Category Archives: Uncategorized

The Curse of the Accidental Millionaire

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The Curse of the Accidental Millionaire is not realizing that you are a millionaire!

What I mean by the previous statement is that instead of saving the money you earn and making it work in investments to become rich, you just increase your lifestyle to match your new income level and status. 

The problem is your stint as an Accidental Millionaire may be short-lived if you don’t have the assets to back it up!

The Curse of the Accidental Millionaire is really about a friend of mine.  At one time he was a highly paid director for a decent sized company where he had about 46 people reporting to him.

He had it all, a BMW, a half million dollar house in the mid-west (which is the typical McMansion that everybody talks about), a country club membership, and the most elaborate vacations!

Why I remember him telling me that for New Years Eve, he took his wife to the Hilton hotel and spend over $1,000 just for that night!  Speaking of his wife, she of course has a $10,000 diamond wedding ring, with an equally expensive wedding wrap.  My friend and his wife would eat at restaurants that ran well over $100 for just the 2 of them.

Then misfortune happened, while I’m not sure of the exact details, he decided to work for a different company.  That company paid well too, until they laid him off…

Today he has nothing, my friend and his wife got a divorce and together they owe about $100,000 in debt.

If my friend had sunk that money in a balanced investment portfolio and controlled his spending by living below his means, I calculate that he would have a net worth between $750,000 to $1,000,000 dollars today, or perhaps even more! 

So the takeaway for me from watching his experience with money are as follows:

  1. Live below you means and don’t scale you spending up as your income increase by large bounds.
  2. Buy into investments that reduce your taxes while you are earning such a large salary… such as 401ks, IRAs (if you qualify) and other retirement options.  That way you actually save more of what you earn instead of paying the tax man.  Later when you are retired and you are in (most likely) a lower tax bracket, they will get less of your hard-earned money!
  3. Chose a practical, frugally logical spouse over one that has no clue about money.  I married a frugal accountant and that made all the difference!
  4. Pay attention to past stories about your potential mate, if they tell stories of going on elaborate vacations and still have an actually engagement ring from a previous failed engagement… These little warnings should set off loud alarm sirens in your head!!!
  5. Schedule an appointment with a fee based financial advisor!  Perhaps those third party eyes will tell you if you are on or off the proper financial road or not!

And so concludes the story of my friend that fell victim to the curse of the accidental millionaire.  Don’t let this happen to you, learn as much as you can about finances today, and work with your spouse to try and establish your financial goals, to ensure a smooth path to riches!

Readers, do you know of any accidental millionaires that were cursed to lose it all because of poor financial planning or other issues?

-MR

Reasons To Spend Money – I Don't Want A Coffin Full Of Dollars

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The Reasons to Spend Money are numerous, but one big reason is because when I die, I don’t want a coffin full of dollars! 

 

Now, I’m not saying to take a casual stroll to the bank and pull out all of your money, saying “Vegas, here I come“, either though!  Oh, by the way, the saying “What happens in Vegas, stays in Vegas” really means that the money you take and gamble with in Vegas, stays in Vegas 🙂

Without further ado…

The Reasons To Spend Money :

  1. To live a balanced life, effectively avoiding the dreaded “coffin full of dollars” that are now worth nothing to you!  Once you’re dead, that money is just pretty artwork on a piece of paper that you will never see or touch again.
  2. So you don’t miss out on life!  Saving money like a miser is actually very expensive with respect to time.  The time you waste hording and saving is precious time that could be spent in other ways, like with family and friends.
  3. To visit other places and cultures!  If I had the money, I’d try to take a few trips overseas just to experience the sights and different cultures over there.
  4. Spoiling your kids (a little).  Why not, if you have the money, $100 is like a fortune to a 7 year-old!!!  Don’t go overboard, but perhaps buy something nice for special occasions and holidays!
  5. On high personal value items.  High value items are things that you receive much joy or happiness through.  For example, you might value redline hot wheel cars that you had as a child.  Nostalgic memories have very high value, so why not buy that $50 to $100 dollar car off of eBay?  After all every time you look or touch it, it will remind you off a different time that is long gone except in your memories!
  6. Safety!  Use the money that you have squirreled away to move to a safer area for your kids to grow up in!  And you too for that matter!!!  Or perhaps a safer car to drive the kids around in.
  7. Special local experiences!  Go to an occasional professional football game, even if it is expensive!  Nothing is cooler than hanging with friends eating hotdogs and drinking expensive domestic beers while watching the game from the stands.  Go to the orchestra too!
  8. To treat your girlfriend or wife to a surprise romantic dinner!  I’ve only done this once, but it was great!

Well, this list isn’t complete, but it’s late!  If you have any suggestions, please do tell!

-MR

Life Of The People

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The Life of the People where I live is focused on academics and sports!  The great educational system is one of the reasons we decided to built our house in our small city.  The sport teams in my city that almost always go undefeated.  We are a middle class to upper middle class community.

So today, I thought it would be interesting to discuss the makeup of the people where I live and introduce you to some free tools, so you check out your community too.

First, to learn about the life of the people where you live, we need a more objective tool than just what I think, so I’m going to use Prizm from Claritas.  It’s a fun tool to see what the major groups are that represent your community based on your zip code.

