Kathren Ashton

FIN 1050

The Millionaire Next Door Questions

After reading The Millionaire Next Door, answer the following twelve (12) questions and

compose your Reflective Writing.

1. Explain the following two (2) concepts addressed in The Millionaire Next Door

Big Hat, No Cattle

Big Hat, No Cattle refers to people who look and play the part of a very financially

successful person even when theyre not. The less you spend on unnecessary or expensive

items the more money you will have in the end. This is how millionaires tend to live their

lives and is why they are so wealthy.

Go To Hell Fund

A go-to-hell fund is a fund that has enough money to allow you to not work for ten or more

years.

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).

Mr. Richards is a mobile-home dealer and because of that he doesnt have a certain standard

to live up to. He doesnt have to live an upper-class life so he spends less money in his day to

day life. Mr. Ford has a career as a lawyer and therefore has to spend more of his income to

live up to the standard that has been set because of his high-profile career.
3. UAWs live beyond their means. PAWs are builders of wealth. Describe someone you

know who is either a UAW or PAW (or is headed in that direction) & what can be

learned from their example.

My brother is a classic example of a UAW. He always has to have the nicest clothes and

shoes but he cant even afford child support for his three children and has to live at home at

36 years old. He couldnt afford rent because he bought his one year old son Jordan shoes. I

strive to save my money and specifically save as much as I can while I still live at home. I

am going into engineering so I can make a decent amount of money to provide for my future

family and my parents when theyre older.

4. Provide short answers to the following three (3) questions:

Most people will never become wealthy in one generation if they are married to people who

are __________.

Wasteful. As a couple, you cant accumulate wealth if your spouse is always wanting to buy

unnecessary and wasteful items.

Upon giving his wife $8 million of stock, from taking his company public, what did his wife

continue doing?

She continued to cut coupons for their groceries that week because she still had to do her

Saturday-morning chores.

Why would someone who is a millionaire need to budget?

Just because you are wealthy and have money doesnt mean you shouldnt budget where

your money goes. Whether you make $20,000 or $2,000,000 a year, you need to know what

your money is going to and when it will run out. Millionaires maintain their millionaire status

by budgeting.
5. 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.

Teddy was raised in a very poor family so once he grew up he wanted to be visibly wealthy.

He wants the whole world to know he has money because he didnt when he was growing up

so he works to purchase things because he thinks they are signs of financial success.

What was the small change Teddys parents could have made that would put them in the

millionaire category? (Be specific.)

His parents always spent all of their income, they never saved. Whenever their income was

increased they would immediately plan to spend it. This way of life and way of spending

severely impacted their son and made him develop a skewed outlook on wealth.

6. Mr. Rodney is a high-income/low-net worth corporate manager. Explain why he is

described as having sold his financial independence.

He turned down his employers offer to increase his wealth because he claimed he couldnt

afford it. He had so many other payments that he didnt have any money left over to invest

and he wont be financially independent until he reevaluates his priorities and changes his

spending habits.

7. If your goal is to become financially independent, what should your plan be? (Be

specific).

To become financially independent, you need to sacrifice and look at the big picture.

Sacrificing high consumption today will lead you to financial independence tomorrow

meaning you need to look at what is really necessary for your everyday life and look at what

you want your tomorrow to look like and plan accordingly.

8. Why did Mr. W.W. Allan decline the gift of a Rolls-Royce?

He knows what comes with owning a status product. Once you own one status product

people start question you on why you dont own more and it starts a downward spiral. He

specifically stated that owning that vehicle wasnt compatible with his lifestyle; he fishes

often and wouldnt feel comfortable throwing fish in the back seat of a Rolls-Royce.

9. Regarding Economic Outpatient Care (EOC), answer the following three (3) questions:

What is the likely financial outcome for Mary and Lamar once her mother passes away?

Once Marys mother passes away and they are no longer the recipients of the monetary gifts

from her parents they will struggle to continue to live the lifestyle they are living. Even with

a hefty inheritance, living the life style they are accustomed to, they will probably blow

through it fairly quickly and will struggle without the extra income.

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?

