Is The Key To Wealth Found In A Book?

by Millionaire Mommy Next Door on September 24, 2009

in Book Review,Success Principles

Personal Finance BooksI often scan the business and finance section at our bookstore for new book covers. Virtually every week, I find new titles. Row upon row of money books. How many ways can money be discussed? Which one holds the key to wealth and financial freedom? More importantly:

If the answer to wealth is revealed between the covers of the books proliferating in bookstores, why aren’t more people wealthy?

Take my mom, for instance. Despite her intelligence, upper-grad college education and vibrant energy, she struggled financially her entire life. She passed away a few years ago, penniless.

My mom was an avid reader. My inheritance consisted of boxes filled with books — including a large assortment on the topic of personal finance. If the cure to her financial woes was sitting on her bookshelf, why didn’t her money life thrive?

I am convinced that achieving wealth and financial freedom takes more than understanding how to make, save and invest money. Becoming wealthy is the product of factors more fundamental — and complex — than math.

I really didn’t do anything extraordinary to become a millionaire. No grand inventions, no Fortune 500 company, no big paychecks. I applied basic money principles and they worked. I ask myself, why did I apply these principles, but not my mom? What does it take?  Why have I achieved financial freedom while others have not?

While I do have a few explanatory thoughts, I struggle to answer this question succinctly.

I’ve been told more than a few times that I appear to think differently than the crowd. Is the key to my personal and financial success in these five words?

When I was 30, I told my husband, friends and family that I wanted to be financially free by forty.

“Yeah, yeah, and who doesn’t? Best of luck with that!”, they replied.

Undeterred, I studied money books and personal finance web sites and drafted a lifetime financial plan. When I shared my plan with my husband, he remarked skeptically, “If it’s that easy, why isn’t everyone doing it?”

My response to him was:

  1. they don’t know how to do it,
  2. they aren’t aware of the possibilities,
  3. they don’t want it bad enough, and/or
  4. they haven’t made the choice to do what it takes.

Today, I’d add two more reasons:

  1. they don’t have (or haven’t developed) the capacity to delay gratification, and/or
  2. they believe their personal life circumstances prohibit it.

What are the key factors that help you? Hinder you? Do the reasons I’ve outlined above speak to you? Why or why not? Please share your insights and experiences in the comments.

In my next post, I’ll share the very specific factors that I attribute to my own personal finance success.

photo credit: gaspi *your guide

{ 37 comments… read them below or add one }

MoneyEnergy September 24, 2009 at 5:00 pm

You put it well – how many ways can money be discussed? I think sometimes we all forget our initial motivation and keep looking outside ourselves for something we think we’re “missing” – maybe there’s something in *that* book I don’t know yet, etc… but really, all we need to know we probably already know after we’ve read a few of the key personal finance books – maybe there are at most ten for every person that will be really transformational and kick off a new mindset. After that – once you start noticing that there don’t seem to be any new books that do that for you – you’ve graduated to the next stage. Of course, you don’t have to wait to get to that point to start taking successful action! Since so many of these actions require patience and “one-step-at-a-time” determination anyway, might as well get started moving in the right direction now.

Reply

Pete from CA September 24, 2009 at 8:01 pm

I think you pretty much nailed it, although I think #1 and #2 are about the same, and #3, #4, and #5 are about the same again. So to summarize, I think it comes down to:

1) they don’t know how to do it
2) they don’t want it bad enough
3) they don’t believe it’s possible

On that last note let me mention that financial independence is in the eye of the beholder, meaning it’s relative to your expectations. Personally, I am a bit surprised that a family of 3 feel financially independent with only $1M in assets (as I understand that is or was your situation) but I am happy for you that you feel that way.

Reply

Elizabeth September 24, 2009 at 8:01 pm

A key element of “Making the choice to do what it takes” is the concept of delayed gratification, something we Americans have been bad at since the 80s. Another fear many people have is their personal life circumstances. These two factors keep many peoples’ dreams from ever becoming goals.

As an artist, I hear people say all that time that achievement is a result of luck or inherent talent, when it really comes down to hard work, awareness of possibilities, and perseverance. A touch of obsession helps, too.

Reply

Pete from CA September 24, 2009 at 8:21 pm

Elizabeth,

you may be right about achievement but that’s not the same thing as financial independence. I am a firm believer that dumb luck can lead to financial independence (without much of an achievement to speak of) just as often as hard work.

