CFs and High Rollers

CFs and High Rollers

The following are both true statements:

  • You should save until it hurts.
  • Money is meant to be enjoyed.

A couple of weeks ago I dove into The Millionaire Next Door. I got frustrated with it after about 45 pages. Story after story of people wearing awful suits, driving s---box cars, and living in 1,200 square foot houses, with multiple seven figure bank accounts.

Admittedly, those people are rare. More commonly, we find people with expensive suits, expensive cars, and giant houses—crushed by hundreds of thousands of dollars in debt, and with no savings.

You do not want to be either of these people.

Category 1: The CF

Don’t write me asking what CF stands for. If you can’t figure it out from the context, I can’t help you.

Saving money and living below your means is good, especially early in life, when you are better able to tolerate cheap clothes, cheap food, and cheap apartments. Live below your means, save money, pay down debt, invest, and build wealth. I do not have a problem with someone under the age of 45 living below their means.

I do have a problem with someone over the age of 45, who has accumulated lots of wealth, living below their means.

The Millionaire Next Door is full of stories of people who live like they are poor, even though they are actually rich. These are people who are close to or in retirement. It is not an issue of financial security—they have plenty of money. Spending it would simply give them no pleasure. They just like to watch the number in the bank account get bigger.

I have a moral problem with that. If you earn money, you had better ------- enjoy it. Maybe not when you are 35, or even 45. But by the time you are 55 (and hopefully before), you had better be enjoying the product of all the work and good risk-taking you have done over the course of your life.

Not many people will openly admit this: money allows me to buy material things, which give me pleasure. What the authors of The Millionaire Next Door don’t get, is that a suit is not a suit. The cheap ones are not the same as the expensive ones. I have a few people give me grief about my shirts, which are not cheap. They say I could buy $29 shirts at Charles Tyrwhitt. Admittedly, Charles Tyrwhitt makes decent shirts, but screw you—I like my shirts. They give me pleasure. They are better than Charles Tyrwhitt. They look better, too. And they last forever.

I had a friend who was a very senior investment banker. He is a CF.

One day I asked him, “Are you still wearing the JoS. A. Bank suits?”

“Oh yeah,” he said.

“You go to fundraisers and political functions and closing dinners in those suits?”

“Of course. Nobody cares.”

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“They do care,” I said. “People can tell.”

“Nobody can tell,” he said.

I was getting nowhere. It is pretty rare that you have a CF who changes his mind and stops being a CF.

But optimally, that is how it is meant to work. You’re supposed to be a CF early in life, accumulating assets, and then not a CF later in life, decumulating assets. The problem is, most people can only do one or the other. Born a CF, always a CF. Or, you could be the opposite—a high roller.

Deep down, in many ways, I am still a CF. It pains me to pay for dry-cleaning—I did all my own ironing for years after college. To this day, I have never paid for a shoe shine.

Category 2: The High Roller

Some people are the opposite of CFs.

My wife and I went to Safeway in our 20s and bought all generic brand stuff. Lots of people don’t do it that way. They go to Whole Foods.

There is a big difference between a Safeway grocery bill and a Whole Foods grocery bill. It could be a difference of a couple of hundred bucks a week.

Is there a quality difference between generic brands at Safeway and the stuff at Whole Foods? Of course. Is it worth $10,000 a year? Your call.

I don’t really have a budget (more on budgets shortly), but I do keep track of how much I spend, usually by looking at my credit card statements at the end of the month. If I normally spend x, and one month I spend more than x, then I’ll usually tighten the belt for the following month.

Budgets are annoying, but guess what—some people, like the high rollers, need budgets. Not spending money doesn’t come naturally to some people.

What really needs to be taught to these people is austerity—the idea that you can make do with less. If you explain to them that the choice is either ramen at 25 or Alpo at 75, they will think it’s a false equivalence and spend the rest of their lives knocking on Door Number 3, trying to earn more money so they don’t have to undergo austerity.

The problem with high rollers earning more money is that the spending usually expands along with the money, leaving them no better off than they were before. And once you expand your spending, austerity is hard. Increasing your standard of living is easy. Decreasing it is one of the hardest things to do.