When talking to Ms. BPF they found that she actually had significantly more fear about her

business and future than a typical affluent business owner because a typical affluent business

owner has gone through enough trials that they have overcome the majority of their fears.

Ms. BPF has many fears about her business, her future, and how her siblings will perceive

the help she received from her parents.

In the case of Laura (A Woman of Great Courage), explain the primary message derived

from her story.

The primary message derived from her story is that regardless of what happens to you in life

if you choose to be successful, you can be. Her husband left her for his secretary and instead
of moping around and just going back to the job that she knew she made something of herself

and used all her various skills to start her very successful business.

10. Regarding Affirmative Action, Family Style, answer the following two (2) questions:

In the example of sisters Ann and Beth, describe the consequences to Beth and her husband

from receiving EOC.

Beth and her husband are under the parents control. Beths mother essentially picked out

their house, is at the house constantly, and they live very close to the parents. Beths husband

is seen as inferior and is constantly disrespected and demeaned expected to act more as a

servant than a part of the family. Beth and her husband couldnt live their lifestyle without

her parents help so they have been conditioned to deal with whatever they have to to

continue to receive EOC.

Explain the concept weakening the weak.

Weakening the weak is when instead of helping someone grow by addressing their

weaknesses and fixing them, you give them a free pass to not have to deal with their

weakness. In one example, they talked about a child who had a verbal deficiency problem.

Instead of getting him tutors and helping to fix the problem they transferred schools but when

that didnt fix the problem the father started writing his sons papers for him and he still

writes his papers for him today.

11. Explain the root cause for the conflict between Mr. W & the residents of the vacation

condominiums. (HINT: Its not because of his dog.)

It didnt have to do with the dog. That may have been what initially started it but it seems

that he was upset about how much the other owners of the condominiums were concerned

about how people looked. The other owners were so worried about how it would look having
blue-collar employees invading their space that they forgot all about the dog. Mr. W didnt

want to be surrounded by those types of people.

12. Now that you have finished reading The Millionaire Next Door, answer the following

three (3) questions in a minimum of three (3) paragraphs. (12 pts)

What are the two (2) concepts you found most useful? Explain why.

The importance of setting a budget. I have a monthly budget that I tweak constantly

throughout the month to meet my needs for that month. Ive always known setting a budget

was important and I know I wouldnt survive without mine because I would end up spending

all my money on useless garbage but reading the examples of millionaires who stick to a

strict budget still makes me realize that this skill is something that I will use for the rest of

my life regardless of how much money I make.

I also really enjoyed reading about the concept of weakening the weak. I grew up in a

household where I was expected to rise up to a challenge so whenever I had a problem I fixed

it. I was never given insane handouts or given something just because I was struggling. I

worked for every grade in high school and I worked hard for every job Ive been hired for. I

look at how many examples there were in this book of affluent parents just throwing

handouts to their kids and it was just very shocking at how common it actually is.

Give a specific example of one small change you can make to improve your financial well-

being.

I would like to start saving 10% of my income every month so I can continue to save more

money. Even though it is a very small amount its better than what most of the adults my age

are saving and it will be a good starter savings account to build on once I am in my career. I

also think working to pay off my credit card and even starting at my student loans would be a
 great change to make because the less debt Im in when I graduate, the better off I will be in

the future.

Reflective Writing

Compose 2-3 paragraphs explaining how completing this assignment helped you achieve at least

two (2) of the SLCC Learning Outcomes:

Students think critically and creatively

In this assignment, I have had to engage in reflective thinking, and demonstrate higher-order

skills. This assignment has made me reflect a lot on what my plans are for future retirement,

which is something I wasnt even worried about before. Ive also demonstrated higher-order

skills. For instance, I have analyzed different situations and the outcomes that came from them

and evaluated my own life and the lives of others around me in accordance with some situations

mentioned in the book.

Students develop computer and information literacy

This assignment required me to use contemporary computer software and hardware. I had to use

Microsoft Word to complete the assignment. I also read the book online on a PDF document, so I

used my computer skills to find that online. I also had to figure out how to create my website

(and I had a lot of fun making it) to start my portfolio because this is the first class Ive taken that

has required it.