The Millionaires’ Club

I am a fan of Dave Ramsey.  Most of his advice I agree with, but just because he’s a millionaire, doesn’t mean that if we disagree on something, that makes us wrong (even if we’re not millionaires…yet).  He recently published a piece on millionaires that I found too cherry-picked:  http://www.daveramsey.com/blog/recognize-a-millionaire.

First on the list is Hilary Swank, who clips coupons.  I don’t clip coupons out of the newspaper, I print them off the computer.  It costs you either way, whether you factor in the price of the newspaper or the ink and paper one uses to print.  I prefer the convenience of the latter.  Hilary Swank doesn’t think of herself as wealthy (as the article claims), but just because she doesn’t think she is doesn’t mean than she’s not.  I don’t see how this mindset has factored into her being (and remaining) wealthy, because there are plenty of people who are filthy rich and know it, and they stay rich.  I do think clipping coupons (and sometimes, not buying something at all) isn’t a way to get rich, but rather a way to get a good deal and save money.  I use coupons, but I end up spending what I’m saving on something else.  I just get more bang for my buck.

I think Dave Ramsey is under the false impression that a lot of people spend money to impress people they don’t like.  I admit, I like having a nice house to have friends over, but I also like having nice things for my own pleasure.  I enjoy decorating my home and making it a place that is comfortable and functional.  The main thing for me is keeping it clutter-free.

Next on Dave’s list is Dave Cheriton, a Google investor.  This guy is a billionaire.  He saves half of all his restaurant meals for the next day.  One could say, why eat in restaurants at all?  Why not just brown bag it?  I’ve heard that most restaurant meals (when you factor in appetizers, free bread and the dessert) would feed a family of four in most third world countries, but if I did what Mr. Cheriton did, the food wouldn’t taste as good the second time and I’d still be hungry upon leaving the restaurant.  This just seems like the equivalent of a millionaire not upsizing his fast food order every time.

However, I do think Warren Buffet was worth mentioning.  He lives in the same, paid-for home he bought fifty years ago.  If my husband and I didn’t have to pay for housing, we’d be sittin’ in butter.

Now this segues into one of the few things I disagree with Dave Ramsey about.  I don’t think it’s necessary to rent until you can buy a home outright (especially if you don’t make the kind of money most of his callers do).  After all, the rent my husband and I are paying is paying for our landlady’s mortgage.  That’s like paying interest right there.  What’s more, when you rent, your landlord can raise your rent every year, but if you had a fixed house payment, there wouldn’t be that worry.  I hear all this claptrap about don’t buy homes you can’t afford (one might have been able to afford it when they bought it), but you still have to live somewhere, and sometimes mortgage payments are cheaper than rent payments.  I do think, if possible, one should save up to buy a house, but for us working class folks, that might take us twenty years, and in twenty years of mortgaging, we might be able to have a paid-for house, because what we used to pay in rent, we apply to the mortgage.

My husband and I live in a rental house, and after just one year, we’re going to have to move, because our landlady can’t afford to stay in the house she’s in (talk about the sins of the landlords trickling down to the second generation of tenants).  I don’t understand why anyone would want to have two house payments.  That is no way to live!

Now the bit about Mitt Romney (I don’t care how you feel about him–this is not a political blog) shopping for blue light specials on golf clubs at K-Mart, that’s great.  Why spend more for something you can get for less?  However, the man does own several homes, but that was after he became a millionaire, so that brings me full circle to the title of my post.  Some thrifty habits one keeps, even after they become millionaires, but as for owning several homes, unless he got a really sweet deal on them, I think that sort of dwarfs the money he saved on the golf clubs.  I just think if I ever became that rich, I’d prefer to put spend my money on vacations and classes–experiences rather than things.  Of course, one can have a pretty nice experience in a vacation home.

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2 thoughts on “The Millionaires’ Club

  1. Good post overall! I think you are a bit confused about Dave saying not to buy a house until you can pay for it in cash though. He says to save up as much of a down payment as possible and only borrow on 15 year fixed interest rate. Which is still a HUGE grasp in my opinion for regular working class people.

    I also wish I had purchased a “starter” home instead of a home where I planned on having a family. I can’t have children, so now I own a 4 bedroom 2 bath house with a huge yard and two people to fill it. It’s older and requires a lot in maintenance. A smaller place would have worked out in the end. If only we could see into the future!

    You’re completely correct about the rent vs house payments as well. Rent in my area is a heck of a lot more expensive than my mortgage payment…but they don’t have to worry about replacing their roofs or broken air conditioner units either. HA!

  2. Thanks for the clarification. I went through his Financial Peace University with my then-boyfriend (now-husband), and that experience got me started on him. I totally agree about the fixed rate mortgage (you’d be no better off than renting that way, since a landlord can just raise the rent every year), but I agree, a fifteen year mortgage isn’t very attainable if one is “working class”.

    Though landlords are required to keep all those things fixed, our landlady was hard to pin down when our garbage disposal and dryer stopped working, so we had to grit our teeth sometimes while we waited for her to do the right thing; we didn’t want to antagonize her, for we’d have to depend on her to give us a good reference, even though we wanted to scream, “Just get the damn things fixed!” No wonder they’re called landlords–they “lord” it over you!

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