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Author Topic: 8 frugal habits that will help you make millions, well pesos that is :)  (Read 10242 times)

Offline Lee2

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None of us really need to invest to get ahead, I have lived my whole life following #1,3,6 and 8, take it from me that it works to get ahead, I do not know about becoming a millionaire unless they are referring to pesos.  ;)
Quote
http://www.aol.com/article/2016/03/10/8-frugal-habits-that-will-help-you-make-millions/21325854/
Want to be a millionaire? According to Inc., it's not that crazy of a goal anymore. One in 20 American adults are considered millionaires. This is 5% of the population, and it proves that you and I can become millionaires, too! Although having a bank account with a million dollars rarely happens overnight, it's achievable if you follow the eight frugal habits listed below.

1. Live below your means. While status items like a silver Tesla or Balenciaga handbag are fabulous, you don't need these items to live. In order to extend your wealth, you have to live below your means. If you don't really need a giant house with four bedrooms, don't buy it!

2. Never pay full price. The ultra-rich never pay full price for anything. Look at famous actresses. They don't buy the the expensive gowns they wear to the Oscars; designers give them the dresses for free. John Rampton, the author of the Inc. story, says "households that average an income of $100,000 or more use more coupons than households that earn under $35,000 annually."

3. Cut out unnecessary expenses. Small unnecessary expenses add up over time. Pay attention to your bank account, and be sure that your bank isn't charging you unnecessary fees.

4. Rent or sell your current possessions. If you have a closet full of clothes you no longer wear, bring them to the local consignment store.

5. Leave the cash and plastic at home. "If you leave the house without your credit card and a large amount of cash, you won't be tempted to purchase items that you don't really need," Rampton explains. He also says that " if you don't have the cash to make a purchase or pay off your credit card, then you probably can't afford the purchase in the first place."

6. Don't waste money on get-rich-quick schemes. Nobody gets rich quickly. The probability of you winning the lotto is slim to none, so don't waste your money on gambling.

7. Go green. Save money by carpooling to work instead of driving yourself. Collect cans and bring them into a recycling center to get cash. Turn down your heater, and use blankets or a space heater instead of heating your entire house.

8. Get a side gig. A side job will bring in additional income. It will also cause you to spend less, because you will spend more time working instead of spending your money on leisure activities. Every little bit helps!

:) Happily married since 1994 & live part of the year in Cebu and the rest in S. Florida.

Offline Splooge Magoo

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I've done pretty well for my family so I will expand and/or add to it a bit:

1. Save, save save. While working, have money deducted each pay cycle to an investment account. When it gets to $500 or $1000, buy low cost index funds (VTI for me). When the stock market dips like we have had in the past year, live like a dog and invest more.

2. Every raise, put and additional 1/2 in your 401K.

3. Your car should last a least 10 years. After the loan is paid off, invest the payment in (1). The next car, same thing and you can find recurring bills to cut that worked its way up to help with the new payment.

4. Everything you buy should be high quality. Stop buying cheap every few years. Buy quality once and it will save money over time.

5. Call your cable company up today and ask for the cancellation department. They will lower your rate with a promotional offer. Do this each year. Take the savings and increase (1).

6. Round up your mortgage, car payment or any long term loan. The interest savings adds up real quick.

7. Volunteer for all of the crappy jobs at work. Supervisors will remember this come review time you should be taken care of, plus you will never be out of work as there are always crappy jobs that no once else wants to do. If things go bad at work, you will be one of the last ones let go.

8. Quit drinking, smoking and/or drugs - Its expensive and leads to bad decisions. Take that money and use it for (1).

9. Order take out instead of eating at the same restaurant. Saves on tips, overpriced drinks and impulse desserts.

Dan

Offline Hestecrefter

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"One in 20 American adults are considered millionaires."

That statistic comes as a surprise.  The article quoted goes on to say: "Although having a bank account with a million dollars rarely happens overnight, it's achievable if you follow the eight frugal habits listed below."  That suggests that the author defines "millionaire" as someone with liquid assets of $1 million.

Even taking a more expansive approach, and defining a millionaire as someone with a net worth of $1 million, I find the 1 in 20 statistic startling.  Most young adults have not had time to accumulate $1 million, which suggests that a very high percentage of older adults are millionaires.  It makes me wonder about all the articles one keeps encountering on the web about Americans not being financially prepared for retirement. 

As for the observations of Master Splooge, I find myself overall in respectful agreement, save for items # 3 and 8.  In the case of #3, I would say borrow only for a house.  Even then, make a down payment of at least 35%.  Motor vehicles should be cash purchases. 

