Question on "Rich Habits"

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Question on "Rich Habits"

Postby C4NT » Fri Jul 26, 2013 10:19 am

There have been a variety of internet news articles recently written ( Link.1, Link.2,to link a few) on the book Rich Habits - The Daily Success Habits of Wealthy Individuals by Thomas C. Corley. I have not read the book, but many of his findings from comparing the daily habits of "rich people" versus "poor people" that were mentioned in the various articles are very interesting.

Including:
13. 67% of wealthy watch 1 hour or less of TV. every day vs. 23% for poor

14. 6% of wealthy watch reality TV vs. 78% for poor.



Much of the discussion online have been arguments about correlation versus causation (not surprisingly). I'd be interested to hear Bogleheads thoughts on some of these items, but I have a question about one of them in particular.

8. 80% of wealthy make hbd calls vs. 11% of poor


What the heck are "hbd calls"? My google skills have failed me on figuring this one out. It may have something to do about Human Biodiverstiy (not even sure what that meant), but I couldn't figure anything out 100%.

Thanks in advance.
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Re: Question on "Rich Habits"

Postby empb » Fri Jul 26, 2013 10:35 am

According to one source that quotes the same list: 'happy birthday calls'. I still have trouble integrating that information into the wider context though!
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Re: Question on "Rich Habits"

Postby MnD » Fri Jul 26, 2013 10:36 am

Happy birthday calls - calling friends and family on their birthday.
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Re: Question on "Rich Habits"

Postby C4NT » Fri Jul 26, 2013 10:39 am

Wow, thanks...I wasn't even close to coming up with that one.
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Re: Question on "Rich Habits"

Postby Alan S. » Fri Jul 26, 2013 5:29 pm

Note that there is fairly high degree of negative mobility among the "rich". That means that some of their habits are instrumental in loss of assets and best avoided. It would be best to heed the habits of the rich who show a steady increase of asset valuation, than just those who happen to be rich at the moment.
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Re: Question on "Rich Habits"

Postby thomasbayarea » Fri Jul 26, 2013 5:41 pm

I wish somebody wrote a book on "NBA Habits", maybe I could become a better basketball player.

Michael Jordan brushes his teeth for 7 minutes a day
Kobe ties his shoe laces up side down
Lebron reads his email before Facebook
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Re: Question on "Rich Habits"

Postby ofcmetz » Fri Jul 26, 2013 5:48 pm

thomasbayarea wrote:I wish somebody wrote a book on "NBA Habits", maybe I could become a better basketball player.

Michael Jordan brushes his teeth for 7 minutes a day
Kobe ties his shoe laces up side down
Lebron reads his email before Facebook



Wow, no wonder MJ has such shiny whites.

I find some of the more obscure correlations entertaining, but not actionable. The ones that are actionable are the ones like living below ones means, and staying married to one spouse. The Millionare Next Door book had a lot of info on the habits of the rich. It suffers from survivorship bias, but is still an entertaining and enlightening read.
Showing up at the donut shop at 5 am to get them hot out of the oil is an example of successful market timing.
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Re: Question on "Rich Habits"

Postby enderland » Fri Jul 26, 2013 5:51 pm

He defined “wealthy” as earning at least $160,000 annually and holding at least $3.2 million in assets.


I'll be honest, I'd be far more interested in looking at the habits of those who are "wealthy" by having more than $1M in assets yet net incomes below $100k a year their entire lives.
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Re: Question on "Rich Habits"

Postby nedsaid » Fri Jul 26, 2013 11:29 pm

I have known some well to do folks.

One habit that I notice right off the bat with these folks, nice homes and non-descript cars.

A car or truck is a depreciating asset and the depreciation really adds up if you have to trade for a new car every three years.

The well-to-do folks put more of their money in things that appreciate like homes.
A fool and his money are good for business.
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Re: Question on "Rich Habits"

Postby technovelist » Sat Jul 27, 2013 12:24 am

nedsaid wrote:I have known some well to do folks.

One habit that I notice right off the bat with these folks, nice homes and non-descript cars.