Exhibit A:

http://www.nytimes.com/2007/11/12/technology/12google.html

Reply

Millionaire Mommy Next Door September 24, 2009 at 10:37 pm

@Pete from CA: The 1st million takes care of our family’s basic long-term needs, but we haven’t stopped there. We haven’t dipped into our savings yet. Surprisingly, we have simplified our lifestyle to the point that our very part-time business still provides all of the money we need, so our net worth continues to grow. We’ve learned to live a rich life as do-ers, not have-ers.

I skimmed the article you linked to and from what I could tell, I think I disagree that her outcome was just “dumb luck”. She could have spent it all, right? In that case, she wouldn’t be financially free. Many of the lucky people who have won the lottery aren’t financially free today because of the choices they’ve made since then.

You sound like you have achieved financial freedom. What personal characteristics do you attribute to your success? How much money is “enough” for you?

Reply

Pete from CA September 25, 2009 at 12:28 am

“She could have spent it all, right?”

Right. So if you look at it that way, she did two things:

1) She acquired a few million bucks within a few years while working a job that pays $450 a week.
2) She did not spend it all on dumb things.

In my estimate #1 was luck and is bordering on impossible (I don’t believe I could do it) while #2 is skill and is a piece of cake (I most definitely believe I could do it). Therefore my assessment of her situation is that it was 99% dumb luck that contributed to her financial freedom.

I admit that this is not necessarily objective (maybe someone finds it a lot easier to pick the next Google than to live within the means provided by millions of dollars) but that’s the way I see it.

In any case, I think we can agree that (referring back to Elisabeth’s post) hard work, awareness of possibilities, and perseverance had nothing to do with her financial freedom.

I have not achieved financial freedom. If I believed that I could reliably generate 6-7% real return (meaning after inflation) per year then I would be close but I have a hard time believing that. You often cite 10% return on diversified stock investments as a measuring stick, but I think that is pre-inflation and works only on average over a very long time horizon, like 40 years.

My only personal characteristic that could play a role in my eventual financial independence is the ability to feel satisfied with relatively little (in more ways than you would imagine). This is the “I want it bad enough” part. Beyond that I also have a job that provides me with above average income but I attribute that more to luck than to my personal greatness (even though I am by far not as lucky as the Google masseuse). I feel that I am clearly lacking in the “know how to do it” and “believe it is possible” aspects.

As for how much is enough… I don’t really know. I think deep inside I feel that financial freedom, in the sense of amassing a big enough fortune to support me till the end of my life, is an illusion. Here is one of my favorite quotes: “Property may be destroyed and money may lose its purchasing power; but, character, health, knowledge and good judgment will always be in demand under all conditions.”

Reply

Debbie September 25, 2009 at 5:12 am

Think it all boils down to actually DOING something. It is true of all self help books that so many people read but never actually do. The current culture and I suppose the American Culture is instant gratification. Someone who wants to be financially independent has to delay gratification for awhile. Also strongly believe that one must always put something away in savings before anything else is paid. My Father always said I had to pay myself first for if I put the savings part at the bottom of the list of “to be paid” there will never be money and he was right.

Reply

Christina September 25, 2009 at 7:23 am

I agree with Debbie. It is in the doing that things happen. We can argue over the semantics of it all day but if you do not do what needs to be done then nothing great will happen.

It is hard not to want what others have. The latest cell phone, gaming system, and iPods are just a good example. If my house is not as nice as the neighbors I must be doing something wrong. It is crazy to me that we have so much and yet we want more. And at what cost.

Reply

kristi September 25, 2009 at 8:05 am

Honestly, I think it all comes down to the last item on your list: “They believe their personal life circumstances prohibit it” with BELIEVE being the key word. It reminds me of one of my favorite quotes – “Whether you think you can or think you cannot, you are right.” -Henry Ford

Sometimes that it is hard to do if you have unsupportive or negative people around you, but if you can make yourself believe you can do it, things around you will change for the better. It’s the law of attraction.

Reply

Jenn M September 25, 2009 at 8:41 am

I agree that it takes thinking unlike many others. When I mention that we are on the road to become debt-free many nod or say I wish I could. I agree that many think that, Well I would but I’ve got so & so… We are planning to adopt again and will save the amount of money necessary for fees. You’re right you must learn to delay gratification. SO MANY don’t want to.

