Category Archives: Money Matters

Marriage Red Flag

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My nomination for a SLP personal finance journalism award—given to the author of a particularly succinct, lucid, and provocative personal finance article. From Rachel Emma Silverman in the Wall Street Journal (10/17/11):

If you care too much about money, your marriage may suffer.

A new study by scholars at Brigham Young University and Provo, Utah and William Paterson University, Wayne, N.J.. looked at more than 1,700 married couples across the U.S. to determine how their attitudes toward money affected their marriages.

Couples who said money wasn’t important to them scored about 10% to 15% better on measures of relationship quality, such as marriage stability, than couples where both or one spouse were materialistic.

Also, couples in which both partners said they valued lots of money—about 20% of the couples in the study—fared worse than couples who were mismatched and just had one materialist in the marriage.

“Couples where both spouses are materialistic were worse off on nearly every measure we looked at,” says Jason Carroll, a BYU professor of family life and lead author of the study. “There is a pervasive pattern in the data of eroding communication, poor conflict resolution and low responsiveness to each other.”

In the study, published recently in the Journal of Couple & Relationship Therapy, participants completed a questionnaire which evaluated their relationship and asked, among other things, how much they value “having money and lots of things.”

Dr. Carroll says the research team had expected that disparate couples, those with different ways of viewing money, would have worse relationships. They found, though, that it was “materialism itself that’s creating much of the difficulty,” even when couples have plenty of money, he says.

Materialism might cause spouses to make poor financial decisions, such as overspending and running up debt, which can strain relationships. What’s more, materialistic spouses may pay less attention to their relationships and give their marriage lower priority than other concerns.

In other words, marry someone who values “having money and lots of things” at your own risk.

Seigels—You Disgust Me

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Subtitle: Thank goodness for Bill Gates and Warren Buffet.

A friend, in his early 40’s, was dating a multimillionaire C.E.O. He bragged to me that her kids didn’t even have to put their dishes in the dishwasher because that’s what the live-in maid was for. The full-time maid, he explained, enabled the mom and school-aged children to spend more quality time together. I’m calling bullshit.

I used to show some of my students an excellent education documentary about three third grade classrooms—one in the US, one in Germany, and one in Japan. There were no janitors at the Japanese school because educators there believe that students benefit from cleaning the school themselves at the end of each day. “Cleaning,” one school director explained, “creates a kind and gentle spirit.”

Over the years, I’ve noticed that my young adult and adult students who grew up on farms in Montana and eastern Washington are especially hard workers.

Many college bound high school students, following their Type-A parents’ lead, are excused from household chores on account of homework, after school sports, and related college application padding activities.

Ron’s Rule: Any adolescent that’s too busy to put her own dishes in the dishwasher and help around the house in a few different ways every week is too busy. This is what I’m talkin’ about.

My advice. Let the help go, slow down, and give your kids a chance of creating not just a kind and gentle spirit, but genuine respect for maids, janitors, dishwashers, and other manual laborers. The cost of excusing our young people from cleaning their toilets, making their beds, and doing their dishes is a debilitating arrogance.

Which takes us to the Siegels of Orlando, FL. Remember: italics means I’m quoting, underlined text denotes sarcasm, and everything else is my normal, slightly less-sarcastic voice.

Excerpts from a 10/22/11 Wall Street Journal article by Robert Frank. Adapted from “The High-Beta Rich: How the Manic Wealthy Will Take Us to the Next Boom, Bubble, and Bust,” by Crown Business:

The Siegels’ dream home, called “Versailles,” after its French inspiration, is still a work in progress. Its steel-and-wood frame rises from the tropical suburbs of Orlando, Fla., like a skeleton from the Jurassic age of real estate. Ms. Siegel shows off the future bowling alley, indoor relaxing pools, five kitchens, 23 bathrooms, 13 bedrooms, two elevators, two movie theaters (one for kids and one for adults, each modeled after a French opera theater), 20-car garage and wine cellar built for 20,000 bottles. 

At 90,000 square feet, the Siegels’ Versailles is believed to be the largest private home in America. The Siegels’ home is so big that they bought 10 Segways to get around—one for each of their eight children. After touring the house, Ms. Siegel walks out to the deck, with its Olympic-size pool, future rock grotto, three hot tubs and 80-foot waterfall overlooking Lake Butler. Her eyes well up with tears.

I’m tearing up in sadness for you Jacqueline.

Versailles was supposed to be done by now. The Siegels were supposed to be living their dream life—throwing charity balls and getting spa treatments downstairs after a long flight on their Gulfstream.

