I am again reviewing and raffling off a book. This time it’s the Middle Class Millionaire by Russ Prince and Lewis Schiff.  I will be drawing a winner next Thursday 10/2, so leave a comment or question 10/1/08 Wednesday 5 pm for a change to win.  Author Lewis Schiff is interested in taking questions about the book!

I believe this book will become just like the millionaire next door because it really examines a new middle class of people. Those who earn a good living, save money, but aren’t in the ranks of the “Wealthy”.  They are people from whom it can all be taken away at any time.  Even if you don’t win this book, I would definitely recommend borrowing it from the library. But let’s move on to the review.

Chapter 1: Influence of Affluence

The book is based on 576 families whose net worth was declared between $1 million and $10 million, including the equity of their primary residence.  These people both inherited and earned their wealth, and while they lived everywhere in the US, they tended to congregate on the Coasts.  These millionaires had a different mindset than the average middle class family and the authors set out to examine what it was.

The chapter starts by looking at differences between the Ultra Rich and the middle class millionaire.  The first subject Bruce Spector was a millionaire and had done well for himself. But unlike the ultra-rich he was unable to afford a physician specifically dedicated to his care.  But he was rich enough to want care above and beyond what the masses had.  Together with Dr. John Hutchins he started the company called PinnacleCare International.

The idea that people who are well off can afford better healthcare.  The plan?  Well it costs $8k/year per family of any size, $7k set up fee, and extras from $3-20k/year.  It is not an insurance company or health care provider.  Instead these members pay this money to have a Doctor look afer their medical records like a financial portfolio.  A trained staff is on call to help you out of any sitution and assess the best course of action.  Meaning, they will research and determine the best heart surgeon in the country and get you an appointment.  No waiting in emergency rooms, no holds on getting an appointment, referrals are top notch and you are basically paying for Concierge medical services!  Doctors are willing to see you because they know your money and power if you can afford PinnacleCare.

Basically the middle class millionaires in the book are examined for their lifestyles and habits. They are found to be extremely achievement oriented, high earning and high spending.  They are willing to invest in what they value as important.  Hence the PinnacleCare skyrocketing success.

In this chapter they defined middle class as a family earning between $50k and $80k/annually.  With a net worth below $1 million.  This is the upper ranges of the median salaries inthe US, but it’s hard to differentiate between $80k in the midwest versus $80k in New York City.  3128 households were interviewed as middle class while 586 were “middle class millionaires” (MCM).

Chapter 2: Millionaire Intelligence

This chapter looks at what separates the millionaires from the rest of us.  They say 4 key traits to the millionaire intelligence are hard work, networking, persistence, and financial self-interest.

First MCM, believe anyone can be successful if they work hard enough.  On average they work about 70 hours a week instead of 41 for the middle class.  They work a lot harder than the norm.  Second MCM network all the time.  They do it naturally, compulsively and without realizing it.  They rank knowing people are essential/important to getting ahead.

The third trait is never giving up.  MCMs are able to deal with failures and setbacks all the time. They were able to overcome a bad financial decision and they still go on.  A lot of middle class people take it as a sign to give up.  Finally MCMs go where the money is.  80% of MCMs own their own businesses or are part of a partnership.  They are constantly learning on the job, move around, and follow where they think the business takes them.  Their flexibility and ingenuity are key.

Chapter 3: Middle Class but Millionaires

While they can be considered the “Millionaires next door”, these MCMs are more than that.  The third chapter talks about their lifestyles.  One example is a millionaire couple that loved their neighborhood, but the house not so much.  So instead of moving, they just gutted and rebuilt a house they loved in the neighborhood they loved.

MCMs basically consider themselves “upper middle class” 67% or “middle class” 33%, versus the middle class households between $50-80k who say “middle class” 79%, and “upper middle class” 21%.  But what really constitutes wealthy?  MCMs say at least double digit millions, versus the middle class who said $1 million.  This explains why these MCMs feel like they fit into their old neighborhoods while they are rich.

But what they authors found is MCMs values mirror that of the middle class.  They value parenting, ethics, family, honesty, and education.  They also value community and friendships.  One interesting difference is that MCMs place high value on measuring their sucess as a parent, based on how well their children do.  They are devoted to their children’s academic and future success.

