Real millionaires rarely look like a million bucks(ZT)

Real millionaires rarely look like a million bucks Most Americans must choose between appearing rich and actually being rich, says author Thomas Stanley. Gregory Karp The (Allentown) Morning Call December 17, 2006 The Millionaire Next Door, a book that dashed our notions about whoAmerica's millionaires really are and how they spend their money,marked its 10th anniversary recently, and nobody noticed. No party. No10th-anniversary edition. Nothing. That's shocking for a runaway book that sold out its first printing inthree days, held a spot on The New York Times' best-seller list formore than three years and is hailed as a staple for any personalfinance book collection. The book by Thomas J. Stanley and William D. Danko, subtitled TheSurprising Secrets of America's Wealthy, was published Oct. 25, 1996.But the striking and profound findings revealed in that book a decadeago are as true today as they were then -- especially when it comes tospending money. The book showed that millionaires spend their money smarter than other people. They still do. Most important, the book showed that people with average, steady jobscan become millionaires over their lifetimes -- that most millionairesare made, not born. Indeed, 80 percent of millionaires arefirst-generation rich, the authors found. They are modest. In fact,they might live next door. The book's fundamental message about spending is this: You can lookwealthy or you can be wealthy. For most people, the choices aremutually exclusive. So, in honor of the 10-year anniversary of TheMillionaire Next Door, we caught up with Thomas Stanley. During a blunt conversation, Stanley talked about common spendingtraits of millionaires a decade ago and in his current research, to beexplained in his next book, which has the working title Looking Rich inAmerica. The wealthy know spending matters. Financial health is about earningand spending. Although earning a lot of money is correlated withwealth, it's not a perfect correlation. "The spending issue issignificant," Stanley said. "I believe very strongly that not everybodycan play great offense. In other words, not everybody can make $1million a year or even $100,000. The typical household in the UnitedStates makes under $50,000 a year. "Given that, you have to look at defense. To play great defense, youhave to know where all the money is going. And most people don't. Sothe first thing I would tell people is to account for every dime andnickel they've got and write it all down. You'd be shocked at how muchmoney people waste. It's ridiculous." They are thrifty. "There is still a wonderfully frugal group of peoplein America that we don't talk about, but they're out there," Stanleysaid. "The majority of them don't have a wine collection. They do servewine to guests, but the median value of a bottle was about $13, notexpensive stuff. "It's not an impressive lifestyle; it's just that they're not confused.The reason they don't have a second home isn't because they can'tafford it. It's just a hassle." Stanley's most recent research for his coming book is about brands thatwealthy people use. "There are a lot of millionaires buying stuff atWal-Mart. They don't have a problem with buying, maybe, socks orunderwear there or at a Costco or Sam's Club. Men's Wearhouse isselling them a lot of suits, I can tell you that," he said. "People think, 'If I wear a $900 suit, I'm going to look wealthy.' Theproblem is, if you wear a $900 suit and put the glitz on, you're notgoing to look wealthy, because wealthy people don't do that. "What I'm trying to tell people, especially young, impressionablepeople, is this ain't the way the world works. If you're looking atbeing happier by having more things, get a life." They are not deprived and miserable. "On a scale of happiness, they'requite happy," Stanley said. "In fact, the more wealth you have, thehigher your satisfaction." But their happiness comes not from materialthings but from achievement and being financially independent. It comesfrom satisfaction with their family and job. "There is absolutely no correlation between happiness and the brand ofcar you drive. It has nothing to do with it. What happens is before youbuy the Porsche, you'll think it will make you happy, but it doesn'twork that way. The guys wearing a Seiko watch or a Rolex or a Timexhave no difference" in happiness. They don't drive away wealth. The No. 1 make of car owned bymillionaires in 1996 was Ford. Today, it's Toyota, according toStanley's new study. Luxury brands do not top the list, and manymillionaires, 37 percent in 1996, bought used cars. "There's certainly something about buying used cars," Stanley said."Today, they're a little more likely to buy new cars. But what they'lldo is buy a $22,000 Toyota and keep it a long time." Stanley's research shows high-priced cars seem to be wealth-repellent."What's interesting about spending is that everybody thinks all themillionaires in America have BMWs. Even among the highest incomelevels, about 60 or 70 percent have never owned a BMW," he said. "Ithink BMW is a great car. I'm a car guy. But I won't buy one becausethere is a relationship between wealth and how much people spend forcars. There's no doubt about it. It's a significant relationship." They don't care about the Joneses. "In a lot of the surveys we've done,you find people making 200 grand a year, which is in the top 2 percentof American households, and they're not happy," Stanley said. "Thoseare the people who are living in neighborhoods where the median incomeis $300,000. That's the problem. I don't think people really understandthat. The people who try to keep up with the Joneses and ahead of theSmiths, well, they are the Smiths. They don't get it." The Morning Call is a Tribune Publishing newspaper in Allentown, Pa.E-mail Gregory Karp at [e-mail]. For additional discussionon spending wisely, see the Spending Smart blog athttp://blogs.mcall.com/spendingsmart