The rich are different from you and me, though maybe not quite like we think they are.
We imagine athletes, entertainers and, more recently, entrepreneurs, when we ponder the wealthy. But the enduring lesson of the classic personal finance book, “The Millionaire Next Door,” is this: Most of the rich grow wealthy because of modesty, thrift and prudence. They live happily in starter homes. They don’t subsidize irresponsible adult children. They have an allergy to luxury automobiles.
I doubt I’m the only one who returned to my well-worn copy to brush up this week, after the sad news of the death of one of the authors, Thomas J. Stanley, in a car accident. The book, which has sold more than three million copies since its publication in 1996, made its co-author, William D. Danko, a millionaire himself and helped Mr. Stanley achieve similar security and leave academia for research and writing.
Nearly 20 years later, Mr. Danko says he is still amazed at their good fortune, given that the book was never meant to be a money bible. Still, it stands today as a sort of promise that everyday people have a shot at accumulating true wealth through habits and not just outsize risk. That people in blue-collar businesses doing real work can, by saving well and not spending lavishly, achieve real comfort. And people continue to buy into it, even if such a path does require its own luck along the way to avoid job loss, natural disaster and health setbacks.
Mr. Stanley was a marketing professor when Mr. Danko first encountered him while a student in his class, a scholar more interested in the affluent as a target than as an adjective for the rest of us to try to tack in front of our names.
Mr. Stanley became a mentor, hiring him as a research assistant and encouraging him as he completed his master’s degree in business administration and Ph.D. The two got on well in part because of their similar blue-collar upbringings, Mr. Danko said, given that his father died when he was young and that Mr. Stanley was the son of a subway car driver. In 1993, Mr. Stanley told him about his idea for a book about wealthy people and asked him to be his partner on the project to crunch numbers and dig back into data the two had compiled earlier.
What they found was that there were plenty of people who lived in expensive houses with enormous mortgages in high-income neighborhoods who didn’t have much in the way of net worth. Lots of others, however, were quiet millionaires, having socked away plenty from ownership of the sorts of small businesses that young adults don’t clamor to get into. Mr. Danko has spoken often over the years of bovine semen distributors, with their long gloves and rubber boots and beat-up pickup trucks. All giggling aside, they are stand-ins for all sorts of unglamorous businesses that can yield small fortunes over time. Many of their owners and key employees are rolling in money, but you’d never know it by how they present themselves to the world.
The working title for the book in progress was “Big Hat, No Cattle,” calling to mind the phrase some people use to describe those who talk a good game but can’t back it up with action or power. But it was “The Millionaire Next Door” that ultimately stuck. They got a $50,000 advance, according to Mr. Danko, an enormous sum for a book by a couple of academics. He remembers the contract coming to him from Mr. Stanley with “PTL” written in the margins, for Praise the Lord. The publisher printed just 5,000 copies at first.
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SOURCE: N.Y. Times – Ron Lieber