Hannah Edwards

4/18/17
Fin 1050
ePortfolio Assignment

Questions The Millionaire Next Door

After reading The Millionaire Next Door, Answer the following ten (10) questions
and compose your Reflective Writing.
1. Explain the following two (2) concepts addressed in The Millionaire
Next Door
Big Hat, No Cattle
From reading this book, I would assume that Big Hat, No Cattle
means someone who lives the life of luxury, or so they think. Buys
fancy cars, big houses, and many nice things, but doesnt have any
investments, savings, business stock, or anything but material things.
Go to Heck Fund
A go to heck fund is when someone has enough savings or investment
to tell their boss to Go to Heck, and they would still have enough
money to live happily without receiving another pay check for a very
long time.
2. In the example of Mr. Richards (PAW) & Mr. Ford (UAW), both men
are close in age & yearly income. Explain why Mr. Richards has
nearly five times the net worth of Mr. Ford. (Be specific).
Mr. Ford is an attorney and has a yearly income of $92,330, while Mr.
Richards is the proprietor of a mobile-home dealership and has a
yearly income of $90,200. Who do you think has a larger net worth?
With Mr. Ford making just barely more than Mr. Richards it seems
logical to assume that Mr. Fords net worth is just slightly more than Mr.
Richards. Surprisingly Richards has a net worth of $1.1 million while
Ford has a net worth of only $226,511. Why is that so? Because Ford is
an attorney, he feels the need to buy foreign luxury cars, join country
clubs, where high quality suits, and expensive Tiffany silverware and
serving trays to maintain his upper-middle-class lifestyle. Mr. Richards
the dealer doesnt need fancy cars or other fancy liabilities to maintain
the life of a dealer. He probably uses that money to invest, therefore he
is very financially stable.
3. Provide short answers for the following three (3) questions:
Most people will never become wealthy in one generation if
they are married to people who are ____________.
Wasteful. A couple cannot accumulate wealth if one of its members is
a hyperconsumer.
Upon giving his wife $8 million of stock, from taking his
company public, what did his wife continue doing?
She didnt react much at all. She said, thank you and continued cutting
out coupons from the paper. Even though their family was rich, they
didnt go out and buy unnecessary items. They still lived as though
they did when they were barely scraping by.
 Why would someone who is a millionaire need to budget?
While reading the book, I came across an amazing quote that is a
pretty good motivator for me.
Have you ever noticed those whom you see jogging day after day?
They are the ones who seem not to need to jog. But thats why they
are fit. Those who are wealthy work at staying financially fit. But those
who are not financially fit do little to change their status.
4. In the example of Theodore Teddy J. Friend and his parents,
answer the following two (2) questions:
The book describes Teddy as being possessed by
possessions. Explain this comment.
While Friend works very hard and for long hours, he isnt doing it to
become wealthier, he does it to possess more objects. He works to buy
6 fancy cars, an expensive house in and upscale neighborhood,
expensive fancy clothes. He doesnt invest just gets money to spend
money on useless crap.
What was the small change Teddys parents could have mad
that would put them in the millionaire category? (Be specific.)
While Mr. Friend was young his parents were poor, yet they still had
enough money to smoke 3 packs of cigarettes a day. Throughout their
46 years of smoking, they spent $30,000 more on cigarettes than they
did on their house. If they would have invested that money into a
cigarette company instead of spent it on cigarettes, after 46 years they
would have $2 million.
5. Mr. Rodney is a high-income/low-net worth corporate manager.
Explain why he is described as having sold his financial
independence.
While being the manager of some place, the company offered him
exchange 6% of his income into the companys stock. He denied this
offer by saying he couldnt afford it. Instead he used that money to
maintain his high-income/low-net worth life style.
