Frugal Mindset | Frugal, Wealthy and Wise

An Open Letter to Millennials

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Dear Millennials,

You have a tough go of it and I feel for you. My generation the Baby Boomers grew up in post-war American prosperity which supposedly knew no bounds. However, by the 70s and 80s, fissures had started forming in the Great American Dream.

In contrast, most of you came of age smack dab in the middle of the Great Recession, the worst economic downturn of three generations. Meantime, you were told that education was worth whatever it cost, even if it meant taking out staggering student loans to pay for it.

Gone forever is a lifetime career that your grandfather enjoyed at a large corporate employer, replete with a pension and retiree benefits. Growing up, you witnessed your own parents dealing with the anxiety of relentless layoffs. You are probably disillusioned by the mind-numbing grind of a typical corporate work place and hey, I can’t blame you, having spent decades there.

But know this: you have tremendous potential and opportunity. First and foremost, you have the gift of time; time to see investments made now be multiplied many times over. You are resourceful and entrepreneurial because, well, you have to be. You know how to hustle, how to string several part-time jobs together to pay the rent. You have experienced surviving in tough times.

Are you able to begin saving? I must ask this question since I see so many of you at outdoor cafes throughout Philadelphia. But understand; I am grateful that so many of you who have put down roots in Philly. Your presence has revitalized the city. You deemed Philadelphia cool enough that you chose it over moving to Austin, Seattle or New York. And not just Philadelphia, either. Inner cities throughout the nation are booming, thanks to your efforts, energy, and vitality.

I want to hear from you and get your input, dear millennials. What are your most pressing questions about finances? How are you handling student load debt? Concerns about health care? Future aspirations? Marriage and starting families? Do you have an action plan in place for building long-term wealth? What help do you need along the way? What topics do you want to see addressed in future postings?

I look forward to learning more about your perspective on life in the twenty-first century. And please tell friends about Frugal, Wealthy and Wise.

Cheers, Paul

This posting is dedicated to my two favorite millennials: Benjamin and Abigail

Here are some avenues for providing feedback:

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Practical, Pithy and Poetic: Proverbs Yields Plenty of Advice on Wealth and Money

Photo credit: KOREphotos via Foter.com / CC BY-NC-SA

The book of Proverbs, found in the Bible and the Jewish Ketuvim (Writings), is a truly remarkable work of literature. It serves up a continuous barrage of practical advice and astute observations on any number of topics. It is truly timeless: written some three millennia ago, it remains uncannily relevant into the twenty-first century.

I believe there is great benefit in studying the book of Proverbs – no matter what your religious beliefs, inclinations or background may be.

In a brief reading of Proverbs, I identified over 70 passages that address wealth, finances and money. The first passage is found at the bottom of this article

In the weeks to come, I plan to post a new proverb on the weekdays that I’m not publishing other articles. This should take us well into 2017.

Enjoy. And profit from the wisdom found in Proverbs.

Cheers, Paul

Proverb #1: Honor the Lord with your wealth and with the firstfruits of all your produce; then your barns will be filled with plenty, and your vats will be bursting with wine. Proverbs 3:9-10 (ESV)

P.S. A large portion of Proverbs is ascribed to Solomon, king of Israel: dates for Solomon’s reign are circa 970 to 931 BC. He’s the guy who said “there is nothing new under the sun.”

And for examples of contemporary Jewish ‘wisdom’, I give you…..

Showing up is 80 percent of life. — Woody Allen

Success breeds complacency. Complacency breeds failure. Only the paranoid survive. — Andy Grove (1936-2016) co-founder of the Intel Corporation. As a Jewish lad growing up in Nazi-occupied Hungary, Mr. Grove knew a thing or two about paranoia.

Scripture quotations are from the ESV^® Bible (The Holy Bible, English Standard Version^®), copyright © 2001 by Crossway, a publishing ministry of Good News Publishers. Used by permission. All rights reserved.

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You can’t spend what you ain’t got: Why You Need to Automate Your Savings

You can’t spend what you ain’t got – this line is part of a song by McKinley Morganfield, aka bluesman Muddy Waters (You Can’t Lose What You Never Had)

In reality, people today do spend what they don’t have and get buried in debt. But I seriously doubt Mr. Morganfield had an AMEX or Visa in his pocket when he left Mississippi for Chicago. Continue reading “You can’t spend what you ain’t got: Why You Need to Automate Your Savings”

The Morning Latte: Traveling the Road to Ruin on 4 Dollars a Day?

Oh that evil, much maligned, Four Dollar Latte…

Latte Author David Bach (The Automatic Millionaire) coined the term ‘Latte Factor’ over ten years ago. The point being made: small, habitual (shall we say, mindless) expenditures add up over time. This leads to a missed opportunity to save, invest and build wealth. I also make a similar argument in ‘Catch the Little Foxes’.

