Millionaire Next Door

I just finished re-reading The Millionaire Next Door. I’d put it in my top-10 list of favorite books.

The first chapter is online.

Here's an excerpt:

PORTRAIT OF A MILLIONAIRE

Who is the prototypical American millionaire? What would he tell you about himself?

* I am a fifty-seven-year-old male, married with three children. About 70 percent of us earn 80 percent or more of our household's income.

* About one in five of us is retired. About two-thirds of us who are working are self-employed. Interestingly, self-employed people make up less than 20 percent of the workers in America but account for two-thirds of the millionaires. Also, three out of four of us who are self-employed consider ourselves to be entrepreneurs. Most of the others are self-employed professionals, such as doctors and accountants.

* Many of the types of businesses we are in could be classified as dull/normal. We are welding contractors, auctioneers, rice farmers, owners of mobile-home parks, pest controllers, coin and stamp dealers, and paving contractors.

* About half of our wives do not work outside the home. The number-one occupation for those wives who do work is teacher.

* Our household's total annual realized (taxable) income is $131,000 (median, or 50th percentile), while our average income is $247,000. Note that those of us who have incomes in the $500,000 to $999,999 category (8 percent) and the $1 million or more category (5 percent) skew the average upward.

* We have an average household net worth of $3.7 million. Of course, some of our cohorts have accumulated much more. Nearly 6 percent have a net worth of over $10 million. Again, these people skew our average upward. The typical (median, or 50th percentile) millionaire household has a net worth of $1.6 million.

* On average, our total annual realized income is less than 7 percent of our wealth. In other words, we live on less than 7 percent of our wealth.

* Most of us (97 percent) are homeowners. We live in homes currently valued at an average of $320,000 [in 1997]. About half of us have occupied the same home for more than twenty years. Thus, we have enjoyed significant increases in the value of our homes.

* Most of us have never felt at a disadvantage because we did not receive any inheritance. About 80 percent of us are first-generation affluent.

* We live well below our means. We wear inexpensive suits and drive American-made cars. Only a minority of us drive the current-model-year automobile. Only a minority ever lease our motor vehicles.

* Most of our wives are planners and meticulous budgeters. In fact, only 18 percent of us disagreed with the statement "Charity begins at home." Most of us will tell you that our wives are a lot more conservative with money than we are.

* We have a "go-to-hell fund." In other words, we have accumulated enough wealth to live without working for ten or more years. Thus, those of us with a net worth of $1.6 million could live comfortably for more than twelve years. Actually, we could live longer than that, since we save at least 15 percent of our earned income.

* We have more than six and one-half times the level of wealth of our nonmillionaire neighbors, but, in our neighborhood, these nonmillionaires outnumber us better than three to one. Could it be that they have chosen to trade wealth for acquiring high-status material possessions?

* As a group, we are fairly well educated. Only about one in five are not college graduates. Many of us hold advanced degrees. Eighteen percent have master's degrees, 8 percent law degrees, 6 percent medical degrees, and 6 percent Ph.D.s.

* Only 17 percent of us or our spouses ever attended a private elementary or private high school. But 55 percent of our children are currently attending or have attended private schools.

* As a group, we believe that education is extremely important for ourselves, our children, and our grandchildren. We spend heavily for the educations of our offspring.

* About two-thirds of us work between forty-five and fifty-five hours per week.

* We are fastidious investors. On average, we invest nearly 20 percent of our household realized income each year. Most of us invest at least 15 percent. Seventy-nine percent of us have at least one account with a brokerage company. But we make our own investment decisions.

* We hold nearly 20 percent of our household's wealth in transaction securities such as publicly traded stocks and mutual funds. But we rarely sell our equity investments. We hold even more in our pension plans. On average, 21 percent of our household's wealth is in our private businesses.

* As a group, we feel that our daughters are financially handicapped in comparison to our sons. Men seem to make much more money even within the same occupational categories. That is why most of us would not hesitate to share some of our wealth with our daughters. Our sons, and men in general, have the deck of economic cards stacked in their favor. They should not need subsidies from their parents.