As much as I deplore The Millionaire Next Door, I have to concede there is some wisdom in the book. The little things, taken in accumulation, do matter. The example people typically use is skipping the venti caramel macchiato at Starbucks every day, which saves you 6 bucks. Multiply that by 252 work days, and that’s real money. It adds up.

I should also point out that if you have seven figures in the bank, you can have the venti caramel macchiato if you want. You’ve earned it.

It’s a Balance

It’s tough to sell centrism.

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Dave Ramsey has made a living selling extreme austerity as an antidote to spending like a sailor. That works for a lot of people, because an all-or-nothing solution is easier to implement than some middle ground solution.

My solution is two-fold:

  1. Implement austerity while you’re young and building wealth, and for the love of God, spend your money once you’ve accumulated it.
  1. Remember that it’s a balance. Being cheap affects relationships. People remember that stuff.

You know how every once in a while, you hear these stories about some 90-year-old lady who dies and leaves $7 million to a cat shelter? And nobody realized she was sitting on 7 million bucks?

I have mixed feelings about those stories. I’m happy, of course, that she saved 7 million bucks (and I’m happy for the cats) but I’m bummed when I think of all the things she could have done to enjoy herself, but didn’t. Save money, but don’t save it without a purpose. As Saul Bloom famously said in Ocean’s Twelve:

“I want the last check I write… to bounce.”


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Albert Little
Aug. 20, 2018, 10:46 a.m.

For me, this article was a frustrating mixture of both good and maddening thoughts.  I would totally disagree with one comment, then agree with the next sentence.  Jared wants to put everyone in his self-defined box of acceptability.  The problem is everyone has their own definition of what is “acceptable”.  Who cares if someone wants to save and not spend???  Why is it any of our business?  Just because we do not actively try to convince them to change does not mean we are working to convince others to do the same as they are.

My wife and I are both “savers”, but on different levels.  She wants to save more every month, where I am happy as long as we have a good (and previously discussed) level of savings.  However, for the good of our marriage, I am indeed happy to continue to save more… keep HER happy!  Happy wife…  Arrange YOUR finances based on YOUR priorities, not those of others.

Debt is a major financial problem in our society, and we are all paying for the mounting bad debt write-offs in consumer credit.  Most reading this article do not have a debt problem, and to those I say, enjoy your cash to your own level of desire, but remember to set aside enough to cover multiple years of nursing/assisted living home for you and your spouse (if married), and consider funding your grandkids’ education.  Also, be careful about spending the principal that has been providing significant annual investment income.  You may desire for your last check to bounce, but no one knows exactly when that last check will be written.  I can’t imagine anything worse than running out of money with perhaps years more to live.
Aug. 16, 2018, 2:05 p.m.

But some of us CFs just wouldn’t be happy being high rollers and I don’t eat ramen noodles.

Food is one of those markets where there exists an inverted price/quality ratio option. In general, the highest quality food I can possibly get comes out of my backyard at the lowest price I could possibly pay. Real estate is like that too. I have 53 acres of peace and freedom that is at the bottom end of the real estate market because it is where no high roller would ever want to go.

Liz deForest
Aug. 16, 2018, 1:05 p.m.

I am a CF and think Dave Ramsey is a piker for cheapness.  I was raised to live off of half of take-home.  Now that so much income is investment income I can spend big and still live off of half.  This has worked very well for me and I spend more now, but then I was the oddball who went to therapy to learn to spend money when I realized I had gone way too far.  This article came at a very good time as I am deciding if I should remodel the fixer we bought.  Looks like yes.
For seriously cheap Mr Money Moustache is the gold standard.

jack goldman
Aug. 16, 2018, 12:05 p.m.

Jared, you are successful, success buys material things and happiness. The trouble with success and happiness is it is temporary. Many people are not after happiness or pleasure or global travel, all which I have done. Many people just want PEACE, to be out of the God forsaken spiritual wasteland where there is ONLY material wealth and no love, no time to recognize the spiritual beauty of life.