Reply

Little House September 25, 2009 at 8:46 am

I agree with all of your points, especially the delay gratification. I think this hinders many people (my husband struggles with this one, but is getting better!) to becoming financially worry free.

Also, thinking differently than others (or outside the box) is something not everyone has learned to do, it’s kind of a higher-level thinking. I’m working on my teaching credential and right now there is a big stress towards getting students to think outside the box. In the past, there wasn’t that focus, so maybe many people haven’t learned how to do this.

I look forward to your book, your blog makes it seem so simple!
Little House

Reply

beverly September 25, 2009 at 9:52 am

the reason i read your blog is because you have DONE it and you have a sense of enough. if a million wasnt enough youd just end up on The Housewifes of CA (or wherever you live, i forgot). financial independence is also a state of mind, people often do it with no large amount of savings or investments, they just have the GUTS to do it. an Eeyore could NEVER do it. so i add guts to the list.

Reply

Tina B September 25, 2009 at 10:59 am

I think people have their comfort levels in life and without some active soul searching and pushing past them they can’t grow. I have noticed that in wealth (or lack of), cleanliness, fitness levels….I think it has to do with more then laziness, probably more to do with something in their upbringing. Some people learn behaviors from their parents and others rebel and do the oppisate because they do not want to be like them.

Some of us have been had it ingrained that rich people are evil (heard it all my life), life is against us, we are oppressed, we don’t have the power to accumulate wealth because of lack of something (education, rich family, knowledge, skills, luck). I am trying to reprogram my inner voice and it is a lot of work.

Reply

Cheryl September 25, 2009 at 1:23 pm

I can tell you that one of your biggest assets is your hubby being on board with you.

You’re similar. Share the same goal(s). You’re on the same page. You’ve got great support.

Not all of us have that.

You decided BEFORE having kids to make it happen. Great decision.

I’ll tell what you my own biggest struggles are. My hubby is NOT on board. He only half listens to whatever I say. My kids are teenagers. They’re going to be ANGRY at me if I suddenly decide to go 1800′s on them. My kids are not spoiled, I promise you that. All of their friends and people they know have MUCH more than they do. Give up cell phones & cable TV? Which I HATE paying for, BTW…they would NOT understand that. They have lives too. I already KNOW I’m gonna have to really wait until my youngest is 18.

THEN…I’m selling my house and living either in a mobile home somewhere (if my hubby is still w/ me), or I’m shacking up in a boarding room somewhere, and I’m BANKING EVERY CENT I CAN!!!!!!!!!!!!!!!!!!!!!! I’ll be eating Ramen Noodle Soup and drinking WATER! And my hubby would NEVER IN A MILLION YEARS live like that, even for a few years!

Some of us ARE prohibited. We choose that over being constantly MISERABLE!

Reply

JB September 25, 2009 at 2:34 pm

I think the last one, “they believe their personal life circumstances prohibit it”, is the most likely culprit. Since our belief systems dictate our actions, if they believe they are in circumstances preventing the accumulation of wealth, then their actions and behaviors will follow suit. They will behave as if they are destined to be poor, and thus they will BE poor.

Limiting beliefs are a huge part of why we are or aren’t where we want to be.

Reply

Laura September 25, 2009 at 4:54 pm

Jen – you are spot on when I think back on my life and how I conducted it. I am not like your mother (but then I have not had a devasting illness either) I have medical insurance and a long term medical illness policy if I do come into that devastating illness. Have I read either one of those policies and what they cover? Ah no. I remember one year I did read what my medical covered and found out it covered chiropractic Yea! I was glad that read it and took care of myself. (The little charts they have in the documentation is helpful…) But truly I have not read the policy again in like seven years and it always changes… because my co-pay goes up! This part of myself makes no sense to me – and yet I find I do not change…Thanks for the venting room.

