on November 11, 2009
I read Thomas Stanley's The Millionaire Next Door three years ago and was thoroughly impressed by the insights and research. While reading it I wished the author had published a revised edition with updated numbers - the book was published in 1998. This book (Stop Acting Rich...) covers similar themes as the book I previously mentioned. However, it has updated numbers and includes insights gained from the financial crises of 2008-2009.
The central theme of this book is that there is a difference between those that are genuinely rich and those that act like they are rich. This book details the differences between these two groups of people - what they wear, drive, eat, drink, etc. These differences, presented throughout the book in the form of several tables and lists, are backed by empirical data that are drawn from the author's extensive research on the affluent.
We live in a culture of hyperconsumerism. It is far easier to act rich than to become truly rich. All we have to do is to buy the luxury goods/services that we think the rich buy and we get the feeling that we are rich. But this kind of excessive consumerism is detrimental to our net worth. The author explains that most rich people become wealthy and stay that way by being frugal and by being investment oriented as opposed to consumption oriented. As for wealth and happiness he warns, "those who think that acting rich must be predicated on hyperconsumerism are likely to end up on the short side of both the wealth and happiness scales".
Throughout the book many myths about the rich are dispelled. Their consumption habits are described and compared with those of the pretenders. What brands of shoes, suits, watches, etc do they wear? What wines and spirits do they consume? What motor vehicles do they drive? Where do they shop? And how much do they pay for the goods listed above? The insights are illuminating and thought provoking.
During the financial crisis of 2008-2009, many articles were published regarding the benefits of frugality and the dangers of excessive consumption. In many ways the root of this crisis (sometimes referred to as the Credit Crisis) was excessive borrowing and consumption. I share the author's belief that as soon as the economy improves, people will resume their spendthrift ways. This is most unfortunate since it could lead to a repeat of the crisis we just experienced.
Bottom line - I highly recommend this book as the single best personal finance book I have read. You cannot save the whole of society from this disease of hyperconsumerism. But by educating yourself, you can simplify your lifestyle so that you can be truly rich as opposed to just acting like you are rich.
on September 28, 2009
I'm a big plan of Tom Stanley's research and books. I first encountered Stanley at a trust conference many years ago, and I've read and recommended his books to dozens of clients and prospects. His insights are helpful and entertaining.
His newest book, Stop Acting Rich: And Start Living Like A Real Millionaire, reveals the differences between what we say and what we do. He chronicles the spending patterns of genuinely rich people, and the lifestyles they enjoy. It's interesting, because there are two groups of people with serious money: the glittering rich (think Donald Trump or Bill Gates) and the millionaires next door. And, as you'd guess, they consume differently.
Spending by the glittering rich, well, glitters. These are the few folks with so much money that spending really doesn't matter. They own multiple cars, multiple timepieces, and they tend to entertain lavishly. We all know who they are and they set a remarkable standard for living.
Other rich people are remarkable for differing reasons. As Stanley has recorded previously, they stand out for their modesty and good sense. These millionaires drive Toyotas, wear Seiko watches, and surround themselves with value-oriented merchandise. We know who these neighbors are, too, but we probably don't realize how financially successful they truly are. They set a different kind of standard.
Here's the paradox of this book. Almost everyone else (and that's a huge chunk of our society) dwells in yet another culture. This is the culture of false wealth. Where looking rich is more important than being rich. It's the world of luxury goods sold to high-income buyers. But, sadly, that spending pattern yields no genuine wealth. The simple act of buying those goods, by itself, is financially counterproductive.
These are residents of mini-mansion neighborhoods. And owners of luxury automobiles and Rolex watches. They send their children to private schools and belong to expensive country clubs. They buy Brooks Brothers suits and shop at exclusive department stores. They are glittering rich wannabes, and they spend most of their income on a prestige lifestyle. There's nothing left for saving.
The depressing truth is this book won't change much. Most of us would rather look rich than be rich. We like those luxury goods and that luxury lifestyle, even if we can't afford them. We can see how sensible living might bring stability and success. We know Tom's right, but we don't want to live in sensible neighborhoods or drive sensible cars or wear sensible clothes.
That's the paradox of Stop Acting Rich. We don't want to.
on January 23, 2010
I absolutely adored "The Millionaire Next Door" and loaned my copy out regularly. The message of that book was spot-on and there were mounds of research to back it up. I was brought up with depression-era parents who were value-oriented and frugal. They didn't do without and splurged on things that were important to them but didn't waste a dime. I can remember going out to eat and not being able to order a cheeseburger and had to order a hamburger because the cheese cost 5 cents extra and that wasn't worth it. Cars were a means of transportation and were driven until they became undependable. The cars were also ordered without radios since they didn't listen to the radio when they drove, so why pay for something you weren't going to use?
