybe mistakenly so) of buying the best vehicle I could afford then driving it forever.

If you are going to buy a new car, keeping it for a long time makes sense (and saves lots of cents). A number of people buy new cars every few years. At one extreme, I know one person who buys a new car as soon as she is finished with the payments on her latest new car purchase, which is why her husband encourages her to get payments that last as long as possible--he knows that the longer the payment schedule, the longer it would be before she buys a new car. But buying a new car and holding on to it "forever" is far cheaper than flipping new cars every few years.

My parents' particular luxury was trips to foreign countries (not just Mexico and Canada, but also Japan, Italy, when I was growing up and they took us kids along, and they have been to more contries since I graduated from college). But they saved up for the trips and there were usually 2 or 3 years between such trips, the other summers being eithr camping, usually in the nearby mountains, or a trip up to Washington and back to California.

I think my particular luxury is buying a new computer every third year. However, on my past two computers, I have purchased better machines than usual with the intent of holding on to them longer, and it has succeeded--my annualized computer costs had gone down by buying machines that would last longer.

So, while we may have our particular luxuries, that does not, in and of itself, rule out the possibility of being a PAW.

Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post Back To Top
Author: AKJayhawk Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 422 of 5069
Subject: Re: The Millionare Next Door Date: 8/15/2003 1:25 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 2
I see nothing wrong with buying a brand new car vs used, as long as it fits into your budget and you plan to keep it for many years. You need to make sure you can afford a substantial down payment to avoid being "upside-down" in the car (ie owe more than it's worth).

If you're shopping for brand new, check with your employer, insurance company, and other organizations you're a member of (AAA, AARP, USAA, etc)--they might have a discount program you can use.

I bought a new Chevy truck in Dec; my employer is a GM Supplier so I qualified for the supplier discount program. It's a set price--I paid 4% over what a GM employee would pay. For my truck, that knocked over $5K off the sticker price. Then I also qualified for any rebates and incentives being offered--that cut another $3200. I also got to deal with the fleet sales people--much more efficient. On top of all that, this was the easiest car shopping experience I've ever had.

Now, I love to haggle, so car shopping isn't a daunting task for me, but this was a better way to go. I went down and got the book on 2003 Chevy trucks listing all the options. Took it home and broke down all the features into "must have" and "nice to have". Faxed that list to the 2 Chevy dealers in town. Each called me back and said they had one truck that met all my must haves--dealer A's was grey (2d choice color) and dealer B's was blue (1st choice color). Drove them both and went with dealer B to get the blue one. Entire car shopping experience was maybe 5 hours worth of work, of which probably 2 hrs was paperwork. I had also pre-qualified for financing with my credit union, so it was like a cash deal as far as the dealer was concerned.

I ended up with a new truck that's worth about $10K more than I owe against it, and will be paid off early because I can make extra payments (essentially I'd budgeted payments assuming almost sticker price, discounts allowed for that extra pmt $$ going towards principle instead). I realize this was a super-sweet deal that not many folks can get, but there's other programs out there. My insurance company (USAA) has a buyer's program where you tell them make & model, they negotiate with the dealer to get you their best price. I've seen mixed reviews on it, but depending on your car shopping savvy (or lack thereof), something like that might be for you.

Thanks
• Jeff

Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post Back To Top
Author: SloanT Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 424 of 5069
Subject: Re: The Millionare Next Door Date: 8/15/2003 1:42 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 1
Jeff:I realize this was a super-sweet deal that not many folks can get, but there's other programs out there.

One such program is autobytel.com, which gives you access to fleet pricing also. Along with fleet pricing on the sticker price you also get better pricing on all options you add. It's like ordering off a menu rather than fighting for every dollar.

A recent example: DW and I negotiated for and very nearly bought a brand new Infiniti G35. We had one dealer down from $33k to $30500. We called the autobytel dealer (which was actually owned by the same guy) and the fleet price was $28900. Even after we walked away the first dealer still claimed that $31500 was the absolute lowest he was allowed to go... Fleet pricing is good, even for talented negotiators (DW is fierce!). I highly recommend autobytel.com to everyone.

st

Print the post Back To Top
Author: Eldrehad Big gold star, 5000 posts CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 432 of 5069
Subject: Re: The Millionare Next Door Date: 8/15/2003 3:09 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 45
I do have a disagreement with one of the points however. I've always made it a habit (maybe mistakenly so) of buying the best vehicle I could afford then driving it forever. Now were not talking Mercedes here but Nissans and the like. I'm not sure I'd put my trust in a vehicle that was purchased from a private individual though these people sem to think it's a good way to do things.

I would never call this a mistake.

You mention you don't put trust in a vehicle you would purchase from a private individual. Yes, one can mitigate the risk by searching for the vehicle's history with an outfit like Carfax, and getting it checked out by your own mechanic before purchasing, but there's still a risk.