I have a dream to one day throw charity balls, get spa treatments at home, and own a Gulfstream. That’s some inspiring shit.

The home was the culmination of David Siegel’s Horatio Alger story, from TV repairman to chief executive and owner of America’s largest time-share company, Westgate Resorts, with more than $1 billion in annual revenue and $200 million in profits.

Yet today, Versailles sits half-finished and up for sale. The privately owned Westgate Resorts was battered by the 2008 credit crunch and real-estate crash. It had about $1 billion in debt—much of it co-signed by the Siegels.

The banks that had loans on Versailles gave the Siegels an ultimatum: Either pay off the loans or sell the house. So it’s now on the market for $75 million, or $100 million if the buyer wants it finished.

Today the Siegels have to make do in their current 26,000-square-foot mansion.

Before 2008, Mr. Siegel’s company, Westgate, was earning hundreds of millions of dollars a year for the family. The Siegels poured $50 million into Versailles, which seemed reasonable at the time. When friends asked David why he wanted to build the largest home in America, he had a simple answer: “Because I can.”

“I was cocky and I didn’t care what the house would cost because I couldn’t spend all the money I was making,” Mr. Siegel says.

Plus two points for honesty, minus twenty for volunteering to share all these details in a national newspaper. No sense of embarrassment. Stupefying.

Ms. Siegel has started a nonprofit called ThriftMart, a mega thrift-store that sells donated clothes—many from her own closet—and other items for $1.

That would be funny if it wasn’t so sad.

She (Jacqueline) does miss the Gulfstream. After they defaulted on the $8 million jet loan, the banks seized the plane. The Siegels can use it only occasionally, with the banks’ permission.

Recently, the family boarded a commercial flight for a vacation, making for some confusion. One of the kids looked around the crowded cabin and asked, “Mom, what are all these strangers doing on our plane?”

What a legacy—eight f-ed up kids.

Fraud Antennae

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By comparison, we’re a very strange family. We almost never talk to and never text with Away At College Daught (AACD). We Skype on Sunday nights. Typically, six days without any contact. I understand if you want to tar and feather us.

So it was quite surprising when AACD called mid-morning, mid-week recently. Someone had just called her from her bank and said they needed her debit card number because they were having problems with their network. She gave it to the caller. And immediately realized she’d been duped. Her mom told her to immediately call the bank and everything would be okay. She did and it was, but her experience begs an important question. How do we form meaningful trusting relationships with others while simultaneously guarding against criminally inclined people looking to take advantage of us? More succinctly, how do we develop fraud antennae? The more desperate people’s economic lives become, the more critical it is we develop fraud-detection skills and sensibilities.

I told AACD’s younger sissy the debit card story as a precautionary tale and explained to her surprise that there are people in the world who wake up every morning trying to figure out better ways to steal elderly people’s life savings.

Bernie Madoff, besides offering regular 20% returns, was supposed to be pretty charming. Nicholas Cosmo probably was too. A minnow compared to Madoff, Cosmo only defrauded 4,000 investors out of $195m. Or consider David Dutcher’s experience. Here’s a teaser to get you to read the entire LA Times article:

David Dutcher met Sharon on Match.com in late 2008, a few months after separating from his wife. “We had a lot in common,” he recalled. Sharon loved four-wheel-drive trucks and sports. They met for coffee, then dinner. Sharon was tall, slender, blond and beautiful. She moaned that she had not had sex in a long time. She told him he had large, strong hands and wondered if that portended other things. She described his kisses as “yummy.” “It felt a lot like Christmas,” said Dutcher, 49, a tall, burly engineer with wavy red hair. The women fiddled with Dutcher’s tie and massaged his neck and shoulders. The brunet unbuttoned her blouse to reveal generous cleavage. “I am way over my head with these girls,” he remembered thinking. “I hadn’t been out dating in a while.”

Apparently Dutcher’s Christmases are different than mine, but I digress. “Sharon” had been hired by Dutcher’s ex-wife. The night ended much worse than Dutcher imagined—with his arrest for driving under the influence by a cop working with Sharon and Dutcher’s ex. The age-old honey trap* with some crooked soccer moms and cops thrown in for good measure.

The crooked uniformed cop, an admittedly extreme example of fraud, brings to mind the uniformed Norwegian killer who every adult on the island somewhat understandably, albeit tragically, assumed was legit.

