How To Live Like a Millionaire

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how to live like a millionaireWhat comes to mind when you think of living like a millionaire?

Do you have visions of fast cars, beautiful people, sipping wine in the tropics, or living in a McMansion?

If you read this blog regularly, you’re probably not too surprised to find out that The Millionaire Next Door is very much unlike the stereotype many people have of wealthy people.

Live Like A Millionaire

Live Below Your Means

What this means, in the simplest terms, is that you Income Minus Expenses = Profit.  No matter how much you earn: if you are spending more than you make, you will be poor!

As I shared in an an earlier year-end review, I disappointed myself by spending more than I was earning.  Some unexpected expenses came up, and we were just not in the place to prevent them.

We’ve been many times before in our lives, thankfully, but I noticed a process taking place within me as I got further into debt.

I did not track my spending.  In other words, it was just easier to survive month to month and not actually take a look at some of the painful expenses I’d incurred over the previous months.  The only problem was, I was becoming more and more overwhelmed.  It was like the Dutch boy sticking his finger in the wall to prevent the bursting of the dam.  That could only last so long, and then the dam was going to burst.

Here’s the Solution!

Thankfully, after a several months, I realized I needed to take action!  Part of my paralysis was a feeling of being overwhelmed, like having a ball of fear eating at the pit of my stomach.

Another part of the paralysis was, frankly, pride and shame.  The two seem to go together sometimes.  We’re too proud to admit we were wrong.  And then, when we admit we may have made mistakes, we are often ashamed of having fallen short of our own personal values and expectations.  But, if we can acknowledge we were wrong and then reach out for expert help to make it right, great things can happen.

In my case, I reached out to a non-profit ministry called Crown.  It’s a Christian organization dedicated to helping people develop Biblical spending habits.  There are a several resources at their site.  In my case, I contacted a Crown financial counselor.  He was extremely knowledgeable, and helped me review my debts, income, and expenses.  Then, he helped me put together a spending plan that is going to help me carry out my goal of living with my means.

Pay Off Debt

Once you have set up your spending plan, make sure that you apportion a certain amount of your income toward paying down high interest debt, such as credit card debt, auto loans, personal loans.  The high interest on these debts is costing you thousands of dollars over the long run, while making the credit card and other loaning companies rich!

You may want to consider utilizing this free debt snowball calculator from Becoming a Debt Free Christian web page.

Start Saving Now!

If you work for a company, take advantage of the retirement match on the 401K programs they may offer.  The match is free money!  At the very least, you can put in the smallest percentage required for the company to make a match.  And if you automate your savings, as espoused by The Automatic Millionaire, you will be benefiting from the seventh wonder of the world called Compound Interest.

Practice the Secret of the Long Time Horizon Thinking

Brian Tracy, in Wealth Building Made Simple: Take Control and Build a Financial Fortress (Made for Success Collection), describes one of the key of the wealthy person versus the poor person.  The wealthy person has learned to practice long time horizon thinking.  In other words, the wealthy person is willing to forgo short-term perks for long-term benefits.

Think of a doctor.  A doctor sacrifices years of her life in the pursuit of the eight plus years of medical training required for her field.  Oftentimes she takes on a chunk of personal debt.  However, she knows that doctors are among the highest paid professionals, and she is willing to go through the discipline and sacrifice of long hours of study, while giving up an easier life.  She keeps the long-term prize in mind.

Many “wealthy appearing” people will spend more than they have in their budget to get that new car, a bigger home, or fancy clothes.  However, the millionaire next door knows the value of a dollar and is willing to think about how much a dollar invested at 10% over 42 years will bring her versus the dollars spent on depreciating assets or on possessions she cannot afford in the current moment.

In the interest of helping you acquire or  improve your financial budgeting, debt repayment, and investing skills, I recommend the following reading:

Blogs:

Erica.Biz 

Erica Douglass is a young woman in her 20’s who built her own company from scratch and then sold it for $1.1 million dollars a few years ago!  She now runs her own blog and shares her own insights on what it takes to become a millionaire by making money online.  She does not sugar coat any of the difficulties required to build a business through blood, sweat, and (sometimes) tears.  But at the same time, she shares her incredible successes, as she is on her way to making her second million dollars!

I think you’ll thoroughly enjoy this post she wrote called How To Manifest Large Sums of Money.

Get Rich Slowly

I like this blog because it’s NOT about tossing your money at the next infomercial or online guru who tells you that you can become a millionaire and work from home in your underwear in the course of 90 days! :)

J.D. Roth has built his blog slowly and painstakingly over a several years.  He and his staff of writers give loads of helpful advice to put you in the millionaire mindset as you re-vamp your financial attitudes and actions.  This article about How to Get Out of Debt is just one example of his superior articles.

Personal Finance Books

Debt-Free Living: Eliminating Debt in a New Economy, by Larry Burkett.

Larry Burkett is one of my all time favorite personal finance authors.  He has passed away, but he is one of the founders of the current Crown ministry I wrote about earlier in this article.  He has always been very balanced and frank about what it takes to handle your finances effectively.

The Sound Mind Investing Handbook – A Step-By-Step Guide To Managing Your Money From A Biblical Perspective, written by Austin Pryor.

