Kelvin Taylor

FIN-1050 ePortfolio
The Millionaire Next Door

1. A. The concept of Big Hat, No Cattle refers to someone who lives the
life of luxury and wealth, or at lease appears to live that life, when they
dont actually have the money or net worth to support it.
B. A Go to Hell Fund is the money accumulated to be able to live
comfortably for 10 years or longer without having to work or depend on
an income.
2. Mr. Richards has put an emphasis on investing his money and learned to
make his money work for him. He is also smarter and more frugal with his
money. Mr. Ford has the idea that wealth is accumulated by his income
and his net worth reflects this. Mr. Ford spends most of the money he
makes and is not frugal enough with his money.
3. A. The cornerstone of wealth-building is being frugal with your money.
B. Most people will never become wealthy in one generation if they are
married to people who are wasteful.
C. Upon giving his wife $8 million of stock, from taking his company
public, his wife continued to clip coupons.
D. Millionaires need to budget their money so they can continue to
increase their net wealth. That kind of money can still be spent quickly, so
budgeting is crucial.
4. A. He measures success by what the material objects he owns. His focus
and money goes towards possessions like boats, houses, and cars.
B. His parents could have taught him that saving and investing was more
important than the need to earn more to spend more.
5. He has sold his financial independence because almost all of his income
is going towards his expenses. Like most UAWs, he is spending money at
the same rate he is earning it which results in him being a slave to his
money and nearly living paycheck to paycheck.
6. He declined the gift of the Rolls-Royce simply because it was too nice for
his current lifestyle. He didn't want the workers in the restaurants he
visited to feel exploited, and he felt uncomfortable driving around in such

a nice car when he didn't need it. It wasn't necessary for the lifestyle he
was living and for his fishing hobby.
7. A. Economic Outpatient Care is the economic gifts, or "Acts of Kindness",
given to adult children by their parents or grandparents. These usually
include money or valuable assets.
B. He was upset upon learning that his parents were donating their
property to the local private college. He felt that this property belonged to
him, and he was entitled to receive it.
C. Because he was a victim of EOC, he felt like it was his money being
taken away. Victims of EOC tend to feel entitled, and that their parents
net worth is their own net worth.
D. The fundamental rule regarding wealth building is to always live below
your means, no matter what your income is. So long as you are able to
accomplish this, you will be able to increase your net worth.

8. A. The family style, or advice, that they were given was that woman
shouldn't have careers. Sarah wanted to be financially independent and
went on to have a career, become very successful, and establish herself
as a PAW. Meanwhile, her sister Alice was quite the opposite. She was
very financially dependent upon her father, and was a victim of EOC. It
was a constant struggle for her throughout her life because she did not
establish financial independence early on like her sister.
B. He told him that it's not about how much money he makes, but what
he accomplishes that matters. So long as he focuses on becoming the
best he can be, the money will follow.
9. The root cause for the conflict between Mr. W and the residents of the
vacation condominiums was that their lifestyles clashed. Mr. W was a
PAW and definitely lived within his means. He did not drive the fanciest
cars or live the lavish lifestyle that the other residents lived. Since the
other residents were UAW's, they did not like that Mr. W did not try and fit
in. They were so concerned about image and money, that Mr. W's PAW
lifestyle irritated them.
10. A. My perception on millionaires has definitely changed. I have always
understood the basic concepts taught in this book, but was amazed at
how much easier it can be than I previously thought. I consider myself
more of a PAW, or at least I am striving to become more like one as much
as I can.

I understand the importance of living within my means, and do the best I

can to disperse my savings into various investments along the way. I
previously thought that your salary was still one of the key factors to
becoming a millionaire. I look at doctors and CEO's who appear to be rich,
and I may have falsely perceived this based off of their salary and
lifestyles. I also learned that while many people may appear to live the life
of a millionaire, they may be UAW's just giving off that impression.
After reading this book, I began to think about all the people I know who
are millionaires and what their personalities are like. So many of them
share the characteristics of a PAW described in this book. There are also
many people I know who have a very high salary, and still seem to be
struggling or living paycheck to paycheck. Being able to look at real life
examples has helped me understand the makings of a millionaire.
B. The two concepts that I found most useful was being able to discern
between a PAW and UAW, and becoming financially independent at a
young age. I knew before reading this book that there were people who
lived within their means and were smart with their money, and then there
were those people who liked to appear rich and successful. This book
helped define those people for me, and make other things more clear.
After reading how much more successful PAW's become, I have really
made it a goal to structure my life and spending this way.
My mind was really opened up to the various ways that restrict people
from becoming financially independent. Although I have never been given
anything from my parents, and have always been taught to work hard, I
need to work hard to think like I am entitled to anything. There are times
where I think I deserve my parents house or other assets when they pass
away. I learned in this book the importance of becoming financially
independent, and how to achieve this.
These two concepts really go hand in hand. The key attribute of a PAW is
their financial independence. I now have a better understanding of how
this independence is accomplished, and that it doesn't always depend on
how high your salary is. If I work on forming the habits of a PAW, I will be
able to establish the financial independence that I want.

C. One specific thing that I plan on changing is becoming more frugal so that
I can live within my means even better. One thing I have always struggled
with is keeping to a strict budget. I am a pretty good spender, and do my
best to save my money, but I know that sticking to a strict budget will
help me understand where my money is going and how I can save more.

My wife sometimes struggles with being wasteful. I think that sitting down
and coming up with goals as a couple, and a plan to accomplish them will
help us work well together in accomplishing more financial independence.
The budget will help her and I understand what we are wasting our money
on.
Another way I can become more frugal is to actually calculate my net
worth and set goals for the future. I think that by planning a budget on my
current income, I will be able to be able to stick to that budget better
when my income increases. That will result in a higher net worth and help
me work towards my goals.

Reflective Writing
The biggest learning outcome I was able to achieve through completing this
assignment was thinking critically and creatively. Although many of the
answers were clearly defined in the book, I had to think critically and
creatively to understand the answers. Thinking more in depth about the
answers helped me to understand them better and learn how to apply them
in my life. One thing that I have found about most of the business classes I
have taken is that critical thinking is crucial in the business world. Critical
thinking goes hand in hand with the mindset it takes to become more
financially independent.
I also think that this assignment helped me to communicate effectively. I had
to clearly explain my answers throughout this paper. One of the most difficult
things to do it to take your critical and creative thoughts and write them
down so that others can understand your thought process. I really enjoyed
this book, and felt like I got a lot out of it. I wanted to be able to share that
information with others in a way that reflects my understanding and
excitement of the materials.