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The Frugal Millionaires by Jeff Lehman

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The Frugal Millionaires by Jeff LehmanJeff Lehman is a millionaire from the dot-com era (former exec at Alta Vista, Webaroo, read more about jeff). More importantly, Jeff Lehman had a few millionaire friends. What he did was ask each of his millionaire friends for a list of tips they used to “make their money work smarter for them.” He and his friends would trade these tips and they’d all be the better for it. Rather than stop there, he decided to expand his network until he compiled a list of ideas and tips from seventy millionaires. He packaged those 800 practical and useful ideas into a book and that book is The Frugal Millionaires.

The book begins with a little discussion of what is a frugal millionaire, the six ways frugal millionaires think differently about money, how they were selected and included, etc… that stuff was all well and good, but I wanted to get to the meat of the book. What are these 800 tips from these 70 anonymous millionaires and how valuable would they be for me? What I expected to find were some tips that would help me save tens or hundreds of dollars (these same tips should save a millionaire somewhere on the order of tens or hundreds of thousands of dollars), which would be well worth my time to read!

The organization of the book was a little scattered but it did have one good organizational design, the tips were categorized in twenty-four categories that, for the most part, made sense without much additional explanation. The first category was Financial investments and the last was retirement planning, though you had some other topics like spending and clothing mixed in along the way. In each category, Lehman simply lists out the tips as they were likely written on the list he received as part of his agreement to swap ideas. Some are very analytical, bullet points of ideas and steps, while others are very conversational, “I do this because…”

Here’s one of the more analytical ones from the Financial investments category:

BEH — I break down my investments into three groups:
1) Preservation: Typically municipal bonds. These have paid off nicely and limit downside.
2) Risk: Mix of stocks.
3) Income producing assets: Real estate and cash producing small businesses (laundry mats, car washes, etc.).

I thought that was a valuable way to approach investing because it didn’t assume that the next dollar was always going into the stock market. Many of the “tips” are more like “insights,” they don’t tell you what to do, they simply show you a different way of thinking about something . One of my favorite ideas was this one about financial advisors: “SR&BS — Find a good financial person and make them tell you how they invest their own money.”

Sometimes the ideas are just funny, here’s one from the credit card category: “BG&H — There’s no reason to try to impress anyone with a gold, platinum, black or plutonium card. The only people who will appreciate this is the credit card company collecting the annual fees.”

Overall, I enjoyed the book but I think the tips were billed as a little more practical than they really were. There are tips in there for buying cars and for selecting financial advisors or the best gym, but weren’t as practical and immediately applicable as I would’ve liked. I enjoyed the book because it was interesting to gain insight into how these frugal millionaire’s thought. The BEH idea I shared in the above is an interesting insight into his investment philosophy – set a good base with safe munis, then generate income with assets like real estate and businesses, then play a little in the risky stock market. I’m not financially prepared to be doing much more than muni’s and the stock market, but it’s certainly a good thing to be cognizant of for the future.

If you are looking for immediately applicable tips to help save you a dollar, you probably won’t find this book very helpful. If you want to gain insight in how these 70 millionaires think, this book is right up your alley. I personally think the latter is more valuable but that’s from my perspective, we all have different needs and expectations. Either way, I would recommend that you flip through the book at your bookstore to see if it’s right for you.

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11 Responses to “The Frugal Millionaires by Jeff Lehman”

  1. Chiko says:

    I don’t really like books that talk about saving your way to wealth, because anyone can do that, plus it takes a long time. I like books that teach you how to create enough wealth that you don’t have to worry about saving your way there like “The Ten Roads To Riches.” I plan to retire by 25, so I need something a little faster. But, that doesn’t mean I will not be checking this book out. Seems like an interesting read.

  2. Chiko,

    If you aren’t frugal, it doesn’t matter how much money you make. Any amount can be blown by someone who doesn’t know how to save. Those who stay millionaires (and most who get there anyhow) are frugal. Read The Millionaire Next Door.

    Perhaps you do have a billion dollar idea and the luck and hard work to see it to fruition even in this economy, but that’s sort of like winning the lotto and I would have a plan b, c, d, e, etc. and save your money in the meantime.

    And you say that anyone can save their way to wealth like it’s a bad thing! Yes, it takes awhile, but when you learn to live frugally it’s not like you spend all that time just waiting for your ship to come in. There’s more to life and happiness than spending your first million!

    I’m curious, though, what exactly do you plan to do after you retire at 25?

  3. Chiko says:

    @Meg

    I am positive that even if Bill Gates wanted to, the is no way he can spend all the money he has. Anyways, that is not my point. My point is that you can create enough wealth that you don’t have to worry about saving to gain or maintain it.

    I plan to retire at 25 by establishing about $3,000 in residual income and then walking away from corporate America to chase bigger and better (and risker) dreams. You can check out my plan on my site.

  4. Well, I’m listening if you want to sum up that plan, but frankly, we can’t all be Bill Gates. Obviously, some people do get very rich, but even with the best laid plans there is a large element of luck.

    And what do you mean by “$3000 in residual income”? Per month? Per year?

    • Chiko says:

      $3,000 per month in residual income. If you check out my site you will see a more detailed plan. My plan is to create that by the age of 25.

  5. Donna says:

    I owned a couple of vending machines (a small cash business) when I lost my job during the dot.com bubble. It was very fun in the beginning. The problem is finding a good place for them, the dollar changer getting stuck and people using foreign coins on you. All the change was kind of a pain and I went the legal route, declaring the business to the tax man and all that (I really kind of wanted to know if you could make legitimate money like a real business.) The answer is – you can, but I’ve learned (and this comes to flipping houses too, been there done that) there is no free lunch. You’ve got to work for it! You can only make easy money on the whole real estate deal thing AFTER you’ve spent a good bunch of years learning the ropes, doing the work, wearing down the shoe leather and using up the cell phone minutes – plus getting contractors to come when they say they would! Basically – stablishing yourself as the go to person – so I would venture that there’s still no free lunch even then, cuz you’ve put your time in to earn that deal coming to you easily.

    • doc says:

      I agree there is no free lunch
      I flip equities but it takes a lot of work and research plus some luck. Sound familiar

      I’ve made money and easily beat the S&P by a wide margin but it was due to a huge effort.

  6. Donna says:

    By the way – any hints on how one buys muni bonds? So used to using Sharebuilder, I don’t even really know about buying anymore.

  7. KB says:

    1st part of this article is ok but when he move into the true agenda of pushing the environmentalism crap that is when the whole article gets thrown out..
    They turn off the water when brushing their teeth.. come on..

  8. mikestreb says:

    I read this. It was pretty good.

  9. Ms. Snow says:

    Anything in life that creates everlasting life, success, happiness,encouragement, and knowledge most people have a negative view before positive. Your true values come from within.Your surroundings will defeat you, if your frieates anynds are negative. Alwways feel you r important.A writer can not force his talents to create a new you. If you dont have a creative imagination you will fail no matter if your still rich. My thoughts of the part I read gave me and idea no matter how much money you have you must invest and have multiply ideas continue your success. your


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