So after I click the “Prizm from Claritas” link, next I entered my zip code at the prompt, and then enter the security code…   I get the following:

  • Country Casuals
  • Country Squires
  • Middleburg Managers
  • Sunset City Blues
  • Upward Bound

If you click on each designation at their site, it display some basic information about each group.  So, for the example, the “Upward Bound” group has a median HH (Household income) of about $86,692.  This particular group represent the traditional soccer moms and dads in cities like mine.  Below is more information that describes this particular segment of the Upward Bound classification:

Upward Bound

2009 Statistics:
US Households: 1,998,401 (1.73%)
Median HH Income: $86,692 
Upscale, Middle Age w/ Kids
More than any other segment, Upward Bound appears to be the home of those legendary Soccer Moms and Dads. In these small satellite cities, upscale families boast dual incomes, college degrees, and new split-levels and colonials. Residents of Upward Bound tend to be kid-obsessed, with heavy purchases of computers, action figures, dolls, board games, bicycles, and camping equipment.
Lifestyle Traits
  • Order from target.com
  • Buy toys by Internet
  • Read PC Gamer
  • Watch Nickelodeon
  • Honda Odyssey
    		•
    Demographics Traits:
    Urbanicity: Second City
    Income: Upscale
    Income Producing Assets: Above Avg.
    Age Ranges: 35-54
    Presence of Kids: HH w/ Kids
    Homeownership: Mostly Owners
    Employment Levels: Management
    Education Levels: College Grad
    Ethnic Diversity: White, Asian, Hispanic, Mix

    This group represents my wife and I fairly well.  The biggest exception is that she doesn’t work (at least not full time).

    While the PRIZM databases is mainly a marketing tool, I always found the information fascinating, and a good marker to compare both my income and our lifestyle against.  Of course, I just checkout the snapshot (which is free).   The snapshot provides enough to get a decent picture of the area though.

    We’re pretty luck that even though we are in the “Upward Bound” group based on most of the descriptions of the lifestyle, we have friends in higher groups with more (like the power boat, and jet skis, etc), so we get the best of the upper tiers too.

    Want even more information about your city?  Try https://www.city-data.com/!  This site has more details about the city statistics!  Include what your firemen and police officers earn (at least my city does).

    Hopefully your city ranks well too!  Try it out, I’m betting you’ll think it’s pretty cool too!

    Tell me what you think or if you have additional links that you use for great demographics about your city!

    -MR

    How To Live A Balanced Life

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    This guest post is by The Digerati Life, a financial site where you’ll find top credit card deals, investing resources and saving advice.

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    How do you put a value on something?  How do you measure one’s worth or success?  Some measure their success by the investments they own, some do so through career achievements, while some do so through the accumulation of material things.  Funny enough, I even know someone who measures their success by the number of points they collect in their rewards credit card accounts.

    The problem with this manner of judging one’s success and worth is that it’s very shallow and superficial.  Who a person is cannot easily be measured by the money he has in his bank account.  Perhaps, it is this very disillusionment of materialism and consumerism that has led the Crafton family to liquidate all their assets and set sail for the seas… for seven whole years.

    The Crafton Family isn’t your average family.  Husband and wife, Tom and Kathy Crafton were both successful in the medical field before they set sail.  Kathy was an ICU nurse, while Tom was a family psychologist.  They had all the trappings that came with their jobs: a big house, and all the material stuff that they could want… or buy.  But what was it that drove this high-income family to just abandon the mainland in favor of the high seas?  For seven whole years?  According to this Washington Post story, they embarked on their voyage because they had gotten disillusioned by their wealth: while they had the big house and the mountains of stuff, they saw that they did not need all this and they wanted to see their kids grow.  They didn’t want the alienation that came with acquiring more stuff but not being able to build a relationship with their kids; they knew that family was far more valuable than what they could acquire with their high-income careers.  And so, they liquidated all their assets in six months and set sail.

    How about you? Are you feeling the ennui that comes with the same old routine, day in and day out: working, coming home, watching TV, sleeping, waking up and rushing to work once more, looking forward to the yearly vacations…  By now, you must be wondering if there’s something more to life than living it in a cycle, or a rat race, so to speak.

    Now you don’t have to do something as drastic as the Craftons have done — and radically uproot your regular routine and your life in favor of 7 years at sea with your loved ones.  All you really need to do is to find balance.

    Here are some tips to promote balance in your work and life:

    • Find some time to devote wholly to your family. Avoid the trap of letting work run your life.  When you’re able to consciously find time for family and relationships at home, there shouldn’t be any reason to want to cocoon yourselves at sea for 7 whole years.
    • Let your money work harder for you.  Try to establish sources of passive income.  Have a good amount of your financial assets invested in high interest accounts. Also, have a good percentage invested in high yielding investments in online stock brokerage accounts.  By letting your money work for you, this will allow you to work at a pace, and in a field that lets you live a more balanced life.
    • Understand that money is not everything.  If you get a job offer that will only kill your relationships with your spouse and kids, then rethink the offer.  Is it worth it?  Your income may not be worth it if, 5 years down the line, you suffer a divorce because you neglected to spend time with your family.
    • There are certain careers and jobs that are not as stressful but can pull in significant income.  Figure out what kind of job can work for you, do some research on it, and see if you can shift your career from stressful to sane.

    Balance is key to living this life.  While most people go through life harassed, harried and enslaved by their jobs, you don’t have to live this way.  Take the time to figure out what will work for you, and always hold relationships and family as a higher priority over money.  Work on being content with what you have, and make the decision to live a balanced life.

    MR, here.  As readers of my blog know, I’m a big proponent of a balanced lifestyle in practically every regard.

    I’d like to thank the writer for Digerati Life for contributing such a great piece that fits so perfectly here at moneyreasons.com!!!

    -MR