"Brent D. Gardner, ChFC" <bgardner20[at]cox.net> wrote in message
news:tlrMb.21295$zf.15679[at]okepread05...
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I think Michael was questioning the median net worth. If the creators of the
formula studied only the affluent, how would they know what the median net
worth of people in a particular age group would be? It does seem
counter-intuitive that the median savings for a person age 37/$60000 income
would be $222000. Wouldn't the median be a person in the 50th percentile?
( or have I forgotten the correct meaning?)

Elizabeth Richardson

In article <M4xMb.21301$zf.13490[at]okepread05> , Brent D. Gardner, ChFC wrote:
- quote -

You are showing such disdain for index funds, as though they were some
sort of a scam.

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Just because lottery winners are excluded, for obvious reasons (to
avoid my objection), does not mean that the formula is right.

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What do you mean by rewarding?

We are talking about a proper measuring stick -- defining what
constututes good "accumulators" -- and not giving out rewards. Bank
account is the reward. A "PAW" or "UAW" label is a measure. A measure
needs to be useful in guiding behavior.

Telling someone to achieve high investment returns, usually, is not
helpful, generic pro-free market admonitions notwithstanding.

Telling someone to become a better accumulator by forgoing certain
expenses is always helpful if the advice is followed.

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then the formula should reflect how well one is saving instead of how
well one is allocating capital, no?

i

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The people a financial planner/money manager sees is by nature a
self-selected group (i.e. they are interested in getting their
financial affairs in order or want them more in order). One hears
over and over again and even from you how poorly many if not most
people manage their own money. My gut reaction to the formula is that
if the median person, especially at the 75K and below income level,
fits this formula, overall people are not doing as poorly in managing
their money as I thought. If this is actually the mean net worth then
I would feel differently. These are just gut reactions, however.

"Ignoramus7264" <ignoramus7264[at]NOSPAM.7264.invalid> wrote in message
news:btt5nf$cf6$3[at]pita.alt.net...
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If you worked with entrepreneurs on a daily basis, you'll see rather quickly
that there is NOTHING random about success in business. Random is an
overused work promulgated by those who promote index funds. It doesn't
apply at the grass roots level.

Lottery winners are specifically excluded in the work of Stanley and Danko,
so the formula does NOT apply to them.

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Rewarding effort, instead of results, is egalitarianism, at its root. The
goal, when rewarding effort over results, is equality of outcome, rather
than equality of opportunity. This is not unlike what Karl Marx wanted. It
didn't work, either. Obviously.

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If you read the work, you'd realize that it is NOT about business and
investing success, per se, but about living within ones means, primarily,
and NOT spending money on the normal consumer items so many feel they can't
live without.

Brent D. Gardner, ChFC
Chartered Financial Consultant
http://members.cox.net/brentdgardner1378/

"Be ever questioning. Ignorance is not bliss. It is oblivion. You don't go
to heaven if you die dumb. Become better informed. Learn from other's
mistakes. You could not live long enough to make them all yourself." - Hyman
George Rickover (1900-86), Admiral, US Navy, advocated development of
nuclear subs & ships

The Chartered Life Underwriter (CLU) and Chartered Financial Consultant
(ChFC), designations owned and exclusively offered by The American College,
signify the highest standards of academic study and professional excellence
in the financial services industry.

"Michael Grinnell" <msgrinnell[at]charter.net> wrote in message
news:237a8ae7.0401111222.5032b02[at]posting.google.com...
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Thomas Stanley and William Danko, together, have studied the affluent, and
what makes them different, for well over two decades. I don't think anyone
has spend that much time, or written so much, about the subject.

The formula is their creation, based on their observation and analysis.
There will always be those who question its validity, and most of them
haven't spent a whole year studying the affluent, which is why I don't give
much weight to their arguments.

I use it in daily practice. I find that is is more accurate, than not, and I
interview several dozen people each week.

Brent D. Gardner, ChFC
Chartered Financial Consultant
http://members.cox.net/brentdgardner1378/

"Be ever questioning. Ignorance is not bliss. It is oblivion. You don't go
to heaven if you die dumb. Become better informed. Learn from other's
mistakes. You could not live long enough to make them all yourself." - Hyman
George Rickover (1900-86), Admiral, US Navy, advocated development of
nuclear subs & ships

The Chartered Life Underwriter (CLU) and Chartered Financial Consultant
(ChFC), designations owned and exclusively offered by The American College,
signify the highest standards of academic study and professional excellence
in the financial services industry.

