Stephanie Preston

E-portfolio
The Millionaire Next Door Questions

1. Explain the following four concepts addressed in the Millionaire Next Door:
a. Big Hat, No Cattle
i. Big Hat, No Cattle is someone who presents themselves as big and powerful
or wealthy but really isnt.
b. Go to Hell Fund
i. A fund that consist of enough money to live on without working for 10 or more
years.
c. PAW
i. Prodigious accumulator of wealth. People who save a lot of money. They
dont spend unnecessary money or drive big fancy cars. They are frugal people
and live well below their means. They are good at building wealth compared to
others that earn the same per year.
d. UAW
i. Under accumulators of wealth. People who dont save much or any of their
money. They often live above their means or very paycheck to paycheck. Many
people with high incomes are UAWs.
2. Provide short answers to the following four questions.
a. How is wasteful defined in the book?
i. Wasteful is spending unnecessary money. Buying expensive foreign cars,
expensive watches, and big houses. Most of the wealthy save their money and
dont spend affluently.
b. What is the cornerstone of wealth-building?
i. The cornerstone of wealth building is be frugal, frugal, frugal. One of the most
common things that was noted while interviewing millionaires was that the
majority of them live well below their means.
c. Most people will never become wealthy in one generation if they are married to
people who are
i. They will most likely never become wealthy if they are married to UAWs or
affluent people.
d. Upon giving his wife $8 million of stock, from taking his company public, what did his
wife continue doing?
i. Upon receiving 8 million dollars his wife simply said thank you and went on
cutting her coupons.
3. In the example the Theodore Teddy J. Friend, provide 3 reasons why Teddy is considered a
UAW and what was the message that Teddys parents sent him about consumer behavior?
a. Reason 1
i. He is the ultimate consumer. He purchases the best and newest things.
b. Reason 2
i. To Mr. Friend wealth and being better off always meant having a high income
and having nice things.
c. Reason 3

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E-portfolio
i. He works and earns to impress others.
d. Parents Message
i. One earns to spend. When you need to spend more, you need to earn more.
4. In the example of Mr. W.W. Allen, a self-made millionaire, he never extended credit to people
who exhibited the Big Hat, No Cattle philosophy. Why? Why did he decline the gift of a RollsRoyce?
a. Philosophy
i. He believes that high status objects change a person. Receiving one just leads to
purchasing more which turns a person into a big hat no cattle type person.
b. Rolls-Royce
i. He declined the gift of the car because if did not fit his lifestyle. He works and
lives in an area where that kind of vehicle would make him stick out. He also
didnt want his employees to think that he was using them.
5. Regarding Economic Outpatient Care, answer the 5 questions below.
a. Define economic outpatient care.
i. EOC is a parent caring for an adult child and providing for their affluent lifestyle.
Especially to the extent where the adult children cannot maintain their lifestyle
without the assistance of the cash gifts.
b. Like the example of James, many EOC receivers (inaccurately) view themselves as
i. EOC receivers view themselves as entitled to their parents money and
possessions.
c. As illustrated in the example of Henry & Josh, what is the fundamental rule regarding
wealth building? Be specific.
i. Whatever your income, live below your means.
d. Why did Laura succeed?
i. One reason Laura succeeded was because she was raised in an environment
that nurtured independence and discipline.
e. Why were sisters Sarah & Alice so different regarding wealth accumulation?
i. The sisters were so different because the one sister Sarah and her Papa had
different ideas about what a womans role in society was so Sarah left when she
was young and got cut off financially from her father. Her father then turned to
his other daughter and catered to her every need. He provide money for her
and her family to live in a nice house and have nice things so Alice like her father
became very affluent. Sarah on the other hand had a strong desire to become
financially independent so she was very frugal.
6. Now that you have finished reading The Millionaire Next Door
a. What are two concepts you found most useful?
i. The first concept I found most useful was the idea of living below your means. I
have a hard time doing that now as a young couple with a baby.
ii. The second concept I found to be most useful was the section on you arent
what you drive. I like nice cars and that chapter helped me to reevaluate my
need for nice cars.
b. How will you apply them in your life?

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E-portfolio
i. I will apply living below my means by reevaluating my budget and seeing where
I can cut costs in order to provide for a larger amount of savings potential.
ii. I can apply the concept of you arent what you drive but thinking seriously about
what I need in a car before going out and purchasing one as well as being a used
car non dealer loyalist.
c. In your own words, give your thoughts in a minimum of three paragraphs.
This book had quite a few good points and I am glad to be able to read and learn some of this
information at such a young age. I was very surprised in the first few chapters it talked about how much
a person should be worth based on their age and income. I was very shocked to see that I should be
worth $50,000 dollars. Many of the stories explained to me how my parents spend their money and why
my husband and I spend our money the way we spend our money.
Another thing that was interesting to me was the profile of the millionaire. I to had a very
stereotypical view of a millionaire before reading things book. I thought that they drove fancy cars and
had big houses. My definition of wealth was also different then what the books definition is. After
reading this book it definitely changed my perspective on who is truly well off.
Overall I thought book was a valuable read. There were many great concepts that I can apply to
my own life. The Millionaire Next Door also gave me ideas on how to better save and prepare for mine
and my childrens future.

Reflective Writing
The Millionaire Next Door helped me achieve the SLCC learning outcome think critically and
creatively, by teaching me about different ways to think about my personal budget and new ways to
reduce spending and save for the future. The book showed me ways to think outside the box.
Another learning outcome it helped me achieve was developing knowledge and skills to work
with others in a professional manner. Mostly the example of Mr. W.W. Allen helped me to learn skills to
work with others because of his respect for those he worked with in regards to how he acted and
dressed himself as well how he presented himself to his employees.