I've been re-reading this book to refresh my memory and give myself a little encouragement and push. I have Millionaire Women Next Door, too, and I'll be starting on that next.
So the formula to see if you are a PAW (prodigious accumulator of wealth), AAW (average accumulator of wealth), or UAW (under accumulator of wealth) is this:
Multiply your age times your realized pretax annual household income from all sources except inheritances. Divide by 10. This, less any inherited wealth is what your net worth should be.
They also say that you are a PAW if your net worth is twice the amount of wealth expected. And you are a UAW if your net worth is half or less than the amount of wealth expected.
I used DH's age since he is the one bringing in the money and older by 9 years. Our net worth should be $226,600. Half of that is $113,300 so according to the book we are not quite UAWs, but pretty close. Yet I know we can do better.
I figured that if we paid off everything except for the mortgage we still wouldn't be there, but we would be a lot closer at about a net worth of over $195,000 or so. But it is still very eye-opening and I can see us doing very well in the next 5 years if we keep our debt low and continue living below our means.
The Millionaire Next Door
December 31st, 2007 at 03:30 pm
December 31st, 2007 at 05:21 pm 1199121666
December 31st, 2007 at 05:45 pm 1199123111
Here is a link that sums up the average first generation millioniare.
I did a rough calculation ( i didn't include my emergency fund, cars, or car loans) but I am an AAW. Woo hoo!!! If i got rid of my mortgage I would be PAW.
December 31st, 2007 at 05:52 pm 1199123529
December 31st, 2007 at 06:10 pm 1199124631
I am a PAW, and proud of it. Savings have always come first, then money to pay the bills. Luckily, I've always had enough to go around!
December 31st, 2007 at 07:33 pm 1199129612
December 31st, 2007 at 08:17 pm 1199132275
December 31st, 2007 at 08:48 pm 1199134126
It is so great to see so many PAWs on here! It definitely gives me hope to reverse our situation. We have always bought homes under the amount the loan officer said we qualified for. That is a horribly inflated number! We would sit down and figure out the amount we could really afford. We upgraded once, but really we spent the same for our new home that we sold our old home for. Now we are done and happy with the home we are in....not too big, not too small.
Ooo...and I forgot about The Millionaire Mind! I think I'll see if the library has a copy of it.
December 31st, 2007 at 10:48 pm 1199141322
December 31st, 2007 at 11:25 pm 1199143550
Actually at: $60,000
Hmm...
December 31st, 2007 at 11:52 pm 1199145160
http://cgi.money.cnn.com/tools/networth/networth.html