Nassim Taleb had a few words about how that book was misleading. The gist of it was that the people profiled became millionaires in spite of themselves, such as simply being in the right instrument at the right time, and not necessarily through prudent and expert financial machinations and that correspondingly, their ideas/lifestyle does not paint a picture of how millionaires think and live so as to emulate them, put their thinking/lifestyle on as one's own and become a millionaire, but rather, it depicts the common lifestyle traits these people share.
They were entrepreunereal. 80% had college degrees, most were not great students, they averaged C+ I think, many started their business while working for a corporation when they found out how bad the subcontractors were and they decided they could do better. The book originated because the guy that wrote it was tasked to find out how to pitch investments to them by a big name brokerage. They did not borrow to have the upper middle class lifestyle, they lived within their means, thus the title since most people borrow their way into their lifestyle. Max
Hehe I have an even better story. I was trying to explain the whole asset thing to my friend and pointing out how homes become liabilities. He refused to accept it citing his parents house which is an asset and has more than doubled in value. So I asked why dont they just sell it and get a cheaper one. Apparently the house was mortgaged to the max so they were stuck living there and paying it off. I think my point was made.
Sorry but this book straight out sucks. It is very boring, loaded with repetitive statistics. The moral of the book was to be cheap. Most of the subjects had like a mil or 2, but were living way below the means and did nothing but save save save. I do not understand the point of having money if you cannot use it. These are not real millionaires, just cheap and frugal people who do not understand how to enjoy money. In fact, it is as if they are almost afraid of spending money.
I think the point is that the path to financial independence, and that for me is what it is all about. It's not about having a million in the bank it's about answering to no one, the path is different for everyone. In fact the traditional path of going to school, get a master, work at Global Industries Inc. is really a path to slavery in IMHO. Our whole economic system is built on indentured servitude by means of credit and overconsumption. I've run into plenty of working class stiffs who make 300/500K a year but have enormous mortgages, no saving, debts up the ying/yang because the make good like all the other jonses so they can show they are executive material, marriage on the rocks, kids they never see and still answer to hireups like the first day as a rookie analyst. Once you get on that consumption treadmill it's very hard to get off. Then I know guys who are pretty conservative, worked their asses of in their early years, saved and INVESTED banked a few million, drive preowned bimmers and at 40 something work from 9-1 in their own office wearing sandals and shorts and then hit the Golf Course. Life is all about pay now or pay later. Those who are smart enough not to buy into the system can find a pretty quick path to a true independence even without an IPO or Lotto Ticket. Don't get me wrong I can appreciate the nicer things in life ( I am working on getting a Patek ) But never forget that new, shirt, car, watch was designed by some 20 something and is being marketed to you by another 20 something who just trying to make budget. "Richest Man in Babylon" should be required reading for children and should be handed to every incoming freshmen at University.
Mecro I have no idea how old you are but I can tell you if you're spending all your money, when you hit retirement, you'll wish you had what you spent. You don't have to hoard every dime, but be prudent. Pay now or pay later. Later is when you'll need it the most, to live life with some degree of dignity without having to go without medical care or whatever. When the bones get cold you'll want the freedom to go where its warm. And all throughout life, if you care about anyone besides yourself, you'll want to help someone in need. You can't help if you don't have it. Money is meant to be used. The question is are you a good steward of it or are you wasteful. Money can buy freedom to really enjoy life, or it can keep you in bondage. Patrick Henry said "give me liberty or give me death". That can be used in many different elements of life.
"Richest Man in Babylon" should be required reading for children and should be handed to every incoming freshmen at University. ABSOLUTELY !!!
I browsed "Rich Dad poor dad" and found it pretty disappointing. Maybe I had a negative bias after I read the Smart money article about the author. It came across as pretty simplistic and felt like it targets a rather unsophisticated audience. It seemed to be a popular book here in London alongside other get rich quick in real state books which reinforced my impression. I will have to check "Richest Man in Babylon"
I think "Rich Dad Poor Dad" is geared towards those who are financially ill informed. It was rather basic, hammering home some very basic principles, but still he explains why your personal residence is a liability instead of an asset. Having read that whole series, I can easily see why my generation and the previous generation pass on ignorant information...... we didn't know any better. "Richest Man in Babylon" is entertaining. I read it at least twice a year. There again the principles are basic, at least they BECOME basic. To someone who doesn't understand the idea of paying yourself first, and then what to do and not do with what you've saved, its eye opening. Its required reading for my kids, and its helped them a lot. In conversations, the principles are referred to many times.
That is not my point. The people in the book were living way below their means. Some of the "millionaires" were shopping in the same stores where people on welfare shop. My income multiplied recently but Im not spending ALL of it. I increase my standard of living expenses proportionally and allow myself more fun. But I do save a certain percentage. Thats usually what happens when people start making more money, they increase both the standard of living and savings. There is a difference between being economical and being cheap. The people in that book were not real millionaires.