The Quiet Millionaire - A Comprehensive Review

[This post is written and copyrighted by FIRE Finance (http://firefinance.blogspot.com).]

Brett Wilder, a certified financial planner and author, shows us how to set a path for financial security in his new book "The Quiet Millionaire." Wilder has over forty years of professional experience as a personal and business adviser and has helped thousands of individuals become what he calls "quiet millionaires". To quote him:

Being a quiet millionaire is a realistic aspiration if you are knowledgeable and diligent about becoming one.

Who is a quiet millionaire?

They are people with clear financial objectives who have set themselves on a path toward financial security. From goals in career, lifestyle, and education to retirement & estate planning, quiet millionaires are purposeful and forward thinking in how they spend and invest their money. They also know how to handle debt.

A Walk through "The Quiet Millionaire"

The Gist

Wilder begins with a self discovery questionnaire which helps the audience to identify what about money is most important to them. He feels that knowing how we personally value money helps us to chart the directions we need to take in making life choices.

Then he guides us through various aspects of financial decision-making and ways to grow and protect our wealth from the early stages of our career through retirement. This book comprehensively covers topics like cash flow, assets, liabilities, taxes, investment, employee benefits, insurance health care, college funding, business ownership and how to keep money during retirement. Personal stories bring Wilder's points to life and illustrate the pitfalls and obstacles that many face in the journey to financial security.

Chapters

1. What Is Important about Money to you?

In this chapter we are led to discover to who we "really" are and what is it that we "really" want out of life. We are provided with tools like building block questioning processes to understand what is important about money to us. Also we are helped to personally discover the creative aspects within. In short, we are advised to be specific about where we are going, how to get there in order to become and stay the quiet millionaire.

2. The Financial Management Review

We are provided with a detailed Financial Management Review (FMR) process to overcome major obstacles impeding our financial progress. Brett shares the seven major obstacles to financial success, namely:

• i. Undisciplined spending, ii. Materialistic thinking, iii. Costly debt
• iv. Taxes v. Inflation vi. Poorly structured investment portfolios and
  
• vii. Unforeseen life changing financially devastating events.

We can print the FMR forms online for our use, ongoing referral and monitoring.

3. How to Have a Positive Cash Flow?

As the title goes this chapter helps us to understand where our money disappears and how to keep more of it. Key points are:

• Make more money than you spend
• Keep track of where and how you spend your money
• Control impulse spending
• Have healthy family communication about money issues
• Just say "no" to easy credit and ATMs
  
• Establish a financial budget, use software tools like Quicken, or MS Money
  
• Pay yourself first with automatic saving deductions
• Plan your financial goals, save what is required to achieve them and determine respective cash flows for them
• Develop a "pay as you go" attitude, shun credit card mentality, use check or debit cards, or a single credit card that is paid off COMPLETELY every month

4. Do You Own the Right Assets?

Now we get to learn the various types of assets and understand the distinction between personal use assets and investment assets. Also, it pays to be knowledgeable as well as intelligent about when to or when not to purchase them. It is important to realize that the quantity of whatever we own does not necessarily enhance the quality of our lives. Instead we are urged to make purchasing assets a good business decision rather than an emotional or impulsive one. Time to complete the assets section of the Financial Statement Planning Worksheet and keep it updated annually.

5. Are You An Intelligent Borrower?

This chapter helps readers to understand the different types of debt and their management techniques. It must be realized why credit cards are troublesome and why we should not pay a single penny in credit card interest. Wilder shares two cardinal rules for debt management:

• Spend less than you make to avoid a troublesome debt situation
• Always match the repayment term of your debt to the expected usage life of the item purchased

We are advised to only borrow in order to intelligently leverage the purchase of our assets. For example, we can intelligently leverage low interest rates with higher investment returns. So we should research our borrowing options before incurring debt and know the true cost of the debt along with its implications and effects on our wealth accumulation process.

6. Are You Paying Too Much Tax?

Now comes the taxing time! We are guided to understand:

• The difference between taking tax deductions versus planning tax reductions
• The basic structure of the federal income tax system in order to reduce our taxable income
• Two cardinal rules for reducing taxes and managing cash flow
• Throughout the entire year, proactively, perform intelligent tax reduction management in order to maximize your after-tax dollars for wealth accumulation.
• In managing your cash flow, think in terms of what you must earn in pretax dollars in order to make purchases with after-tax dollars.
• Two tax myths that can hurt you
• Deferring taxes is always good
• Taxes paid go down during retirement

Its time to start working on the Tax Awareness Worksheet to know the actual amount of after-tax money that we have available to spend and save. If necessary, Brett advises to seek fee-only professional assistance for tax reduction & after-tax cash flow management.

7. How To Be An Investment Winner?

An interesting chapter which aids us in knowing the requirements for a well structured investment portfolio, wisely plan, coordinate and know our investment programs. It is a must to know our tolerance for risk. And here are the seven biggest investment mistakes we should avoid:

1. Focusing on the least important investment decision first
2. Trading individual stocks
3. Attempting market timing
4. Emotional investing decision making
5. Not taking advantage of tax loss harvesting
6. Not realizing that a negative investment environment can be positive
7. Losing too much investment value during down-market periods

The next step is to build and maintain a successful portfolio based on the Nobel Prize winner Modern Portfolio Approach. If we need professional investment advice, it makes sense to go for fee-only advisers.

