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Madalyn
Montgomery
The Millionaire Next Door
Questions
1-
Explain the following
concepts addressed in The Millionaire Next
Door
“Big Hat, No Cattle”- This saying came from
a middle age Texas man. This means
that people act like they have money but really they don’t.
They spend money on wishful thinking that they will make that money.
“Go to Hell Fund”- This means that someone
has enough money to live without working for ten or more years just fine.
PAW- PAW means the prodigious accumulator
of wealth. This is determined by a
person’s net worth if he/she is a PAW, UAW or AAW.
Being a PAW means that a person’s net worth is at or above 25% of wealth
all together. These people bring in
the most net worth.
UAW- UAW means under accumulator of
wealth. This is determined by a
person’s net worth if he/she is a PAW, UAW, or AAW.
Being a UAW means that a person’s net worth is below 25% of wealth all
together. These people bring in
the least amount of net worth of money.
They have money but spend any that they have.
2-
In the example of
Theodore “Teddy” J. Friend provide three reasons why Teddy is considered a
UAW. What was the message Teddy’s parents sent him about consumer
behavior?
Reason
#1-His net worth is less than one fourth the expected figure that is should
be.
Reason
#2- He spends all the money he makes, he has no savings to show for the
money he makes.
Reason
#3- His mentality is wrong.
He has the “significant others” mentality.
He is waiting for his significant other to save the money but that other
person is not real. He does not
want to change. He wants to just
make more to have more possessions to show for it.
Parents
Message- The message his parents told him was to have a high paying job to
buy the finer things in life.
They never had a savings account.
It was all about what you could show with your money.
They always went all out with anything they did.
3-
In the example of Mr.
W. W. Allan, a self-made multimillionaire: He never extended credit to people
who exhibited the “Big Hat, No Cattle” philosophy.
Why? Why did he decline the gift of a
Rolls-Royce?
Philosophy-
Mr. Allan never gave money to people who exhibited the “Big Hat, No Cattle”
philosophies because he knew he would never see that money again.
Those types of people spend the money that they have “hoping” to make
it.
Rolls-Royce-
Mr. Allan declined the Rolls-Royce because it was not him.
He claimed that he couldn’t throw his bloody fish in the back of the
Rolls. It was not his lifestyle to
have one. He didn’t want to change
himself just for a present.
4-
Regarding Economic
Outpatient Care (EOC): Define
EOC. List three reasons EOC can be harmful to the
recipient?
Define
EOC- EOC means economic outpatient care. This means that parent give their adult
children a lump sum of money. The
parents feel obligated that they still need to provide for their kids.
Reason
#1- It can be harmful because it is easier to spend others money than
yours. These families are not
learning how to save money. They
are not even learning how to take care of themselves.
Reason
#2- The private schools medical, dental and homes are rising in
prices. Those are the things most
EOC money is going towards. Which
means debt is going to rise.
Reason
#3- The parents that are giving this money away are not very wealthy
themselves. When they retire they
are not having money to live off of.
The kids are not able to support them either because they were too busy
spending the money rather than saving it.
5-
Now that you have
finished reading The Millionaire Next Door, give your thoughts.
What are the two concepts you found most useful?
How will you apply them into your life? In your own words,
give your thoughts.
The first concept that I
really found most useful for me was to find out what wealth category I was
in. I found that I was a UAW. This was not very surprising for me
because I am just a poor college student.
I have a lot of bills to pay for plus paying tuition is an extra
amount. What was more surprising
to me was the realization I came to when I was reading the book I just kept
thinking how I just spend any money I have. I don’t have a lot but I make it look
like I do. I just reminded myself a
lot like Teddy Friend and his parents.
The second concept that I
learned from this book was how much money I should be saving.
I need to stop spending my money on pointless items.
This book has really helped me understand I have a problem that I need to
fix. Before I read this book I also
thought that investing my money into things was a waste.
I didn’t know that it was safe and that it could actually make me
money. I need to realize for
myself that saving money for my future and children is more important than
throwing my money on useless items for show.
I will apply both of these
concepts into my life. With the
first concept knowing where I am with wealth compared to other people gives me
an idea of what I need to work on.
It gives me motivation to get up to a PAW instead of UAW.
The two concepts I learned really go hand in hand with each other. I want to get to the point in my life
where I can save money and not live pay check to pay check.
I also want to have money saved for myself for retirement and for my
family when I pass away. My pan as
of right now is to start putting $200 away into my savings from each pay
check. I am also going to start
putting money into a CD account.
For the final thing I am greatly to cut back on expenses.
I am going to only buy things that are a real necessity.
Reflective
Writing- Reading the Millionaire Next Door was a great learning
experience. It opened my eyes a
lot to different financial circumstances. It also opened up my eyes to what
financial circumstance I am in.
Through reading The Millionaire Next Door it helped me achieve two SLCC
learning outcomes. The first is it
made me think critically. The
second is it made me acquire substantive knowledge.
The book really helped me
think critically about my life. It
made me realize that I have a lot financially to work on.
It really made me take a step back to look at my own life.
A lot of the stories I could relate to. It showed me where I was in the wealth
category, which was very low. It
gave me different ideas on how I can overcome this and save my money. So after reading it I had to think of
hat changes in my personal life I could make.
The second learning outcome
I achieved was that I acquired substantive knowledge.
From this book I gained the knowledge of what wealth really is. In the book it talks about how wealth
is not the same as income. If
someone makes a good income and spends it all they don’t get wealthier. Wealth is what you save and accumulate
it’s not what you spend. I never
thought about wealth this way. I
always said I was wealthy because I do make a lot.
I just can’t seem to save it.
This book said some really profound things that brought me a lot of
knowledge on finances.
