Image courtesy of Tom RuetteThomas Stanley, the author of "The Millionaire Next Door" has made a career out of studying the wealthy and found that most millionaires don't live the way you think they live. Stanley's definition of a millionaire is someone who has assets of at least a million dollars, not including houses and cars.
One of the most common traits of millionaires is that they live well below their means. I think one of the biggest causes of the current housing crisis is that people were trying to "live like the Joneses" and bought a lot more house than they could afford. If you are making $100,000 a year, you probably should not be buying a $300,000 home. Surprisingly, as a whole, more millionaires live in a $300,000 home than those that cost over a million.
Believe it or not, most millionaires are actually frugal. They saved money and became millionaires by making cost-conscious decisions when it comes to big ticket items. They don't always buy the biggest home, the most expensive car or send their kids to the most expensive schools. Most millionaires don't drive a Mercedes, BMW, Porsche, or other expensive cars.
As a society, we are so quick to equate wealth with possessions. I admit that I am guilty of doing this myself. Consider this: the next time you are sitting at the traffic light and there is a BMW or Mercedes to your left and a Toyota Camry to your right, don't be so quick to assume that the person driving the BMW is the one with money. The person driving the BMW probably has a car payment the size of a mortgage payment and may be struggling to make the payment whereas the driver of the Toyota Camry may own his vehicle free and clear and is using his money to build real wealth and not just an appearance of wealth.
Let's start living like millionaires in 2009. Let's start living a frugal lifestyle and use our money to build wealth. If you are about to purchase a home, think about what you can truly afford, not what the bank will lend you.
I'm not saying you should deprive yourself of the occasional splurge. If there is something that you want to buy (excluding a house or car), go for it. Just make sure you've saved the money and are not relying on a credit card to finance the purchase (unless you pay in full each month).