In article <237a8ae7.0401111222.5032b02[at]posting.google.com> , Michael Grinnell wrote:
- quote -

My view on this is that the formula looks at the result, which is
subject to all kinds of factors like business success and investing
return, which are arguably random. Someone who just won $1,000,000 a
lottery is a PAW, according to the formula.

I would personally look at efforts, rather than at results. So, for
people working for a salary, I would look at percentage of said salary
that was spent on reducing debts or invested. People who save a large
% of salary it are better "accumulators" than people who save a low %
of salary.

I applaud business success and investing success. But they don't
really compare how well you are accumulating, they compare how well
you allocate capital.

i

I like this view. I left graduate school three years ago. Prior to
that I worked in community and rural development in SE Asia
(needless-to-say, that did not pay too well). In three years with my
wife home with our two young children we have managed to go from
virtually zero to about half the "median". Speaking of the "median",
I don't see any numbers at all, or even any sort of figures on which
this is based. For someone 37 years old with a $60k salary this
figures 220000 net worth. Given what I keep hearing about how poorly
most people manage their finances, I find it hard to believe this is
the median net worth for someone with a $60k salary at age 37. What
is the consensus on this?

Mike


"Caroline" <caroline10027remove[at]earthlink.net> wrote in message news:<YDXLb.3158$zj7.192[at]newsread1.news.pas.earthlink.net> ...
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"BMS" <mcfarland[at]yahoo.com> wrote
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One problem with the PAW formula is it tends to discourage youngsters from going
after dreams that are, in the long-term, beneficial to them and society.

I would not condemn a person who did not become a PAW until age 40 or so. Why?
Some of them are medical doctors with ridiculous medical school debt. Yet where
would we be without health care professionals?

As for business entrepreneurs, knowing the rate of failure of new businesses, I
wouldn't be inclined to encourage this route to PAW, either.

So to the 20-something young people who may feel slighted by the PAW formula, I
say: Get a good job in an area you love. Don't spend beyond your means. Because
of your passion for your work, success will follow.

"Brent D. Gardner, ChFC" <bgardner20[at]cox.net> wrote in message
newsZTLb.11340$zf.8141[at]okepread05...

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I know exactly what you mean here. Spot on!

Michael

I use the same formula, with a bit of difference.

(a) Use total (combined) income -- both spouses.
(b) Use *average* age.

For example, I'm 34, wife is 30, so I use the average
age -- which is 32 in my case.

Works for me.

"Ignoramus14056" <ignoramus14056[at]NOSPAM.14056.invalid> wrote in message
news:btor5t$tlp$1[at]pita.alt.net...
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"Beep Beep" <redsweater[at]nc.rr.com> wrote in message
news:eqTLb.252447$I53.11930358[at]twister.southeast.rr.com...
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Some examples border on the extreme. One guy I was referred to was 23 at the
time. He said point blank that one of his goals was to have $1,000,000 in
the bank by the time he was 25. Before I had my HP 12B out, he said he
already had $500,000 saved.

The first thing most people think of is "inheritance."

But...no.

This guy's parents are wealthy, to be sure. True entrepreneurs. They haven't
given him anything, but they did him one favor. When he was 18, Dad
co-signed on a $10,000 personal loan, so the son could buy a small business.
A coin operated car wash, that needed some TLC.

Five years later, that first loan was long paid off. Now he owns a dozen car
washes, two used car lots, a car financing company, and half-interest in a
large health club (with his older brother). That was five years ago. Today,
he owns several more used car lots, two auto-repair franchises, and two more
gyms. I've lost count how many car washes he has.

He told me he was "saving to save" because that's the way he was raised. His
Dad told him that if he had a million, he could borrow five million, which
would give him the freedom to all manner of small businesses, as they come
up for sale.

No savings? Then he'd have to get a job working for someone else, and that
just wouldn't do for someone in this family.

