Jared Muir

FIN 1050
Joseph Howell
16 April 2016
The Millionaire Next Door
Big hat, no cattle plays the part of just because you are rich doesnt mean
you have to play the part. Such as the Texan man did not when his British partners
came to see him, just because he didnt look like he was wealthy they believed that
he wasnt the man they needed. He then goes to say I dont own big hats, but I
have a lot of cattle. Meaning that he doesnt look wealthy but he sure is and has
the funds without showing off.
The go-to-hell fund means you have accumulated enough wealth to live
without working for ten or more years.
Mr. Richards has nearly five times the net worth of Mr. Ford because he does
not have an image to uphold and doesnt spend his money as freely trying to uphold
an image. Due to this he can put his funding to more important things than new
suits for each day of the week.
Being frugal is the cornerstone of wealth-building.
Most people will never become wealthy in one generation if they are married
to people who are wasteful.
Upon giving his wife $8 million of stock, from taking his company
public, what did his wife continue doing? Investing.
Why would someone who is a millionaire need to budget? They
become millionaires by budgeting and controlling expenses, and they maintain their
affluent status the same way.
The book describes Teddy as being possessed by possessions.
Explain this comment
Being possessed by possessions means that you are working for the
economic symbol of having wealth or to spend your earning on things just to have
them.
What was the small change Teddys parents could have made that
would put them in the millionaire category? (Be specific.)
They spent when they had money. They stopped spending when they ran
short of money. Due to this they did not budget nor save if they had to. Furthermore
they did not invest their money to earn more.
Mr. Rodney is a high-income/low-net worth corporate manager.
Explain why he is described as having sold his financial independence.

Mr. Rodney spends his income towards $4200 monthly mortgage payment,
two leased vehicles, tuition bills, club dues, a vacation home, and taxes. Due to this
he is constantly in a debt which lowers his assets.
Why did Mr. W.W. Allan decline the gift of a Rolls-Royce?
He understood that he did not want the persona of a wealthy man and did not
want the luxury so that he did not need to fill himself with more and more of it. He
felt out of place accepting the vehicle as he explained that he couldnt take it
fishing and couldnt feel normal with it, so he declined it.
Define Economic Outpatient Care (EOC).
EOC is a term used to express when a wealthy parent provides money to an
adult child.
Upon learning his parents were donating their property to the local
private college, describe Jamess reaction.
In the book his stated reaction is Son of affluent couple screams, "That's my
property, too, and the college people can't come in (to my yard)."
Why was Jamess response predictable?
It is a predictable reaction because James has received his wealth from his
parents and views it as his own therefore did not want to give it away, thinking its
his.
As illustrated in the example of Henry & Josh, what is the
fundamental rule regarding wealth building? (Be specific.)
The fundamental rule is whatever your income, always live below your
means. This is so that you do not go into debt or rely on once a year bonus such as
Josh does with the $10,000 dollars. If you live below your means you can save more
money.
Why were sisters Sarah & Alice so different regarding wealth
accumulation?
According to the book its because Sarah was a type B wife. Alice spends
money and relies on the money from Papa whereas Sarah and her husband have a
simple budgeting plan.
What did Kens father tell him often? (Be specific.)
Emphasize your children's achievements, no matter how small, not their or
your symbols of success. Due to this Ken focuses on achievement.
Explain the root cause for the conflict between Mr. W & the residents
of the vacation condominiums. (HINT: Its not because of his dog.)
Mr. W. and many of the buyers of his condominium units have had a number
of disagreements. In several of the complexes where Mr. W. previously bought units,

his buyers passed so many restrictive covenants that Mr. W. was .uncomfortable
even spending vacation time in his condominiums.
How has your perception of millionaires changed?
After reading this it made me realize that anyone could be a millionaire and
we wouldnt know it. Just because someone isnt playing the part of a wealthy man
doesnt mean they are not! Throughout the book it states multiple times where
someone doesnt look the part they should be playing. Such as the man in Texas
who met up with his British partners. They searched his whole office with him
standing in front of them only to realize he is the man they need. Just because he
wasnt wearing the big hat doesnt mean he isnt he man.
Just because someone has lots of money doesnt mean they shouldnt
budget. There were multiple people who received more than others yet their net
worth was less because it was all disposable income. Rather than saving their
money or investing it they spent it all on looking like they were wealthy and
upholding an image. Due to this people earning less of an income had a higher net
value.
When I did my bank telling work there were many people who came in and
looked like they were poor. In reality they were making large deposits and had
healthy bank accounts with a large go-to-hell fund. I found this interesting because
it was a real life example of how people dont need to look wealthy to be wealthy,
and I think that is something most people forget.
What are the two (2) concepts you found most useful?
The two concepts I found most useful was big hat, no cattle and EOC. I
found big hat, no cattle useful because it displays our image of millionaires and how
it is not always true. I personally would rather look dirty and beat up with all the
money to back me rather than suit and tie with no money.
I found EOC helpful educationally because it shows how not everyone earns
their own wealth. Some of the millionaires are wealthy due to an inheritance or
residual income. Due to this it may spoil them and put thought like they are the
ones who earned it into their head.
Give a specific example of one small change you can make to
improve your financial wellbeing.
One small change I can associate into my everyday life is my budgeting. If I
were to budget myself better and not have as much disposable income I believe
that would help significantly. In the book it states almost everywhere the
importance of budgeting and how it can make you worth more than someone who
earns more than you.
It is sometimes difficult to properly budget due to all the bills you may have
or the money burning a hole in your pocket. That is why you must be smarter than
your money and urges. If you can overcome that you can be a more responsible
spender. If I am a more responsible spender then I can save so much more money.