So, let’s pick on the 4-dollar latte. Say you stop at a local coffee shop to pick one up most weekday mornings. We will just focus on the financial cost and not the time you spend waiting in the store queue for said latte to be prepared.

That’s $4 a day, $20 a week, approximately $1,000 a year. Continue reading “The Morning Latte: Traveling the Road to Ruin on 4 Dollars a Day?”

Growin’ Up Poor in Memphis

Memphis Bicycle 2 My parents were ‘Depression babies’ born in 1931. Mom’s family managed to hang onto their farm in Missouri but Dad’s family lost their home in Detroit. Mom and Dad met at Concordia Teacher’s College in River Forest, Illinois, just outside Chicago. They were the first generation in their families to attend college.

We moved to Memphis in 1958 when I was 3. Dad was a teacher and later the principal of a Lutheran grade school. (Yes, being Lutheran in the South can get really weird. Nowadays, I’m Presbyterian and live in a neighborhood that’s predominantly Jewish and Irish Catholic.)

Memphis in the late ‘50s and early ‘60s still had vestiges of the Jim Crow South – White and Colored restrooms. Sharecropper shacks along Highway 61. Sanitation workers carrying mounds of refuse in a washtub on top of their heads. Mom and Dad, to their credit, raised us to not harbor prejudice; we were taught that all people are created in the image of God.

When we moved to Memphis, it was just my sister Lisa and me; we would eventually be joined by 5 other siblings. Supporting 7 children on a modest school teacher’s salary was a challenge, to say the least. We never lacked for basic necessities but wants were almost always put on hold. Mom was a fabulous cook but there were times that she would have to get really, really resourceful when there was more month than money. We wore hand-me-down clothing, rode hand-me-down bikes, rarely ate out. Vacations consisted of staying with either one set of grandparents or another. There was a nagging feeling, that I’m sure a many poor people feel: to be on the outside looking in.

For us kids, if we wanted something, we had to work to pay for it: dues for the boy scout troop, a bike, an occasional Coca Cola. I collected soft drink bottles in the neighborhood for the 2 cent deposit refund. When I turned 12 and was old enough to get a paper route, it was like hitting the lottery. I was earning $30 a month! Mowing lawns during the summer brought in additional income.

My high school was situated in a working class neighborhood. Teachers were very dedicated but resources thin and options limited. I marvel at the vast differences between my high school experience and those of my kids’ attending a public high school in the Philadelphia ‘burbs.

It was a forgone conclusion that my siblings and I were on our own when it came to college. At the urging of a high school math teacher, I applied for and got a scholarship at Memphis State’s Herff College of Engineering. The scholarship was $500 per year and almost covered tuition for two semesters. Most semesters, I worked part time while carrying a full academic load. I lived at home.

Two brothers and two sisters followed me to study engineering at Memphis State (now University of Memphis). Among us, we have one civil engineer, two mechanical engineers and two electrical engineers. For all of us, an engineering degree was a ticket to a better life. Upon graduation, we secured jobs with the likes of Procter and Gamble, Hewlett Packard and the National Security Agency.

Sadly, the city of Memphis still struggles economically. Its sister city Nashville has eclipsed it in population and economic growth. Today, Nashville gets mentioned in the same sentence as Austin and Charlotte while, Memphis gets mentioned in the same sentence as Buffalo, Cleveland and Detroit.

I offer you the following lessons learned from Growing Up Poor in Memphis:

Whether rich or poor, parents need to model and teach frugality to their children.
Don’t indulge your children’s every whim. A child need to work for and set goals for attaining a portion of the things they want.
The oppression of poverty extends beyond lacking things. It is also a state of mind, that feeling of always “being on the outside looking in”.
A marketable college degree can still be a ticket to upward mobility. I dare say that selection of a college major is more important than the status of the educational institution.
Sadly, the cost of college has far out-paced the general cost of living. While being ever more essential for economic advancement, a college degree is increasing out of reach for many Americans.

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Revisiting The Millionaire Next Door

Twenty years ago this October, The Millionaire Next Door, authored by Thomas Stanley and William Danko, made its debut. As a book, it qualifies as a timeless classic on personal finance. It was published at a time prior to the Dot-Com boom, the Dot-Com bust, 9/11 and the Great Recession. Yet, its insights on accumulating wealth remain relevant today.

No it’s not a book on managing one’s personal finances per se, but an analysis of ‘ordinary’ millionaires and how they got there. The main message: most millionaires don’t look the part or live a flashy lifestyle. They live well below their means and have invested the difference. Many accumulate their wealth as business owners. They tend to drive older cars and live in modest homes.

Continue reading “Revisiting The Millionaire Next Door”