I came across a copy of the book, The Millionaire Next Door, through the most frugal way possible. It was sitting on the shelf, at our local Book Exchange, somewhat out of place in the midst of all the romance novels and knitting books. Well, to me, free is a great price to pay for this book (as requested, I did donate to keep the book exchange running).
This is a somewhat ironic ‘find’. It was the same month I started reading personal financial blogs and got interested in investing. Several financial bloggers had mentioned the philosophies in this book. Now, to put my plans into action!
It dawned on me how much this book reflects our life so far: As a medical student, it had been my dream to one day practice Medicine in America. Not only for the financial rewards, but for the modern medicine and advances available here. With sheer grit and determination, we are technically there – 7 figures net worth, after many years of hard work.
Frankly, I don’t even remember when we got to “Millionaire status”. It was not until I started this blog that I summed our net worth (still an estimate as it takes into account how much our current home and rental properties are worth).
While it is somewhat thrilling that we are millionaires by definition, it has not even changed our lifestyle. Nor has it changed our work ethics and attitude. It is simply a step in our plan towards Financial Independence, giving our children a reasonable head start in life (college education, postgraduate education) and giving back to our community (setting up a Donor Advised Fund by 2018). I still do the laundry, vacuum the floors and clean the toilets at home. My husband still spends his time on the never-ending yard work outside. I still look for and clip coupons when I do my grocery shopping.
Obviously, my income is a lot higher than the average Joe (and Jane) on the street, which allowed us to get to this point sooner.
We (unknowingly) have followed the 7 characteristics mentioned in the book all along. Here is the list:
Character 1: Living Below Our Means. Being frugal is definitely our main path towards our current wealth. Until recently, I knew nothing about investing and finance. I am still learning (tremendously) about the subject. Some of my colleagues who earn similarly high incomes still have a negative net worth. However, we have always lived below our means. While I was still in training, our household budget was around 50-60% of our gross income. Currently, we spend around 15% of our gross income on an average month. As such, our savings rate is extremely high. However, we do earmark money for donations every year, and we are in the midst of setting up a donor advised fund.
Character 2: Allocate time, energy and money to build wealth. Thomas Edison once said that genius is one percent inspiration and 99 percent perspiration. I will argue that wealth building is the same. You can read about my strong work ethics here – on Earning more than 500K in Internal Medicine and working hard as a primary breadwinner in the family. Planning ahead has always been something we did: even when we had minimal to no net worth. My next goal is wealth building through passive means – do you have any suggestions on this? Comment below!
Character 3: Financial Independence is more important that appearing wealthy. This is definitely true for us. No luxurious cars or flashy clothes/handbags for me. I can’t image spending $100 on a new pair of shoes. I did finally succumb and paid $35 on a pair of Clarks for work, when the soles almost came off my old work shoes (8 years+, and bought from Ebay). Having said that, I am starting to loosen the purse-strings ever so slightly and give my family and I a ‘treat’ once in a while.
Character 4: Parents did not give us direct financial assistance. They did pay for my education (which is priceless!), and graduating without any education debt has allowed me to get to where I am, a lot quicker. For that, I am forever grateful. However, we paid for our homes and cars with our hard-earned money. We relocated to the United States with a near-negative net worth. In fact, the first month here, we ‘owed’ our kind landlords deposit money until I got my first paycheck. As for my kids, no ‘graduation gifts’ as such is in the works – i.e. new car, house down payment, etc! I do not intend on handouts for my three children, although we have saved enough to pay for their education costs.
Character 5: Important to have our children be self-sufficient. That is something we have been working on with our minor kids. Although they will be taken care of education-wise and kept fed and clothed until they graduate, we have no intention to financially support them otherwise. As such, we are (trying our best) to promote good habits that will help them in life – encourage resilience, good work ethics and promoting independence. It sure takes longer to supervise the kids cleaning the toilet properly than to do it myself, I got to say.
Character 6: Entrepreneurship and finding new opportunities. I have always been good at finding my own niche. I worked as a copywriter and wrote for trade publications through high school and medical school. Read my article about Earning > 500K as an internist. I make the most of the opportunities presented to me. Working on passive income streams and investing now, and open to ideas from you, dear readers.
Character 7: Choosing the right occupation. Despite the stress that comes with it, I enjoy my job. Even when I do achieve financial independence, my goals are to continue what I am doing. While not everyone needs to be a doctor, lawyer or businessperson, it is about finding the niche and working to the top of whatever occupation you choose. Read about The Wealthy Barber by David Chilton.
Do you agree with these 7 characters? Comment away!
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