Irrational Frugality

Before a gaggle of dudes lost their jobs, I couldn’t get enough of the Secret Service-Columbia prostitute story mostly because the primary agents’ irrational frugality makes me feel better about my own litany of dumb-ass money saving moves. Allegedly, the prostitute, I mean escort, wanted $800 for spending the night with the Secret Service agent. He offered $30. For $770 several Secret Service careers are over. In the still-to-be-built Irrational Frugality Hall of Shame that “misunderstanding” should be front and center.

Take-away. Always pay your escort the agreed upon price.

One example of my irrational frugality took place in Chengdu, China in 2003, in a Carrefour store, a gigantic, French-owned, everything store. I bought some socks on sale. They probably cost $1.00 originally, but were on sale for 60 cents. While being rung up, I realized I didn’t get the sale price, so I politely pointed that out. After getting blown off, I persisted, and asked if I could talk to a manager. They found my sense of efficacy oddly entertaining and soon, the cashier, manager, and I were engaged in a mangled Chinglish conversation over forty cents.

Like most imbeciles in similar situations always say, it was the principle. After about 20 minutes, I got the 3 yuan owed to me. So my time is worth about $1.20 an hour. But then again, it’s not everyday Big Red gets to stick it to Red China.

"Escorts" not hookers

Stoic Insights on Materialism

Stoics knew, in Irvine’s words, that luxurious living only whets one’s appetite for even more luxury. Exhibit A, the GalPal and I need hotel upgrades now. Consequently, they practiced poverty or voluntary discomfort—whether fasting, sleeping on the ground, or purposely not dressing warmly for cold weather—to harden themselves against misfortunes that might befall them in the future. They did this to extend their comfort zone, reduce their anxiety about future possible discomforts, and better appreciate what they already had. They also sometimes gave up pleasurable experiences because they knew pleasure seekers lose some self-control and end up serving multiple masters. Having written about this exact thing before reading Irvine means I’m well suited to modern-day Stoicism.

Even ancient Stoics knew that maintaining luxuries takes a lot of time. Musonius argued that luxurious living must be completely avoided, but Seneca said it was okay to acquire wealth as long as one doesn’t harm others to obtain it. He also argued it was acceptable to enjoy wealth as long as one was careful not to cling to it. Most Stoic teachers advocated simultaneously enjoying and being indifferent to the things wealth makes possible. Seneca and Marcus thought it was possible to live in a palace without being corrupted. Similarly, Buddha said, “He that cleaves to wealth had better cast it away than allow his heart to be poisoned by it, but he who does not cleave to wealth, and possessing riches, uses them rightly, will be a blessing unto his fellows.”

Seneca said “life’s necessities are cheap and easily accessible” and “the man who adapts himself to his slender means and makes himself wealthy on a little sum, is the truly rich man.” Socrates said “we should eat to live, not live to eat” and dress to protect our bodies and not impress others. We should favor simple housing and furnishings too.

Seneca, Marcus, and Buddha would have supported the non-consumerist, simple living, social justice orientation of the Occupy Wall Streeters. On the other hand, they would have rejected their knee-jerk antipathy towards the well-to-do.

Marriage Red Flag

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

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.

What, if anything, will we learn from the recession?

I’m not a regular viewer (a necessary qualifier to retain some semblance of masculinity), but I caught an episode of Oprah one night last week. The theme, the recession’s negative impact on people.

I’ll introduce you to a few of the guests, describe what I think the producers wanted me to conclude from the segment, and explain my actual reaction.

Guest one, a 24 year-old woman, had lost her job with an interior decorating company. Not only had she done three internships in college, she had “done everything right” and still ended up standing in an unemployment line. I was supposed to conclude that’s wrong and sad. Sure it’s sad whenever anyone who really wants to work can’t find a job, but even sadder was the subtext: college graduates are entitled to good jobs.

Robert Reich, whose contributions were underwhelming, was the talking head putting the individual stories into the broader context of a changing economy. With respect to guest one, even I might have done a better job framing her experience.