I am the frugal guy you talk about. I don’t get pleasure from material things or material success. If find the yuppie status symbol life repugnant and sedate. I get pleasure in nature and peace. These are different kinds of people, motivated by the spiritual or the material. The love of money really is the root of all evil. Money is just a fake score, especially now with fake, faith based, worthless debt notes that are simply counterfeited to keep the felony fraud alive. I do believe counterfeiters should be put to death. We are debasing our families and our lives. What kind of society tolerates a nation were over 40% of the children are born to single mothers, smart people don’t have children, but low IQ immigrants have ten or twelve on welfare and I pay? Money is being debauched and it’s debauching our families.

I agree with pleasure but I have a rule. The more expensive something is the less important it is. The cheaper things are the more important they are. Think about it.
Aug. 16, 2018, 11:14 a.m.


Just wanted to thank you for your articles. I don’t look forward to many publications, except yours and the Mauldin team.  Hopefully I can attend one of your events to see you talk in person.

Tom Wenneson
Aug. 16, 2018, 10:37 a.m.

I have a different take on ‘The Millionaire next Door’.

It is: ‘the difference between those who become wealthy is not a function of how much they make, its how much they spend - and where - of what they make’

I never got the sense that they were scrimping in latter days to retain wealth, just that they lived a more conservative life than the stereotypical wealthy person is thought to live - and that was why, on an average income of $80k, they were millionaires, vs. their peers who spent all they made.

They also, typically, did a crappy job of passing their values on to their kids who then overspent their incomes to keep up with the Jones…

Still, your point is a great one: money is a tool and is meant to make things happen in your life. Hoarding it when you no longer need to is silly and likely quite selfish.

John Faubl
Aug. 16, 2018, 10:31 a.m.

I’ve always had the same problem with the Millionaire Next Door. I read that a long time ago but I kind of remember there was conflicting advise. There was lots of praise on people living poor and having millions in the bank and having something to give to your heirs.  They also talked about how money given to your heirs is not spent the way you want-paying for the grand kid’s college, etc.  It is usually blown on crazy purchases and is gone in a few years.  I plan on bouncing my first check the day I die.

Don Wilks
Aug. 16, 2018, 10:20 a.m.

I jumped off the corporate hamster wheel 20 years ago. I was 38. I decided my time was more important than what kind of shirt I wear. I am hardly a CF, but no where near a high roller. I spend my money on travel and services that give me comfort and time.

My main point is: don’t spend your money on those things that the sellers want you to buy to convince yourself you are cool, hip, or not a CF. Don’t fall for that crap-it is not really happiness, not true happiness anyway. Some possessions may bring happiness (as my Jeep does), but one must be careful to ensure that the happiness is on YOUR OWN terms, not those of an over advertised society.
Aug. 16, 2018, 10:20 a.m.

If one can afford whatever one can think of, but does not want the burden of chasing after ;more goods, more responsibilities, more care, why should his life be benchmarked by the ambitious of others?

Warren Buffett is a case in point, happy with what he has and does, with always a friend around to lend him a personal jet.
Unused funds will be better used to help those in need.

Consumption for its own sake is the death of both spirit and body, ss well as driving the world to disaster

Read Henry Ford’s own life story and Small is Beautiful

Aug. 16, 2018, 10:06 a.m.

I have to tell Jared, that article was written like someone who has no children and so has no stake in the future.

Just like your assessment of The Millionaire Next Door, there are kernals of truth in some of what you wrote.

However, although I always advocated for my grandparents to spend more of their money and enjoy life, my family is also grateful for the wealth they passed down. With the mistakes I made during the financial crisis, it has been reassuring to have the backstop of the wealth that stand to be my inheritance.

Also, I am a second marriage type with three young children and now over 55!  Some wealth is spent, but I must remain largely in the accumulation phase to ensure child related expenses will be covered and that we don’t have to stockpile Alpo, as you say.

Side note:  Your advice to invest in yourself and use financial resources in entrepenurial ventures has helped.  My brother and I are working on a scalable, computer based project that should be very lucrative, but the developmental stage is quite expensive.  Your advice has helped me steel my resolve to see it to completion.

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