Your Rich Neighbor.

Background
I have been an avid listener of Dave Ramsey since the summer of 2001. When I first started listening, I had recently graduated with a Master’s degree and gotten a killer job with a major aerospace company, and was “in the mood” to treat myself to something nice. Something nice, being a brand spanking new Lexus GS300.

Amazingly, the week before I actually went in to the dealer to seriously look at getting one, my mother had mentioned she had heard this guy on the radio talking about finances and thought I might be interested in hearing what he had to say. Long story short, I listened and really –heard- what he had to say, and didn’t buy that Lexus, and saved myself $50,000 and completely changed the way I look at money.

Over the years, I’ve heard Dave refer to this book, “The Millionaire Next Door” as a good book to read, but just have never made the time to read it. In November 2005, I went to Hawaii for a few weeks (to celebrate my grandparents’ 70th wedding anniversary), so I figured I might have some time to read a couple books and I picked this up.

Things you need to know and consider
First of all, there are a lot of tables and statistics (lingo) presented. You don’t have to formally know statistics, but it may help a little in deciphering what they are talking about in certain instances. Things like Median, Standard Deviation, and Tests for Significant Difference are thrown around on some of the tables.

Second. This book is not about the rich types you see portrayed on the entertainment news shows… the ones who live the high life and spend money like it grows on trees. As the title implies, this book is about people who live in your very town that are millionaires, but you probably don’t realize it. They live like middle class folks mostly, and hide their true net worth from everyone.

A very important distinction that is made in this book is, the difference between “appearing” to be wealthy and actually being wealthy. I know in my city, there are some nice subdivisions where the houses are brand new and selling for around $300,000 for 3,000 sq ft. I know first hand of several families who live in there where both parents are working, they drive new cars, and they are in debt up to their eyeballs. They have the look and act down pat. But in reality, they have no money at all.

Third. You are going to be challenged by reading this book. The way you think about your lifestyle and what is truly important will be called in to question. That is, if you are living a life of a “UAW” (Under Accumulator of Wealth)

What the book tells you
As I was going through the book, I thought to myself, “A lot of this seems to be common sense.” The common sense part being basically, “Spend less than you make and save some of it.” However, all you have to do is take a look around and see that a lot of us in America don’t live by this simple common sense thought.
The stories that Dr. Stanley presents in this book illustrate how with a little planning and thought, it truly is a simple process to become a millionaire. The main thing you’ll learn is that through wise saving and investing, over time (like 30 or 40 years) your money will grow to tremendous amounts thanks to a basic mathematical concept known as Compound Interest.

There is a smattering of useful discussions on how the wealthy teach their kids. So, if you have kids and want to teach them how to wisely handle money, there’s a chapter on that in here as well. Likewise they talk about economic outpatient care, where the parents give money to the kids and bail them out of financial mistakes. I think in a lot of cases that’s known as “enabling” in psychology terms.

To me the most fascinating thing in the entire book was the section where they discuss how wealthy people don’t buy new cars. This ties in to my first paragraphs where I mentioned that Dave Ramsey helped change my mind on that. Actually reading this book, and seeing the testimony of people who are indeed wealthy, and seeing that their cars are bought used 2 or 3 years old, really makes a lot of sense. At this point in my life, I’m 30 years old and can say, “I’ll never buy a new car.” Simply realizing that the average car loses about 30% of it’s value in the first couple years… makes me sick thinking about throwing all the money away on a new vehicle.

In the book towards the end, they state that “money isn’t everything.” I believe we all realize that fact. However, if you don’t have money, then you can’t do a lot of things in this world. The prime example is giving and blessing others. Not to be crude, but I don’t recall ever seeing any poor people blessing and giving. Do you? Not to say that those with less of a financial situation can’t do good or be blessings in other ways than giving money... but you see my point.

In summary, if you’re looking for a “get rich quick” scheme, reading this book isn’t going to help you with that. This is more of “get rich slow, through smart decision making.”

Conclusion
Overall I found this book to be a very enlightening read. Granted, it’s a little dry at times, but the information is good to know. If you listen to the Dave Ramsey show, you’ll find that a lot of the statistics he quotes on the show related to how wealthy people live and how they got there, it comes from this book.

Christmas is fast approaching along with New Year’s. If you have friends who are in “money trouble” and have open minds, this may be an excellent gift book to get for them this holiday season.

You know the definition of insane… someone who keeps doing the same things over and over and expects to get a different result. Apply that to money matters, and it’s easy to see that, if you’re in a financial mess you need to step back, take a look at how you got there, and begin to take different actions in your life to become financially more responsible and eventually, financially independent.

This book will help any one do that!