The Frugal Billionaire: How the Wealthy are Getting By

NAPLES, Florida.  Paul Westcott, 67 and retired, is known by his neighbors as a penny-pincher.  “He buys all his jets used,” says neighbor Armand Sanders, a former CEO of a consumer products company.  “And he takes them down to the drive-through car wash and vacuums them out himself.”

Low-mileage, one-owner.  This baby’s loaded!

Westcott represents a phenomenon that financial planners say bears out the lessons they try to teach young people starting out.  “Mind the millions, and the billions will mind themselves,” says Wade Northrup of Wealth Management Associates in Old Naples.  “Most people become rich by simply managing their expenses wisely, like not having more than three homes.”

Beach cabana

The topic is of interest here as Congress considers whether to change the treatment of the “carried interest” of private equity firms to ordinary income, making it taxable in the year of receipt.  “My carried interest isn’t something I can eat, or drive or sleep in,” says Marc Marston of Agamemnon Partners, manager of a fund that makes leveraged investments in technology companies, financial services firms and Pokemon cards.  “When we liquidate our current portfolio I’ll have enough money to buy most of Ireland and Wales, but that’s several years off.”

“Todd, we’re going to have to sell one of your strings of polo ponies.”

Political handicappers say a populist mood in the country has improved the prospects for passage of legislation that will adversely affect the wealthy, causing some families to take steps now to manage their children’s expectations. 

 

“But Mom–Courtney had a rhino at her party!”

“I told Heather that her Sweet 16 party might not be as lavish as she had hoped,” says Lindsey Campbell, mother of two and wife of a hedge fund manager.  “The water slide will be two stories instead of three, she can have an elephant but not a rhinocerous, and she can only invite 350 of her closest friends.”

Copyright 2008, Con Chapman