Chapter 4: The Rich work for the Poor

The next chapter starts out how MCMs are sending their kids off to college. They feel going to a “name” school is important and are willing to pay for it.  They are always looking for help and the extra edge.  They reported they are 2-3x more likely to be asked who they use for mechanics, plumbers, etc.  And not only do they give out networking names, they are also more likely to ask people for help as well.

MCMs are also more likely to have a beater car to drive to work and a luxury car.  They feel it’s an important accessory to their sucess/image. These MCMs are targeted by the electric car companies because they are seen as “early adopters”.  Meaning they are a group of people willing to try out something new, and definitely will tell/influence others about it.

Chapter 5: The Doctor will see you whenever you’d like

I discussed this briefly in chapter 1.  Well this chapter really focuses on MCMs and their healthcare.  They talk about how poorly run healthcare is done in the USA.  That you go into to see a doctor and spend hours waiting to talk to them.  Thus “concierge” medicine has been recently born.  The idea that you get immediate access to a doctor.  That you aren’t paying for insurance or care, but the chance to be seen by an “exclusive” provider. These “concierge” services are mostly in urban areas, but the costs are still quite expensive, considering it’s not insurance or care provided.

The doctors who provide this sort of care are very happy.  Why? The insurance reimbursement are “tip money”.  Instead their bread and butter earnings come from the clients themselves who are forking over thousands to see them faster.  Also the doctors are given a chance to know their patients in depth and really learn what is going on, instead of rubber stamping them out the door.

The chapter further discusses concierge services for other things.  They get special treatment and help with reservations for travel or dining, tickets to a show, just about anything.  The idea that the MCMs are wasting their time chasing deals, but rather spending it as they choose.

Chapter 6: Best Advice money can Buy

MCMs as you’ve noticed like to get help.  They want to know everything and anything. They also don’t mind paying for the best advice they can get asap. This next chapter discusses how they don’t try and do things themselves. They realize their limits and instead hire the best lawyer, accountant, coach, etc.

The newest trend is hiring a life coach. Someone to help you plan where you want to be and how to get there.  A person who directs the life you want. MCMs view it essential to “improving” themselves.

Chapter 7: The ownership experience

This chapter looks at how a MCM vacations. They have a enough wealth to vacation, but not enough to really buy second, third homes, etc.  They also are into variety and being the first ones to vacation there.  So a club was started by a billionaire who felt that people should be able to vacation anywhere.  The company was called Exlusive Resorts, where people pay $120k depot, $16k membership dues, and are able to vacation at exclusive condos around the world.

MCMs view vacations differently from the middle class. They say it is time for the family to be together. They want to “experience” things together.  Probably because they work so much they value time together.  Thus buying into this club means people have access to luxury at a fraction of the price.  The chapter further examines other travel sharing companies which bring luxury for a fraction of the price.  Guess being rich also means not wanting to waste it on foolish items you rarely use.

Chapter 8: Roots and Wings

This chapter talks about the congregation of MCMs.  They flock to new developments and subdivisions as well as older neighborhoods.  Often times the same things attract them and they are drawn to the sense of family and community.  These neighborhoods specifically target and attract MCMs by having parks, good schools, and community activities.

Chapter 9: The new rules of the new rich

The final chapter of the book talks about the rich.  That the rich in the US is getting richer, and the poor well poorer.  That the consumption in our country is really driven by the rich. Recently the bell-curve shape of incomes has changed.  It is now a sideways hourglass or barbell.  Meaning the poor are a large percentage of the population and the rich at the other, while the middle class is diminshing.

The chapter asks the question if you are ready to be rich?  It talks about how to get to be rich by following the mindset of MCMs.  Finally it says that opportunities are out there for everyone we just have to be willing to take the risk and failure.  And it rounds out by asking do you know any middle class millionaires?

Conclusion:

This book I think was as distinct as the millionaire next door.  I believe that the US is changing and has been changing for the last decade into those who have and have nots.  That the middle class is disappearing.  That we need to move up or move down.

I enjoyed reading about the surveys conducted on the MCMs and middle class. And seeing how they overlapped and differed.  Basically this book talks about the noveau rich who are making a new class of people still tied to their “poorer” roots but finding their way in the catergory of rich.

Hope you enjoyed the review, and will try and read the book.  Leave a comment to win!