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What Billionaires Do

by Business News Report

5 billionaires living below their means
Given the choice, Warren Buffett would opt for a good burger and fries accompanied by a cold cherry Coke. Each of these men is worth a fortune, though you might not know it by looking at them. Frugal, no-frills approaches have paid off in their businesses and their lives
At least once in your life — maybe even once a week or once a day, for that matter — you have fantasised about coming into a lot of money. What would you do if you were worth millions or even billions? Some of you may do nothing at all. Believe it or not, there are millionaires and billionaires among us who masquerade as relatively normal, money-conscious people. Take a peek at some of the most frugal wealthy people in the world.
Warren Buffett
Millions of people read Warren Buffett’s books and follow every move of his company, Berkshire Hathaway. But the real secret to Buffett’s personal fortune may be his penchant for frugality.

Buffett, who is worth an estimated $47 billion, eschews opulent homes and luxury items. He still lives in a modest home in Omaha, Neb., that he purchased for $31,500 more than 50 years ago. Although Buffett has dined in the best restaurants around the globe, given the choice, he would opt for a good burger and fries accompanied by a cold cherry Coke. When asked why he doesn’t own a yacht, he responded, “Most toys are just a pain in the neck.”
Carlos Slim Hel√∫
While most of the world is very familiar with Bill Gates, the name Carlos Slim Hel√∫ rarely rings a bell. But it’s a name worth knowing. Slim, a native of Mexico, was recently named the world’s richest person — that’s right, richer than the Microsoft co-founder. Slim is worth more than $53 billion, and, while he could afford the world’s most extravagant luxuries, he rarely indulges. He, like Buffett, doesn’t own a yacht or plane, and he has lived in the same home for more than 40 years.
Ingvar Kamprad
The founder of Swedish furniture phenomenon Ikea struck success with affordable, assemble-it-yourself furniture. For Ingvar Kamprad, figuring out how to save money isn’t just for his customers, it’s a high personal value. He’s been quoted as saying, “Ikea people do not drive flashy cars or stay at luxury hotels.” That goes for the founder as well. He flies coach for business, and when he needs to get around town locally, he either takes a bus or heads out in his 15-year-old Volvo 240 GL.
Chuck Feeney
Growing up in the wake of the Depression probably has something to do with Chuck Feeney’s frugality. With a personal motto of “I set out to work hard, not get rich,” the co-founder of Duty Free Shoppers has quietly become a billionaire but even more secretively given almost all of it away through his foundation, Atlantic Philanthropies. In addition to giving more than $600 million to his alma mater, Cornell University, he has given billions to schools, research departments and hospitals. Loath to spend if he doesn’t have to, Feeney beats both Buffett and Kamprad in the donation category, giving out fewer grants than only the Ford and Bill & Melinda Gates foundations.
A frequent user of public transportation, Feeney flies economy class, buys clothes from retail stores and does not waste money on an extensive shoes closet, stating,”You can only wear one pair of shoes at a time.” He raised his children in the same way, making them work the same normal summer jobs as most teens.
Frederik Meijer
If you live in the Midwest, chances are good that you shop at Frederik Meijer’s chain of grocery stores. Meijer is worth more than $5 billion, and nearly half of that was amassed when everyone else was watching their net worth drop in 2009.
Like Buffett, he buys reasonably priced cars and drives them until they die, and, like Kamprad, he chooses affordable motels when traveling for work. Also, like others on this list, Meijer is focused on the good his wealth can provide to the community.
The bottom line
The little secret of some of the world’s wealthiest people is that they rarely act like it. Instead of over-the-top spending, they’re busy figuring out how to save and invest to have that much more in the future. It’s a habit you might want to consider in order to build up your own little storehouse of cash.
The millionaire next door
Authors: Thomas J. Stanley & William D. Danko
One goal that should be on the list of most people is to be financially independent
The Millionaire Next Door is one of the most important books published on the subject of personal finance. Thomas Stanley and William Danko are professors of sociology who have made studying wealthy Americans their specialty. They performed extensive statistical research to profile, who wealthy Americans are, how they acquired their wealth, how they live, and how their families function.
From the inception, Stanley and Danko make it clear that the image of “Lifestyles of the Rich and Famous” has nothing to do with the lifestyle of most wealthy Americans, especially first-generation wealthy Americans. Contrary to the belief of many people who believe most wealth is inherited and “you can‚Äôt make it in America today,” eighty percent of America‚Äôs millionaires are first-generation rich.
I am going to focus on first-generation wealthy Americans here, because they give the most valuable lessons for acquiring wealth. I‚Äôll call them “the wealthy.”
The wealthy are extremely frugal. They do not live in extravagant homes and drive Rolls Royces or BMWs. They live in modest homes and mostly drive full size American cars. (57.7% of the vehicles millionaires are driving are American cars or trucks.) Many of them buy used cars (about 36%).