Reply

morrison September 26, 2009 at 8:43 am

You can’t become a millionaire solely on reading wealth books. This is what worked for me:

1. reading books was a start. but after awhile, books get stale. you have to understand that much of the info you glean from books is already old news by the time you get to read it. same with magazines (already 30 days old) and you have to read internet articles with a grain of salt.
2. you must have the desire to be wealthy. i did. i dreamt about it day & night. once you have the desire, you are open to opportunities. which brings us to #3, which, IMHO, is THEE most important factor in the whole kaboodle.
3. you MUST be in the right place at the right time. in other words: luck plays a very important part in your wealth conception. think about it: the vanderbilts and rockerfellers made their money during the railroad and oil boon. if they started out today, could they re-achieve their wealth? the answer is NO. (can Bill Gates make his billions now?) same with MMND, she made her $$$ a few years back. can she replicate that same system today? no, she can not. I made my millions back in 2001. can i do it today with the same theory in place? absolutely not. there is a time and place for everything. sooooo-you must be aware of the trends, be self-educated, alert and want wealth more than anything.

you have to be agile enough to the changing environment around you and be quick enough to adjust and change. most of my wealth is in hard assets BUT there is an increasing danger to my cash holdings. for example, the G-20 are meeting right now as I write this and there is good concern that the global nations may demote the US dollar and take on a new world currency. if that happens, what will happen to my American cash holdings? my hard assets will probably increase in value but my cash holdings may deteriorate. what will be my next move in order for me to hold onto my much deserved wealth? is anyone else thinking as I am? right now, some US Treasury bonds are paying ZERO percent. most other cash investments (CD’s) are paying slightly above 1%. the odds of me pouring any cash into wall street is near improbable. i’m positioning myself to be in the right place at the right time so that i can get the biggest return from my buck. literally.

last and foremost:
#4 surround yourself with other millionaires. move into their neighborhoods, rub shoulders with them, listen to their conversations, watch what works for them, what doesn’t. learn wealth management instantly and in real-time.

Reply

swissmexms September 26, 2009 at 10:06 am

Dear Jen,

I continue to read your blog because it is chock-full of realistic advice, questions, and suggestions to achieve a quality life. Bottom-line, anyone visiting your website wants to know how to live within their means. No matter what their means are.
It is amazing how many people ascribe others financial savy to “luck”. Ok, to each his own opinion. But, if you were to question these same people you would note that they visualize, conceptualize, and strategize their lives around finance. So when the time comes, and if they hit it big, or save a great deal of money they are prepared. Prepared to jump on sales, deals, etc. I have met countless wealthy individuals, and I daresay not one of them is frivolous. That is the ones that still have their fortunes. Some can be labeled downright “cheap”, and those are the ones that can often lose big too.
So, I believe, and have demonstrated in my own life, several principles.
1. You don’t have to be born to wealth
2. You must have a POSITIVE image of financial success to meet goals.
3. No matter what comes along, (health issues, etc.) you must ALWAYS keep your financial goals in mind.
4. Hello! Someone makes fun of you for not having cable, a sports car, expensive dinners out, who cares?! You smile and…
5. Delay instant gratification!!!!!
6. If you cannot delay gratification and appreciate the abundance you already have (and yes, we all have it, read Victor Frankel’s -Mans Search for Meaning), then oh well, no money.
7. Do read, and question other wealthy, successful individuals.
8. Appreciate TODAY! Stop obsessing, start living!
9. Be creative! I cannot stress this enough. Think outside the box! I once worked at the Y.M.C.A. I didn’t have any money for clothes. Often large donations of clothes were brought in and I asked if I could choose some of the clothes for myself. BRAND NEW clothes were in the bag! Go around the different neighborhoods in nice communities and look at the curb on trash day. I “found” a perfectly good PIANO on the curb. I didn’t need it, but a friend did. I am always looking for opportunities. LOOK FOR OPPORTUNITIES. I have NEVER been disappointed. You’d be amazed at what life presents to you when you EXPECT opportunities.
10. If all the above “gross you out” or don’t jive with your lifestyle think about alternatives. Remember, the key to ANY success is to FOCUS!!!

Namaste Friends!

Reply

LC September 26, 2009 at 2:53 pm

Cheryl makes a good point. My family is not “on board” either. I have increased my income tenfold in the last decade, but the more I earn, the more they become irresponsible and look to be bailed out. Car payments not made, loan payments not made, rent payments not made.

Yes, “helping” them is a choice. I could refuse to bail them out. I could let the (adult) kid get evicted for not paying rent or get chased by creditors for student loan repayments. I could let hubby lose the car for not making payments because that cool tool in the garage was more important at the time. Then they’d tell me money is more important to me than they are.

Ability to delay gratification is imperative. Not just for anyone seeking to build wealth, but for their family, too.