As an adult I have largely maintained the basic philosophy of not worrying about what other people think of you and spending money based upon doing what makes me and my family happy. I have had friends who drove the BMW, that had the huge house, that took the elaborate vacations (philosophy they lived by was that if you can make the payment, you could afford it). Now that I am in my late 40's and time as moved forward, many of those same friends have filed bankruptcy, had to sell the house due to drop in income, etc. and several are having a hard time making it with the current economy. Saving was considered boring and I was actually ridiculed for not spending more money by one friend who eventually filed bankruptcy. Even after all of that, it seems that most people don't really learn their lesson. As soon as they are able, the spending on luxuries ramps back up, little shoring up of savings is done and they are no better off than they were before.
The series of books by Thomas Stanley really hits the nail on the head with who is truly wealthy (largely defined as assets of $1,000,000 or more) and those who are spending it as fast as it comes in so that they can live what they perceive to be the lifestyle of the "rich". What he started in that first book is continued on throughout his other books including this latest one "Stop Acting Rich ... and Start Living Like a Real Millionaire." I would love to make all these books required reading for college students right before they enter the world of work. It would be a real eye-opener for many of them and the ones that "get it" could be saved a lot of financial mistakes.
My bottom line on this particular book:
1) Holds a mirror up to the reader's face to take a good, hard look at the financial decisions being made
2) Pokes holes in the perception that spending money and buying things make you happy
3) Shatters the perception that people who are "rich" spend lavish amounts of money on luxury goods including cars, homes and other things to impress the people around them.
4) If the reader learns nothing else but the phrase "Big Hat, No Cattle" it's worth it.
5) On the negative side - it is pretty repetitive at times particularly when large amounts of time is spent on particular items - for example, the price of wine purchased and the number of bottles in the home
Many people won't like the message - talk about an "inconvenient truth" -- but all of us should listen.
on November 3, 2009
I looked forward to reading "Stop Acting Rich" but I found it to be too repetitive. Although the book is 200+ pages, I felt as though the first chapter covered the ultimate message and the remainder of the book only served to reiterate the concepts without significantly furthering them. Sure, some examples and data in later chapters further reinforced the message but one could easily get the message within the first few pages, skip the rest of the book, and still understand the point that less consumption, decreased spending, and more frugal living is more likely to help you gain wealth than buying fancy cars, expensive clothes, and enormous homes. I liked the book but felt a bit short-changed when I found the chapters to be so repetitive.
on December 6, 2009
I have read and enjoyed a few of the Stanley books. This one is as good as all his others. Reading books like this will help keep you from falling into the consumptive lifestyle. My wife and I own a small business that I started. We have a net worth of about $4 million, of which about $2 million is in cash and stocks. We have no debt. We give 10% to charity each year. I grew up on welfare, my wife not much better. We live below our means, drive Honda cars and have a $500k house in a MN suburb. We have maybe 20 years or so before retirement. I worked 100 hour weeks for years on end. I'm in no way trying to brag or be arrogant. If you can live below your means, save religiously, not succumb to our consumer oriented society, and give to charity, I think you have a recipe to easily be a millionaire someday. I'd like to retire with $10 million. If I don't make it, that's ok because I'm already so far away from those 18 years of welfare that I know I'll never be back there---ever.
on December 20, 2009
I found Stop Acting Rich to be repetitive and often tedious, and an overall disappointment. If you have already read The Millionaire Next Door then there is little reason to purchase this book. The message is the same, but the names of his subjects have become annoyingly childish such as Anna After, Barbara Before, Mr. Multipliski, and Author Grapes. This may sound like I am nit picking the work, but I found these names to be ridiculous and difficult to take seriously.
I do agree with Stanley's underlying message that most American's will sadly spend their lives trying to keep up with the Joneses, and never really get ahead. "More than $70 trillion in realizes or reported income was generated by US households between 1997 and 2006, yet only 3.5% of these households were in the millionaire category". I also believe frugality is an important tool for anyone who wishes to achieve financial freedom. However, I find some of Stanley's statistics very difficult to believe, and question their accuracy. I think that many of the statistics used in this book came from his originally research prior to the 1996 release of the millionaire next door. He does suggest that he has conducted more recent survey's to confirm his original findings, but many of the numbers feel more accurate in the early 1990's than in 2009. I also question Stanley's biases in interpreting the results as well.
