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My Millionaire Friend Offers the Best Advice You’ll Get All Year

What do billionaires like Warren Buffet and Steve Jobs — and my millionaire friend — all know that you and I don’t? It’s so simple you’ll be appalled you might not be doing it.

Billionaires and millionaires do this one thing; why don't we all?I had planned to write a column about credit scores until my friend Pete called me earlier in the week and asked me to meet him at his office. After our meeting, I knew I had to share with you what he told me.

Pete (not his real name) is a close friend and a very successful entrepreneur, one who’s made millions in the music business. He counts everyone from Bono to Bruce Springsteen among the friends he’s made along the way.

I presumed that Pete wanted some advice on projects he plans to launch in 2014. He has a book in mind about the friends he’s made and the adventures he’s had. This I know: Any book from him on how to make it in the music biz should be required reading for artists, managers and promoters alike.

And yet, as Pete will tell you, no ride to the top comes without turbulence and trouble. When I arrived at his office, he was in a reflective mood. He wanted to take stock of where he’d been over the last year, one that saw him sell a palatial home and give up quite a few material possessions on the road back to fiscal serenity.

You might not think millionaires have to make moves like this. But the wealthy people I admire most never let let their material possessions or creature comforts define them. That’s true whether you’re talking about Warren Buffett inhabiting the same Omaha home he bought in 1958, or the late Steve Jobs living in relative simplicity compared to his neighbors in Palo Alto. And we’re talking billionaires here, not just millionaires.

In 2013, Pete managed to turn his business around after years of struggle. How did he do this? To say that he went out and hustled more work only tells part of the story. And it’s not the most important part.

Pete recapped the year as one where he acted on a piece of financial wisdom that he’d forgotten during those heady days when money came in faster than he could spend it.

“The most important piece of financial wisdom,” he told me, “is to spend less than you make. There are a lot of other things that are important when you want to build wealth. But it all boils down to spending less than you make. When you do that, you don’t have to worry about things getting out of control. If you spend less than you make, you’ll always be fine.”

Then he repeated it, as though trying to reinforce the point to himself, and to me: “Spend less than you make. Spend less than you make.”

Could this be the most important piece of financial advice you’ll get for ringing in 2014? Certainly, the logic and the math here are bonehead simple. If you add up the total of everything you make, and it’s enough to meet your expenses, you will indeed be just fine, as Pete suggests.

But think about just how damn hard that is to do for millions of Americans.

Armed with our credit cards, and a sense of impatient entitlement replacing delayed gratification, we want what we want when we want it. And we want it now. As a result, look at the mess we’ve gotten ourselves into: Average household credit card debt now stands at above $15,000, though chances are you or someone you know has a figure well above that amount.

We live in a consumer society that constantly bombards us with messages to buy, buy, buy. And let’s face it: Buying feels a lot better, and squirts a lot more endorphins into the brain, than tightening the belt and passing up things we want. They don’t call it “retail therapy” for nothing, though enough of such a course will set you up for financial rehabilitation therapy.

You may think that this condition marks a unique feature of 21st Century American consumer society. Yet go back more than 200 years and you’ll see a lot of the same forces at play. Here’s what Ben Franklin wrote in his 1758 essay “The Way to Wealth.” Modernized for today’s audiences by Jack Vincent, Franklin’s message sounds utterly contemporary in our consumer landscape of today:

People who want others to think they are wealthy will not be wealthy. … You will only add to your suffering if you go into debt. Unnecessary debt is financial insanity! Don’t do it. Do you really need a motorcycle? Do you really need a boat? Do you really need expensive furniture or more clothes?

After several years of struggle in his business—one symptomatic of an industry-wide decline—Pete had some tough decisions to make. He wanted to keep his business going. He wanted to make more money, and he did. But he also wanted to drive his overall expenses down. And to do that, he had to take a fearless moral and financial inventory, to see what on his expense list could get trimmed. While he loved his home, he and his wife started to talk about downsizing—a sensible move given that both of Pete’s kids are in college. When he sold it, he stopped writing huge checks for real estate taxes, for starters. He still loves very comfortably, by the way.

I compare Pete’s attitude to that of another friend, whom I’ll call Samantha. She called me on New Year’s Day to complain about how hard it was to find work in her city; about how her parents threatened to cut her off (they actually pay her rent!); about how she’d exhausted every possibility left in her playbook. Of course I suggested a barista job at Starbucks, and of course, she stated beyond any doubt that every single freaking Starbucks in her exceedingly large metro area didn’t have a single solitary job open. Who knew?

“If you can’t find a job, you could always move back with your parents,” I told her.

You’d have thought that I’d suggested a career in porn. Samantha began to yell at me, saying I didn’t understand, that her job market sucked, that no one would help her. While I politely excused myself from the call, I couldn’t help but think of Pete, a millionaire who had the guts to sell his home and live simply, all because he took a hard look at the numbers, and concluded that numbers do not lie.

You could counter that Pete is rich and Samantha is poor. And I’d agree, though to me that has much more to do with their attitudes than anything else.

Have you sat down yet with your own numbers? Do you work from day to day with the vague sense that things will be fine someday, just not now? Can you make tough choices? Do you really, really want to live a life of abundance where you call the shots?

If so, stay as far away from the Samanthas as you can. They’ll only reinforce what we already know, that life is unfair.

Instead, look for guys like Pete who have the uncanny knack for turning the most sour lemons into the sweetest lemonade: Pete, who thanked God for an amazing 2013 before he turned to me and said: “Spend less than you make.”

Published or updated on January 8, 2014

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About Lou Carlozo

Based in Chicago, Lou Carlozo is a personal finance contributor for Reuters Money, a columnist with, and a former managing editor at AOL's Contact him with story ideas for Money Under 30 at, or follow him via LinkedIn and Twitter (@LouCarlozo63).


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  1. Greg says:

    Had to leave the golden nugget for the very last line…clever :)

    But very wise and true. SO simple. But if you take a step back, it’s just common sense.

  2. Mark Ross says:

    Spend less than you make. :)
    Yeah. I can’t help but to agree with Pete on that, no matter what you do as long as you live below your means, you’ll be good.

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