Most of the wealthy have their own businesses. Self-employed people are four times more likely to be millionaires than those who work for others. Most of their businesses are not Fortune 500 corporations.
Twenty percent of affluent households in America are headed by retirees. Of the remaining 80%, more than two-thirds, are headed by self-employed owners of businesses.
Wealth not from salaries but managing assets
The wealthy did not necessarily accumulate their wealth from high salaries or high incomes. Instead, they are excellent at managing their assets. The two main approaches used to accumulate their assets are budgeting and the “pay yourself” or set aside approach. (Take 15% of your earnings and set them aside as “untouchable” for personal spending.)
The wealthy are very proactive in their investment programs. They study investments and consistently invest in the areas they understand best.
The wealthy highly value education. Almost uniformly they underwrite the education of their children and encourage their children to pursue a profession, such as law, medicine, dentistry or accounting.
Many of the wealthy are immigrants who haven’t been caught up in the American consumer lifestyle.
The American consumer lifestyle is the greatest enemy of accumulating wealth. The children of the wealthy do not understand how their parents accumulated wealth, so they consume it. This is the reason family fortunes are dissipated. There are no wealthy Vanderbuilts today.
Why should the study of the wealthy concern you? Isn’t money the root of all evil?
The economic facts are that the median (typical) household in America has a net worth of $15,000, excluding home equity. The median household net worth for the top one-fifth of American households, excluding home equity, is less than $60,000. Without Social Security benefits, almost one-half of Americans over age sixty-five would live in poverty. (And Social Security is in trouble!)
I should think that one goal that should be on the list of most people is to be financially independent. There is a certain confidence one has when in this position. Call it “peace of mind.” You can do an enormous amount of good when you have the means. Yet, despite the fact that many people with relatively modest incomes achieve financial independence, most of us never get out of the starting gate!
I have read every page of this book. I found The Millionaire Next Door to be fascinating, educational reading and recommend it enthusiastically. Give it or loan it to family members. Be sure to put it on your summer reading list. Then take action on what you learn, and I’ll have a lot of wealthy clients!
Top 5 biggest mistakes when buying a car
Avoiding these mistakes can save you thousands or even millions each year
For most people, a car is a necessity. We often depend on our vehicles to get us to and from work every day, transport children to events, and even for pleasure.
Because they are such an important aspect of your life, you want a vehicle that is reliable, comfortable, and maybe even a bit stylish. The vehicle choices are almost endless, so finding the right combination of wants and needs with an affordable price tag can be challenging. Here are the five biggest mistakes you should avoid when purchasing your next vehicle:
* Thinking in terms of monthly payment. Not very many people walk into a car dealership and plan on writing a check or paying cash for their vehicle, and the salespeople know this. That is why the negotiation almost always revolves around how much you can afford to pay for the car each month. This is the easiest way to spend too much on your next vehicle. When negotiating a price, the dealer can do a number of things to make almost any vehicle fit your budget. They can do this by adjusting the interest rate, offer you a longer term on the loan, or restructure the financing in a way that creates a payment that fits in your budget.
It may not seem like a big deal, but even a few extra percentage points or an additional year on the loan can add thousands of dollars to the total cost of the vehicle.
* Buying new versus used. A vehicle is not an investment. Vehicles depreciate in value quickly, so when you buy a new vehicle, you can expect it to continuously decrease in value. In fact, a new car typically decreases in value by 25 to 40 percent in the first two years. The best thing you can do is to let someone else take the initial 40 percent hit and buy a slightly used vehicle that is a year or two old.
Years ago, there was a good reason to buy new, and that was for the warranty. Today, most vehicles longer have warranties that can still be in effect even if you buy a car that is a few years old. In addition, you can often opt to purchase an extended warranty which is typically far cheaper than the value the car lost in the first year or two.
* Choosing the wrong vehicle. Are you are single person who needs a vehicle just to get you to and from work every day? Then you probably don’t need that $45,000 SUV that seats eight and can tow 5,000 pounds. You want a vehicle that meets your specific needs. Sure, there are a lot of cars and trucks out there that will turn heads, but keep in mind that this will come at a premium.
* Not taking into consideration other costs. The actual cost of the vehicle is important, but what is often overlooked are all of the hidden long-term maintenance and insurance costs that go along with a vehicle. Keep in mind that car insurance premiums typically increase with the value of a vehicle, so buying a more expensive vehicle will increase your annual insurance costs. This can amount to hundreds, if not a thousand dollars or more per year.
In addition to insurance, you have to take into account all of the maintenance costs. Vehicles need oil changes, new brakes, air filters, tires, and much more. Luxury or performance models are generally going to require higher end replacement parts that can cost much more than their standard counterpart.
Finally, you need to consider gas consumption. The average person will drive between 10,000 and 15,000 miles per year. Now, with a vehicle that gets an average of 15 miles per gallon with today’s gas prices, you expect to spend more than one that takes 30 miles per gallon. When you think about it, by the time you factor in gas, oil changes, insurance and regular maintenance, you can expect to spend substantial amounts in addition to your monthly car payment each year!