A car or truck is a depreciating asset and the depreciation really adds up if you have to trade for a new car every three years.

The well-to-do folks put more of their money in things that appreciate like homes.


Not all homes appreciate, but they all cost lots of money in maintenance, taxes, and insurance.
A nice portfolio is a better investment that doesn't need a plumber in the middle of the night. :D
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Re: Question on "Rich Habits"

Postby jvclark02 » Sat Jul 27, 2013 8:16 am

technovelist wrote:
nedsaid wrote:I have known some well to do folks.

One habit that I notice right off the bat with these folks, nice homes and non-descript cars.

A car or truck is a depreciating asset and the depreciation really adds up if you have to trade for a new car every three years.

The well-to-do folks put more of their money in things that appreciate like homes.


Not all homes appreciate, but they all cost lots of money in maintenance, taxes, and insurance.
A nice portfolio is a better investment that doesn't need a plumber in the middle of the night. :D


While I find the size of my portfolio comforting, I enjoy the comfort of my home much more :D
Experience is something you gain shortly after you really needed it.
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Re: Question on "Rich Habits"

Postby Leesbro63 » Sat Jul 27, 2013 8:17 am

technovelist wrote:
nedsaid wrote:I have known some well to do folks.

One habit that I notice right off the bat with these folks, nice homes and non-descript cars.

A car or truck is a depreciating asset and the depreciation really adds up if you have to trade for a new car every three years.

The well-to-do folks put more of their money in things that appreciate like homes.


Not all homes appreciate, but they all cost lots of money in maintenance, taxes, and insurance.
A nice portfolio is a better investment that doesn't need a plumber in the middle of the night. :D



+1. We've lived in a nice "move up" house for 22 years. We avoided the next level McMansion although there were times wife and I were at odds about this. Now that the kids are grown, the place is perhaps even too big, but we'll stay here because we are comfortable. We have friends with McMansions whining about property taxes and even one whining about "his mortgage". In other words, many of them seem to have big incomes, big houses but not big portfolios. If I had to do it all again I'd do it exactly the same way.
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Re: Question on "Rich Habits"

Postby nedsaid » Sat Jul 27, 2013 8:40 am

You are right, homes don't always appreciate. The odds are a whole lot better than with a luxury car.

With one exception, these folks I knew had nice homes but they didn't overdo it. A nice upper middle class home but not McMansions.

There was one exception, one family had a very large home with something like 6 bathrooms. They had a large family and the mom was an extremely efficient housekeeper. So it worked for them. I think one of the kids bought it. But even this home was not extravagantly furnished. A nice upper middle class home, but very large.
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Re: Question on "Rich Habits"

Postby Coffee » Wed Jul 31, 2013 6:58 pm

I think a lot depends on what part of the country you live in. I grew up in Southern California (big car culture) ... and pretty much everybody who had money, drove an expensive car.
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Re: Question on "Rich Habits"

Postby manwithnoname » Wed Jul 31, 2013 7:20 pm

Just what is the purpose of this thread? Its like watching a reality show about the Kardashins with about as much redeeming value.
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Re: Question on "Rich Habits"

Postby Coffee » Wed Jul 31, 2013 7:29 pm

manwithnoname wrote:Just what is the purpose of this thread? Its like watching a reality show about the Kardashins with about as much redeeming value.


I think it has value.

Part of being a Boglehead (from what I've gleamed) is learning to change your ideas about money and investing. Part of that is studying how successful people spend their money.
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Re: Question on "Rich Habits"

Postby Teetlebaum » Wed Jul 31, 2013 7:43 pm

Most of the "rich habits" seem to boil down to things like self control, the ability to defer gratification, and the habit of planning ahead. I'm under the impression that a lot of this is inborn. But maybe people can be taught, or "nudged".

(My search for HBD turned up “Has Been Drinking”. One of the things these people actually don't do a lot of.)
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Re: Question on "Rich Habits"

Postby Coffee » Wed Jul 31, 2013 7:46 pm

Teetlebaum wrote:Most of the "rich habits" seem to boil down to things like self control, the ability to defer gratification, and the habit of planning ahead. I'm under the impression that a lot of this is inborn. But maybe people can be taught, or "nudged".