Montgomery
The Millionaire Next Door
Questions
1-
Explain the following
concepts addressed in The Millionaire Next
Door
“Big Hat, No Cattle”- This saying came from
a middle age Texas man. This means
that people act like they have money but really they don’t.
They spend money on wishful thinking that they will make that money.
“Go to Hell Fund”- This means that someone
has enough money to live without working for ten or more years just fine.
PAW- PAW means the prodigious accumulator
of wealth. This is determined by a
person’s net worth if he/she is a PAW, UAW or AAW.
Being a PAW means that a person’s net worth is at or above 25% of wealth
all together. These people bring in
the most net worth.
UAW- UAW means under accumulator of
wealth. This is determined by a
person’s net worth if he/she is a PAW, UAW, or AAW.
Being a UAW means that a person’s net worth is below 25% of wealth all
together. These people bring in
the least amount of net worth of money.
They have money but spend any that they have.
2-
In the example of
Theodore “Teddy” J. Friend provide three reasons why Teddy is considered a
UAW. What was the message Teddy’s parents sent him about consumer
behavior?
Reason
#1-His net worth is less than one fourth the expected figure that is should
be.
Reason
#2- He spends all the money he makes, he has no savings to show for the
money he makes.
Reason
#3- His mentality is wrong.
He has the “significant others” mentality.
He is waiting for his significant other to save the money but that other
person is not real. He does not
want to change. He wants to just
make more to have more possessions to show for it.
Parents
Message- The message his parents told him was to have a high paying job to
buy the finer things in life.
They never had a savings account.
It was all about what you could show with your money.
They always went all out with anything they did.
3-
In the example of Mr.
W. W. Allan, a self-made multimillionaire: He never extended credit to people
who exhibited the “Big Hat, No Cattle” philosophy.
Why? Why did he decline the gift of a
Rolls-Royce?
Philosophy-
Mr. Allan never gave money to people who exhibited the “Big Hat, No Cattle”
philosophies because he knew he would never see that money again.
Those types of people spend the money that they have “hoping” to make
it.
Rolls-Royce-
Mr. Allan declined the Rolls-Royce because it was not him.
He claimed that he couldn’t throw his bloody fish in the back of the
Rolls. It was not his lifestyle to
have one. He didn’t want to change
himself just for a present.
4-
Regarding Economic
Outpatient Care (EOC): Define
EOC. List three reasons EOC can be harmful to the
recipient?
Define
EOC- EOC means economic outpatient care. This means that parent give their adult
children a lump sum of money. The
parents feel obligated that they still need to provide for their kids.
Reason
#1- It can be harmful because it is easier to spend others money than
yours. These families are not
learning how to save money. They
are not even learning how to take care of themselves.
Reason
#2- The private schools medical, dental and homes are rising in
prices. Those are the things most
EOC money is going towards. Which
means debt is going to rise.
Reason
#3- The parents that are giving this money away are not very wealthy
themselves. When they retire they
are not having money to live off of.
The kids are not able to support them either because they were too busy
spending the money rather than saving it.
5-
Now that you have
finished reading The Millionaire Next Door, give your thoughts.
What are the two concepts you found most useful?
How will you apply them into your life? In your own words,
give your thoughts.
The first concept that I
really found most useful for me was to find out what wealth category I was
in. I found that I was a UAW. This was not very surprising for me
because I am just a poor college student.
I have a lot of bills to pay for plus paying tuition is an extra
amount. What was more surprising
to me was the realization I came to when I was reading the book I just kept
thinking how I just spend any money I have. I don’t have a lot but I make it look
like I do. I just reminded myself a
lot like Teddy Friend and his parents.
The second concept that I
learned from this book was how much money I should be saving.
I need to stop spending my money on pointless items.
This book has really helped me understand I have a problem that I need to
fix. Before I read this book I also
thought that investing my money into things was a waste.
I didn’t know that it was safe and that it could actually make me
money. I need to realize for
myself that saving money for my future and children is more important than
throwing my money on useless items for show.
I will apply both of these
concepts into my life. With the
first concept knowing where I am with wealth compared to other people gives me
an idea of what I need to work on.
It gives me motivation to get up to a PAW instead of UAW.
The two concepts I learned really go hand in hand with each other. I want to get to the point in my life
where I can save money and not live pay check to pay check.
I also want to have money saved for myself for retirement and for my
family when I pass away. My pan as
of right now is to start putting $200 away into my savings from each pay
check. I am also going to start
putting money into a CD account.
For the final thing I am greatly to cut back on expenses.
I am going to only buy things that are a real necessity.
Reflective
Writing- Reading the Millionaire Next Door was a great learning
experience. It opened my eyes a
lot to different financial circumstances. It also opened up my eyes to what
financial circumstance I am in.
Through reading The Millionaire Next Door it helped me achieve two SLCC
learning outcomes. The first is it
made me think critically. The
second is it made me acquire substantive knowledge.
The book really helped me
think critically about my life. It
made me realize that I have a lot financially to work on.
It really made me take a step back to look at my own life.
A lot of the stories I could relate to. It showed me where I was in the wealth
category, which was very low. It
gave me different ideas on how I can overcome this and save my money. So after reading it I had to think of
hat changes in my personal life I could make.
The second learning outcome
I achieved was that I acquired substantive knowledge.
From this book I gained the knowledge of what wealth really is. In the book it talks about how wealth
is not the same as income. If
someone makes a good income and spends it all they don’t get wealthier. Wealth is what you save and accumulate
it’s not what you spend. I never
thought about wealth this way. I
always said I was wealthy because I do make a lot.
I just can’t seem to save it.
This book said some really profound things that brought me a lot of
knowledge on finances.