Starve your kids
Posted on February 9, 2006 - Filed Under Rant |
One of my kindred spirits, Nina, wrote on her blog about an Oprah Winfrey episode which aired back in 2004. The episode a financial expert who wrote a book called "The Automatic Millionaire". His philosphy is actually quite simple: cut out little things in your day, take that money and invest it, and after a certain period of time you’ll be a millionaire.
Yes, you too can be a millionaire by cutting out a cup of coffee. Or starving your kids.
What gives here?
Oprah decided to help out us out by putting a calculator on her website based on this guy’s premises. I used this calculator to see how I could become a millionaire. On this calculator, there is a list of items that people commonly spend money on. Most of these items, such as cigarettes, candy, soda, etc do not apply to me because I don’t buy them.
However there are three things on the list that do apply to me.
First is coffee. Guilty as charged. I drink one, sometimes two, shots of nature’s sweetest nectar a day. Sometimes, the sludge in my office finds its way into my tummy. I figured I spend $2/day. Second is gasoline. I spend roughly $40/week on gas, which is $5 a day. Third is cell phone. I spend roughly $1/day on my cell phone.
The author’s philosophy is this: If the yearly total of all these is greater than $1850/year, I should take that money invest it at 10% and in 41 years I’ll have $1 million dollars.
Forty-one years. Imagine that. There are murderers who serve less time in prison.
Ten Percent? Which mutual fund did he pick that generates 10% return a year? Oh, that’s right. He didn’t. Maybe he wants us to invest in the "Automatic Millionaire Investment Fund".
What does this mean? How does this impact me?
I can’t have coffee for 41 years. By the time I have $1 million dollars, I’ll be too old to drink coffee because my doctor will advise against it. Something about a heart attack.
Driving is no longer an option. My money for gas is now being saved. How am I suppose to get to work? My boss will definitely love that. "Sorry sir but I can’t drive to work anymore because I’m saving that money for when I’m 71." The author fails to discuss how I can save money by losing my job.
I’m turning my cell phone off. "Sorry mom and dad but I can’t talk to you for 41 years because I want to have a million dollars when I’m 71!"
There are other items that he lists on his calculator that completely confuse me. Items such as Newspapers, Magazines, Kid’s Lunches . . . what parent in their right mind would deny their kids lunch so that the parent can be a millionaire one day?
I ranted about this at lunch today with my buddy Google. He summed it up best with this one sentence:
Google: I’ll be dead in 41 years.
People argue that this guy’s principles are true when put into practice. I won’t argue with that. You can also stack elephants, one on top of the other, and build an elephant bridge to the moon. The point being is that I seriously have to question the quality of life that these people have.
The formula could be better articulated as this: Deprivation = Millionaire. If you deprive yourself of all those little things that you love in order to be a millionaire, then you’ve lost that which makes us all special and unique. That is to be able to enjoy this life that has been given to all of us.
The author should have called his book "Automatically a Millionaire" because that’s exactly what happened. No doubt the next day after the interview on Oprah, the man’s book shot to number 1 on Amazon.com and stayed there for several weeks.
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3 Responses to “Starve your kids”
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I’m reading this book right now, not because Oprah recommended it, but because it was mentioned on the Vanguard Diehards forum at Morningstar. I think you missed the point of this book (it wasn’t obvious from your post whether or not you actually watched the Oprah episode you mentioned). This book is primarily aimed at low to moderate income level households. If you make enough money that you can save enough of your income to secure your retirement and still buy those $2 coffees everyday, then you’re right, there’s no reason to deprive yourself. But, if your choice is between buying that coffee OR saving for retirement, then you’re going to be in serious trouble because you won’t be able to retire (or retire as comfortably) if you chose to spend you money on pleasures you “couldn’t live without.” The author does not state that you should starve your kids! He’s talking about the difference between having them pack their lunch versus buying food at school. This book is not about depriving yourself of any joy in life. It’s about trying to get people to realize that they need to save for retirement and most people DO have the ability to save some because they spend a lot of money on nonessential items. You don’t necessarily want to be 70 years old and trying to find work to support yourself at the same level as in your 30s because life wasn’t worth living without a $2 coffee.
Michael, thanks for the comment. The author argues that cutting out a $2 cup of coffee/day will make you a millionaire in 41 years. Let me ask you one question: Is that something that you really want to do? Do you really want to spend the rest of your life, determining which items are “essential” or “non-essential”?
If you answered “yes” to those questions, then I feel sorry for you. I can only think of one word “bland”.
The entire point of my blog is to follow the theory that passive income is the ticket to financial independence. I am working diligently to raise my quality of life, not degrade it. I refuse to give up my $2 cup of coffee/day. I accept responsibility for this by increasing my income $2/day through passive income.
For the questions I asked up above, I believe that you replied “No.” Afterall, you’re reading the Vanguard Forums at Morningstar. Add “Rich Dad, Poor Dad” to your book reading list. It’s $8 at amazon.com for a used one.
Wow - love this exchange - been trying to make this point on my blog also. Your blog is very interesting too. All these David Bach, Suze Orman types and the PF bloggers that follow them are depressing. Always guilting about spending money instead of asking how to make more of it. Read Rich Dad Poor Dad and was very illuminating for me too.. and I’m an economics professor