(My search for HBD turned up “Has Been Drinking”. One of the things these people actually don't do a lot of.)


I think that self control and the ability to delay gratification comes with maturity: Something that many people, sadly, never acquire-- even in old age.
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Re: Question on "Rich Habits"

Postby staythecourse » Wed Jul 31, 2013 8:06 pm

Teetlebaum wrote:Most of the "rich habits" seem to boil down to things like self control, the ability to defer gratification, and the habit of planning ahead. I'm under the impression that a lot of this is inborn. But maybe people can be taught, or "nudged".

(My search for HBD turned up “Has Been Drinking”. One of the things these people actually don't do a lot of.)


Agreed 100%.

These are some of the characteristics I see often I "rich" folks. The older I get the more I see many folks fail in their decision making just because they didn't plan ahead. Example is the guy who bought the big house which consumes 60% of his take home pay and then gets fired years later and goes on t.v. crying about getting foreclosed. A person with "rich" habits seem to think ahead and plan for different outcomes with each big decision they make.

Good luck.
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Re: Question on "Rich Habits"

Postby jlawrence01 » Wed Jul 31, 2013 9:49 pm

I read the book this morning as Amazon FINALLY delivered it.

The book addresses the development of good habits including the development of short-term and long-term goals, maintaining and developing long-term relationships (like calling people on their birthdays), and health maintenance.

Some of the points are pretty basic to many. However, I saw a few good ideas that would be worth implementing.

It was well worth the $12.
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Re: Question on "Rich Habits"

Postby MathWizard » Wed Jul 31, 2013 11:24 pm

enderland wrote:
He defined “wealthy” as earning at least $160,000 annually and holding at least $3.2 million in assets.


I'll be honest, I'd be far more interested in looking at the habits of those who are "wealthy" by having more than $1M in assets yet net incomes below $100k a year their entire lives.


I definitely agree. I assume that the $100K is in current dollars, since $100K / yr.
was a huge salary 30 years. By net income you mean gross income - income taxes?
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Re: Question on "Rich Habits"

Postby manwithnoname » Thu Aug 01, 2013 8:10 am

MathWizard wrote:
enderland wrote:
He defined “wealthy” as earning at least $160,000 annually and holding at least $3.2 million in assets.


I'll be honest, I'd be far more interested in looking at the habits of those who are "wealthy" by having more than $1M in assets yet net incomes below $100k a year their entire lives.


I definitely agree. I assume that the $100K is in current dollars, since $100K / yr.
was a huge salary 30 years. By net income you mean gross income - income taxes?


According to an investment analysis $3.1M in net worth puts you in the top 0.25% of all investors.

http://www2.ucsc.edu/whorulesamerica/po ... nager.html
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Re: Question on "Rich Habits"

Postby IlliniDave » Thu Aug 01, 2013 8:37 am

ofcmetz wrote:The Millionare Next Door book had a lot of info on the habits of the rich. It suffers from survivorship bias, but is still an entertaining and enlightening read.


Maybe in context the book benefits from survivorship bias in the sense that understanding the habits of people who maintain their wealth is of more value?

I haven't read the book the OP mentioned but have read a couple others on the subject, including The Millionaire Next Door.

I think people have pretty well captured the essence of what a person can apply.

-Live below your means (sometimes to the point of being a cheapskate). Moderation in clothing, automobiles, and homes seem to top the list.
-Extend your forethought years or decades into the future
-Maximize your unrealized income (minimize your tax liability). For the typical Boglehead that would equate to growing a substantial, tax-efficient investment portfolio.

Hollywood, TV, and fiction have created somewhat of a stereotype of the rich guy smothered in gold lighting $100 dollar cigars with $100 bills. I suppose that happens sometimes, but the wealthy people I know are no where near as crass about it.