Here’s the takeaway for her, the other student in the news lately who has sued her college because she can’t find a job, and anyone who thinks a college degree entitles them to a good job. A new day has dawned. Sizeable student loans and a college diploma guarantee little. Increasingly, businesses are more productive with fewer people. Profit margins are shrinking; consequently, the race to eliminate jobs is accelerating. You’re competing with more people for fewer jobs, not just your college classmates, but elderly people who are finding they have to continue working, and highly motivated, ambitious peers from across the globe.  Good grades and the perceived prestige of your institution mean little absent the following: a genuine curiosity; a strong work ethic; well developed communication, critical thinking, team, and problem solving skills; cross cultural knowledge and skills; integrity, and resilience.

Guest two was a couple that had been living large. The X had a successful hair salon and the Y was a successful realtor before both lost their jobs. As their financial situation worsened, their well-to-do friends quit associating with them. It was clear by Oprah’s sadness, that I was supposed to feel similarly, but I didn’t. Oprah kept asking superficial questions like, “So they don’t invite you to their dinner parties anymore?” To which unemployed couple sadly replied, “No they don’t.” Audience members shook their heads in dismay.

I did my best to set aside the obvious irony of one of the wealthier people in the world exploring the sadness of downward mobility, and wondered why and the hell didn’t she ask them why they pursued friendships based upon superficial signs of material wealth in the first place. This was a sad segment, but not at all in the way the producers intended. What was most sad was the couple’s utter lack of self-awareness. They never said what might have made it a socially redeeming case study. “The recession has been an important wake up call. It opened our eyes to the limits of consumerism and materialism, neither of which form a meaningful foundation for friendship.”

In fairness, one of the other segments did convey a “silver lining, now we know what’s most important” moral, but I couldn’t help but wonder how long the guest’s commitment to frugality and meaningful relationships will continue once the recession ends.

Guest three was a former Denver newscaster who was making 250k at the time of his dismissal. He had taken a 30k/year job working as a vet’s assistance because he had always had a genuine love of animals so his resilience was noteworthy. But again, I couldn’t give the producers the “my how sad” reaction they seemingly wanted because he acknowledged making a whole lot of money for the last 10 years of his 30 year career. Oprah and RR seemingly had it on cruise control and couldn’t bring themselves to ask him and his wife the obvious question, “Why didn’t you live more simply and save more of it?”

Have I lost my mind, criticizing Harpo Productions? I will now be entering the witness protection program.

20-200-2 Much?

Is getting 20 years and  200,000 miles out of our 1993 Toyota Camry Wagon 2 much to ask?

I ask because at 16 and 163 I’m starting to feel like a surfer at the end of a long ride pressing up and down on the board with my feet while trying to get the most out of the 12 inches of white water.

I could write a “Marley and Me” like book about the car and me, but oddly we never named it. One admittedly short chapter would be about the time I drove into the garage and THEN realized the bikes were on the roof. 

The picture below isn’t the actual car, but it looks an awful lot like it. I had bike racks drilled directly onto the roof early on and the wife must have been mad at me a few years ago when she dented in the right front bumper. 

Tinting the windows was the best decision ever. Let’s just say the ladies have paid the wagon and me A LOT more attention ever since. 

Mechanically it’s pretty solid, and the tires are relatively new, but the driver’s door handle snapped off a while back so now I have to grab the remaining two inches with two fingers. There are annoying electrical problems too. The interior dome light doesn’t work even after replacing the bulb so I keep a flashlight handy. And after replacing the turn signal bulbs, the instrument panel lights shuts off after every use of a turn signal (all fuses are fine). Blondie and blonder found that very entertaining on the way to school last week. I wouldn’t wish the upholstery on anyone and the inside roof has a bit of residue from where water probably seeped in through the holes that were drilled for the rack.

Oh, and sometimes it won’t start until it feels like it even though the battery is relatively new (faulty safety neutral switch?).

Killer radio though and a good radio compensates for a lot of shortcomings.

Since I don’t know if the air bag will open, and gas prices have plummeted, I’ve taken it back over. I’d rather kill myself than my wife. “Here lies Dad. He took one for the fam.”

Speaking of dads, mine always got 8 years out of his American cars back in the day. I think he’d be proud that I’ve doubled him up and I like to think he’s rooting for me to stay on the bull until it completely tires.

I have to admit though, the Venza looks nice and I’ve been looking at “pre-owned” Highlander Hybrids on Craigslist. The question is, can I hold off until the London Olympics? I wouldn’t bet on it.