I haven't read the The Millionaire Next Door: The Surprising Secrets of America's Wealthy, but I used to hear it quoted regularly on the radio back in the days when I had a commute to work.
The same example cropped up regularly during the show's personal finance segments: a description of the guy next door with a flash new car or a big house who looks like what we think a millionaire would look like.
But the real millionaire, the one with a substantial net worth and cash in the bank, quite likely has a much more modest used car sitting outside a more modest sized house. The type of house and car that wasn't bought to look the part to someone else.
In fairness, many pretend millionaires do have a millionaire story, but mostly in terms of their car and house loan repayments making the bankers millionaires!
For some reason, this car/house story re-entered my mind this week and I wondered how my choices would stack up. How would I measure up to the Millionaire Next Door?
I'm hoping to score well, surely I must have got these things right to let me retire at forty seven. Plus, I really don't like debt, so apart from mortgages, I've only had a few car loans over the past thirty years. I've never paid interest on a credit card nor had an overdraft. I was bought up being told that if something's worth having, it's worth saving up for. It's not bad advice.
So here we go, cars and houses, how do I measure up to the Millionaire Next Door?
Cars
These days, I'd rather not have a car at all but that's still in the slightly too difficult box. If we lived in a place with car sharing operators, I'd ditch the hunk of metal and plastic sitting on the driveway and go car-less. Hopefully that time isn't so far away, although Sally might need some persuading.
We've mostly been a two car family, although for a year in Hong Kong we had none, and then one car when we lived in a more remote village. We also reduced back to one car after I retired. But for 23 of the last 28 years, we were a two car family, although for 10 of those years my car came with my job.
Of the 15 cars that we bought, eleven were used and four were brand new. That said, we kept two of those brand new cars for 11 years, so the initial loss of value when we drove off the forecourt was spread over a lot of years.
Did we go too flash? Mostly not, although the brand new soft top Audi wasn't the smartest choice (but it was one of the cars kept for 11 years), nor was the used BMW coupé (oops, only kept 1 year). And did my VW Golf GTi work better than a mid range model?.. nope, although my son seemed to have a lot of fun with the GTi🤦♂️. At the end of the day, our list is a lot more Ford, Hyundai, Volkwagen and Peugeot than Audi and BMW.
What's the final verdict, how do I measure up to the Millionaire Next Door in the car stakes? I think I can hold my head up, there's plenty more green in the MND (Millionaire Next Door) score column than there is red. I'm giving myself a decent pass mark, not an A, but I think maybe a B or a B- is fair, and if you took me back to school, I'd take those grades any day of the week!
Houses
We've lived in a lot of houses! In the last 28 years we've called 19 different places home between the UK, Jamaica, Hong Kong, Dubai, South Africa and France. Sometimes it's been a short six month rental, while the longest time we spent in one house was eight years.
Were we living sensibly or living the high life trying to look like millionaires? Time to take the Millionaire Next Door house challenge.
Actually, I don't really know what the Millionaire Next Door house challenge is, so here are my rules - within the criteria is a Millionaire Next Door pass, beyond the criteria is the purvey of pretend millionaires:
Bedrooms: maximum of one spare bedroom is OK
Size: a judgement call as to whether we have adequate or an unnecessary/silly amount of space
Facilities: another judgement call, but things like a swimming pool are not necessary in my book
Of those 19 different places we've called home over the last 28 years, 17 of them didn't have too many bedrooms, weren't too big nor did they have unnecessary facilities. That's not bad, we got it right with 90% of the places we lived which must be worth an A grade.
But maybe I'm getting ahead of myself. What about those two houses that were a little less sensible (this is one of them)? They both had a swimming pool, two many spare bedrooms and whole areas/rooms that we barely even walked through let alone used. Although it was only two houses, we lived in them for the longest times, 9 of the 28 years. Put another way, we lived in good Millionaire Next Door houses for 68% of the time and pretend Millionaire Next Door Houses for 32%.
Looking at it that way, 68% probably doesn't give me an A grade. But we did love one of those houses and, although I probably wouldn't buy it again, I certainly don't have any regrets.
So what's my final score? The swimming pools have to forfeit the A grade, but the majority of our houses were still sensible. I'm going for a pass mark, the pool kind of pushes me towards a C, but I'm going to be kind to myself and bump it to a B.
My Millionaire Next Door final score
I gave myself a B/B- for cars and a B for housing, so it's a B overall. Not perfect, but a good pass. This is just a bit of fun, but there are of course real consequences to our decisions as to what housing and cars we choose.
Going bigger, flasher, newer etc generally costs more. We were mostly sensible, and those decisions helped me reach financial independence and then retire early at forty seven. But we also had cars and houses that we liked, we didn't go without, and still I achieved FIRE dates that I'm very happy with. I often come to the same, boring sounding conclusion, that somewhere in the middle, a happy medium, isn't a bad place to be.
Oops, Millionaire Next Door Newsflash!
We still drive a Nissan Qashqai, and we still live in a 61sqm (650 sq ft) apartment but, from a few weeks back we also live in a 74 sqm (794 sq ft) house. Hmm, two houses, even if neither is that big, that doesn't sound good. Thank goodness I've already calculated my Millionaire Next Door pass grade!