So, doing some round figures, he needed to save $20,000 per month to get
where he wanted to be. He told me he was saving $10,000 every two weeks,
already. No help needed there. He had just fired a financial planner who
lost $160,000 of his money the previous year. He told me that he had told
the financial planner that he was "saving to save" but the financial planner
misunderstood and had invested his money in stocks. He told me that if I
could do better than the bank, he was interested, but no risky stuff.
Afterall, he had to put his goal back a whole year because of the last
financial planner.

Think about it. 23 years old, half a mil in the bank, but he drove a used
car, and lived in a small condo, with roommates. The typical 23 year old has
a new car (too much car, with a note), and lives in an apartment, and makes
minimum payments on credit cards. Few find this believeable, but I've seen
the statements. He didn't exaggerate one bit.

Strange story, but true.

In my book of business, there are a dozen similar young entrepreneurs. One
guy owns 3 Sub Ways, another owns 7 Sonic Drive-Ins, one couple owns a Pizza
Hut, and then there are the young farmers, ranchers, and building
sub-contractors. All under age 30.

One reason some young business owners have higher net worth is they can
control their income, to a degree. A restaurant franchise owner may pay
himself a salary of $30,000 per year, but has cash flow he can spend triple
that. Farmers and ranchers, the ratio of cash flow to taxable income may be
20 to 1, or better. The ones that use that cash to pay off debts tend to
move from left to right on the distribution pretty quick.

Brent D. Gardner, ChFC
Chartered Financial Consultant
http://members.cox.net/brentdgardner1378/

"Be ever questioning. Ignorance is not bliss. It is oblivion. You don't go
to heaven if you die dumb. Become better informed. Learn from other's
mistakes. You could not live long enough to make them all yourself." - Hyman
George Rickover (1900-86), Admiral, US Navy, advocated development of
nuclear subs & ships

The Chartered Life Underwriter (CLU) and Chartered Financial Consultant
(ChFC), designations owned and exclusively offered by The American College,
signify the highest standards of academic study and professional excellence
in the financial services industry.

"Brent D. Gardner, ChFC" <bgardner20[at]cox.net> wrote in message
news:eOHLb.11289$zf.3943[at]okepread05...

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Yeah, I'm right there (almost 30). I guess the income growth is what's
keeping me from making so much progress on this goal - it's more than
quadrupled over the past five years (which is a better problem to have, I
guess.) We've been out of debt (except for the house) for about three years
now.

- quote -

I am definitely known as someone who can stretch a dollar. Some friends
think it's funny but my goal is to never pay retail for anything and at the
same time buy things that last. I especially liked Thomas Stanley's section
on quality furniture in the second book. Having grown up in the Furniture
Capital of the World, pressed sawdust is a pet peeve of mine.

- quote -

For me, I already had very specific goals. My goals tend to be graduated
rather than set. For example, I like percentages and have an increasing
percentage of my income that I want to save/invest with set increases
occurring at certain points in time. Actually, I guess my goals are focused
more on the cashflow management side than the wealth accumulation side; I'm
still focused on building and solidifying my income streams. My planning,
however, is focused on both. My other main financial goal is to continually
increase my financial literacy. Perhaps as the literacy increases, I'll have
more wealth accumulation goals.

- quote -

I can't believe how much debt most of my friends carry. I know people in
their 40's who still have mid-five figures of student loans alone, not to
mention their cars, credit cards, house and business debt. I guess if they
ran the formula, it might induce them to change. I'm sure it would scare
them silly - at least, it should. I have yet to know someone that was a PAW
in their twenties; I'll have to take your word that they exist.

While the formula didn't do a whole lot for me, I can now see why some could
benefit from it. Thanks for clarifying, Brent.

Michael

How about a married couple? What formula would you apply here?

i

In article <UFFLb.11271$zf.10092[at]okepread05> , Brent D. Gardner, ChFC wrote:
- quote -

The formula is more of an average than a hard rule. Remembering from when I
when read the book, it is a trend found from within the population that was
studied. For a twenty something it is something to strive towards, for
somebody near retirement a basic how long the money will last is more valid.

"
Beep Beep" <redsweater[at]nc.rr.com> wrote in message
news:w_GLb.250267$I53.11806456[at]twister.southeast.rr.com...
- quote -

"Beep Beep" <redsweater[at]nc.rr.com> wrote in message
news:w_GLb.250267$I53.11806456[at]twister.southeast.rr.com...
- quote -

Michael,

The first time I did this for myself, I was a UAW, and I was nearly 30. I
changed my behavior, and now I'm well on my way to being a PAW (and its not
easy, because my income keeps growing). The key is to get out from under
revolving credit and pay off notes on depreciating assets. My cars and boat
are paid for now.

