1.

Explain the following two (2) concepts addressed in The Millionaire Next Door:

Big Hat, No Cattle

When someone acts like they are in High standing, but have nothing to back up that
claim. For instance, someone who acts and spends like a stereotypical vision of a
millionaire.
Go to Hell Fund
When an individual has enough wealth saved up from which they can live on for 10
years or more without working.
2. In the examples of Mr. Richards (PAW) & Mr. Ford (UAW), both men are close in
age & yearly income. Explain why Mr. Richards has nearly five times the net worth
of Mr. Ford. (Be specific).
Mr. Ford is an Attorney so he spends a great deal keeping up the appearance of
being successful and wealthy. Whereas Bubba Richards owns a mobile home
dealership and doesnt worry as much about appearances. Mr. Richards doesnt
spend as much on a lavish lifestyle as Mr. Ford so he is able to invest more and
increase his net worth.
3. Provide short answers to the following three (3) questions:

Most people will never become wealthy in one generation if they are married to
people who are __Overspenders(UAW)____________.
Upon giving his wife $8 million of stock, from taking his company public, what did
his wife continue doing?
Cutting Coupons for their shopping trip
Why would someone who is a millionaire need to budget?
The main reason a millionaire needs to budget is to stay financially independent. In
other words if a millionaire doesnt budget they are going to lose money and not be
able to keep their wealth.
4. In the example of Theodore Teddy J. Friend and his parents, answer the
following two (2) questions:

The book describes Teddy as being possessed by possessions. Explain this

comment.
Growing up Teddys parents were poor due to poor spending habits. He became
focused on becoming better off than his parents were. He was more worried about
working to get items such as cars, boats, club memberships, etc Where he should

have had a goal to become financially independent as his parents never really
learned how to.
What was the small change Teddys parents could have made that would put
them in the millionaire category? (Be specific.)
The change that they suggested was to stop smoking and instead invest that
money in shares of a tobacco company and re investing the dividends

5. Mr. Rodney is a high-income/low-net worth corporate manager. Explain why he is

described as having sold his financial independence.
Mr. Rodney wants to become financially independent, however he is not investing
at all due to mortgage, car payments, tuition bills, etc
6. Why does Mr. W.W. Allan decline the gift of a Rolls-Royce?
He believed it was too expensive a gift to receive. He believed if you show the
appearance of wealth you have to keep showing it in other areas (car, clothing,
etc). He also thought it would alienate or put a strain on certain members of his
business like his employees.
7. Regarding Economic Outpatient Care (EOC), answer the following four (4)
questions:

Explain why Economic Outpatient Care (EOC) can be harmful.

The receiver of the money might become dependent on that money. Due to that
dependency they will learn to be financially dependent instead of financially
independent.
Explain this statement: The more dollars adult children receive, the fewer they
accumulate.
Typically when the adult children receive money they spend it right away. If they
receive a lot of money they dont usually invest, because they know they are going
to keep receiving money so why save the money. However, they will never be on
their own financially and will never learn to be financially independent.
What is the likely financial outcome for Mary & Lamar once her Mother passes
away?
They are going to have to learn to budget and lead a simpler lifestyle or they are
going to get in serious financial trouble when they go through all of the inheritance.
They will likely use it up pretty quick and have to learn to not have such a lavish
lifestyle. They will have to stop buying new cars every 3 years
As illustrated in the example of Henry & Josh, what is the fundamental rule
regarding wealth building? (Be specific.)

Live below your means and be frugal. Henry leads a simpler life so he has surplus
dollars, whereas Josh leads a very lavish life and have accumulated a low net worth.
Do simpler activities that cost less and are less status oriented.
5

8. Regarding Affirmative Action, Family Style, answer the following three (3)
questions:

In the example of sisters Ann & Beth, describe the consequences to Beth & her
husband from receiving EOC?
They have to live a life approved of by their benefactor Beths mother. They will
never learn to have self confidence in their own finances and will never have
financial independence.
Explain the concept weakening the weak.
When a parent realizes their child has a weakness they will try to support them by
taking care of the problem for them. The problem with this concept is the child
doesnt learn to take care of oneself and the problem will likely get worse.
What did Kens father tell him often? (Be specific.)
Im not impress with what people own, but by what they achieve.
Im proud to be a physician, always strive to be the best in your field
Dont chase money. If you are the best in your field, money will find you.
9. Explain the root cause for the conflict between Mr. W & the residents of the
vacation condominiums. (HINT: Its not because of his dog.)
Mr. W and his family did not act or look like upper-class or beautiful people. The
rest of the condo complex was filled with the best scrubbed condominium owners
one could imagine. In other words Mr. W lead a PAW lifestyle and the other owners
lead a fancier lifestyle of a UAW so they didnt want him to be associated with them.
10. Now that you have finished reading The Millionaire Next Door, answer the
following three (3) questions in a minimum of three (3) paragraphs.

How has your perception of millionaires changed?

Yes and no. Just from experiences that I have had with some people that had wealth
in my life I already knew that they stay simple and dont lead really extravagant

lifestyles. My grandparents landlord I met on multiple occasions had plenty of

wealth from property he had bought and just rented and held on to. He was also one
of the cheapest men I have ever known. My uncle is a millionaire and his family
leads a pretty simple life. So I already knew wealthy didnt always mean
extravagant. However, what did surprise me was the ethnicity section. When I think
of a millionaire I think of the stereotypical white millionaire. The different ratios with
different ethnicities was a interesting section for me. I was also surprised about how
many are entrepreneurs.
What are the two (2) concepts you found most useful?
The equation based on age and income that tells you a basic estimate of what your
net worth should be. It gives you an idea on how much you should have invested to
have a average net worth. I found the concept of PAW or UAW useful and
unfortunately I have too much in common with the UAW. The main concept that I
found useful was that budgeting is like maintaining a good physical fitness. It takes
willpower and dedication. This is a concept that I can see remembering and
following, because it is very true that you really do need the willpower to live simply
and control your spending. You also need dedication so you can continually maintain
your budget.
Give a specific example of one small change you can make to improve your financial
wellbeing.
The change I am going to make is write down my purchases. I bought a budgeting
notebook a while ago, but never used it. I am now going to be using it to plan my
purchases and plan what I can spend each month. This is especially important
because I am recently out of a job and I really need to look at my finances and plan
my budget until I get another job. Luckily, I have no debt due to working and paying
for school at the same time and I have money saved to live off of for at least 2
years. I am also going to try to donate plasma to help supplement my income.
Reflective Writing

Compose 2-3 paragraphs explaining how completing this assignment helped you
achieve at least two (2) of the SLCC Learning Outcomes:
SLCC Learning Outcomes
1. Students develop quantitave literacies necessary for their chosen field of study
While reading The Millionaire Next Door I really appreciated how they would
show a graph or a table to tell you exactly how they got to their conclusions. It
showed me how tables and graphs can really make information clear and easier to
understand. They also talked about an equation to figure out what your net worth
should be, which I found to be very handy. That equation can let you know if you are
on track financially to becoming financially independent.
2. Students think critically and creatively

Throughout this class and also while reading The Millionaire Next Door I really
learned how many different ways there are to save money if you use effective
problem solving and critical thinking skills. When making purchases you really need
to critically think about whether or not it is the right choice. You need to consider
whether it is in the right price point and if it isnt if the advantages are worth the
disadvantages. That same concept is true with everything you have to look at
something at different angles to see if it is the right choice.