3 Car Garages and Still Adding On

May 19, 2011 - PRLog -- Every book has a main message that it is trying to convey to its audience. In the Bible we see that the main message is a wonderful presentation of salvation in Jesus Christ.  That’s the fundamental message of the Bible. There are many important truths and wisdom that we can draw from the Bible but none is more important than the gospel message of Jesus Christ. As we look at Stop Acting Rich and Start Living Like a Real Millionaire by Thomas J. Stanley, Ph. D., he chooses to drop his biggest takeaway in the second chapter on page 42.

So what we’re going to be discussing in this issue of the Entrusted Steward is probably the most important message regarding our personal finance that we can take away from this particular book.  On page 42, Dr. Stanley writes “I believe the greatest detriment to building wealth is our home/neighborhood environment.”  He goes on to say at the bottom of page 42, “Type of home we live in and where we chose to live often takes the greatest toll on our financial wealth and from it, all other perils flow.”  Then on page 43 he continues “As you will see throughout this book the more affluent the neighborhood, the more its residents spend on almost every conceivable product and service…we take consumption cues from our neighbors…if the priority is to act rich, then move from a modest community to a high consumption neighborhood. Here there will be enormous social pressure for you to spend, spend, and spend more on just about every category of consumer products and services.”

So we learn here that one of the biggest impacts that we can have on our overall financial life starts with the home that we buy. The question that we should ask ourselves is “are we going to buy a home that is well within our means?” or “are we going to buy a home that is right at our means?” Once you make your house purchase, then everything else in your financial life flows from that. Why? Because we take our consumption cues from our neighbors.  One easy way to protect yourself from this is to do some research and figure out what is the most common mortgage of the day. For example in our current day and age, the most common mortgage is the 30-year mortgage. Although, in the 1920s it was a three to five-year mortgage. So if you go and buy a home that has a 10 or 15 year mortgage then you will most likely be able to insulate yourself from going into a neighborhood that’s going to put extremely detrimental consumption pressures on you and your family.
Most any neighborhood you move into is going to put consumption pressure on you but the more expensive the neighborhood the greater the consumption pressure and the more likely you are to end up poor.

Dr. Thomas Stanley continues on page 43 by writing “most of the self-made millionaires I have studied have one thing in common:  They were able to build wealth precisely because they never lived in a neighborhood or home environment where their domestic overhead made it difficult for them to build wealth.”  He goes on in the next paragraph to write, “if you want to actually become rich one day, then enhance your chances by living in a modest home – say, one valued at under $300,000.”  

On page 45, he kind of gives us the John 3:16 of Stop Acting Rich and Start Living like a Millionaire when he writes, “Statistically, it is much easier to become a millionaire if you live and consume like those who live in modest homes, than in expensive ones.” Then finally for this addition of the Entrusted Steward I wanted to include one more piece of writing from this book and that is on page 45 where Dr. Stanley writes “If you examine homes by value from the lowest to the highest, you would find that as the value of homes increases, so does the proportion of people who are living well above their means.”  

This is going to be very hard for us to reverse our thinking. When we see other people that are driving nice new cars, that always seem to have the latest fashionable clothes on, and they always seem to have to live in a home in a well-manicured neighborhood; it’s going to be very difficult for us to be able to see those people and realize that most likely they’re living well above their means. We should begin to think about how people truly build wealth and that is by living below their means. And to live below our means, we need to be around others that don’t pressure us to spend more. So the question for me and you today is: Are you living in a home that is valued in a way that you can live well below your means and not be pressured into harmful consumption patterns for your particular family’s financial situation?

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Eleven Two Fund Management is a Registered Investment Advisor (RIA) located in Marietta, GA. We are proud to be working with Christian Individuals, small business owners, and Families in over 16 states.