The Millionaire Next Door- Questions

1.

Explainthefollowingtwo(2)conceptsaddressedinTheMillionaireNextDoor:
-Big Hat, No Cattle: This is someone who may have the lifestyle of somebody the
average person would assume is wealthy, however the lifestyle they live is ultimately
unsustainable.
-Go to Hell Fund: This concept covers the idea that one has accumulated enough wealth
to live without working for more than ten years.
2. In the examples of Mr. Richards (PAW) & Mr. Ford (UAW), both men are close in age &
yearly income. Explain why Mr. Richards has nearly five times the net worth of Mr. Ford.
-Mr. Richards has five times more wealth than Mr. Ford likely because of the difference
in occupation. Mr. Ford is an attorney meaning he needs to spend more money to display
his familys upper-class lifestyle, whereas Mr. Richards is in a less glamorous occupation
where he does not need to live above his means to display the perception of an upper end
lifestyle.
3. Provide short answers to the following three (3) questions:
a. Most people will never become wealthy in one generation if they are
married to people who are ______________.
Wasteful. The recipe to gaining wealth in a generation includes being
married to somebody who is not an extreme consumer, rather an
individual that is capable of living well below their means.
b.

Upon giving his wife $8 million of stock, from taking his company public,
what did his wife continue doing?
The wife let him know she was thankful as she continued to cut out
coupons from the local newspaper.

c. Why would someone who is a millionaire need to budget?

They would need a budget because it would allow them to track their
spending, saving, and investing which will help them maintain wealth.
Most of the time the reason they became millionaires in the first place is
because of budgeting and their frugal nature.
4. In the example of Theodore Teddy J. Friend and his parents, answer the following
questions.
a. The book describes Teddy as being possessed by possessions. Explain this
comment.
This comment describes somebody who works for materialistic
possessions and who is focused on economic success. This person likely
works ultimately to impress others and therefore he is possessed by
possessions.
b. What was the small change Teddys parents could have made that would
put them in the millionaire category? (Be specific.)
The Friends could have invested the money that they spent on cigarettes
into the stock market or purchase shares in a tobacco company. Over the
course of forty-six years they could have accumulated a tobacco profile
worth over 2 million dollars.
5. Mr. Rodney is a high-income/low-net worth corporate manager. Explain why he is
described as having sold his financial independence.
Mr. Rodney has sold his financial independence because he is on the earn and
consume treadmill. He lives above his means and is not accumulating any wealth
along the way. Because of these financial obligations he has sold his financial
independence.

6. Why did Mr. W.W. Allan decline the gift of a Rolls-Royce?

Mr. Allen declined the gift of a Rolls-Royce because he did not want to change his
lifestyle around a gift he had received. Nothing in his life represented that gift. He
liked to go fishing and put the fish he had caught in the backseat of his car and he did
not want to change his lifestyle to go along with the gift.
7. Regarding Economic Outpatient Care (EOC), answer the following four (4) questions:
a.

Explain why Economic Outpatient Care (EOC) can be harmful.

EOC can be harmful because in most cases it prevents the children from
becoming financially independent themselves which is really important if
you want to accumulate any wealth.

b. Explain this statement: The more dollars adult children receive, the fewer
they accumulate.
Receiving money in the form of EOC does not build the financial
independence necessary to accumulate wealth. So the saying holds true,
the more money adults receive from their parents the less likely they are to
accumulate any wealth.
c. What is the likely financial outcome for Mary & Lamar once her Mother
passes away?
Mary and Lamar are likely to be in some financial trouble when the
mother passes away. Even with a sizeable trust, their high consumption
lifestyle will burn through any money that is left behind for them very
quickly.
d. As illustrated in the example of Henry & Josh, what is the fundamental rule
regarding wealth building? (Be specific.)
Whatever your income, always live below your means.

8. Regarding Affirmative Action, Family Style, answer the following three (3) questions:

In the example of sisters Ann & Beth, describe the consequences to Beth & her
husband from receiving EOC?
Beth and especially her husband were in many ways puppets to Beths parents for
receiving EOC. Beth and her husband had a lifestyle that would not be sustained
without the EOC, therefore they are unable to break free and become independent.
Explain the concept weakening the weak.
This concept covers the idea that parents tend to put it in cruise control with their
stronger, more acheievment oriented child while guiding the weaker child every
step of the way while even making the decisions for the child therefore weakening
the weak.
What did Kens father tell him often? (Be specific.)
I am not impressed with what people own. But I'm impressed with what they
achieve. I'm proud to be a physician. Always strive to be the best in your field. ...
Don't chase money. If you are the best in your field, money will find you.
9. ExplaintherootcausefortheconflictbetweenMr.W&theresidentsofthevacation
condominiums.
The root cause of the conflict between Mr. W and the residents of these
condominiums is that Mr. W and these individuals are not similar in the ways they carry
themselves. Mr. W is wealthy however, he lives his life in a manner similar to middle
class individuals. This is different than the people living in the condominiums.
10. Now that you have finished reading The Millionaire Next Door, answer the following
three (3) questions in a minimum of three (3) paragraphs.
How has your perception of millionaires changed?
After reading the book my perception of millionaires has completely changed. I
find it interesting that most millionaires who will maintain that status over time may not
display their wealth with what they drive, where they live, or what they wear. It was
shocking to me because most of us have this idea that everyone who is a millionaire must
live and look a certain way, but as I learned more often than not this is not the case.
What are the two (2) concepts you found most useful?

The first concept I found to be most useful is the important idea that whatever
your income is, live below your means. This seems obvious however, it is important to
live in a way that allows you to accumulate wealth. The second concept I found to be
useful is similar to the first concept, the idea of the earn and consume treadmill. If I am
ever to be in an occupation where I am earning an above average salary it will be
important to remember to save and invest rather than earn and consume at a rapid rate.
Give a specific example of one small change you can make to improve your financial
well- being.
One small change I will make to improve my financial well-being is to make a
budget. Making a budget will allow me to track my spending and more responsibly spend
my money. Over time I believe that making a budget will allow me to accumulate wealth
and help to grow crucial financial habits that will last me an entire lifetime.

Reflective Writing:
This assignment has helped me to accomplish a couple of SLCCs learning
outcomes. Specifically, I feel that I have accomplished the ability to think critically and
creatively while completing this assignment. I have been able to stop and think about the
information I have been taking in and reflect on how this information impacts my life. I
have been able to draw connections and think critically by using specific ideas that I have
learned while reading this book and attempt to apply these strategies as best as I can.
Another learning outcome I have been able to accomplish by completing this
assignment is the development of computer and information literacy. I found this book
interesting enough that I decided to do some more research to gather more information on
some analysis of this book to help me better understand this material. This has
strengthened my computer literacy and has helped me to understand more thoroughly
many of the concepts that were discussed within the book.