Reply

Shelly September 26, 2009 at 10:36 pm

I think of finding ways to save and not spend money is like a fun game. I’ve been proud that I was able to save up over 6 months worth of living expenses over the last year. With the shaky economy I felt too exposed if I were to suddenly lose my job. Now my stress level has decreased and I’ve even started thinking about what I would really like to do for work, instead of what I’m doing now.
Sometimes it can be hard to not go with the crowd and buy those lattes and eat out everyday. But I sleep better at night knowing I have some security.
Much of the way I am was learned from my parents. They had both grown up poor and to this day still don’t live extravegantly. They retired in their mid-50′s and still live a fairly frugal lifestyle. Case in point: my mother has had the same ironing board for almost 40 years. She bought it at a thrift store when she was first married and it still works just fine.
I shop at thrift stores all the time whenever I need something, especially clothes or household items. If I can’t find what I need then I’ll go pay full retail. When there’s something I want, I’ll look at what it costs and then I’ll try to think of alternatives. Craigslist, ebay, garage sales — these sources are full of merchandise that people bought on a whim and paid full price for.
And my final secret. Money just seems to fall through my husband’s fingers and he’s a spender. Fortunately, I handle the finances and I let him believe that we have less money than we really do. :-)

Reply

Ron Reed September 27, 2009 at 3:38 am

Great article and great comments from all of you. Most merely saying the same thing in a slightly different way.

Brian Tracy was once asked, “If becoming wealthy in America is so easy, why aren’t more people financially independent?” Brians retort: “Because they haven’t yet made a decision to do so.”

I too believe that “luck” favors the one who that believes they can and has worked hard and prepared. Those who recieve wealth without earning it soon find themselves losing it– and very quickly I might add.

I see too many people today complaining about their lot-in-life but doing very little to change it. The formula is the same– for all. The process is simple but admittedly not easy.

There ARE some wonderful books on the market. For those that really want financial indepence– do some research, isolate the top six or so books (recommendations from others; Amazon rankings), and then read them with dilligence.

Subscribe to magazines (Smart Money), newsletters, blogs (such as millionairemommmy…) that teach and encourage financial independence.

Also when an opportunity affords itself, speak with others that have already accomplished what you want. Invite them to dinner, ask questions and take mental notes. Befriend them. Arrange to spend more of your free time with wealthy or wealth-bound people.

Learn how and begin thinking like– a millionaire. Books such as “As A Man Thinketh, Think and Grow Rich, The Riches Man In Babylon, The Magic of Thinking Big, PsychoCybernetics, Million Dollar Habits” are among a few great books that will help you in the area of mental transformation and outlook.

Remember that success leaves clues. If someone else has done it, then so can you. Belive that you can, follow a good solid plan, practice self-discipline and delayed-gratificaton and eventually you too will reach your goal.

Reply

Pete from CA September 27, 2009 at 10:56 am

@morrison

What will be your next move to hold on to your wealth?

And how do you figure out who is a millionaire vs. someone living in a fancy house and driving a luxury car while drowning in debt?

Reply

Ron Reed September 27, 2009 at 10:10 pm

@Pete@morrison

You’re certainly correct. There are numerous pretenders and counterfeiters. Some say they’re merely “faking it until the make it.” Even among the so-called experts, there exist wanna-be’s. I recently read a phrase attributed to Warren Buffet that stated “you don’t know who is swimming naked until the tide goes out.”

If you haven’t already done so, I suggest you read “The Millionaire Next Door.” People who simply have a million dollar net worth live differently from multi-millionaires and they in turn live differently from the “wanna-be’s.”

People who are already operating at the top of their game can offer sound, logical, practical advice. People who are not, simply repeat what they’ve heard or read (and hopefully what you’ve already read).

As Morrison stated, surround yourself with the people that you most want to be like (Although I wouldn’t necessarily recommend moving into a so-called wealthy neighborhood simply for the learning experience). This may be in person, but many times it can be via books, blogs, newsletters, seminars, audio programs. etc.

Sign up with a mastermind group that shares similiar goals and values as you do. Keep educating yourself. Due your due-diligence and work at it each day and the thing you desire will eventually come to pass.