One point I always try to keep in mind... there is almost no such thing as a universal financial mistake. What might be a mistake for some may not be a mistake for others. If you get peace of mind from the way you buy cars, then that's certainly worth a lot.

What really matters is funding those things that are most important to us, and perhaps not funding those things that are not most important. If buying a nicer car and driving it for a long time is more important to you than other uses for your money, then by all means, do so.

Can a Lexus or a Cadillac Escalade by LBYM and fit within a FIRE philosophy? You bet. It all depends on the individual circumstances.

I like to think of this in terms of opportunity cost. Every time we spend money, even a dollar, we are in fact saying that this expenditure is the most important thing I can do with this dollar.

When I buy a cup of coffee at Starbucks (which I almost never do by the way) I am saying, "I'd rather have this cup of coffee than put this dollar into my retirement fund".

Can a cup of coffee be more important? You bet.

Maybe my e-fund is sufficiently funded, maybe I'm contributing enough to my retirement or FIRE fund, and I'm on track to meet my goals... and maybe I really like coffee, it helps me ease into my day, and improves my mood when I get to work.

Or maybe I don't have a big enough e-fund, am behind plan on my retirement savings - and that cup of coffee isn't nearly as important as its other alternative uses.

So... a cup of coffee can be consistent with LBYM and FIRE for some people under some circumstances, and not be for others and other circumstances... but my ultimate piont here is this.

With every dollar you spend (or save), you are saying "This is the most important thing, the thing I'll get the most benefit from, that I can do with this dollar". If the most important thing is that latte, by all means, it's your money... do what's important to you. If the most important thing is a new Lexus, or putting that dollar in your retirement fund, it's your money, by all means, do it.

Just realize that that's indeed what you are doing.

So many people plunk down their money at Starbucks without asking the question, "Is this the best use for my money?" In fact, they are making a financial decision, they are saying that the latte is more important than advancing their FIRE goals, without even thinking about it - that is the real shame.

It doesn't matter whether you buy the latte, the Lexus, or anything else. If you want that latte, and make a concious decision - and come to the conclusion that it's more important than anything else, enjoy your latte!

Just so long as you are doing so with your eyes wide open - too many of us, every day, decide that latte is more important than FIRE without even realizing that that's what we are doing.

And that's the biggest financial mistake of all.

Regards,

Eldrehad



Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post Back To Top
Author: WhiskeyRiver Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 433 of 5069
Subject: Re: The Millionare Next Door Date: 8/15/2003 3:18 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0

Just so long as you are doing so with your eyes wide open - too many of us, every day, decide that latte is more important than FIRE without even realizing that that's what we are doing.


Excellent, excellent post. Thank you.
-Whiskey

Print the post Back To Top
Author: decath Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 434 of 5069
Subject: Re: The Millionare Next Door Date: 8/15/2003 3:19 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 1
I have an Aunt (posted about her last year on the RE board about FIRE'ing at the age of 53) who came to visit us this weekend. She is worth over a million and drove up in her 89 Honda Accord.

Her home had been up for sale for 14 months and she finally sold it this weekend for $300,000. This past year, she bought a small condo for 40k and remodeled it (doing most of the work herself and calling in favors from friends to do the stuff she could not).

She and her husband (until he passed away) were PAW's but also enjoyed life to the fullest.

decath

Print the post Back To Top
Author: Eldrehad Big gold star, 5000 posts CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 435 of 5069
Subject: Re: The Millionare Next Door Date: 8/15/2003 3:23 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
She and her husband (until he passed away) were PAW's...

I really need to read some more posts around here... what's a PAW?

Regards,

Eldrehad


Print the post Back To Top
Author: GusSmed Big gold star, 5000 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 436 of 5069
Subject: Re: The Millionare Next Door Date: 8/15/2003 3:40 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 3
I really need to read some more posts around here... what's a PAW?

It's a CGA:

http://boards.fool.com/Message.asp?mid=19460743

- Gus



Print the post Back To Top
Author: Hyperborea Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 441 of 5069
Subject: Re: The Millionare Next Door Date: 8/15/2003 7:22 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
really need to read some more posts around here... what's a PAW?
------
It's a CGA


Are you sure that it's not a TLA? (Three Letter Acronym)

Hyperborea

Print the post Back To Top
Author: GusSmed Big gold star, 5000 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 442 of 5069
Subject: Re: The Millionare Next Door Date: 8/15/2003 8:40 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
Are you sure that it's not a TLA? (Three Letter Acronym)

It surely is a TLA as well. But it's not a NAA (Not An Acronym).

- Gus


Print the post Back To Top
Author: matt5 One star, 50 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 444 of 5069
Subject: Re: The Millionare Next Door Date: 8/15/2003 10:34 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 8
Decath,

I can tell you point blank based on your very short description of your aunt that she ABSOLUTELY is a PAW (see other msgs in this thread for what a PAW is).