* What would be the ideal occupations for our sons and daughters? There are about 3.5 millionaire households like ours. Our numbers are growing much faster than the general population. Our kids should consider providing affluent people with some valuable service. Overall, our most trusted financial advisors are our accountants. Our attorneys are also very important. So we recommend accounting and law to our children. Tax advisors and estate-planning experts will be in big demand over the next fifteen years.

* I am a tightwad. That's one of the main reasons I completed a long questionnaire for a crispy $1 bill. Why else would I spend two or three hours being personally interviewed by these authors? They paid me $100, $200, or $250. Oh, they made me another offer--to donate in my name the money I earned for my interview to my favorite charity. But I told them, "I am my favorite charity."

Security Conference in San Francisco

Last week I went to a technical conference for work. After hours, Kristin, the girls, and I walked around a bit and ate out together. Kristin added a bunch of her photos from the trip on Facebook. Here are a couple pictures of the Microsoft booth at the conference.

Weight Loss Tip Number Two - Hot Tea at Night

I've lost a couple more pounds since my previous fitness post a couple weeks ago. Not bad considering I went out of town on a business trip. Those trips are the death of me because I go out to eat later in the evening than normal, and the food is paid for by my employer. That's a bad combination.

Besides eating more fruit, I've also made a rule for myself that I won't eat after dinner (this is a big deal for me considering that I used to eat a full plate of leftovers and dessert at night). A few times since I started this, I thought I was really going to die from hunger. ;)

I've started drinking some sweet hot tea in the evening, and that has helped. At least it's something! I does do a decent job of stopping my meanderings to the kitchen.

Jack Handy's Deep Thought o' the Day

I wish I had a dollar for every time I spent a dollar, because then, yahoo!, I’d have all my money back.

Eating More to Lose Weight

My brother and I made a pact that we each would get down to what we weighed in college, by this coming November. Last year at this time I was about 20 pounds over weight (I was traveling for work and eating in restaurants all the time). I've lost ten since then. To make the goal I've set, I need to lose another twelve.

I've tried a few tricks that have helped. One is that I force myself to eat a couple pieces of fruit in the middle of the day, even if I don't feel like it. It cuts my hunger at lunch and dinner and I don't eat as much. Another nice side-effect is that it rehydrates me.

We'll see if I make weight by November.

Fearing Sea Life

This morning at Newport Beach I paddled over the top of a large sea lion (his head was about the size of a man's) when I was turning around to catch a wave. Needless to say, I didn't catch the wave. I was proud of myself for not screaming like a girl, though. I'm not sure why, but I could tell from the way he dove below me that he was just playing (I had seen him lazily cruising through the surf about twenty minutes earlier). I just said "Whoooaaa!"

Dolphins and seals typically don't come inside the surf line. This guy, however, was going right up to the beach and diving below the waves. A girl on a longboard next to me saw him and immediately started paddling away and to the shore. The funny thing was that the sea lion started following her. Her friend laughed.

The Shaq

I thought this blog post by Ted Kluck, one of the writers of Why We're Not Emergent, was hilarious.

…Four years later in the midst of his Great Sadness, Shaq receives a suspicious note, apparently from God, but actually from Pat Riley, inviting him back to that shack, actually a 14,000 square foot Miami mansion, for a weekend. Against his better judgment he arrives at a gated community, in a Cadillac Escalade, and walks back into his darkest nightmare. A nightmare which includes the movies Blue Chips and Kazaam! as well as recordings of all of his many ill-fated rap albums including Shaq Diesel and You Can’t Stop the Reign. What he finds there will change Shaq’s world forever.

More Surfing

The weather has been making a turn for the better, so I surfed yesterday and today. Yesterday on the south side of the Huntington pier, and today on the north side.

Yesterday turned out to be fun, and sunny. The tide was high, but there was some northwest windswell, and some nicely shaped rights were coming through. There was a pack of guys on it, but I just moved a couple hundred yards down the beach and got a few by myself.

There were some really good young surfers out (getting ready for a contest on the south side that started today, I think). Some had really clean bottom turns (to setup their airs and reverses). It's interesting to me that a proper bottom turn (at speed, especially) is probably the most notable skill that separates the top 30% of surfers from the bottom 70%. Deep thoughts.