6. Why did Mr. W. W. Allen decline the gift of a Rolls-Royce?
When he found out he was going to receive a fancy car he thought of
all the issues that would come with it. First off, he thought of how he
might get tempted to try and fit in with the assumed life style that
would come with the car. He would have to buy a fancy house and
some fancy clothes. It just wouldnt look right to have his Rolls-Royce
parked at the parking lot of his work. The main reason he denied it is
because he had to choose between his love of fishing or a Rolls-Royce.
Mr. Allen would regularly go fishing and put the fish he caught in the
back of his vehicle. If he were to accept the car, he wouldnt be able to
put the fish in the Rolls-Royce it would just ruin it, and it would look out
of place at the lake. He also realized he didnt need it. Therefor he
ended up choosing fishing over a Rolls-Royce.
7. Regarding Economic Outpatient Care (EOC), answer the following
four (4) questions:
 Explain this statement: The more dollars adult children
receive, the fewer they accumulate.
The more money adult children receive from their parents or
grandparents the more they rely on that extra income. They feel as
though they dont have to work as hard or as much to earn more
money because they keep receiving free money from their parents.
Because they didnt work hard for that extra money, they tend to be
wasteful and use it on things that they dont necessarily need and
might be better off without.
What is the likely financial outcome for Mary & Lamar once her
Mother passes away?
Because they have been getting that extra $15,000 each year for a
long time, they rely on it. They used it to maintain an upper-middle-
class life style. Without that extra money, it would be hard for them to
afford to keep their kids in private school, continue getting new cars
every year or two, or the fancy house they live in. If they dont end up
changing their habits they will go bankrupt and the struggle will be
real. If they would like to avoid such a tragedy, it is likely that they
must take their kids to public school, keep their cars longer than a
year, and should move to a cheaper, lower-class, neighborhood.
The parents of Ms. BPF were determined to give their daughter
every advantage. After they created an ideal environment
for her, what was the result?
Ms. BPFs parents provided her with everything she could possibly
need and much more. They gave he the money she needed to start a
business, continually gave her $60,000 a year, provided no living
expenses, etc. in the hopes to help her become financially
independent. But now, she is in her late thirties, lives with her parents,
has a business that isnt doing as it should, and she has many worries
in regards to getting her yearly income from her parent. She doesnt
know how use money efficiently and isnt as well off as those who
havent had help from their parents.
In the case of Laura (A Woman of Great Courage), explain the
primary message derived from her story?
In the story, it talks about how Laura was a school teacher and one day
she found a note from her husband that said, I have fell in love with
my secretary. Good luck with the kids. Her job as a teacher did not
pay her enough to support her and her children to maintain their
current life style. Even though she knew her parents had enough
money to support her she was determined to find a way to support
herself. She worked very hard and soon she found a job as real estate.
Within four months she was making more than she did in a good year
being a teacher. I really found it inspiring when Laura said, Its
amazing what you can do when you set your mind to it. Youll be
surprised how many sales calls you can make when you have no
alternative except to succeed.
8. Regarding Affirmative Action, Family Style, answer the following
three (3) questions:
In the example of sisters Ann & Beth, describe the
consequences to Beth & her husband from receiving EOC?
Throughout Beths married life, her parents have been supporting her
and giving her extra income. They continue to do so because they
dont think Beth and her husband can be able to maintain their life
style without the help of her parents. Each day they continue to remind
them. They call Beths husband a bozo and dont think he can take
care of his family. Beths parents have much more control over Beths
household than she does. They boss her husband around like a waiter
and use him as a handyman or chauffer. They have no respect for
Beths family because they are unable to provide for themselves.
Explain the concept weakening the weak.
Instead of encouraging someone to work towards becoming financially
independent, they just tear them down. Continually tell them they cant
support themselves. Continually tell them they will never amount to
anything.
Select one of the Rules for Affluent Parents & Productive
Children & explain why you think this rule is most important.