* Putting $0 down. There are a lot of incentives when it comes to buying a car, and you can often put yourself in a brand new vehicle of your choice with no money down. Sounds great, right? Not so fast. Remember, vehicles depreciate rapidly, so if you finance the full purchase price, you often find yourself upside down on the loan immediately.
Being upside down simply means that you owe more than the car is worth. Remember, there are taxes and other fees that go into a new car purchase, and they are typically rolled into the loan if you don’t put anything down. That means as soon as you drive it off the lot, you owe more money to the bank or dealership than the vehicle is actually worth. This is a very bad idea if you intend on selling or trading the car in before the loan is paid off. If after three years you need to get a new vehicle and you owe $10,000 while the car is only worth $8,000, you will have to either pay $2,000 out of your pocket, or finance that into your new loan. It may feel good to walk out of the dealership with a brand new car without having to fork over a dime up front, but it will cost you.
How to live within your means and get out of debt
It’s downright silly that people who bend over backwards to find bargains also pay hundreds or thousands of shillings or dollars in interest every year without thinking twice. If you really want to save money, pay off outstanding loans and credit card debt as quickly as possible. Some of these guidelines may sound harsh, but the price you’ll pay for ignoring them is even harsher.
Difficulty: Challenging
Instructions: Step 1 – Make a monthly budget and stick to it. Housing, food, utilities, car and insurance payments have to be made. Allocate an additional amount each month to paying off your debt. Many financial planners say that this is the most effective way to manage your finances.
Step 2 ‚Äì Control your spending. This is the first step toward fixing money problems. Most people who spend too much are enthralled with the act of buying, not the value of the goods. Question every purchase–what will happen if you don’t buy? You might be surprised how little real value most stuff has and how easily you can do without it.
Step 3 – Keep a shopping journal of what you buy each day and how much it costs. This may seem tedious, but it will track each expenditure and encourage conscious spending.
Step 4 ‚Äì When you’re paying off any debt, it’s a great idea to know where you stand financially. Specifically, it’s smart to recognise any warning signs that might foretell a personal economic plunge. For example, if you have a student loan, three unpaid invoices from your lender is a big red flag that you’re not keeping up with your loan payments. Another red flag: Your bank account is consistently overdrawn.
Step 5 – Destroy all of your credit cards except one, with the lowest possible (long-term) interest rate. Leave this card at home and use it only for emergencies. Transfer the debt on your other cards to this remaining card. Carry a small amount of cash for daily expenses.
Step 6 – Refinance your mortgage at a lower rate. If your credit is already bad, this may not be possible. But if you can get a lower rate, you can apply your savings directly to pay down your debt, or pull extra cash out to take care of it at once.
Step 7 ‚Äì Investigate a home equity loan with which you can pay off other debts. The idea is to combine your debts into one payment, at the lowest possible interest rate. If you have substantial credit card debt, you’re probably paying a very high interest rate, so other loan options are worth exploring. Approach your bank for information. Sell valuables and use the money to pay off your debt. RVs, cars, boats and other expensive toys should be eliminated. They won’t be fun anyway, if they’re dragging you into financial ruin.
Step 9 ‚Äì Maintain contact with your creditors. Avoiding phone calls and letters from your creditors will make your problems worse. They want to work with you and it’s in your interest to do so before they turn things over to a collection agency.
Step 10 ‚Äì Negotiate a reduction in your annual fee. Finance charges are not the only cost of a credit card–the annual fee can add up to much more than your monthly finance charges. Call your credit card company and negotiate hard to reduce or even eliminate this fee. Again, threatening to close your account usually gets their attention. Don’t bother trying this with cards that are co-branded with airlines or hotels to offer rewards–they will never drop their fee.
Step 11 ‚Äì Avoid maxing out all your credit limits. If you use 80 percent or more of the credit you have available, lenders will think you are living beyond your means–and you probably are.
Step 12 ‚Äì Cancel any accounts you don’t use. Credit cards you acquired but never use are still considered active.
Step 13 – Apply occasional windfalls and raises to eliminate outstanding debt.
Tips & warnings
Pay your bills on time. Besides imposing hefty late fees, creditors bump up interest rates for late payments. Pay parking tickets and car registration swiftly to avoid late penalties.
Call the credit company if, after the above measures, you still can’t tackle your debt. Ask for a “lower payoff amount.” Credit companies will often work with you in severe cases so that they can recoup some of their money. Never use a debt consolidator that advertises aggressively or promises you a quick fix. Often, they’ll plunge you deeper into debt and may even trash your credit record.
Don’t apply for a zero-interest card unless you’re absolutely committed to paying off your debt before the interest-free period ends. If you don’t, you’ll get stuck with a very high rate.

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