As for #8, smoking and drugs...never start, then you won't have to quit.  As for drinking, I say quit if you have no self control and regularly drink to excess.  Me, I refuse to give up my couple of glasses of red wine with dinner.  Expensive, yes.  I buy good wine.  Because I am otherwise prudent with my money, I can well afford the good stuff.  However, I reject the notion my wine drinking has led to "bad decisions". 

I am reinforced in my view on the topic of alcohol by medical advice I received circa 1987.  My family physician - who went on to be recognized as a leader in the profession - saw the effect on me of working in a downtown professional office and lunches out everyday, etc.  He suggested I lose some weight.  He said many find that hard to do, so I should try losing 5 lb., at least to start.  I thought, I'll show him.  I lost 40 lb.  When I next saw him he was amazed and also suggested I had perhaps gone too far.  He asked how I did it.  I mentioned part of the new regime involved cutting out wine with meals.  His response?  He said "I don't like to hear that.  I am one of those who believes that moderate alcohol consumption has health benefits that outweigh the risks."  Truth be told, I had never intended the elimination of wine from my diet to be permanent. 

Maybe that dr. was right about the health benefits.  I have not been in a doctor's office for about 20 years.  Already, I have watched many die younger than I.  Many my age (and younger) around me seem to have endless medical appointments, club bags full of prescription medications; they are having knee and hip replacements, getting dentures, complain of aches and pains, make a big deal of it if they have to carry 50 pounds 100 yards or walk a mile or two.  For them, if they have taken Splooge's advice to heart and have salted away millions, they are in no physical shape to enjoy it. 

As for the original list in Lee's post, a couple of observations:

Item #4. "Rent or sell your current possessions."  Rent what?  Your living room furniture?  Your computer?  Your lawnmower?  Apart from real estate, the only thing the average person might own that has any rent value would be motor vehicles, boats, etc.  Getting into that game can be fraught with difficulty and risks.  I agree with selling anything no longer required, provided it is fit for sale, there is a market and one can effect a sale without putting too much energy into it.  I make the latter comment because it would be better to give the item away and use the time to earn or invest money than to spend a lot of time to sell an item for 20 bucks.

Item #5. "Leave the cash and plastic at home."  I would say learn self-discipline instead, which should have been acquired by about age 12.  The idea that anyone would need to leave cash and plastic at home as a measure to control spending is just plain sad.

Item #8. "Get a side gig."  The best advice here!  Especially if you work for someone else.  Many employers, including governments, are anti-moonlighting.  Why?  Because it keeps employees subjugated.  The employee is at the employer's mercy.  Having a second job/income source means you can tell the employer to shove it, should need arise.  It can be a safety net when one finds oneself getting punted after years of good service.  These days, being a good, productive worker is no guarantee of longevity on the job.  The "side gig" should be something that provides a good income and can be developed into a "main gig" as necessary.

Offline Splooge Magoo

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"One in 20 American adults are considered millionaires."

As for #8, smoking and drugs...never start, then you won't have to quit.  As for drinking, I say quit if you have no self control and regularly drink to excess.  Me, I refuse to give up my couple of glasses of red wine with dinner.  Expensive, yes.  I buy good wine.  Because I am otherwise prudent with my money, I can well afford the good stuff.  However, I reject the notion my wine drinking has led to "bad decisions". 


Hestercrefter - your right, it should be more generalized to fall in vices that are problems or addictive.
Dan

Offline Splooge Magoo

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"One in 20 American adults are considered millionaires."


Item #8. "Get a side gig."  The best advice here!  Especially if you work for someone else.  Many employers, including governments, are anti-moonlighting.  Why?  Because it keeps employees subjugated.  The employee is at the employer's mercy.  Having a second job/income source means you can tell the employer to shove it, should need arise.  It can be a safety net when one finds oneself getting punted after years of good service.  These days, being a good, productive worker is no guarantee of longevity on the job.  The "side gig" should be something that provides a good income and can be developed into a "main gig" as necessary.

This is really subjective - I worked for 15 years for a company the rewarded hard work. A side job would have cut into the real job. I worked with a guy at the same place and he delivered newpapers in the morning before work. You would find him sleeping at his desk. He was warned not to let a $15,000 job endanger a $75,000 job but he never listened and got the boot.

At a different place, I really should have had a second job because the first job had the executives keeping all of increases to themselves. I quit with out a fallback and it took me years to recover.
Dan

Offline Art, just a re(tired) Fil-Am

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I did all those frugal things for 30 yrs during my entire young and adult working career, but I didn't have any money in the bank when I retired at a young age. My situation was rare where I was able to retire at the age of 49 and reside in the Philippines with sort of an adequate source of income to live on, but just recently life has gotten better at my old age when I started receiving my other pensions at age 60 and 62.
Just look at a bunch of posts on this and other forums expats asking if one can live on $800 to $1,500 a month here in the Philippines? It's only doable depending on where one lives and what their habits and or lifestyle are.
Just curious though, what is the average age of most people who have retired and what is their average monthly source of income?
Some of those answers are here at the below links if you are in with the average people who work until 55 and or 65 and above.

http://www.fool.com/investing/general/2015/10/26/how-much-should-the-average-american-save-for-reti.aspx

https://smartasset.com/retirement/average-retirement-savings-are-you-normal
« Last Edit: March 15, 2016, 06:37:33 AM by Art, just a re(tired) Fil-Am »
"Life is what we all make it to be"!
"It's always a matter of money"!
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"Different strokes for different folks"!
"Que Sera Sera"!