8. How To Get Maximum Results from Employer Stock Options and Other Key Employee Compensation Programs?

The chapter explains the rewards and pitfalls of employee stock options and other forms of key employee compensation programs plus how to maximize and preserve their value. Five interesting points for getting the most value from your stock options are:

• Building Stock Option Wealth requires intelligent financial leveraging
• Doing Nothing is a risk
• Lack of Diversification is a risk
• Taxes can gobble up our gains even if we do everything else right
• A well Managed, Detailed and Monitored plan is required for Profitable stock option execution

9. Are You Prepared and Insured to Financially Survive Life's Risks?

This is an important chapter, more so, in view of the recent natural calamity (wildfires that caused losses to the tune of billions of dollars in California). We learn to determine and then carefully balance the different ways to manage and protect ourselves against the risks in life. The general principle is to transfer as much catastrophic risk to insurance companies as we can afford to insure. Brett advises us to understand the intricacies of term and permanent life insurance, and then purchase the right kind and amount of protection. Also, do not overlook protection against the risk of disability which is more likely to occur than most other forms of risk. Time to fill the life insurance analysis checklist.

10. Will Costly Health Care Wipe You Out?

An interesting question! This scenario can happen if we do not know and understand the features plus benefits of health insurance programs offered and a variety of plans like indemnity, HMO, PPO, POS and HSA. We are advised not to purchase specialized disease health insurance. Also, we need to know the difference between Medicare and Medicaid. It makes sense to purchase long-term care insurance to fund costs that cannot be self-funded out of pocket. The health plan evaluation checklist is designed to get us started on charting our personalized plan for managing health care.

11. Follow the Quiet Millionaire's Path to Successful Business Ownership.

Brett's experiences shows that most quiet millionaires are successful business owners. He goes on to explain the success factors of the quiet millionaire business owners. Next are the four stages of transition for a successful business:

1. The Wonder Stage
2. The Blunder Stage
3. The Thunder Stage
4. The Plunder Stage
   

We would not steal the thunder of this chapter, but in a nutshell it provides practical means to find bliss in our work and make money out of it to be a millionaire.

12: College Part I: How to Manage the College Experience Successfully?

The essence here is that the early bird catches the worm. Successful college experiences start with figuring out early what college will cost you and committing to a savings program. And the most important decision in this game is to become knowledgeable about how to select the right college. A four year college planning checklist provides the remaining details.

13: College Part II: How to Make College Affordable?

A gamut of useful information regarding college funding is provided in this chapter. An intelligent saver would use instruments like 529 college savings plan, Coverdell education savings account, Roth IRA and taxable investment accounts. One should avoid using the minor's account, annuity, cash value life insurance, US Govt. EE bond, bank certificate of deposit and savings account to save for college. Brett also advises us to not jeopardize funding our other lifetime objectives such as retirement by paying too much for college.

14: Retirement Part I: How to Quit Working As A Quiet Millionaire and Not Run Out of Money?

A very important chapter for people like us who are on the road to FIRE (Financial Independence Retire Early). It helps us to understand and know:

• Our own retirement plans provided through our employer, group savings plans, pros and cons of the various ways to save for retirement
• Realistic dynamic trends affecting the affordability of retirement
• Social Security system as well as long-term health care possibilities
• The effects of college planning, failing health and long-term health care on our retirement plans
• How to overcome the double-barreled negative effect of inflation and taxation both before and after retirement
• Utilize various retirement savings plans
• Cardinal Rules for successful retirement
1. Never contribute after-tax dollars to an employer-sponsored group tax-deferred retirement plan, regular IRA, or insurance company sponsored annuity
2. If eligible, always contribute the maximum allowable amounts to a Roth IRA which is tax FREE.
3. If you are in a lower tax bracket during the retirement accumulation period than you will be during the retirement withdrawal period, then evaluate saving in a taxable account vs. a tax deferred retirement account. This increasing tax bracket circumstance can occur if an increasingly affluent lifestyle is occurring and will NOT decrease during retirement.
• Periodically, at least annually, perform a detailed retirement cash flow analysis to determine and monitor whether we will run out of money during our lifetime.

15: Retirement Part II: How to maximize Retirement Assets and Transfer Estate Wealth?

And finally, we are taught the best ways to preserve, protect and grow our retirement assets. Brett shares least difficult and private ways for transferring our estate's wealth for maximum value along with legal preparation, implementation and maintenance of proper estate planning. Also, we are helped with the process to determine whether we will take action on our own or would need a trustworthy and competent financial advisor who is right for us.

Buy or Not to Buy?

The Quiet Millionaire is loaded with valuable strategies for maintaining and growing wealth throughout one's life. It is pretty straightforward, replete with real life examples, and provides a thorough approach to management of one's personal finances. At every stage, Brett has provided handy worksheets to increase our awareness about our financial health. These tools are also available online FREE of cost.

This book covers the entire personal finance life cycle. So our suggestion is that depending on our particular financial needs, it is best to loan this book and see how it works out for us.If we feel that it is essential for future references and analysis of our progress, then we might go ahead and buy it.

And if you want to get at FREE copy of the book, please stay tuned to FIRE Finance by subscribing to our feed, since we shall be conducting a GIVEAWAY of the The Quiet Millionaire!

Our heartfelt thanks to Mr. Brett Wilder for writing such a fine book and giving us an opportunity to review it.

Image Source(s): iStockPhoto

Related Posts