Lifestyles of the Rich and Frugal
Gordon Elwood of Medford, Ore., kept his pants up with a bungee cord, accepted handouts from a food bank and refused to have a phone installed in his home because of the cost. When he died in October at age 79, he left a $10-million fortune.
Elwood was among a small fraternity of America’s upper class: the penny-pinching, often shabbily dressed wealthy who are almost as much a mystery to the people who know them as to the millions of strangers who read their stories and wonder, “Why?”
And their stories, while rare enough to make the headlines, are similar enough to sound familiar.
There was Emma Howe of Minneapolis, who left $1 tips but bequeathed $31 million to the poor and disadvantaged.
And Anne Schieber of New York, a former IRS auditor who wore the same frayed black dress every day, but built a $22-million fortune.
And Gladys Holm, a Chicago secretary who never made more than $15,000 a year, accumulated $18 million and gave it all to a children’s hospital.
All were buy-and-hold investors who rarely sold their shares. Each was shaped by the Depression, although none ever suffered extreme poverty. All left most of their money to charity, which helped bring them to public attention after a lifetime of secrecy.
Although the number of millionaires in America rises with each stock market uptick, no one really knows how many are hiding their wealth behind secondhand clothes and modest homes filled with old newspapers, twice-used tea bags and saved balls of string.
The inconspicuous rich are a tiny part of the largest generation of millionaires in American history; the Spectrem Group research firm in San Francisco estimates there are now 8.8 million U.S. households with a net worth of $1 million or more, more than double the number 10 years ago. Yet in a country where many purchase the accouterments of wealth by going ever deeper into debt, these anomalous millionaires refuse to spend what they have.
Experts struggle to explain their behavior, so out of sync with American norms.
Psychologists say that these lowest-profile millionaires are probably motivated by fear, guilt or habit: fear of economic catastrophe or of others’ reactions if their wealth were revealed; guilt over their good fortune when others have less; and the frugal habits of a lifetime.
“If one is used to living on a shoestring all of his or her life, these spartan habits may be so wellingrained that to change them would be stressful,” said Joseph Tecce, a psychology professor at Boston College.
People who know these millionaires grope for explanations as well.
Robert Hutchins, Elwood’s friend and stockbroker, is still at a loss to explain why Elwood continued to pick up bottles and cans along the roadside for the deposit money when he was rich enough to start his own charitable foundation.
Elwood set up the foundation just before he died, funding it with $1.8 million in shares from companies that had stopped paying dividends. Elwood always bought stocks that paid dividends and felt he was somehow being cheated when the dividends ended, Hutchins said.
Researchers who have studied millionaires say the practices of this handful of tightwads may be just an extreme example of the frugal habits shared by many of the truly wealthy.
Thomas Stanley and William Danko, in their seminal book, “The Millionaire Next Door,” found that most of the millionaires they surveyed were in fact relatively frugal. Few had ever paid more than $1,000 for a suit or $250 for a watch.
And in researching a second book, “The Millionaire Mind,” Stanley found that none of his wealthy subjects were given to extremes. They might get their shoes resoled rather than buy new ones, but the shoes themselves were likely to be of high quality--not thrift store finds.
People who pride themselves on their thrifty ways offer another explanation for such behavior: cheap thrills. The happily frugal extol the sense of satisfaction that comes from making do and doing without, from finding new ways to beat the system that fosters overconsumption and disposability.
Amy Dacyczyn, the self-described “frugal zealot” who published the Tightwad Gazette newsletter before retiring from the public eye four years ago, often described the glee she felt in determining whether homemade brownies were actually cheaper than store-bought mixes.
It’s ‘Thrill of the Chase’ for Many
Gary Foreman, who runs the Dollar Stretcher Web site, believes that many of his readers scour for money-saving tips as much for the “thrill of the chase” as for a pressing need to save money.
“It’s a game,” Foreman said. “Even among people that like to spend money, there are very few that don’t like to think they got something for less than everyone else.”
Elwood certainly was far from stereotypical of the miserable miser. Hutchins described him as sociable and garrulous, always ready to strike up a conversation with friend or stranger.
He particularly loved the attention people gave him when he bicycled down Medford streets with his Siamese cat, Badger, riding in a milk crate tied behind the seat.
“People would say what a smart cat he had, and he would say, ‘Sure, it’s a smart cat, but I can still beat him in two out of three games of checkers,’ ” Hutchins recalled.
Elwood left $9 million to several Oregon agencies, including a charity that rescues cats, the American Red Cross and the Salvation Army, where he used to go for free holiday meals. The rest was left to his children, Karl Elwood and Kristy Jo Schults, both of Medford.
Two other frugal millionaires--Emma Howe and Gladys Holm--are also remembered as sociable and friendly.