If I recall correctly, most of the subjects in The Millionaire Next Door were "self-made" with median incomes somewhere around $60K (in the early 1990s, maybe translates to 70s-80s today). My suspicion is that many of the habits are causal or at least supportive of building wealth gradually in the long haul. Imitating some of them sure has helped me (I'm no where near financially wealthy in the objective sense, but the arrow is pointing up much more so than in my inattentive youth). Whether the character traits behind the habits are innate or acquired I don't know for sure.
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Re: Question on "Rich Habits"

Postby Dulocracy » Thu Aug 01, 2013 8:59 am

Want to share a few of the pertinent habits?
I'm not a financial professional. Post is info only & not legal advice. No attorney-client relationship exists with reader. Scrutinize my ideas as if you spoke with a guy at a bar. I may be wrong.
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Re: Question on "Rich Habits"

Postby enderland » Fri Aug 02, 2013 7:09 am

MathWizard wrote:
enderland wrote:
He defined “wealthy” as earning at least $160,000 annually and holding at least $3.2 million in assets.


I'll be honest, I'd be far more interested in looking at the habits of those who are "wealthy" by having more than $1M in assets yet net incomes below $100k a year their entire lives.


I definitely agree. I assume that the $100K is in current dollars, since $100K / yr.
was a huge salary 30 years. By net income you mean gross income - income taxes?


I guess I probably more mean gross salary.

Because realistically, I expect to be under $100k income (in current dollars) my entire career. So for me to look at what people making nearly 2x what might be my peak salary is rather pointless.

The $40k-80k salary range would be far, far, FAR more interesting to look at.
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Re: Question on "Rich Habits"

Postby investingdad » Fri Aug 02, 2013 8:25 am

I sum up "rich habits" differently depending on wealth level. I'll categorize three different levels of wealth because that's how I want to do it. :D

- Super Wealthy. Buffet, Icahn, Gates, Zuckerberg. This level of wealth requires a skill set that few people possess...whether it be extreme business acumen, understanding where technology will go 5 years out and being able to create it, etc. You cannot learn this skill set, you are born with the capabilities. Only a handful of these people around. Extreme barriers to entry. Salaries are meaningless.

- Very Wealthy. Names people don't know. Large business owners, CEOs. Very successful lawyers, real estate investors, market investors, doctors, bankers, etc. Very high barriers to entry. High salaries may have put these people into their level of wealth but keeping a salary is no longer very important.

- Wealthy. The 'masses' if you will. Occupations and lifestyles are incredibly varied. Lowest barrier to entry. Achievable with reasonable salary, requires discipline and maturity at an early age to control spending. Truly the level of wealth where 'rich habits' are important to gain entry. Takes time to get there but the avenue is generally open to a large percentage of the population.


Anyway, that's my simplistic look. Rich Habits as I understand them defined in this discussion will really only put you on the path to last level I defined. At least, I think so. I'm sure there are many exceptions all of you can cite.
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Re: Question on "Rich Habits"

Postby allsop » Fri Aug 02, 2013 11:49 am

Many wealthy are wealthy because they have taken great risks that payed off but there are many for which the risk showed up.

There is also a huge amount of luck involved but the lucky ones are "skilled" while the others are "unlucky" :shock:
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Re: Question on "Rich Habits"

Postby 3wood » Fri Aug 02, 2013 8:36 pm

jlawrence01 wrote:I read the book this morning as Amazon FINALLY delivered it.

The book addresses the development of good habits including the development of short-term and long-term goals, maintaining and developing long-term relationships (like calling people on their birthdays), and health maintenance.

Some of the points are pretty basic to many. However, I saw a few good ideas that would be worth implementing.

It was well worth the $12.


Thanks. I think I'll order it as well. Sometimes these simple things are just not things we do in our busy lives.
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Re: Question on "Rich Habits"

Postby LadyGeek » Fri Aug 02, 2013 8:40 pm

This thread is off-topic and locked (neither personal nor actionable). See: A reminder that non-investing general comment threads are OT

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To explain: This forum has a narrow focus. The site owners wish to keep discussions focused on the personal aspects of personal investing.
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