Is he rich?
This man (a surgeon by the way) had humongous mortgage payments. If you met him and saw his house and his automobiles, you would have had no doubt he was extremely wealthy. Instead he sat in front of me, with tears practically in his eyes, asking me what he should do. He told me that his family didn't need anywhere near the $3 million mansion he had bought. This, of course, no doubt didn't cross his mind when buying the house!
As Andrew points out "Things aren't always what they appear to be." I don't think I would want this surgeon operating on me while he in a serious financial bind!
In this first chapter, Andrew makes the powerful observation that getting your finances on the right path starts with your spending. He points out the importance of distinguishing between wants and needs and offers up a definition of what it means to be wealthy. He defines being wealthy as having enough money to never have to work again and, secondly, to be able to generate approximately $100,000/year from non-work related sources.
HOW DO YOU DEFINE WEALTHY?
One of the subtle points of this chapter is that an education can be obtained anywhere - not just in a formal classroom. A corollary is that the formal classroom, in many instances, doesn't provide important facets of our education.
Andrew received important financial lessons from a millionaire mechanic raising two kids as a single dad! From Russ Perry, he learned that some assets have the potential to increase in value while others depreciate - in other words, he learned how to spend so his assets grow.
Maybe there are people around you who have been successful financially. Talk to them. Learn their secrets. In fact, this book discussion can help get the conversation going. A simple, "I'm reading about a millionaire teacher who was able to buy used cars, drive them and then resell at a profit or close to the original purchase price" can get a conversation going.
HAVE YOU MET ANYONE WHO HAS GIVEN YOU REALLY VALUABLE INSIGHTS INTO FINANCIAL UNDERSTANDING?
As you know, there are many that will happily drag you under. Walk out of J.C. Penney, and there is a credit card sign-up desk seeking to give you a discount if you get their card. Their goal is to get you to walk back in and buy $150 worth of stuff you don't need and end up making minimum payments on it!
Towards the end of the chapter, there are some observations made that may surprise you. For example, family wealth is usually lost after a few generations. See the Chinese proverb. Also, helping children financially is, many times, counter productive!
On page 16, Andrew tells of how he was practically a mad man paying off his debt before he got a serious investment program going. This is important to reflect upon. To get on the right path, you need interest rates to work for you, not against you. If you are bogged down in debt, this is a hole you have to work out of. If this is an issue, you may want to check out one of Dave Ramsey's books from the library after we have finished Millionaire Teacher.
To get on the right path, start by building an emergency savings fund to avoid having to whip out the plastic if the car breaks down, the roof needs fixing, and even if you are laid off at your work. Next, like Andrew, pay off your debt. Now you are ready to start investing and getting your money to work for you!
HOW ARE YOU GOING TO SPEND LIKE A RICH PERSON?