Friday, August 19, 2005

Luxembourg et Veritas: More on The Millionaire Next Door

Ok, I felt like I may have been a little harsh the other day. Another thing I DO like about The Millionaire Next Door: his formula for determining whether you're a PAW (Punk-Ass Whitedude? No, Prodigious Accumulator of Wealth.) All Things Financial has a good summary of it here. This formula helps clarify the very good point that it's not all about having a million dollars, it is about when in your life you have it, in relation to your yearly income. If you have $1 million in net worth a year before you retire at 65, and your yearly income is over $160k, you're not really considered "wealthy," or at least not a good accumulator of wealth. Basically, he's saying that if you make that much money a year, you have no excuse for not having saved more. But according to the formula, if you're 64 and you only make $70,000 a year, you are to be congratulated for what you have achieved by even getting to half a million. (But though you are good at accumulating wealth, you're not wealthy. If you're trying to retire on half a million, you'd better keep pinching your pennies, or hope you don't live too long! I'm not sure the formula makes as much sense when applied to older ages.)

But back to the stastistical silliness. In that list of smaller ethnic groups represented among millionaires, I noticed the curious presence of "Luxembourger." This really has to win the prize for great crashing irrelevance. Based on his sample size of about a thousand millionaires, I'm guessing maybe one of them came from Luxembourg. But does the lucrativity of this lucky Luxembourger support the author's theory that these small, recently arrived ethnic groups haven't yet "become fully socialized to our high-consumption lifestyle" and that's why they are well represented among high accumulators of wealth? Not likely: Luxembourg is one of the tiniest, wealthiest countries in the world.

Some information about Luxembourg from the CIA World Factbook:
Population: 468,571 (no, I didn't leave out any zeros. It's about as many people as live in New Orleans, or .007% of the world's population.)
Size: approximately 998 square miles. Smaller than Rhode Island.
GDP per capita: $58,900, which is about 47% higher than in the United States.
Quote: "The country enjoys an extraordinarily high standard of living."

Isn't it heartwarming to think of all those tired, poor, huddled masses of Luxembourgers coming to America to breathe free and become millionaires...


Jose Anes said...

America is full of financial opportunities. Yet, most of us waste them or let them pass by.

Lets try harder to increase our standard of living.

Lets stop thinking about what the government can provide, and lets start thinking about what our investments can provide.

Money and Investing.

Sue said...

I've been to Luxembourg and they are pretty rich there, why do they need to come here!

Anonymous said...


I just stumbled on this site (I think via-Craigslist)

Here are a few tips I have:

1. I noticed you pay $23.90/month for AOL. This means you use Dial-Up. Why use AOL? You can use NetZero Dial-Up for just $9.99. Also, AOL drastically hogs up RAM and slows down your computer (My college is one of the top colleges in the nation - CMU - in computers (the people there know their stuff), and everyone there is anti-AOL.

2. Credit cards. I assume you have excellent credit, because you care about your money. Why not get a credit card that offers 5% cash back on all purchases? Go to and look at the "Reward Credit Cards" section. It's like 5% off everything.

3. Do you shop at places often? Target? Best Buy? Why not get a gift card off eBay for reduced rates? Gift cards sell, on average for 90% of their real value, so it's like saving 10% off on all your purchases. When I go back to college (on Wed.), the only place worth shopping, is Target. I knew this. I went on Yahoo! Auctions and got a $200 gift card for only $165. It's like getting 17.5% off everything - and I dont even need to clip coupons. Which brings me to my next point

4. Coupons. Online. Coupon codes are wonderful. Google "Dell Coupon Code", or " Coupon Code", or, well you get the idea. You can save a lot of money online by googling coupon codes.

Just a few tips. But I'm sure you knew some of these tips already.


A poor 19-year old college student attending a $40k+ / yr college.


FMF said...

I've recently started a series of posts on my favorite financial book -- The Millionaire Next Door. Stop by when you get the chance -- you'll probably hate it. ;-)

Miguel said...

Why are you still plugging that piece of worthless crap book. If you set the bar at what the author defines as a PAW, then you'll be setting the bar pretty low. I thought you were on track the 1st time - the book is a total scam.

I happen to be a "millionaire" and I think the author is full of it.

DS Dan said...

Re: Anonymous
3) I've never tried this...I'm afraid o receiving a empty gift card and it turning into a he-said/she-said situation in which I get screwed. Have you had good or bad experiences with this?
4) If you type in nonsense in their A9 search engine periodically, you get a 1.57% discount for using A9 on everything on Amazon. You'll know you have it when the logo in the top left turns into a greek pi symbol.