Another thing I saw were volleyball players getting ready to practice below the pier. I was jealous of the fact that it was 9am on a clear, warm Tuesday and they were just starting to loosen up for a few matches of volleyball. Don't they work?

Huntington Cliffs

I surfed this morning at Huntington. The waves were smallish, but it was nice out. I've been surfing at Cliffs quite a bit since we moved to Long Beach. It's the closest spot to my house (~20 minutes) that consistently has waves.

Berkshire Hathaway Shareholder Letter

Warren Buffett has some interesting nuggets of wisdom in his latest shareholder letter. I pulled out of few of these that I enjoyed:

“We’re certain, for example, that the economy will be in shambles throughout 2009 – and, for that matter, probably well beyond – but that conclusion does not tell us whether the stock market will rise or fall.”

“Amid this bad news, however, never forget that our country has faced far worse travails in the past. In the 20th Century alone, we dealt with two great wars (one of which we initially appeared to be losing); a dozen or so panics and recessions; virulent inflation that led to a 211⁄2% prime rate in 1980; and the Great Depression of the 1930s, when unemployment ranged between 15% and 25% for many years. America has had no shortage of challenges.

Without fail, however, we’ve overcome them. In the face of those obstacles – and many others – the real standard of living for Americans improved nearly seven-fold during the 1900s, while the Dow Jones Industrials rose from 66 to 11,497. Compare the record of this period with the dozens of centuries during which humans secured only tiny gains, if any, in how they lived. Though the path has not been smooth, our economic system has worked extraordinarily well over time. It has unleashed human potential as no other system has, and it will continue to do so. America’s best days lie ahead.”

“As predicted in last year’s report, the exceptional underwriting profits that our insurance businesses realized in 2007 were not repeated in 2008. Nevertheless, the insurance group delivered an underwriting gain for the sixth consecutive year. This means that our $58.5 billion of insurance 'float' – money that doesn’t belong to us but that we hold and invest for our own benefit – cost us less than zero. In fact, we were paid $2.8 billion to hold our float during 2008. Charlie and I find this enjoyable.”

Even More Recommended Books - Mark Driscoll

I haven't read most of these.

Dow Jones Industrial Average Falls to 1997 Levels

The Dow Jones fell to 7,115 today (a level not seen since 1997). I graduated from college in 1996. It would have been crazy to think at the time, with the dot-com and housing bubbles ahead of me, that I would have been better off investing in bonds or U.S. treasuries for the next ten-plus years, rather than the stock market.

Now, with all of those historic events (and the birth of my two daughters) behind me , my sentiment is neither overly pessimistic or optimistic. It will take us a while to work through all the issues of the past couple years, but I don't think the U.S. is going to become a socialist state overnight (people were saying the same thing during FDR's tenure, and the pendulum swung back to the right, eventually). I think the typical American on the street has a decent head on their shoulders (economically speaking) and thinks of the current stimulus packages as a short-term bitter pill (like using your credit card to get by for a month when you lose your job).

If I were recommending a course of action, I'd say to start funding your 401k again, if you stopped, or stick your money in an index fund. The goal is to buy low and sell high, right? We know that the Dow is lower now than any time in the past ten years. Ten years down the road, when Time has a huge dollar sign on the cover, like it did on June 13th, 2005, sell.

More Recommended Books - The Resurgence

The Resurgence web site (Mars Hill Church/Mark Driscoll) has a nice list of recommended books, including the ESV study Bible, and including books by a bunch of familiar "conservative evangelical" authors, including Piper, Sproul, Stott, and Packer.

I haven't read most of these books, and I wouldn't mind if you bought me one off the list. ;)

Skydrive

Windows Live is providing 25GB of free storage. It's basically a seamless part of your hotmail account. Just go to the following and sign in:
http://skydrive.live.com/

I think it's a nice feature.

Diesel vs. Hybrid

Here is an interesting article that explores some of the benefits and drawbacks of diesel cars.