Howe, who was widowed twice, was among the first employees of what would become one of the nation’s largest check-printing companies, Deluxe Check Printing. Much of her wealth was in the form of company stock.
The Minneapolis woman regularly gave small donations to her church and other causes; when she died in 1986, she left two-thirds of her $31-million fortune to charity.
Howe loved to be treated to lunch at her favorite upscale restaurant, said Halsey H. Halls, Howe’s former bank trust officer and now a board member for the charitable foundation that bears her name.
“She’d have a martini--she liked her martinis--and she always insisted on leaving the tip,” Halls recalled with a chuckle. “Whether the bill was $100 or $1,000, she’d never leave more than a dollar.”
Nevertheless, the restaurant staff fawned on the good-humored older lady, who enjoyed telling jokes and an occasional “little smutty story,” Halls said.
Holm, who never married, also got rich on company stock, never selling her shares. She was secretary to the founder of what would become American Hospital Supply.
Even as her shares soared in value, Holm continued to live well below her means. Attorney Dale Parks confessed that he was dismayed when she first called him to her small townhouse in Evanston, Ill., in the mid-1970s to discuss estate planning.
“I went to her neighborhood and I thought, ‘I won’t be able to charge this lady anything,’ ” Parks recalled.
Teddy Bear Lady to Hospitalized Kids
Holm was best known as the Teddy Bear Lady because she brought stuffed toys to young patients at Chicago’s Children’s Memorial Hospital.
When arthritis crippled her, Holm would make her yearly rounds in a wheelchair, pushed by Parks. By the end of these outings, the two could barely speak.
“Little tiny children, facing cancer and chemotherapy. Their parents--most of them are so young and scared to death,” Parks remembered. “It’s very, very emotional.”
Although she had hinted that she would leave the hospital something in her will, the actual amount staggered most of those who knew her. Her $18-million bequest in 1996 was the hospital’s largest single gift ever.
Not all of the frugal millionaires were happy people.
Former IRS auditor Anne Schieber nursed a grudge against one family member for more than 60 years and, by the end of her life, was estranged from almost everybody else. When she died at 101 in 1995, she bequeathed $22 million to New York City’s Yeshiva University.
“Nobody knew her. She was a recluse,” said Yeshiva spokeswoman Hedy Shulman. “We don’t even know how she knew about us; she must have read about [the university] somewhere.”
Although many frugal millionaires are unmasked only after they die, sometimes they surface before then.
Former Santa Clara, Calif., resident Irwin Uran, 74, made headlines three years ago when he donated $1 million to the town of Leesburg, Va. The gift startled those who knew him as a white-haired man clad in blue jeans and flannel shirts who lived in a room at a Best Western motel.
In fact, Uran made more than $80 million from the sale of a company he co-owned and his wealth has been estimated at more than $300 million. Leesburg Mayor Jim Clem, a friend, said Uran prefers to live a spartan life with no permanent address and little contact with those around him.
“People will find out where he lives and they’ll hound him” for money, Clem said. After his residency at the motel was mentioned in a newspaper article, “he opened his door and people fell in.”
Uran has since moved out of the motel and relocated to New York. But he continues to send money to area causes, including a recent $250,000 donation to a veterinary facility for horses and money for homes for troubled teenagers.
“He’s a nice man, a soft-spoken man,” Clem said. “He’ll send a $100,000 check at Christmas and tell us to take care of the poor and needy.”
Uran is unlikely to be the last of his kind.
Their Worth Changes, but Lifestyles Do Not
Beverly Hills tax attorney Charles Rettig has several clients who have made “tens of millions of dollars and more” in the long-running bull market by investing in highflying biomedical and tech stocks. Yet many continue to live in the same modest homes and drive the same inexpensive cars as they did before their newfound wealth. Some are so secretive that only their financial advisors know their true worth and a few are so frugal they “won’t even pay $40 for a new shirt,” Rettig said.
Most of these newly wealthy individuals have diversified into a variety of investments, so their riches should persist even if biomedical or tech stocks should crash.
“These individuals typically remain unknown until they die and give the bulk of their wealth to charity,” Rettig said.
While their lifestyles may seem easy to ridicule, their acts of generosity belie the stereotype of the miserly rich.
Foreman, the Dollar Stretcher Web site entrepreneur, believes it’s human nature, more than economic cycles, that lead to the eccentricity about wealth.
“Out of every thousand people, there are going to be a couple who wear striped shirts and plaid pants, who have a cat in their milk crate,” Foreman said. Like the poor, he said, the frugal millionaires “will always be with us.”
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* RETIREMENT RISK
More than half of Americans aren’t saving enough for retirement, a survey finds. C1