Dutcher simply needed to stop staring at the cleavage long enough to ask himself if what he was experiencing was so far out of the ordinary that maybe he had been set up. This is what I’m going to call the “so far out of the ordinary/too good to be true test” and maybe that’s the answer to my question. Then again, a lot of very smart and successful people didn’t think that Madoff’s promised 20% investment returns in a wildly fluctuating, but mostly down market were too good to be true so how can I expect D-squared to have applied the test?

More importantly, how do we guard against more subtle attempts at fraud, like the stream of fake emails or phone calls seeking debit card numbers? And how do we teach young people to form meaningful trusting relationships with others while simultaneously guarding against criminally inclined people looking to take advantage of them?

Experience is the best teacher. AACD is less naive as a result of that phone call, panic, and quick trip to the bank. But what kind of curriculum, dinner conversations, and other resources might help young people be proactive in detecting and thwarting the fraudsters in our midst? More simply, how do we teach them things may not be as they appear?

* When I was a teacher at an international school in Addis Ababa, Ethiopia back when Al Gore was inventing the internet, the US embassy folks invited my male colleagues and me to the embassy for a meeting where they cautioned us about beautiful Ethiopian women known to seduce American men in the hope of weaseling their way out of the country. Even showed a film with case studies on how it was done. This had one effect on my friends and me. We were more excited than normal to go clubbing the next weekend. Alas, I regret I was never a victim of the honey trap. :)

House Hunters International on HGTV

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Love it.

Or I should say “really like it” since moms always says, “You can’t love something that can’t love you back.”

Each tightly packed episode is a thirty minute long travel/house hunting fix. A person, couple, or family chooses among three residences in some foreign country. Recently, while watching a college football game, I caught most of two episodes*. The first was about a British man and an American woman who met in Orange County, California. They were moving to England. Immune to our recession apparently, he needed a large garage for his cars and she needed a dance studio.

The second couple, an Irish man and an American woman moving from Chicago to Ireland, had two small girls. Appears as if Euro men are stealing our women, but I digress. Their Chicago house had a small yard “where every time the girls kicked the ball it hit the wall”. He wanted at least an acre which they eventually found a few minutes from where he grew up.

A few times in the episode he implied his girls needed a large yard, but I couldn’t help but think he was projecting his past on their present. We all do that to some degree don’t we? Recreate our childhoods for our own children in some form—whether tangibly in terms of the house and neighborhood environment or intangibly in terms of norms, expectations, ethos?

Did the toddlers really “need” a soccer pitch-sized backyard? Would their lives turn out much differently with a small yard or if they found a house near a public park? All I could think of was how much of his time and money he was going to have to spend maintaining his giant patch of grass. To each is own.

Dear HGTV network. How about a show with the same format, but focusing on minimalists proactively embracing our new economic realities by looking for smaller yards, less space, less clutter, lower energy costs? People convinced that some cliches, like “less is more,” might just be true.

House Hunters Downsizing. Or Downsizing House Hunters. Either way, I’d watch it during college football commercials.

• This requires deft remote controlling. And I’m the deftest. Which brings to mind the best sports story from the last month. A 97-year-old man who wanted to watch a Milwaukee Brewers playoff game called 911 to report someone had stolen his remote control. According to the Greenfield police report: The man called 911 to report someone had stolen his remote control from his residence in the 9300 block of West Howard Avenue prior to 8 p.m. Sept. 26. The remote control was found after police responded, so the man was able to watch the Brewers game.

Coaching’s Costs and Benefits

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My Atul Gwande bro-mance or man-crush continues to build steam. He begins his most recent New Yorker essay explaining he’s been a surgeon for eight years and. . . for the past couple of them, my performance in the operating room has reached a plateau. I’d like to think it’s a good thing—I’ve arrived at my professional peak. But mainly it seems as if I’ve just stopped getting better.

He points out that top athletes and singers have coaches and asks whether you should too. He asks the question in the context of his own story of contacting his mentor from med school, a well-known highly respected doc, to see if he’d be willing to observe him in surgery and offer suggestions. I recommend the whole essay, but long story short, Gwande breaks through his plateau as a result of his mentor’s objective, insightful, detailed feedback.

Mid-point in the essay, Gwande explains how teacher-to-teacher coaching is one of the most promising reforms being implemented in some school districts.

He also acknowledges that many of his fellow docs and many teachers probably aren’t quite secure enough to open themselves up to pointed constructive criticism.

But he fails to mention another at least equally significant hurdle, sufficient money to compensate experts for their coaching time. School districts have to release coaches from their own classrooms meaning substitutes have to be paid for or everyone has to teach larger classes. And I can’t believe he expects teachers, lawyers, dentists, and other professionals making far less than professional athletes or elite singers to pay for coaching out-of-pocket. It’s unclear how financially strapped school districts and hospitals are supposed to add in coaching costs.