Reply

morrison September 28, 2009 at 12:38 am

@Pete from CA
I have always lived in the richest neighborhoods. I lived, however, in the smallest house. All that mattered was location, location, location. My biggest dream was to one day live in The Hamptons, Long Island, NY. I used to drive up and down Dune Road in Southampton, with my young daughters and tell them we were going to live here one day. An opportunity arose in 1985 and by 1987 I was living in the Hamptons, full time, all year long, for 16 years.
I can tell, from just looking at someone, if their wealth is real or fake. Is their car leased? That’s a dead giveaway. Do they carry any cash or strictly pay for everything with credit? I always hung out with the real deals. When the stock market would take a dive-that separated the men from the boys. Eventually, you know who and where to be. I was ‘in’ because I lived there. ‘They’ don’t want any ‘outsiders’. Multi-Millionaires don’t put their secrets to pen.

In 2001 I sold my Hampton home at the almost top of my game. Another year or two would have cinched me a few more BUT I was able to retire on the equity, so I will not complain. I have again moved into another rich(er) neighborhood, but more established and not so one-time-only wannabes as the Hamptons can be famous for.

Truthfully, I’ll be quite honest with you, right now, in this economic environment, it’s going to be tough to hold onto your wealth. First off, we have an administration in office that is hell bent on wealth distribution. It may be, perhaps, not such a good time to increase the bottom line. I’m more centered on status quo. If you can hold the line, that may just be a good-enough accomplishment temporarily. So, technically, I’m in a wait-and-see mode. This might be a storm that has to be ridden out. I’m watching everything, living in the moment, looking at all the trends, and most importantly, I’m listening. My hard assets are slowly coming back up. It’s my liquid assets that I am most concerned about right now. I am not associating with people right now who are living below their means. Everybody is doing that! I’m with people who are traveling, eating out, buying things……..they have the cash, are not afraid to spend it and I want to know why? And how? There’s the key.

Reply

Todd R. Tresidder September 28, 2009 at 8:59 am

The starting point is commitment. You must be committed to building wealth and achieving financial freedom. You can’t just “want” it.

Commitment to financial freedom is what drives all the actions everyone else is describing in this post. It is what causes you to prioritize the actions that lead to financial freedom above all other actions.

Everyone is committed to something. With regards to money, most are committed to lifestyle and very few are committed to freedom – their results reflect that.

If you want to know your own commitment just look at your results. The results of your life will tell you with absolute accuracy what your commitment is.

When I work with a financial coaching client to achieve financial freedom, the starting point is always commitment. Without commitment to the goal, everything else is a waste of time.

BTW, a lot of people reading this blog will say “Duhhh Todd, I’m committed, that is why I read this blog and follow Jen’s wisdom.”

No! That is not commitment. That is being “interested.” Interest is an intellectual pursuit that does not cause the inconvenient but necessary actions to occur.

Only a deep commitment will drive you to overcome the hurdles and prioritize the necessary actions.

My two cents worth…

Reply

Anna September 28, 2009 at 9:51 am

I always enjoy your posts and I mostly agree with you. Concerning financial books and self help books just as diet books or exercise videos if you do not do anything you do not get any results.

However books and advise in general are very useful. I think sometimes people lack vision and long term planning. These elements are key to motivate people to delay gratification and value “things” for what they really are.

However luck does exist, my ex-brother-in-law has won 2 times the lottery (about 2 million after taxes), he always has been good managing his money and had wealth before the lottery, but 2 million are some help.

Reply

Todd R. Tresidder September 28, 2009 at 12:53 pm

Oops, I forgot to connect the comment about commitment above to this post…consider this an addendum to my previous comment…

The thing about commitment is you can’t get it from a book. It only comes from inside you. Books can provide education and information that might prompt a commitment, but ultimately, commitment is a uniquely internal process.

In other words, no you can’t build wealth from the info in books (IMHO). What books provide you is valuable additional tools for your “wealth building toolbox”. However, commitment provides the energy and focus to put those tools to good use.

I consider commitment the first step to becoming a successful wealth builder.

Hope that helps…

Reply

Jennysaho September 29, 2009 at 2:06 pm

I just have to say Jen that I have really enjoyed your blog over the past years. I also read alot of other personal finance blogs and listen to many finance and frugal living podcasts. My problem has always been that I never see these “opportunities” that everyone speaks of. Also I don’t know how to think “out of the box” nor do I think I have any skills that I could turn into a part time business. I’ve done pretty good with the being frugal. But I can never find a job that pays anymore than $12-15 per hour. I recently had a job that paid 16.5/hour with benefits. Just got laid off last month. The things I’ve done right are, I still live in a house with 6 other roommates, and I didn’t buy a new car. I didn’t even buy a new “used” car. I have the same savaged title car I have for years. So, I saved my money and I have living expenses for ten months. Also I get unemployment for six months, and so I will be able to save $600/month even while I”m on unemployment. Also, another good thing I’ve done is not have children nor get married. But I’ve never got that “big opportunity or idea” that everyone else seems to have had. I feel like I’ll always be living in the same communial house and driving a wreck car forever. I can delay gratification but I’m afraid I’ll have to delay it all the way to my deathbed. That doesn’t seem like a very fun life. How do I recognise opportunies?