While looking through the Rules for Affluent Parents &Productive
Children, the one I found the most important #10. Tell Your children
that there are a lot of things more valuable than money. When I
think of the kind of children I want, I think of children that love each
other, are honest, and happy. I have never had the desire to become a
millionaire because my parents taught me what matters in life, having
people that love you, people you can trust, and being happy about it.
Just because Im not going to work towards becoming a millionaire,
doesnt mean I cant be financially independent. I have one sister that
has a life goal to become a millionaire. Once she does, then what? She
dies and all that hard work she put into becoming a millionaire has no
benefit to her anymore. I dont know how much her time will be spent
on just enjoying life. It scares me to think she is going to live a life full
of money and still not find happiness.
9. Explain the root cause for the conflict between Mr. W & the residents
of the vacation condominiums. (HINT: Its not because of his dog.)
I would assume it was because they didnt like the way he lived. As
said in the story, he lived a middle-class life, yet he had over $30
million. He didnt drive a fancy car, he didnt wear fancy clothes, or
even live as a millionaire should live. He just lived the life he wanted
to live, and the other residence didnt think he was good enough to be
there. So, they used the dog as an excuse to encourage him to leave.
10. Now that you have finished reading The
Millionaire Next Door, answer the following questions in a minimum
of three (3) paragraphs:
What are the two (2) concepts you found most useful? Explain
why.
 Give a specific example of one small change you can make to
improve your financial well-being.
While reading this book, the first concept that stood out to me
was the quote about the runner, Have you ever noticed those whom
you see jogging day after day? They are the ones who seem not to
need to jog. But thats why they are fit. Those who are wealthy work at
staying financially fit. But those who are not financially fit do little to
change their status. Through the last couple years, I had a goal to
save money, so I can afford to go to school. I havent been doing so
good. One thing I would tell myself for motivation is, You just have to
save now, then you can spend all the money you want. I thought that
once I had enough money I wouldnt need to save anymore. Now I
see that isnt the case. I need to save and continue saving.
Throughout my life, I have had the belief, All you need to do is
save your money, then one day you will be rich. Now after reading
this book, I find that isnt true in all cases. I thought I would have to
work hard and get a high paying job to become financially
independent. I now know that its okay if I dont earn $115,000 a year;
I can still work towards becoming financially independent. If I begin
investing, and investing in the right companies it can even be in my
near future. Just need to start doing that.
One small change I can make to improve my financial well-
being is saying no. No to invitation on going out to eat. No to getting
someone an expensive gift. No to buying the more expensive clothes.
No to buying more shoes than necessary, I can only wear one pair at a
time. This doesnt mean I cant enjoy those things. Just means I need
to limit them. I dont have to go to every party. I dont have to have the
nicest clothes. I have enough shows to last a couple of years. Im doing
okay now but, I just got married and lost a lot of my money to the
wedding and the house. If continue those habits, I wont have the
luxury of living a debt free life.
Reflective Writing:
I enjoyed doing this assignment. I especially enjoyed the book that was
chosen for this assignment. This assignment helped me to Think Critically and
Creatively about my future. It helped me go back to the book and more understand
what I was reading. Usually when I read a book I look at, attain some knowledge,
put down the book and go to the next one. In one of the questions it asks about Mr.
Friend. When I first read the story of Mr. Friend, it was hard for me to decipher the
times they were talking about Mr. Friend and when they were talking about his
parents. That was true for almost all the stories I went back and read again. I
usually have a hard time reading and thinking about whats going on in the story at
the same time. But, these questions helped me to more understand what was going
on in throughout the book.
Another thing it helped me do was to Develop Knowledge and Skills to Work
with Others in Professional Manner. As I stated before I have a sister that is money
hungry. I kept trying to tell her moneys not the most important thing in the world. It
seems impossible to get through to her sometimes. Reading this book helps me
realize not everyone thinks the same, and not everyone will see things that seem
obvious to others. I can understand more of why my sister thinks that way. I am now
able to professionally suggest this book to her, instead of getting into a heated
argument with people who will never agree.