If only I had a magical “financial resource” wand. Now that I’m in better touch with my stubborn, self-defeating self-sufficiency, I see areas in my life where I could benefit from coaching.

In late August the personal trainers in mom’s swanky FL health club were doing some intriguing exercises with their clients. Made me want to toss medicine balls and run around with giant rubberbands around my ankles. And I’m sure I could benefit from swimming, running, cycling, triathlon coaching. Listening/marital bliss coaching. Cooking/nutrition coaching. Gardening coaching. Bicycle maintenance coaching. Golf coaching. Social media coaching. Parenting coaching. Writing coaching.

You get the drift.

The Life Changing iPhone 4S

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The earliest adaptors, the tech glitterati, have determined that the iPhone 4S, or the phone’s Siri voice recognition feature more specifically, is a life changer. John Gruber said he “could live without it, but wouldn’t want to.”

Funny how one day life is rolling pretty darn well without voice recognition on phones and the next a few peeps start asking, “How did we ever live without it?” And before long, we’re wondering how did we ever get off the couch to change the television channel and how did we ever use our phones just to talk to people.

Walt Mossberg provided this life-changing Siri voice recognition example. WM, “Find a French restaurant.” 4S, “I found 13 French restaurants, 7 in Bethesda.” WM, “Remind me to call my wife when I get home.” 4S, “Okay, I will remind you.”

I’m not anti-tech, but the hyperbole in the reviews helps distinguish between those earliest adaptors and the much later ones like me. As an AAPL investor I follow the phone releases, and I’m glad when they’re successful, but my heart rate doesn’t quicken at the thought of standing in line to purchase one.

Call me crazy, but the life-changing bar is a little low if it hinges on finding a French restaurant or receiving a reminder to call someone.

Wake me when an iPhone can accurately fulfill these types of requests:

• Find a nearby, inexpensive restaurant on the water with great vegetarian dishes, quick service, and a table near a television programmed to the game.

• Alert me 30 seconds before my wife is about to ask me a “how do you feel about” question.

• Whenever my wife asks a “how do you feel about” question, provide me the optimal answer.

• Show me AAPL’s closing price for next Friday.

• Alert me 30 days before the UCLA basketball team’s next National Championship.

• Tell me if it will rain next Saturday afternoon anywhere in Thurston County between noon and 3p.m.

• On the first day of every month, please remind me how much time I have to live.

Be still my beating heart

Postscript.

Chelsea Clinton and the Meritocracy Myth

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Yes, I'd be happy to join your board.

After reading a few accounts of Chelsea Clinton’s recent appointment to the Board of InterActiveCorp (IAC), a company that runs sites including Match.com, Ask.com, and Dictionary.com, here’s what I think we’re supposed to conclude.

There’s one winner and one loser.

The obvious winner? C-squared herself. The Wall Street Journal explains. Ms. Clinton will receive an annual retainer of $50,000. In addition, she will receive a $250,000 grant of IAC restricted stock.  

IAC’s stock is up 41% this year. Say she serves for ten years. With stock appreciation that will be well over $1m in income for attending what I suspect are quarterly meetings. Winner, winner, several very nice chicken dinners. She’s currently working on a Ph.D at Oxford. Sure hope they reimburse her for her airfare.

The loser is actually losers. From Alyce Lomax in Daily Finance:

This new appointment is a big — and possibly bad — deal for IAC shareholders.

Boards of directors are charged with protecting shareholder interests, whether many investors realize it or not. These days, plenty of corporate problems — such as out-of-control CEO pay — can be correlated with dysfunctional or flimsy boards that have nothing near an independent spirit that’s willing to challenge management teams.

Now 31, Chelsea Clinton was in her teens during the dot-com bubble and only about 20 years old when it burst, for example. That was a make-or-break time for companies like IAC, but she was probably still pretty preoccupied simply with the process of growing up.

GMI’s Nell Minow commented on Clinton’s appointment on PBS’sNightly Business Report, arguing that the best directors have decades of achievement to speak for them. She also pointed out that IAC’s Diller has a tendency to populate his board with “cronies,” which is just one reason The Corporate Library gives that company a near-failing “D” grade for its corporate governance.

In addition, Diller supported both of Clinton’s parents’ campaigns, which gives shareholders no reason to believe this is the kind of independent director that helps make a robust boardroom. In fact, she sounds a bit dependent on her parents’ careers at this point.

Name-dropping “important” or “known” appointees instead of adding truly experienced directors indicates weak corporate governance and madly waving red flags for shareholders. 