Mr. Pryor was formerly a fee only financial planner with a very successful financial practice during the early 1990’s.  However, he felt a calling to write a newsletter for the ‘average person’ to communicate Biblical principles of paying down debt, saving money for emergencies, and investing money for long-term wealth.  I’ve been a subscriber to his newsletter, also called Sound Mind Investing, for years.

The Total Money Makeover: A Proven Plan for Financial Fitness, by David Ramsey.

You don’t have to go very far on the internet to find David Ramsey’s name.  He is a trusted source of advice for getting a balanced perspective on budgeting, paying down debt, and building wealth the right way.  And oh, by the way, I believe he’s a millionaire :)

The Richest Man in Babylon: Now Revised and Updated for the 21st Century, by George S. Clason.

This is far and away another of my favorite all time personal finance reads.  Like you, I love stories, and this teaches the lessons of building wealth in a great story about a camel trader in ancient Babylon.

I hope you enjoyed this review of the millionaire lifestyle!  What are some of your favorite personal finance and wealth building blogs, books, or articles?  I look forward to your comments!

photo credit: Jennifer Su
 

 

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Comments

  1. says

    More great advice Stephen – of all the information you’ve provided I think for me the most important key is awareness. It’s so darn easy to get caught up in the noise and business of life and next thing you know days, weeks and months go by and suddenly you’re broadsided by a situation that’s actually been building for some time.
    marquita herald recently posted…Is it Possible to Become Too Focused on Your Goals?My Profile

    • says

      Yes, Marquita: Awareness Plus the Discipline to track our spending and curtail it as needed is a key success factor to financial freedom.

  2. says

    Stephen…
    You advice is post on and your experience is very typical of many individuals. This was never so evident as when the economy was riding the wave. People spent, spent, spent and were not conservative with their hard-earned money. many got caught when the economy crashed.
    We need to be continually vigilant and careful when spending our money. Ask yourself this…do I REALLY need this? Is it that important? If you can name a minimum of 5 specific reasons that you should purchase the item, then it might be ok. We need to get back to old fashioned principles of money management. Thanks for the great article!
    Martin
    Martin Casper recently posted…Thinking Outside The CubeMy Profile

    • says

      Martin, thanks for the reminders. I like the advice of waiting thirty days before buying something you spot on impulse. Thirty days gives us plenty of time to separate our needs from our wants.

  3. says

    Hey Steve, very comprehensive blog post, chocked full of examples and information. That Richest Man in Babylon is a great classic. I think Albert Einstein said somewhere that the human mind has a very difficult time understanding the concept of delayed gratification, we seem to just have a hard time being able to grasp and live that way. Yet, the results of doing so can be incredible powerful, as we all know. Great post!
    Hans Schoff @ storm shelters recently posted…Installing an Underground LS-6 Lifesaver Storm ShelterMy Profile

    • says

      Hans, thanks for stopping by. You’re so right about delayed gratification. The delay is what makes the gratification so worthwhile, especially when it comes to saving up for something and paying cash, instead of charging it on the plastic.

  4. says

    I was reading on Erica and loved her story.

    I know people who make more than a million per year and still shop at Aldis….lol.

    The long term plan is far more logical than short term. I see a lot of people get caught up on it and can never get out of debt.
    Nile recently posted…Blogging Ain’t Perfect: Your Blog VoiceMy Profile

    • says

      Nile, I don’t doubt that some of the smartest people I know are Aldi shoppers, including you :) I also love to go there. Thanks for your input.

  5. says

    HI Stephen,

    I read the Millionaire next door. It gives an interesting perspective.

    My life experience tells me that real wealth is in the mind. Some people can go bankrupt several times in their lives and still live a lavish lifestyle, while some are very wealthy and never take money out of the bank, dieing in poverty.

    I am by no means perfect, but I find if I live my life following my intuition, while applying myself to the task at hand, it will works out. My piece of wisdom is that we get what is truly important to us. Unfortunately, for many, being debt free isn’t very important!
    John Gaydon recently posted…I Never Knew I Had So Many FriendsMy Profile

    • says

      John: I agree with you. I would also add that wealth is in the mind, followed by experience of repeated actions that we need to learn from. Unfortunately, some people keep going after wealth, but do not learn from their mistakes, and end up broke. The really successful ones keep going through ‘broke’ and finally make it. But the wisdom of coaches and wise people is a great tool to keep in our backpack on this journey.

  6. says

    Stephen,
    I heard once on the radio about a man that owed nothing but had one dollar, and was therefore richer than most of us. That’s very true and what you say reminded me of that story. Live within your means! Not to mention that a form of modern servitude (slavery, almost) is living to pay off mortgages, cars and credit debts. A life given a way to the creditors, in exchange of having nice things. With insight such as yours hopefully more of us (including me) wil heed the advice! Thanks for sharing.

    • says

      Mario, thanks for the great story. It’s not always what we earn, but what we keep after we’ve earned it, that keeps us free.

  7. says

    Are you talking to me?? I think so.. Although I know I often spend out sides my means, a push to be more careful about my spending is good to hear! Great post, and I will be sure to check out some of your suggestions. Thanks, Stephen
    Holly recently posted…Hooked Into Another Weight Loss Miracle?My Profile

    • says

      Holly, with both our body weight and our finances: keeping health in the forefront (whether it’s a healthy bank account or healthy body), plus tracking our inputs/outputs, will make a big difference. I’ve been using LoseIt to track everything I eat in the last 60 days, and I’m down 13 lbs!

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