Alex Chavezs ePortfolio Assignment Fin 1050,

Due 4/19/16
1. Explain the following two (2) concepts addressed in The Millionaire Next Door:
Big Hat, No Cattle refers to act flashy like you have a lot of assets but
in actuality you dont. Its all for show.
Go to Hell Fund refers to having enough money saved up so that if
you were to tell your boss to go to hell, you have enough saved to
live off of for a period of time.
2. In the examples 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).
The reasons why Mr. Richards has nearly 5x the net worth as Mr. Ford is
because of his lifestyle. He doesnt need new flashy suits to go to work where
Mr. Ford spends significantly more of his household income to keep up with
his lavish lifestyle.
3. Provide short answers to the following four (4) questions:
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 said that she was
appreciative and continued to cut coupons
Why would someone who is a millionaire need to budget? That is how
they actually maintain and/or increase their wealth. By budgeting they
control their expenses
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. He works to buy things and to show them off.
What was the small change Teddys parents could have made that
would put them in the millionaire category? (Be specific.) Over the 46
years that they smoked that equated to be around $30k and if they
would have invested that money even into a tobacco company they
could have built a tobacco portfolio that could have been worth around
$2Mil.
5. Mr. Rodney is a high-income/low-net worth corporate manager. Explain why
he is described as having sold his financial independence. He had an
opportunity at financial independence when his company offered him

Alex Chavezs ePortfolio Assignment Fin 1050,

Due 4/19/16
matching stock options with is company that he said that he could not
participate in due to a high mortgage, leased cars, and club & tuition dues
each month. He could have become a millionaire instead he is stuck in a
earn-to-consume treadmill.
6. Why did Mr. W.W. Allan decline the gift of a Rolls-Royce? He believed that
products change people, If you buy one high profile product you would need
to buy more to keep up with the social consistencies so before long your
entire lifestyle would have to change. All Mr. Allen wants to do is throw fish
in that back of his car when he goes fishing every weekend. You cannot do
that with a Rolls Royce.
7. Regarding Economic Outpatient Care (EOC), answer the following four (4)
questions:
Define Economic Outpatient Care (EOC). Giving your adult kids a lot of
money aka an act of kindness.
Upon learning his parents were donating their property to the local
private college, describe Jamess reaction. He yelled stating that It was
his property too. And that they couldnt come on to his property.
Why was Jamess response predictable? It was predictable because his
family had been giving him money and possessions his whole life. Even
if he viewed himself as self-made.
As illustrated in the example of Henry & Josh, what is the fundamental
rule regarding wealth building? Live below your means no matter what
your income level is.
8. Regarding Affirmative Action, Family Style, answer the following two (2)
questions:
Why were sisters, Sarah & Alice so different regarding wealth
accumulation? Sarah didnt like the idea that her father said that women had
no place in the workplace so she left ventured out on her own to be
independent where her sister followed her fathers plan.
What did Kens father tell him often? (Be specific.) I am not impressed
with what people own, I am impressed with what they can achieve. I am
proud to be a physician, always strive to be the best in your field. Dont chase
money, If you are the best in your field, money will find you.
9. Explain the root cause for the conflict between Mr. W & the residents of the
vacation condominiums. (HINT: Its not because of his dog.) The community
didnt see Mr. & Mrs. W as beautiful people, beautiful enough to live in their
community. They just used the dogs as leverage to get them to leave.
10.Now that you have finished reading The Millionaire Next Door, answer the
following three (3) questions in a minimum of three (3) paragraphs.

Alex Chavezs ePortfolio Assignment Fin 1050,

Due 4/19/16

How has your perception of millionaires changed? Prior to reading this

book, when I think of a millionaire I think of people in big houses, flashy cars
and expensive trips but after reading this book I can see that there can be
millionaires all around me just simply living below their means as to maintain
their money.
What are the two (2) concepts you found most useful? Some concepts
that I have learned was to live below your means, I can think of a few
situations where I have spent larger amounts of money just to keep up with
the people around me but that was never in the best interest in my family in
the long run. Also I have learned that some of the small expenses that I have
that are reoccurring can turn into a larger expense. One of the areas that I
have noticed with my family is that we eat out often which doesnt seem bad
$20 here $40 there but when I look at my monthly bank statements I can see
that a large percentage of our monthly income is spent on food which is not
only bad for our wallets but also bad for our health.
Give a specific example of one small change you can make to improve
your financial wellbeing. One small change that I can make to help my
wellbeing is to invest more money in areas that have a more positive
return rather than a happy meal that adds pounds on my scale.

Reflective Writing Compose 2-3 paragraphs explaining how completing this

assignment helped you achieve at least two (2) of the SLCC Learning Outcomes:
Communicate Effectively
Think Critically & Creatively
I believe that completing this assignment helped me achieve a better way to
think critically and also communicate effectively. For thinking critically, I feel
that this book has opened up my perception on how a millionaire lives and
better manages their wealth. I always believed that if you were a millionaire
that you had to live up to the social norms of being a millionaire ae. Lavish
possessions and social status but in actuality I could be acquaintances with
many millionaires that just simply choose to not live beyond their means. I
guess my thinking prior to reading this book was naive and closed minded
but I guess it only makes sense that everyone can have a different take on
how they decide to spend/manage their money.
And for communicating effectively, this has actually opened up another
communication lane with my father. My father retired about 5 years ago and
is always talking about investments and saving money. A few years over 5
years ago I changed professions and had to move a pension that I have
earned and a 401k, My father helped me move them into a fund with Fidelity
but at the time I didnt really know what any of it meant but after reading this

Alex Chavezs ePortfolio Assignment Fin 1050,

Due 4/19/16
book and taking this class has helped me try to better understand what to do
with my money. Since starting this class and book I have made other
investment choices that I hope will not only help educate me on this process
but build my familys wealth as well.