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FIN 1050
After reading The Millionaire Next Door, answer the following twelve (12) questions and
1. Explain the following two (2) concepts addressed in The Millionaire Next Door
Big Hat, No Cattle refers to people who look and play the part of a very financially
successful person even when theyre not. The less you spend on unnecessary or expensive
items the more money you will have in the end. This is how millionaires tend to live their
Go To Hell Fund
A go-to-hell fund is a fund that has enough money to allow you to not work for ten or more
years.
2. In the examples of Mr. Richards (PAW) & Mr. Ford (UAW), both men are close in age &
yearly income. Explain why Mr. Richards has nearly five times the net worth of Mr.
Mr. Richards is a mobile-home dealer and because of that he doesnt have a certain standard
to live up to. He doesnt have to live an upper-class life so he spends less money in his day to
day life. Mr. Ford has a career as a lawyer and therefore has to spend more of his income to
live up to the standard that has been set because of his high-profile career.
3. UAWs live beyond their means. PAWs are builders of wealth. Describe someone you
know who is either a UAW or PAW (or is headed in that direction) & what can be
My brother is a classic example of a UAW. He always has to have the nicest clothes and
shoes but he cant even afford child support for his three children and has to live at home at
36 years old. He couldnt afford rent because he bought his one year old son Jordan shoes. I
strive to save my money and specifically save as much as I can while I still live at home. I
am going into engineering so I can make a decent amount of money to provide for my future
Most people will never become wealthy in one generation if they are married to people who
are __________.
Wasteful. As a couple, you cant accumulate wealth if your spouse is always wanting to buy
Upon giving his wife $8 million of stock, from taking his company public, what did his wife
continue doing?
She continued to cut coupons for their groceries that week because she still had to do her
Saturday-morning chores.
Just because you are wealthy and have money doesnt mean you shouldnt budget where
your money goes. Whether you make $20,000 or $2,000,000 a year, you need to know what
your money is going to and when it will run out. Millionaires maintain their millionaire status
by budgeting.
5. In the example of Theodore Teddy J. Friend and his parents, answer the following two
(2) questions:
The book describes Teddy as being possessed by possessions. Explain this comment.
Teddy was raised in a very poor family so once he grew up he wanted to be visibly wealthy.
He wants the whole world to know he has money because he didnt when he was growing up
so he works to purchase things because he thinks they are signs of financial success.
What was the small change Teddys parents could have made that would put them in the
His parents always spent all of their income, they never saved. Whenever their income was
increased they would immediately plan to spend it. This way of life and way of spending
severely impacted their son and made him develop a skewed outlook on wealth.
He turned down his employers offer to increase his wealth because he claimed he couldnt
afford it. He had so many other payments that he didnt have any money left over to invest
and he wont be financially independent until he reevaluates his priorities and changes his
spending habits.
7. If your goal is to become financially independent, what should your plan be? (Be
specific).
To become financially independent, you need to sacrifice and look at the big picture.
Sacrificing high consumption today will lead you to financial independence tomorrow
meaning you need to look at what is really necessary for your everyday life and look at what
He knows what comes with owning a status product. Once you own one status product
people start question you on why you dont own more and it starts a downward spiral. He
specifically stated that owning that vehicle wasnt compatible with his lifestyle; he fishes
often and wouldnt feel comfortable throwing fish in the back seat of a Rolls-Royce.
9. Regarding Economic Outpatient Care (EOC), answer the following three (3) questions:
What is the likely financial outcome for Mary and Lamar once her mother passes away?
Once Marys mother passes away and they are no longer the recipients of the monetary gifts
from her parents they will struggle to continue to live the lifestyle they are living. Even with
a hefty inheritance, living the life style they are accustomed to, they will probably blow
through it fairly quickly and will struggle without the extra income.
The parents of Ms. BPF were determined to give their daughter every advantage. After they
When talking to Ms. BPF they found that she actually had significantly more fear about her
business and future than a typical affluent business owner because a typical affluent business
owner has gone through enough trials that they have overcome the majority of their fears.
Ms. BPF has many fears about her business, her future, and how her siblings will perceive
In the case of Laura (A Woman of Great Courage), explain the primary message derived
The primary message derived from her story is that regardless of what happens to you in life
if you choose to be successful, you can be. Her husband left her for his secretary and instead
of moping around and just going back to the job that she knew she made something of herself
and used all her various skills to start her very successful business.
10. Regarding Affirmative Action, Family Style, answer the following two (2) questions:
In the example of sisters Ann and Beth, describe the consequences to Beth and her husband
Beth and her husband are under the parents control. Beths mother essentially picked out
their house, is at the house constantly, and they live very close to the parents. Beths husband
is seen as inferior and is constantly disrespected and demeaned expected to act more as a
servant than a part of the family. Beth and her husband couldnt live their lifestyle without
her parents help so they have been conditioned to deal with whatever they have to to
Weakening the weak is when instead of helping someone grow by addressing their
weaknesses and fixing them, you give them a free pass to not have to deal with their
weakness. In one example, they talked about a child who had a verbal deficiency problem.
Instead of getting him tutors and helping to fix the problem they transferred schools but when
that didnt fix the problem the father started writing his sons papers for him and he still
11. Explain the root cause for the conflict between Mr. W & the residents of the vacation
It didnt have to do with the dog. That may have been what initially started it but it seems
that he was upset about how much the other owners of the condominiums were concerned
about how people looked. The other owners were so worried about how it would look having
blue-collar employees invading their space that they forgot all about the dog. Mr. W didnt
12. Now that you have finished reading The Millionaire Next Door, answer the following
What are the two (2) concepts you found most useful? Explain why.
The importance of setting a budget. I have a monthly budget that I tweak constantly
throughout the month to meet my needs for that month. Ive always known setting a budget
was important and I know I wouldnt survive without mine because I would end up spending
all my money on useless garbage but reading the examples of millionaires who stick to a
strict budget still makes me realize that this skill is something that I will use for the rest of
I also really enjoyed reading about the concept of weakening the weak. I grew up in a
household where I was expected to rise up to a challenge so whenever I had a problem I fixed
it. I was never given insane handouts or given something just because I was struggling. I
worked for every grade in high school and I worked hard for every job Ive been hired for. I
look at how many examples there were in this book of affluent parents just throwing
handouts to their kids and it was just very shocking at how common it actually is.
Give a specific example of one small change you can make to improve your financial well-
being.
I would like to start saving 10% of my income every month so I can continue to save more
money. Even though it is a very small amount its better than what most of the adults my age
are saving and it will be a good starter savings account to build on once I am in my career. I
also think working to pay off my credit card and even starting at my student loans would be a
great change to make because the less debt Im in when I graduate, the better off I will be in
the future.
Reflective Writing
Compose 2-3 paragraphs explaining how completing this assignment helped you achieve at least
In this assignment, I have had to engage in reflective thinking, and demonstrate higher-order
skills. This assignment has made me reflect a lot on what my plans are for future retirement,
which is something I wasnt even worried about before. Ive also demonstrated higher-order
skills. For instance, I have analyzed different situations and the outcomes that came from them
and evaluated my own life and the lives of others around me in accordance with some situations
This assignment required me to use contemporary computer software and hardware. I had to use
Microsoft Word to complete the assignment. I also read the book online on a PDF document, so I
used my computer skills to find that online. I also had to figure out how to create my website
(and I had a lot of fun making it) to start my portfolio because this is the first class Ive taken that