If you haven’t read The Millionaire Next Door, by Dr. Thomas Stanley & Dr. Willian Danko, you’re missing a treat. The first thing I recall about this book is his characterization of millionaires in reality.
In contrast I remember watching The Apprentice and seeing Donard Trump drive up to his house–a really sweet house–in a really sweet Mercedes Benz convertible. You may think this is what a typical millionaire lives like. If so, you’re wrong. The typical millionaire’s house looks just like yours. S/He drives a Ford F-150 pickup truck.
Dave Ramsey regularly has a “millionaire theme hour” where he only takes calls from millionaires. Mr. Ramsey is a big proponent of Drs. Stanley & Danko and his callers invariably confirm their thesis.
These guys distinguish between prodidgous accumulators of wealth (PAWs) and under accumulators of wealth (UAWs). I can’t do them justice in this post so you really ought to read their book. But one hallmark of the UAW is maintaining the appearance of wealth. Buy the too-expensive house then peer-pressure from your neighbors makes you buy the too-expensive car, then you send the kids to the too-expensive private school, and vacation in the too-expensive place, et cetera, et cetera, ad paupertas. People with above-normal incomes impoverish themselves trying to look like they are rich. They spend so much money appearing rich that they cannot save the money to join the PAWs who actually are rich.
Creating a false appearance of riches is not always a bad thing. Salesmen understand that their appearance–real or otherwise–is a key to getting the sale. Consider Mr. Trump above. He was selling The Apprentice to an audience who might aspire to business success and would be motivated by the image of its trappings. Meanwhile real millionaires had the television turned off and were reading a book during this TV show’s run. Millionaires are more likely to spend an evening with a good book than in front of the boob tube. Mr. Trump was on TV which is an appearance not substance medium of communication.
In my youth I was recruited by friends to join Amway. I had the opportunity to sit in someone’s living room and listen to a double-diamond cosmic direct distributor give a motivational talk and extole the benefits of selling Amway. Part of the sales pitch was the nice car, the expensive suit, and all the trimmings of prosperity. You can’t sell the American Dream wearing sack-cloth and ashes. Mr. Trump may be evil, but he’s not stupid. He is a salesman and a very good one.
If you want to use the promise of wealth to motivate people to follow you, you must engage in some conspicuous consumption. I’ve noticed this in the start-up companies I’ve been involved with. The founder was invariably a good salesman and it showed.
This is one exception where it makes sense to appear richer than you really are.
But most of the time, it makes more sense to appear poorer than you really are. Contrast two guys driving into an auto repair place with a Ford and a Mercedes, respectively. Who is more likely to get a bargain? “Oh, he can afford it. Look at that car he’s driving.” Frankly, it is better to be regarded for who you are than for what you have. Deal honestly and fairly while making no show of your net worth. This can be a pride thing. If you think that working in a car wash is beneath you, then you should probably find work in a car wash just to get over yourself.
Me, I can’t wait for baseball season so I can get a job as an usher at the local ballpark.
I had just swallowed the kool-aid inherent within these considerations when I happened to go for groceries. At the corner where I turn into the store there stood a lady holding up a sign. My evil shadow-self calls this failure theater. The beggar in America uses his free-speech rights to ask for charitable gifts. Such a beggar trades upon his appearance of poverty and we’ve heard stories of the beggar taking his day’s earnings and getting into a nicer car than most of the people he solicited.
I don’t approve, but it is a free country.
This is my one exception to the principle of stealth wealth. Normally, I believe I ought to have the self-assurance to eschew the appearance of riches. Don’t act rich if you aren’t rich. The UAWs of this world are trying to keep up with the Joneses who are trying to keep up with them. Nobody gets rich off conspicuous consumption except finance companies.
Happily, I am neither a beggar nor a salesman, I don’t have to present the false front of either poverty nor prosperity. If you’re a beggar, buy a winter-beater or hitch-hike to your corner lest someone discover your fakery. If you’re a salesman, wear a Hong Kong knock-off Rolex until you can buy the real thing with cash. Otherwise, live as humbly and honestly as your finances allow.
And pass the catfood.