The Millionaire Next Door

I recently finished reading The Millionaire Next Door by Drs. Stanley and Danko. I remember borrowing this from the library a couple of years ago and it failing to catch my interest. Fast forward to now, when my overall interest in personal finance and wealth-building has developed, and I found it fascinating. Their research reinforces so many basic tenets of personal finance, mainly spending less than you earn. They also present an interesting paradox, namely, that those who appear wealthy probably aren’t. There’s also an underlying theme of family values since most of the millionaires married once and stayed married, usually raising several children along the way. If you get a chance, I recommend checking this out. As for me, I'm moving right along to Stop Acting Rich:...and Start Living Like a Real Millionaire.

A new perspective

A few weeks ago, misfortune threw car trouble my way. The anticipated repair was pricey but after calling around for other estimates, seemed within the range of reason for a 7 year old car with 100K miles. I had had several conversations with a friend earlier in the year about buying a new car and I had decided to keep this one going for a couple more years so I went forward with getting the repairs done.

Then I had the car taken to one of those other places (it was overheating so driving 20 miles was out of the question) and found out that it was much worse than the original mechanic thought. A word of advice: if the mechanic calls you and begins by reminding you of your car’s trade-in value before telling you the cost of repairs, you should heed his advice to buy a new car.

I was unprepared for the emotional roller coaster that followed. My first instinct was to replace a convertible with another convertible – logical, right? I shopped around and found some cars that were very nice. Yet something kept me from pulling the trigger on the purchase. I simply couldn’t fathom taking on $20-25K in debt. I was unprepared to purchase a car at the time and consequently did not have much cash saved for a down payment so financing was in order.

Fortuitously (or perhaps not), a mini-break came up during this process. I flew across the country for a long weekend and got to take something of a break from the car problems. I was in a great position – I got to step away and think about what I was doing and how I should do it.

This was when I started considering non-convertible options. When I'd talked to the mechanic, he recommended Honda (Civic or Accord) and Toyota (Corolla or Camry). Once the idea crossed my mind, I couldn’t believe that I had brushed it off earlier (isn’t that the way?). When I came home, I started looking for a late model, low mileage car that would be fuel efficient, comfortable, and that would hold its value well.

And that’s exactly what I got – a 2007 Honda Accord with 26K miles on it.

Unfortunately, in an unplanned situation like this where time is of the essence, one is limited in the amount of frugality that can be practiced. I ended up with a car loan, which pushes my other plans back a bit. Yet I’m comfortable with the balance that I struck – I didn’t buy a clunker with the little bit of cash I had on hand but I also didn’t buy the brand new convertibles that caught my eye (oh, how I will lament the lack of drop-top come spring).

The unexpected result of this process has been a constant questioning of my own assumptions. I feel like I’ve regressed to toddler phase because my constant question is “why?” Does the fact that I’ve done something a certain way in the past automatically mean that it’s the best way? This mindset is being applied both at home and at work and I have to say, it’s interesting. Ah, change is so scary and so good, all at the same time.

Staying focused...but how?

Change is hard. It’s so much easier to fall into the same old routines, to walk the easy route. I had a Sunday afternoon and evening with no plans. Instead of doing something productive or getting around to something I’d been meaning to do for a long time, I ended up watching television for the majority of the day. I spent a good portion of today doing the same thing. How do you stay focused on your dreams? Trent over at The Simple Dollar re-posted an article from 2007 about personal finance lessons a couple of weeks ago and reading the first one truly did rock me like a hurricane: Every time you buy anything, you sacrifice a bit of your dreams.

What a succinct way to bring things into perspective. When I agree to go out on the town for an expensive evening, I’m pushing my debt-free status back further. And it doesn’t just apply to spending money. While I don’t think that I need to spend every minute of every day wholly focused (because that’s unrealistic), spending time on unproductive activities is keeping me from realizing my dreams. How do you maintain focus?

Why blog?

So what’s so special about my journey and why blog about it? Well, I’m a single woman and I don’t feel that I have a lot of support in this area. My friends and family aren’t on the same page with me and I often get blank stares when I get to talking about my plans. Taking it a step further, I regularly get comments about “live a little” and “you can’t take it with you.” Their view is that I’m a young, single, successful woman so I “deserve” to play hard right now. Someday, I’ll be saddled with lots of expenses (because, you know, that’s how it is for them so it has to be that way for me) and I will regret not doing/buying things. What they don’t understand is that there are tons of ways to play hard without spending a lot of money. In reading other personal finance blogs, I’ve learned that there ARE others like me out there and I’m re-energized. So while I’m here to share my thoughts, dreams, and ideas, I’m also here to learn about yours.

Live Your Dreams

Live your dreams. These words float through my head several times a day. I thought I knew what that meant to me but over the past few months, I’ve learned that maybe it’s not what I thought it was.

A year or two ago, I started reading about personal finance. MSN Money and The Simple Dollar started things off and now, I keep up with ten or twelve sites on a regular basis. I came to realize that I’m in pretty good shape when it comes to personal finance so I treaded water, occasionally picking up a new tip or two.

Then I read Dave Ramsey’s “The Total Money Makeover” this summer and it was like my blinders were ripped off. I was someone who had a long way to go on her journey. Sure, I only had “good” debt (a student loan and a mortgage) but it was still debt and it was holding me back. So I got aggressive and mounted an attack on the student loans.

A couple of months later, I started reading “Tales of a Female Nomad” by Rita Golden Gelman and I realized just how much it appealed to me – learning, helping, freedom. It spurred me to work harder, pushing forward to eliminate that student loan debt.

Then my car bit the dust. I struggled with this decision (more on that later) and eventually, I came to realize that a cheaper, slightly older car would cause a shorter delay in my plan. This was a more difficult decision than I would have expected.

It was then that I realized I was on a major journey. My dreams and goals had become clear and I was working my way towards them. It was an exciting moment.

Off to the Races!

It’s taken a long time and a lot of thinking to get to this point. It took me several weeks to work up the courage to make the leap, only to find that the name I’d chosen for this blog was taken. So were several variations and iterations, leading me to conclude that it just wasn’t time to get started. Things have come together and here I am! Thanks for joining me on this journey.