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Saturday, April 11, 2009

How To Become a Millionaire

The old adage is that if you want to be someone, then act like they do. Dress For Success books are built around the idea that if you want to be the boss, you have to look like bosses look.

This is the first post in a series on how I've used good personal finance books to build a six-figure nest egg over the past 9 years. Maybe these steps will work for you!

Now I know that the odds of me becoming a Millionaire are pretty slim, considering my age and the big bumps in my history. But I know I can do better than I am doing now because I have a history of success -- and you will too, if you follow at least some of these steps.

So I'm working millionaire habits into my life by doing some of the things (not all of the things) that millionaires do as outlined in several books, the first of which is The Millionaire Mind, by Thomas J. Stanley, Ph.D. I've recommended it before, and continue to learn more from it. Here is how you can follow some of the advice from that book and add to your net worth.

1) Buy a used copy from Amazon, if you want to buy one that you can mark up in. I've gotten books from's used sellers as low as 15 cents -- shipping has been the biggest expense. Otherwise, get it from the library.

2) Studying and copy the success factors:

a) Hire a good CPA. I hired a CPA to review my tax forms this year. It helped me save hours of work around a confusing issue with my 529 plans for my daughter. Does this sound counterintuitive? I thought so, until I hired someone who handles small businesses. She understands my situation and saved me enough money by pointing out an obscure deduction that her fee of $150 was paid for.

"More than 2/34d of self-made millionaires in America rely on the advice of CPAs and attorneys." A direct quote from page 153 of the Millionaire Mind book.

Also, after taking a 12 month diary of the lifestyle activities of millionaires, it was surprising to see how much time wasn't spent on yachts, eating out or traveling. 85% of all millionaires inteviewed spent time consulting with a tax expert. No other activity was as common among all the millionaires interview (733). You can see other results on page 373 of the book.

Considering how much of my income is eaten up by taxes, I can only imagine how much a millionaire spends, so the time allocation makes sense. I'm going to spend more time learning about legitimate tax deducations. I file under head of household until my daughter is 23, so I don't have to do too much bobing and weaving, but I need to start getting my house in order for that day.

b) Millionaires clip coupons and shop at Sam's or Costco. I went to Sam's today to load up on toilet paper, and cat litter. Toilet paper was .002 per sheet (36 rolls * 200 sheets per role = 7200 sheets at $14.83 per package for Quilted Northern). Charmin was twice the price.

Cat litter was .34 cents per pound for Fresh Step. I splurged on the name brand because I live in an apartment and don't want the adored cat causing a stink, so I paid a little higher than my target rate of .325 per pound, which is available with the off brands.

I saved $10 because I used a gift card that I earned as a special when I renewed my Sam's Club membership.

c) According to Dr. Stanley's research, more millionaires spend free time with family and friends than yachting. They understand how much value friendships bring to happy lives.

So I took a walk with a friend of mine today who is going through a rough time. We got to reconnect!

I also want to entertain at home at least once in the next 30 days. So I have a wine tasting at my home scheduled for early May. Cheaper than going out...

There is a tremendous amount of information in Dr. Stanley's book. In the interest of full disclosure, if you buy through the link to the right of my blog, I do get a small fee. But I recommended this series of books a long time before I had any particular interest in promoting the product. And I recommend getting a free or used copy if you can, I'm a big fan of the library system!

More steps to becoming Financially Free coming soon. Have you tried any of the steps mentioned above and been successful? Or hated them? I'd love to hear your thoughts...please comment below.


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