I use this with clients all the time, for two reasons.

1. It is a diagnostic tool. UAWs need counseling, and behavior change. They
need to spend less, save more, pay off debts. Median folks need to fine tune
portfolios, protect assets, and make long term goals. PAWs need income and
estate tax planning, asset protection, and advanced planning strategies.

2. It is a motivator. People who see they fall on the UAW side tend to want
to improve their situation. If they don't want to change, they make poor
clients, so I move on. For those who aren't goal oriented, it gives them
something to work for.

Younger people often find themselves under too much debt, but that doesn't
change the fact that they need to change to get ahead. It is pretty rare to
find a PAW under 30, but they do exist. Usually, they are the more frugal
types, who live well within their means, and have already established a
habit of being a net saver. A UAW nearing retirement is in trouble.

Brent D. Gardner, ChFC
Chartered Financial Consultant
http://members.cox.net/brentdgardner1378/

"Be ever questioning. Ignorance is not bliss. It is oblivion. You don't go
to heaven if you die dumb. Become better informed. Learn from other's
mistakes. You could not live long enough to make them all yourself." - Hyman
George Rickover (1900-86), Admiral, US Navy, advocated development of
nuclear subs & ships

The Chartered Life Underwriter (CLU) and Chartered Financial Consultant
(ChFC), designations owned and exclusively offered by The American College,
signify the highest standards of academic study and professional excellence
in the financial services industry.

"Brent D. Gardner, ChFC" <bgardner20[at]cox.net> wrote in message
news:UFFLb.11271$zf.10092[at]okepread05...

| Age times income, divide by 10 = median net worth for one that age, with
| that income.
|
| If one's net worth is HALF the median, they are an Under Accumulator of
| Wealth (UAW).
|
| If one's net worth is DOUBLE the median, they are a Prodigious Accumulator
| of Wealth (PAW).
|
| Brent D. Gardner, ChFC
| Chartered Financial Consultant
| http://members.cox.net/brentdgardner1378/
|

What's the consensus on the fairness of applying this formula to those who
are at the extreme ends of the age range? I read the book and the sequel and
got some really good stuff out of both of them but I thought this formula
was a bit too general. For those of us who are still in our twenties
(especially those of us with above-average income), after running that
formula can create a bit of despair. Saying that the median 22 yo has
accumulated over two years of income their first year out of college isn't
realistic.
At the same time, I think some older folks may run the formula and get a
false sense of security because they may be considered a PAW but still not
have enough to meet their personal requirements.
Overall, I liked the books and the comparison of UAWs and PAWs but I didn't
care for the formula. I got the sense that a lot of people who read the book
would use it as a guide instead of competent professional help.

I know this thread was simply a request and a provision of the formula, but
I just wanted to get this off my chest.

Michael

"Elizabeth Richardson" <erichktn[at]worldnet.att.net> wrote in message
news:GRzLb.14619$Ub6.360635[at]bgtnsc04-news.ops.worldnet.att.net...
- quote -

Age times income, divide by 10 = median net worth for one that age, with
that income.

If one's net worth is HALF the median, they are an Under Accumulator of
Wealth (UAW).

If one's net worth is DOUBLE the median, they are a Prodigious Accumulator
of Wealth (PAW).

Brent D. Gardner, ChFC
Chartered Financial Consultant
http://members.cox.net/brentdgardner1378/

"Be ever questioning. Ignorance is not bliss. It is oblivion. You don't go
to heaven if you die dumb. Become better informed. Learn from other's
mistakes. You could not live long enough to make them all yourself." - Hyman
George Rickover (1900-86), Admiral, US Navy, advocated development of
nuclear subs & ships

The Chartered Life Underwriter (CLU) and Chartered Financial Consultant
(ChFC), designations owned and exclusively offered by The American College,
signify the highest standards of academic study and professional excellence
in the financial services industry.

Could someone please post the formula for Prodigious Accumulators of Wealth
(is that right?)? Also, how do you apply the formula for a married couple,
since, for many of us, that Accumulation is jointly owned.

Thanks,

Elizabeth Richardson