Offline Hestecrefter

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This is really subjective - I worked for 15 years for a company the rewarded hard work. A side job would have cut into the real job. I worked with a guy at the same place and he delivered newpapers in the morning before work. You would find him sleeping at his desk. He was warned not to let a $15,000 job endanger a $75,000 job but he never listened and got the boot.

At a different place, I really should have had a second job because the first job had the executives keeping all of increases to themselves. I quit with out a fallback and it took me years to recover.
This time Splooge, you are right.  There is an element of subjectivity I did not address.

My comments apply, probably, more to government workers, particularly those at higher levels.  I have had that experience.  Governments do not have to have an eye to the bottom line.  In the private sector, an employer is unlikely to get rid of a hard-working, productive employee, for no good reason.  That employer recognizes the value of that employee and, as well, will be mindful of the cost of seeking and training a replacement, etc., with no assurance that the replacement will be much good. 

On the other hand, in government, one is far more vulnerable to whims, particularly if one is seen as a high producer/achiever.  Governments thrive on mediocrity.  The guy who comes in, works hard, and looks like a star, makes others feel threatened.  Someone in a higher position might see that the new guy's willingness and ability will reveal to the world that the person who feels threatened is not so hot after all.  If that person has a little bit of clout, they can find a way to have you gone.  Even if severance must be paid.  Who cares?  The taxpayer pays.  Private sector employers are much less likely to dump a solid producer, who is generally well-liked, and pay severance to boot. 

I worked for 15 years for a company the rewarded hard work. A side job would have cut into the real job.

Yes, I think in the private sector that can happen.  If you put all your energy into the "real job", you can reasonably expect to be rewarded.  On the other hand, government is not set up that way.  For example, let's say we have a private sector factory producing widgets.  They require some hand-crafting and skill.  The employer has 20 guys in the shop producing them.  The employer figures the average employee can turn out about 3 widgets per day, of merchantable quality.  New guy comes in and consistently turns out 5 widgets per day and each one is of the highest quality and workmanship.  In government, there would be a pay scale for widget makers that recognizes only years on the job. Like teaching.  One moves up in pay each year for 10 years, or whatever.  The teacher maybe gets another pay hike for earning a master's degree.  Nothing to do with relative ability.  In government, the superstar widget maker will get the same as everyone else.  In the private sector, the employer will most likely give the star increased wages and/or benefits or risk losing him to the competition.  Governments have no competition.

I recognize that my widget example is a bit flawed in that the kind of job involving production of a product is not usually something encountered in government and, in the private sector, a lot of production jobs are union, and often there is little scope for rewarding the top guns.  The kind of government jobs I have in mind are above the union levels and require the exercise of skill and judgment.  Some can broadly be described as "case management" jobs.  I have worked in such positions and, having come from the private sector, I have been astonished by the low level of productivity of those who have been there for the long term.  I could close more files in a month than they would ever do, with me just barely ticking over.  But we all received exactly the same salary and benefits, year in, year out.  In that situation, a second job hardly detracts from the main gig.  I needed it to keep me from falling asleep on the main job out of boredom. 

In the kind of government job of which I speak, if the work piled up, what happened?  In the private sector, the employer might exhort the existing employees to do more, with the promise of increased remuneration for increased production.  In government, while exhortation might be attempted, it generally fell on deaf ears because you are dealing with a group who are all assigned "Manager Level 9" or whatever and all get the same pay.  There is no room to offer more and no such thing as overtime pay in those jobs in the instances I have seen.  From what I have seen, when you exhort a group like that to do more, you are met with a near-universal complaint that "we are overworked now, it's too much, blah, blah, blah."  So, the typical response of government to an uptick in workload (or a failure to address existing workload in timely fashion) is to recruit and train another 6 people at $120,000 a year, with a full month of vacation to start.  No need to consider the cost.  The taxpayer will pay.

Offline Splooge Magoo

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Hestercrefter - I agree with your comment although I only had a few months experience working at the IRS as a tax examiner. It was a pretty nasty group and it was more of a sweat shop than an office. You had to review 54 returns an hour. I figured out after a few weeks hard work was rewarded. So I would do the 54 then shut my eyes for a few minutes to rest.
Dan