To Act Like the Rich, Be Frugal

**firefly615** · 12-27-2009, 07:56 PM

Here's a great article to read going into the new year.
Of course, we all know what this article says is true, but it's nice to be validated for our frugal ways!

http://customsites.yahoo.com/financi...-like-the-rich

**PlainCash4** · 12-27-2009, 08:24 PM

Great article.
Also i like to joke around about acting rich. for example i tell my friends ..The city bus is "my driver"....my paycheck is my "royalty check" and pizza ( rare occasions) is.."catering".

My new additions is my '91 buick is my "aston martin"....lol

**NcsstyBrdsIngnty** · 12-28-2009, 11:49 AM

Love the validation, hate the idea that Americans won't become more frugal or learn from this recession. I'm sure Mr. Stanley is much more educated in this than I am, but:

". . . .engineers. . . .have a tendency to live below their means and to be quite efficient in transforming their income into wealth."

From what I can tell, at my company this isn't very true.

Each have around 60k in student loan debt ($500/mo payment for 15yrs), about 10k in CC debt, and drive brand new (2008/2009) 30k cars on leases and loans. It cracks me up when one of them talks about not being able to make rent on their $650/mo one bedroom, on a 60-65k salary, while having sushi for lunch for the third time this week.

I call this the "I'm smart, so of course I make smart choices with money" problem.

**firefly615** · 12-28-2009, 01:12 PM

I have to agree NBI. I think some of this has to do with many (not all!) of the up and coming generation feeling entitled to have everything they want and to "live the dream" the minute they finish college. As if because they made it through college they are owed the lifestyle they see on tv or their parents provided for them after years of hard work.

If they were able to start off their lives on that sort of income making the right choices they could go so far!!

**pollypurebred39** · 12-28-2009, 01:37 PM

"Q: How do you recommend that people become prosperous if they would prefer to get off the consumer treadmill?

A: The simplest way is to live below one's means.

The typical household should be able to put away 5 percent of their annual income while they are in their 30s, 10 percent when they are in their 40s, and 20 percent when they are in their 50s.

This is also related to satisfaction with life overall. There is a highly significant correlation between satisfaction in life and living in a home and neighborhood which are easily affordable.

What is a good rule if you are determined to become wealthy?

The market value of the home you purchase should be less than three times your household's total annual realized income. Also, if you are not yet wealthy, but want to be someday, never purchase a home that requires a mortgage that is more than twice your household's annual realized income."

While we never did the top part well, hanging head & shuffling feet, we did do the second part. When we purchased our home our income for one year was almost the total amount of the house. Now our income is no where near that, wishing we would have had a crystal ball view in the future and paid off our house before my husband was standing on peoples stoops, a pizza in hand.

**NikoSan999** · 12-28-2009, 02:59 PM

Originally Posted by pollypurebred39

"Q: How do you recommend that people become prosperous if they would prefer to get off the consumer treadmill?

A: The simplest way is to live below one's means.

The typical household should be able to put away 5 percent of their annual income while they are in their 30s, 10 percent when they are in their 40s, and 20 percent when they are in their 50s.

This is also related to satisfaction with life overall. There is a highly significant correlation between satisfaction in life and living in a home and neighborhood which are easily affordable.

What is a good rule if you are determined to become wealthy?

The market value of the home you purchase should be less than three times your household's total annual realized income. Also, if you are not yet wealthy, but want to be someday, never purchase a home that requires a mortgage that is more than twice your household's annual realized income."

While we never did the top part well, hanging head & shuffling feet, we did do the second part. When we purchased our home our income for one year was almost the total amount of the house. Now our income is no where near that, wishing we would have had a crystal ball view in the future and paid off our house before my husband was standing on peoples stoops, a pizza in hand.

We kinda did the top part and did do the second part...HOWEVER...the last 14 months took all our top part and our house is NOW between 6 and 7 times more than annual income.

**pollypurebred39** · 12-28-2009, 03:14 PM

We had a small savings, some investments, our retirement fund and an EF, but we never we're calculated. We never sat down with our accountant and said this is where we want to be when we retire. As far as the house, my husband is making less then a tenth of what he made before, we've got way too much house for our income. That said it's only 750 sq. feet of living space and to rent out this way is more then our mortgage!

**NikoSan999** · 12-28-2009, 03:32 PM

Originally Posted by pollypurebred39

We had a small savings, some investments, our retirement fund and an EF, but we never we're calculated. We never sat down with our accountant and said this is where we want to be when we retire. As far as the house, my husband is making less then a tenth of what he made before, we've got way too much house for our income. That said it's only 750 sq. feet of living space and to rent out this way is more then our mortgage!

Hey, 750 square feet is 78 feet more than what we're looking at in the future, least for awhile. ( gotta insert giggle here cause I'm not gonna cry...at least not today )

It's a roof and a floor. We're golden. We're all lucky we aren't in a tent city. And no thanks to the banks or our illustrious government.