Reply

Chad @ Sentient Money September 30, 2009 at 7:03 am

The two reasons you list that speak to me the most are:

1) they don’t have (or haven’t developed) the capacity to delay gratification, and/or
2) they believe their personal life circumstances prohibit it.

I would add two more to your list Jen:
- Most don’t actually want to be rich (similar to #3, but a different angle). I would argue that many people do not want the responsibility wealth brings and shun it. Of course, this isn’t a concious decision. Most people want to be led and having money usually puts you out in front in some way, shape, or form. Some people are peasants and some are kings.
- Most people are taught to be poor from a young age. Again this has parts that are similar to others and my one above. We are taught that a job is the way to go, and it may be, but it doesn’t have to be. We are taught that we need a new car every 4-5 years. We are taught that a 10% savings rate is just fine, and it is, for a wage slave. Etc.

Key factors that help me? The main two: control over my life and being “better” than others. I don’t actually think I’m better than other people who aren’t financially savy, but I do think I’m winning the game.

Hinder? The constant societal pressure to keep adding things to our lives. The cell phone is a good example. I really have no desire to have one, but my job and my social circle requires me to have one. Plus, I really don’t like being theoretically reachable 24 hours a day. Too many people expect you to be.

Reply

Carol September 30, 2009 at 1:51 pm

I agree with your list and would add “patience” to it. Learning the skills required to meet your personal definition of financial independence takes time, effort and reiteration. Refine goals, reduce costs, increase passive income. Repeat. It doesn’t happen overnight but it CAN happen if you have, as you say, belief and desire.

Reply

cognezans September 30, 2009 at 3:26 pm

I get a lot of Yeah-yeah-and-who-doesn’t-best-of-luck-with-that reply when I say I want my financial freedom by age 35. So, it was really refreshing and very much encouraging to read this post of yours today! Yes, you have said it right. Other people just don’t see the possibilities and would usually sabotage themselves by believing that financial freedom could not be achieved.

But here my contribution, I think that the route to financial success should be traveled with:
1. An unfailing belief that one day you’ll make it.
2. Constancy to purpose and patience.
3. Always believe on the good that money brings.
4. Definitely, learning to delay gratification.
5. Finally, knowing what you really need.

so millionaire mom, again, kudos to you! :)

Reply

Steven in Chicago October 1, 2009 at 9:48 am

@Jennysaho

“How do I recognise opportunities?”

One word: Education. I went back to college at 35 and got a degree in computer science. At the time, I didn’t mind being the oldest student in the classroom. After I graduated, I worked for the same company until I retired at age 57.

During my years with the company, I saved every penny I could and invested the money in dividend paying blue chip stocks. Twenty per cent of my paycheck before taxes became my “pension plan”. It adds up very quickly and before I knew it, I had an additional stream of income.

I kept it simple and I think that is the key. I never chased the latest hot stock and I never owned more than 20 stocks in my portfolio. I bought companies I understand and I listened to people like Warren Buffett.

Best of luck to you.

Reply

JennySaho October 1, 2009 at 4:51 pm

-Steven in Chigaco
I have a B.S. in Industrial Engineering. I haven’t ever even had an interview for an engineering job in the 6 years I’ve been out of school. I guess I could go back and get a masters. However, half the people I ask advice from think that getting more education would just be a waste of time. I’m so confused and overwhelmed trying to figure out what to do. I HAVE saved every penny that I can, either in IRA or my savings account. The problem is there is VERY little money coming my way that I can save. I’m completely discouraged, it’s very hard for me to just “believe” that I will make my goals. I’ve been believing and looking and looking and looking and working every crappy job I get. It seems that not every story has a happy ending, no matter what I do.