I believe in a balanced lifestyle, which includes living below your means. However, extreme frugality and an obsessive focus on achieving financial success can be equally as damaging to ones life as is hyper consumption. Stanley's choice to portray Joe DiMaggio as a financial icon, who found happiness without having to spend on consumer goods was a poor choice. Joe DiMaggio actually lived a very sad life filled with few friends and little family. He was more focused on money than he was family and friends. His only son was a homeless wanderer who Joe was estranged from. The fact that Joe DiMaggio managed to save 45 million dollars is irrelevant. This is an example of how Stanly often twists the facts in order to reinforce his beliefs. Stop Acting Rich is certainly not Dr. Thomas Stanley's best work. I would only recommend this book, if you are a die-hard Stanley fan looking for further analysis into the millionaire lifestyle originally portrayed in The Millionaire Next Door.
on December 1, 2009
Dr. Stanely's most recent research and newest book..."Stop Acting Rich..." is wonderful.
It is meant to open the eyes of those of you with leashed BMW's and Patek watches who have forgotten that a car is for transportation, a watch is to tell time and real wealth is to take care of you and your family (at least the deserving members) for multiple generations.
No one has done the research like Dr. Stanley. No one can translate that academic research into prose that can help people develop a vision for their own financial futures.
Dr. Stanley doesn't pretend to be an investment guru, nor does he fancy himself a stock picker. Rather he holds a mirror in front of the truly wealthy and allows us all a glimpse into what they see reflected of themselves.
They don't try to impress anyone, they simply are impressive. They don't try to "Keep up with the Joneses"..they are the Joneses that everyone should attempt to keep up with.
Read Dr. Stanley's newest book only if you have the courage to do what the title suggests.
on September 18, 2009
I must admit that I was quite intrigued by this title - I wasn't really aware that some people were "acting rich" and I could not really understand what the difference was.
In Stop Acting Rich, author Stanley takes an extremely interesting look at so-called "rich" and the many, many differences that exist between people who are truly millionaires and those who just want to look like they are.
I guess I was a little naive before reading this book and I have to say that the author does a great job of showing the difference between the two very distinct mentalities. I was quite surprised at some of the statistiques quoted in the book - especially about housing and how millionaires view their homes and their new worth.
Very educational and quite fascinating.
on August 19, 2010
I was really excited to read this, since for the first time in my life I have money to save and hopefully grow. But I was sadly disappointed. There are some very good points. Here are the most useful points of the book, and really sums up the author's point:
1) There are very rich people who can spend whatever they want and never put a dent in their wealth. These are multi-millionaires and they buy all kinds of crazy things, like Louis Vuitton bags, Ferrari's, Rolex watches, private jets, Grey Goose, mansions, etc. They can afford it because they are rich enough.
2) This is the minority of millionaires, because most millionaires are not this rich. These millionaires, however, only spend like this because they can afford to financially and likely didn't spend $$ like this before they were this rich.
3) Many people with high incomes (and some people without) buy the same status symbols that the very rich people buy. It makes them feel better about themselves to wear things, live in places or own things that make them appear to other people that they are very rich. They may have a high income, but a majority of their money is being spent on maintaining this facade lifestyle that makes them look rich to others. In reality, they are not building their wealth or becoming rich. They are living above their means because it makes them feel validated and part of this exclusive rich club.
4) Most millionaires got this way by saving their money, investing wisely and living below their means. Many continue to live below their means after they are millionaires. This is how to become wealthy.
The main flaw of the book is it is repetitive and not organized in a way that gets straight to the point. I don't need to know what % of millionaires drive Toyotas AND how much they spend on an average dinner AND which watches they buy AND which neighborhoods they live in, etc, etc, etc. Each chapter is divided into another "status symbol" that most millionaires do not buy and each chapter makes the same exact point over and over again. This made it a pain to get through.
The most important thing I learned from this book is that status symbols don't really impress other people and no matter how rich you look, its not going to actually make you rich. I do think people fool themselves into thinking that these status symbols are really just better quality and that they make them happy.
I see examples all the time in my real life. My friend who has four designer bags but needs more. My old boss who came home with bags full of clothes from Nordstrom at least 2-3x/week. My current boss who makes 2x more than I make, and yet has trouble making ends meet (he once leased a land rover and rents in the most expensive part of the city), while I am able to save money on half his salary.
The one big missing piece of the puzzle, which is perhaps beyond the scope of this book, is that we are seduced not only by the lifestyles of the rich, but by advertising. The super-rich are glamorized and it looks sexy. This book doesn't really address that issue too much, but I think its the core of the overspending, hyperconsumerism culture that exists today.
on June 28, 2010
I can sum up the entire contents of this book in one line... If you want to live like the millionaire next door, live in a house that is within your means and is the nicest house on the block.
This book builds on Stanley's excellent book "The Millionaire Next Door" by restating what he said in that book--most of the wealthy in America are people who don't look rich but drive sensible cars, wear modest clothing, and save a lot of money. These are usually entrepreneurs, not doctors, lawyers, and mid-level managers. So you "live like a real millionaire" by making modest purchases and saving the rest.
I would read this book only if you haven't read any of his others. But, really, "The Millionaire Next Door" is the one you should read--it is a classic.