Automakers do have reason to be optimistic about diesel's future. J. D. Power and Associates predicts that by the year 2015, they will slightly outsell hybrids, 1.5 million to 1.45 million. But to fulfill that prediction, diesels will have to overcome their environmentally unfriendly image. For decades, it was tough for car manufacturers to meet tighter U.S. emission standards for pollutants—specifically nitrogen oxides, or NOx. But technological advances have made some performance diesels like the Jetta run almost as cleanly as some unleaded cars.

For me, the idea of getting a diesel, in order to save money on fuel, is more intriguing than getting a hybrid. My reasons are that diesel technology has been around for a while, diesels are cheaper than hybrids, and driving a hybrid just seems so...metro.

Superbowl Sunday

I'm rooting for the Cardinals. I decided to go with them early this year because the Rams stank and I like Kurt Warner.

Here is a nice article from Jason Whitlock arguing that Kurt belongs in the Hall of Fame, whether or not his team wins this Sunday.

Warner is a winner because he has the intangible that matters the most when it comes to quarterback play. He's fearless in the pocket. He'll take a hit to deliver the football. He'll hold the ball and give his receivers time to get open. He's accurate under duress.

I've made this point before but it's worth repeating. A quarterback's toughness permeates the entire football team. When the 200-pound, pretty-boy QB is willing to approach the game with a linebacker's toughness, it puts pressure on the rest of the roster. Guys don't mistake aches and pains for injuries.

Through the Bible with Chuck Smith

I started listening to Chuck Smith's through-the-Bible series about a year ago. It's been rich. I went through the New Testament up to 2 Thessalonians. Recently I've been going through the Old Testament. I just listened to the Ruth sermon yesterday.

Chuck has a nice way of not getting in front of the text. He is covering large chunks of Scripture in each message, typically 5 to 10 chapters, so sometimes a big portion of a message is him just reading through a large passage. He also sprinkles each message with charming illustrations.

The biggest complaint I here about Chuck is that his sermons are slow and boring. But I think that once you get the idea that he wants to take you through the whole Bible, his teaching makes more sense. Not every portion of the Bible is going to hold you in rapt attention. However, once you begin to grasp big sections of Scripture and simple orthodox doctrines, it is sure to affect you in a positive way.

I think that these evening Bible studies, going through the entire Bible, are the lifeblood of his ministry at Calvary Chapel Costa Mesa.

Tebow

Yes, I'm on the Tim Tebow bandwagon. Too bad it's slowed down since the college football season ended. I came across a few links concerning him that I liked:

Here is the website for his family's missions organization.

Here is a video of him on a missions trip.

Another video with his family before he won the Heisman.

Britt Merrick's Recommended Reading List

I've been listening to some messages recently by Britt Merrick of Reality Carpinteria (a Calvary Chapel affiliate). I've really enjoyed them. He recently posted a list of recommended books.

I find it notable that he lists a lot of Reformed writers, including Spurgeon, Lloyd Jones, Piper, and Grudem, although from listening to Britt, his take on Calvinism is close to the traditional Calvary Chapel line of thinking (as is mine). You can read a little about that here. I see this as a positive more than anything, since I have a lot of affinity with the Calvinist teachers that I've listened to. As long as a guy is plain spoken and has a cross-centered ministry, I don't have any problem supporting him.

Another thing to note is that it doesn't look like Britt is keen on many new books. Most of the books in the list are by dead guys.

Carl Trueman

This article by Carl Trueman is really good. It cracked me up.

First, I am struck, by and large, with the coincidence of the concerns of the cultural Christian types and those of the middle class chatterati. Plenty of talk about Christian approaches to art, music, literature, sex, even international politics. All very interesting subjects, I'm sure, and the topics of many a chardonnay-fuelled discussion after a hearty dinner party. But what about subjects that aren't quite so interesting? Take street sweepers, for example; or hotel lavatory attendants; or workers on an umbrella manufacturing line. Why no conference on the Christian philosophy underlying these vital callings and trades? After all, imagine how gruesome a Christian conference on international poverty would be if it was held in the pouring rain in the Ritz Carlton hotel in some big city, but there were no road sweepers, lavatory attendants, and umbrella makers. Wet, dirty and unhygienic, I would guess.