The older I get (31 now) the more I think I can spot people in life like Decath's aunt and the more I want to become exactly like them.

Back to the thread topic: money spent on cars....

my Dad once explained it to me like this. Buying a car falls into 4 categories:

1) STATUS - how cool does this car look? For some it's the PT Cruiser, for others a brand new Ford F-150. Or an Infiniti G35. Or a Chevrolet Corvette. Or Honda Element. The point is....how many heads will I turn driving this car?

2) SAFETY - will this car protect me in an accident? Seat belts, front and side air bags, gov't crash tests, etc. Is there really that HUGE of a difference in safety between all cars produced from 1990 until now? I personally do not think there's that big of a difference (OK, everyone says Volvos are safest - fine)

3) RELIABILITY - will it start on a cold January morning with 10" of snow on the hood when you left it out over night? Once again, not a huge difference in reliability in MOST cars over the last 10 years (yes, I know J.D. Power and Consumer Reports overwhelmingly find foreign cars far superior to domestic in reliability, but stick with me here).

4) BASIC TRANSPORTATON - does this car get me from Point A to Point B faster than a skateboard, bus, train, boat or scooter? Once again, I believe MOST cars are equal in this regard. Once you arrive at work in the morning at 8am it does not matter one iota whether you took a Lamborghini to work or a Chevette. They both got you from home (Point A) to work (Point B).

That being said, I believe that points 2, 3, and 4 are basically the same in MOST cars. Safety, Reliability and Basic Transportation. I know I'm generalizing, but come on - there isn't THAT BIG OF A DIFFERENCE between all cars in those three categories. So.....where do people put 95% of their costs/emphasis/looks/concerns???

STATUS!!!!

Bingo! You guessed it. Status. Put another way--> if we all had to drive with brown paper bags over our cars wouldn't it really stink to be paying $350/month for *your* paper bag and I'm paying $200/month (or maybe nothing per month!) for mine.

Bottom line---> if you can get past the "status" thing, you can save a ton on cars over your lifetime!

just my .02

Matt



Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post Back To Top
Author: GusSmed Big gold star, 5000 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 445 of 5069
Subject: Re: The Millionare Next Door Date: 8/15/2003 10:52 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 9
my Dad once explained it to me like this. Buying a car falls into 4 categories:

You missed one.

5) Fun.

People who don't enjoy driving never understand that one.

- Gus

Print the post Back To Top
Author: mjuarez Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 451 of 5069
Subject: Re: The Millionare Next Door Date: 8/16/2003 5:21 AM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 1
5) Fun.

People who don't enjoy driving never understand that one.


That is true. I personally like driving, a lot. However, driving can only be really enjoyable, in my opinion, on deserted roads or interstate highways. How enjoyable can driving be when you're moving at 5mph in rush hour traffic? Even if you have a Mitsubishi Evo VIII, you're not really going to use the AWD, the slip-lock differential, etc when commuting to/from work. A 1970 VW Bug could do the exact same job, while costing $30K less. OTOH, when it's a track racing day... then every last penny invested in that Evo will be worth it. :-)

For transportation needs, you could do with basically whatever is functional for you. Right now my complete transportation needs are met by a $200 bike I bought 3 weeks ago. Would be much different if I was back home, though. Then, my 1987 BMW 325e would really get a workout.

Marcos

Print the post Back To Top
Author: Marxtacy Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 452 of 5069
Subject: Re: The Millionare Next Door Date: 8/16/2003 5:51 AM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
I'm not sure I'd put my trust in a vehicle that was purchased from a private individual though these people sem to think it's a good way to do things.

Buy a late model used car with at least a few months of the manufacturer's warranty left. Problem solved, and you might even find one that still has that new car smell. (However, like a previous poster wrote, if it is a model that doesn't depreciate in the first few years you might as well buy new if you must have that make/model.)

marxtacy


Print the post Back To Top
Author: Dilmatz Three stars, 500 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 460 of 5069
Subject: Re: The Millionare Next Door Date: 8/17/2003 8:10 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
E --

I, too, thought this was an excellent post, so much so that I made my first recommendation.

I LOVE my coffee and my coffee shop. It *does* help me ease into my day and I do buy it with my eyes wide open. I'd rather cut my own grass, wash my own car, and cut my own hair (what's left of it -- :-)), etc., and get myself a great cup of coffee when I want to than pay for others to do it. And, mind you, this is after paying the bills, putting money in savings, etc.

When I talk to people about budgets, they almost always say the same thing -- something along the lines of, "Oh, I shouldn't have bought my lunch today." It's a guilt reaction that doesn't take their whole life style and spending style into account. I tell them the same thing: "It's all a matter of how you decide to spend your money, not to NOT spend money."

Anyway, dug your post...

Print the post Back To Top
UnThreaded | Threaded | Whole Thread (17) | Ignore Thread Prev Thread | Next Thread
Advertisement