Cody Wright

Personal Finance
10/13/15

1. Explain the following four concepts in the millionaire next

door:
The big hat, not cattle expression means to me that just
because they have millions of dollars doesnt mean they are
going to exploit it on expensive, rare or even costly items or
even apparel. Like the books says one of the millionaires from
the study said they have a $5,000 watch and more than 1/10 of
the people on the study have spent less than $5,000 watch.
The Go To Hell Fund expression means that the millionaire has
enough money that if they didnt want to work or get fed up with
the business that they have enough money to live off their
income for 10-12 years since each of them save up to 15% of the
income they make.
PAW-is where a given individual is worth twice the value of the
given level of what is expected, Paws are high class, top
quartile, they know what is going on and are builders of wealth.
An example from the book us 635,500 dollars year has a net
worth of 1,270,000.
UAW-are individuals that live above their means, they are great
consumers and often time spend more than the PAWS do. They
are one half of the income or net worth of PAWS typically. So from
example above as well UAWS would have a income of 317,500
or less.
2. Provide short answers to the following four questions:
How is wasteful defined in the book? A lifestyle that is
marked by lavish spending and hyper consumption.
What is the cornerstone of wealth-Building? Being frugal.
Most people will never become wealthy in one
generation if they are married to people who are? Wasteful
Upon giving his wife $8 million of stock, from taking his
company public, what did his wife continue doing? She
expressed her thanks while continuing cutting food coupons out of the
newspaper for 25 and 50 cents off purchase and she has been that
way since the time they only owned a table to now where they own
much more and have much more money.

3. In the example of Theodore Teddy J friend and his parents

answer the following two questions:

List two reasons why Teddy is considered a UAW? Teddy is a

UAW because he has set his mind since he was young that he would
live a better life than his parents meaning he would have very nice
things like a nice car, house, and even shop at expensive stores.
Another example is by not investing in stocks or other financial
investments with his money he would rather have a nice car, dress
nice and have nicer thing than the other college students, than
saving money.
What was the message Teddys parents sent him about
consumer behavior? One earns to spend. When you need to spend
more, you need to earn more.
What was the small change Teddys parents could have
made that would put them in the millionaire category? They
could have invested small amounts periodically which become large
investments overtime. Example would be there cigarette money and
instead of spending money on the companys products they could
have invested and have money invested in the millions.

4. In the example of Mr. W.W Allan, answer the following two

questions

He never extended credit to people who exhibited the Big

Hat, No Cattle Philosophy. Why? In his mind, such people would
never be able to repay their debts. These types according to Mr. AllenSpend, Spend, spend, in anticipation of having money before they
even earn it.
Why did he decline the gift of a Rolls-Royce? As stated in the
book there is nothing the Rolls-Royce represents thats important in my
life. Nor would I want to change my life to go along with owning the
Rolls.

5. Regarding Economic Outpatient Care (EOC), answer the

following four questions:

Define Economic Outpatient Care (EOC)- Refers to the substance

Economic gifts and acts of kindness, some people give their kids and
grandkids.
Upon Learning his parents were donating their property to the
local private college, describe James reaction? He viewed his
parents donation to the private college a threat to his future income.
Why was James Response Predictable? Because he has received
substantial cash gifts from his parents throughout his adult life.
As illustrated in the example of Henry & Josh, what is the
fundamental rule regarding wealth building? Whatever your
income, always live below your means. This means to not spend all of

your money because you have it and dont go out and buy top of the
line clothing by what is necessary and convenient.
6. Regarding Affirmative Action, Family Style, answer the

Following two Questions:

Why were sisters Sarah & Alice so different regarding wealth

accumulation? The difference was Sarah strived to be successful and
independent as an example of a PAW and very conservative and
making her net worth much higher than that of her sister a house B
wife who supported her husband fully who was a consumer and spends
more than they have and leave it up to daddy to cover the bill (UAW).
What did Kens Father tell him often? I am not impressed with
what people own. But Im impressed by what they have achieved.

7. Explain how the Root cause for the conflict between Mr. & and
the residents of the vacation condominiums? I believe the Root
cause was nothing to do with the dog as your hint suggested but as the
people didnt like Mr. W and his family and were trying to come up with a way
to get rid or have the family move out from the condominiums because of the
judging condominiums owners thoughts of Blue Collar people, and Mr. W
made the right decision and move on his part getting his wife, family and dog
away from hostile and judgmental people.
8. Now that you have finished reading The Millionaire Next Door,

answer the following questions

How was your perception of millionaire changed? I think my

perception of the millionaires was changed by mostly the type of
aspect the easy to assume stereotypical Millionaire, it is easy to judge
and assume that every millionaire out there lives beyond their means
has the $5,000 watch and also luxury cars and a mansions beyond
means and from the surveys and storys of this book I actually
completely different conservative Millionaires what some are called
Blue Collar, because they dont live or look the part. But they are the
part that people assume they are not.
What are two concepts you found most useful? I found that the
Paw/UAW concepts were the most useful because it actually gives the
expression and changed my mind of Millionaires if what is thought to
be overspending, over-consuming UAWS and the PAWs are the
conservative double the net-worth of a UAW and invests their money
and time into long term investments and funds.

Reflective Writing

Learning outcome #1- I honestly think that this assignment has helped me
learn to think more critically & creatively when it comes to money and the
assumption of what the millionaire next door could look like and what that
person has really become and accomplished which to you may not look like

much because of what they appear to own, wear, have and personable items
but really they are PAWS- people who are conservative, live among their
means, invest in long term investments. They also do not have to have the
luxury car, house, Boat or anything of the sort they are living among means.
Learning outcome #2- I also think that this assignment has grown my
development and knowledge & skills to work with others in professional
Manner because it is like I said in the aspect of big hat, not cattle concept
where people dont look the part of owning a million dollar business, firm or
company, and could easily blow a major deal, transaction, or business
opportunity by insulting or looking at the owner or new business partner of
lower quality or as a UAW of the entrepreneurs in the world today.