The unreported loser is the notion of meritocracy that the right loves to trumpet. This is the idea that the relative work ethic of U.S. citizens determines their success instead of the color of their skin, their gender, or their parents’ connections. Ironic that a first family of the left disproves one of the right’s foundational ideas.

C-squared’s appointment proves the playing field, that is life in the U.S. in 2011, isn’t level, the starting line of life is staggered, and an individual’s personal capital sometimes trumps others’ smarts and work ethic.

Stereotyping Occupy Wall Streeters

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A conservative Republican friend who I refer to affectionately as a “right wing nutter” is increasingly becoming a conservative Independent. He rails about many of the same things the OWSers (Occupy Wall Streeters) do including the negative influence of lobbyists and the unfair advantage gigantic corporations have over small businesses. Even though his fixes would no doubt differ from theirs, the Nutter and the OWSers diagnosis of our economic problems would overlap a lot.

Add into the mix, a “talking to” he gave his teenage son recently. Synopsis—being a man entails living passionately and standing up for and fighting for things that are important to you.

Connecting those dots, I asked him what he thought of the Wall Street protests.

Knee-jerk derision.

Why? My guess is anti-hippie bias. Can’t get past some of the protesters’ “out there” outward appearance and “in your face” style which he probably associates with liberal symbols from the counter culture movement in the 1960’s. Can’t quite get to the content of their character.

Many jump to negative conclusions about others based upon superficial things like clothing, tatts, piercings, hair coloring, mohawks, purple Converse hightops.

Young 1950’s and 1960’s Civil Rights activists were shrewd to wear their “Sunday best”. Maybe 2011 Occupy Wall Street activists don’t want the support of independents like my friend enough to change their individual, idiosyncratic personal style.

Here’s a 6+ minute film that provides an on-the-ground feel of things. And some stills.

Look pretty Main Street to me

Percussion and face painting, oh my!

Shouldn't there be a law about the mixing of tye-dye, bandanas, and the flag?

Occupy Wall Street protesters wake up and start their day in their encampment in Zucotti Park as people walk to work through the park Tuesday morning.

For the love of God, they're sleeping under tarps.

Steve Jobs

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John Gruber of Daring Fireball quotes Steve from his 2005 Stanford commencement address:

Remembering that I’ll be dead soon is the most important tool I’ve ever encountered to help me make the big choices in life. Because almost everything — all external expectations, all pride, all fear of embarrassment or failure — these things just fall away in the face of death, leaving only what is truly important. Remembering that you are going to die is the best way I know to avoid the trap of thinking you have something to lose. You are already naked. There is no reason not to follow your heart.

Puts the negative press coverage of the iPhone 4S in perspective. We forget we’ll be dead soon and lose sight on what is truly important and instead focus on the status phones provide, stock prices, and market share.

[Besides the commencement address, fav read from last night—The Steve Jobs I Knew by Walt Mossberg]

The Politics of Travel

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The North Korean dictatorship now sees tourists on cruises as the best way to generate some foreign currency with which they can keep buying western luxury goods for themselves. Fifty-four pictures here.

Do the mostly Chinese tourists have no conscience? Don’t they realize they’re propping up the most heinous dictatorship in the world?

Easy to rip them I suppose, harder to reflect on the ways our travels sometimes negatively impact the people and cultures we visit.

When teaching and living in Ethiopia, I took what I thought at the time was an excellent picture that captured the harsh reality of poverty in the developing world. It was of two young girls who had hiked up to the top of the hills north of the capital city, Addis Ababa, with a huge thicket of wood branches on their tiny arched backs. Technically it was National Geo-like, and even more impressive after the excellent matting and framing job. After having it hanging in our home for quite a few years, the haunting, absent look on the girls’ faces started to trouble me. Despite being someone who values my privacy, I hadn’t asked for their permission. I raised my camera with my fancy zoom lens, pointed it right at them, and snapped.

There was no reciprocity in our interaction, no balance. I’ve since taken it down and use it as a discussion starter when teaching about cultural globalization.

I have other similarly unflattering travel stories. We don’t like to think about, let alone tell those stories though, opting instead for innocuous ones as if our travels are apolitical.

Our travel negatively impacts the physical environment; our physical presence inevitably changes the cultural environment; and our loding, dining, and recreational decision making tends to create distant economic winners and local losers.

To mitigate our negative impact, maybe we should travel less often, over shorter distances. And when we do travel far afield, we should strive to do so as global citizens, not amoral global tourists like the damn Chinese on the North Korean cruises.