Reply

Chad @ Sentient Money October 2, 2009 at 7:35 pm

@JennySaho

I disagree with Steven a little. I’m not saying education can’t be the answer, but it is never ever the magic bullet. A bachelors degree doesn’t guarantee a job for anyone, as it’s like a high school diploma was 30 years ago. A masters doesn’t either, but it does increase your odds a little. It also massively increases your debt in most cases.

If you do want to get your masters you need to start searching for schools early, and I would look for any type of graduate assistant position you can find. Free school would go a long way toward financial freedom and most schools love to find graduate students to do the real work for the professors. It’s what I did for my masters.

Some other suggestions (I don’t know your situation, but these are just some thoughts):

- Move – Certain cities are doing less bad than others. Example: Washington, DC has a very low unemployment rate compared to the rest of the country. Yes, much of it is government, but those jobs support a lot of local industry. Another option is the old rust belt cities (not Detroit). Some of them like Pittsburgh are dirt cheap and never experienced the boom, so they missed the majority of the bust. Of course, it may take a while to find the job you want in a place like Pittsburgh, but the low end jobs are more tolerable due to the low cost of living. Of course, I don’t know where you live right now. I have lived in both, so this from personnel experience.

- Think about a complimentary masters degree instead of an industrial engineering masters. Maybe an MBA? Again, I don’t know your desires, so this might not work.

- There is also supposed to be free college courses provided by the UN. I haven’t looked into this, but it could be an option while you continue looking.

- Look into government.

- Learn a foreign language that is in demand in the corporate world (Mandarin, Hindi, Vietnamese, Portuguese, etc.). Rosetta Stone is supposed to work very well, but never used.

- Contact people in your field and potential professors in grad school and ask questions. It may spark an idea or they may think of you in 6 months when an opportunity crosses their desk. I was trying to get out of accounting (BS degree) and contacted professors in 2-3 different fields at major universities (Pitt, Princeton, etc.) and all responded quickly and with real responses. People love talking about what they do if they like it.

None of this may help, but I had nothing to do and thought I would dispense the little wisdom I have personally experienced in my life.

Reply

Millionaire Mommy Next Door October 2, 2009 at 7:50 pm

Great insights, everyone. Thank you for weighing in with your thoughts and experiences! You are awesome.

@JennySaho, I am a big proponent for networking through volunteering. Or negotiate an unpaid apprenticeship with someone doing what you’d like to do. In other words, make an offer too good for someone to pass up. Learn all you can from them, get your foot in the door, make connections. When a job comes up, you’ll know all the right skills and all the right people.

Reply

Millionaire Mommy Next Door October 2, 2009 at 7:58 pm

@JennySaho, forgot to respond to your question, “How do I recognize opportunities?” Next time you can’t find what you need or want, you just found one an opportunity.

One example: I interviewed a 29 yr old mommy today who earns millions in annual revenue selling non-toxic baby products online. She spotted the opportunity when she had her first baby and tried, unsuccessfully, to find BPH-free bottles in her local markets. She was told by the manufacturer that they were having distribution problems. She solved the problem, added a few more products, and now she’s wealthy.

Another mommy couldn’t find the type of shoes she wanted for her early walker. China had them, but not USA. She created line of similar shoes and now sells them through Nordstroms and earns millions.

Reply

Michael Harr @ TodayForward October 10, 2009 at 12:29 am

Solid post and a lot of great comments. One book that wasn’t mentioned that hits many of these points is ‘Think and Grow Rich’. This book has a fairly detailed treatise of the mentality that is required to accumulate wealth. Written in the 1930s, it is a classic book on personal finance and the drive/determination required to achieve results.

@JennySaho – It sounds like you haven’t really found anything that makes you want to jump out of bed and get cracking in the morning, so you might be better off reading books like 48 Days to the Work You Love or Earn What You’re Worth or even going to a career counselor in your area. Until you find something that genuinely gets you excited, you will find the road to wealth very difficult.

One of the key components of building wealth (without the aid of lottery/inheritence/dumb luck) is that you have to give in order to get. The giving part here is all about what you’re contributing to society (through your efforts) and what those efforts are worth. Take some time and think about all of the things that you can contribute and try to find something that gets you excited. Some people call it karma, some call it sowing and reaping, give it a name, but the principle is the same…you must give in order to get.

I wish you luck with your career and pursuit of wealth, and remember, the only anchors we have in life are our own.

Reply

Leave a Comment

{ 3 trackbacks }

Previous post:

Next post: