2009 Issue 2 - How to Ruin Your Financial Life - Counsel of Chalcedon

8/12/2019 2009 Issue 2 - How to Ruin Your Financial Life - Counsel of Chalcedon

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Howto RuinYour Financial Life

Ben Stein

(12 excerpts from the 55 humorous nug-

gets taken on to ruin your finances fromHow To Ruin Your Financial Life by BenStein, reprinted from Sound Mind In-vesting, June 2006, Volume 17, No. 6)

Ive long been a manic observer andclassifier of how success and failurecome to pass. In every action I take,

I try to ask myself, Am I behaving likeso-and-so who went into bankruptcy?or Am I behaving like my dad, who hada gift for avoiding the pitfalls that leavemen and women in desperation?

Or, to put it another way, whenI was a child, we lived in a neighbor-hood with people who had fancier cars

than we did, played at elegant country

clubs, and thought nothing of layingdown a handful of bills on a horse.hey all wound up broke. I try not todo anything in the way that they did.I have friends here in Hollywood whomade excellent incomes for decadesand now cant afford to take a vaca-tion. I try to avoid doing which they

did, too. Instead, I try to put myself inthe mold of the people who wake upeach day knowing that they can paytheir bills not just for this day, but fora decade, without worrying too muchabout where the next dollar is going tocome from.

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13Councel of Chalcedon Issue 2 2009

Years ago when I told my father that

I could buy a certain estate (which was

bigger than I really needed) and still be

years away from being in the neighbor-

hood of poverty, he said, Good, be-

cause thats a neighborhood you never

want to be in. Tats what this book is

about. Do the things in this book con-

sistently, and youll find yourself in the

neighborhood of poverty. Do them very

rarely, and youll sleep soundly at night

in a nice neighborhood.

Let me make this point as clear as

possible: Tis book is calledHow to Ruin

Your Financial Life for a reason: If you

follow the rules in it, you will ruin your

financial life. (Here are a dozen ways in

case you want to get started.) If you do

the opposite, sunny days lie ahead.

1. Forget abouttomorrow

Tats right. Its always today. omorrow

will never come at all, so dont make any

plans for the future. Making plans is a lot

of work, and thinking about the future is

frightening. Its a lot easier to just think

about today. Plans for the future involve

calculations and variables and may

require some form of self-disciplineyuck. Plus, theres so much uncertainty

about the future that sometimes you

dont really feel good when you think

about it. So why think about it at all?

Its just a way to get prematurely gray.

Instead, think about what fun you can

have now, and how much enjoyment and

spending you can cram into one day.And do not make any financial

plansoh no. Forget about making any

deposits to a savings account or an In-

dividual Retirement Account (IRA) or a

Keogh. Tose things are for people who

worry about money and end up making

themselves sick.

I mean, come on, tomorrow will bejust like today. You have enough to eat to-day, right? You have enough to wear, youown a car, and you have a roof over yourhead, dont you? Well, then, youll alwaysbe so fortunate because thats just theway things tend to work out in your life.

2. Set up a high-profile,high-consumption

lifestyle

Being cool really comes down to this:High school never ends. And who were

the coolest kids in high school? Te oneswith the best toys. Now its still highschool, whether youre 25 or 55, and

youre still really only making the sceneif you have the hippest clothes, the new-est car, and have just returned from themost elite vacation spot. And if someScrooge-like accountant warns you that

youre overdoing it, tell him to stuff it.After all, life is short. You have to go forit with all the gusto you can right now.Party hearty, dude!

And heres something else to thinkabout: If theres one thing you can becertain of as your expenses mount, itsthat one of the most enjoyable things in

the whole world is to have a magnificenthome. Te feeling you get when you walkinto a stately mansion or ocean-view con-do is one of deep pride and inestimable

joy. So go even further into debt to set upthat high-profile, exorbitantly expensivelifestyle by purchasing the homeof your dreams. But waittheres more, as the Vpitchmen say! Once

youve bought thehouse, dont justlet it look likesome collegedorm room.

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Councel of Chalcedon Issue 2 200914

No! Make sure its furnished extravagantly.o heck with the cost! Did Napoleon wor-ry about the cost when he was buildinghis palaces? No, and neither should youif you want to make the right impression.

Save money and live within yourmeans? Ridiculous. But impress yourfriends and make them seethe with

jealousy over your opulent lifestyle?Priceless.

3. Dont balance yourcheckbook

Why should you? Te bank will send youa little form if youre overdrawn, wontthey? In the meantime, youll want toavoid that uncomfortable feeling of be-ing hemmed in by lots of numbers andcolumns of figures, and instead, just dowhats fun and easy.

After all, youre not a machine. You

cant be programmed to function like ahuman calculator. You need to be yourown sweet, carefree self. Besides, if youkeep track of how much you spend, itmight depress you. So, please dont do it.

4. Save money onlywhen you feel like it

After all, what is saving? Its taking moneyfrom present consumption and puttingit in a dark vault where you dont haveaccess to it and cant spend it at will. But

think about it: Whats the good of moneyif its hidden away like that? It will justget cold and lonely. But inyour hands, if

you can spend it on something you reallyenjoy, that money is hard at work making

you happy. Sure, you could put the moneyin a savings account or a CD and it mightshow up every month as a typed entry ona piece of paper, but what fun is that? Itsway better to spend, spend, spend and liveit upand maybe meet a cute guy or galin the process.

You could invest your money in astock-market account, but then every

month youd get a statement thats com-plicated and hard to understand. Somemonths it would show that you were up,and some months youd be down. (Andwhat a drag it would be to open up thatenvelope and see youve lost some of yourhard-earned cash! Youre better off nothaving that account at all!) But if you buy

several new cashmere sweaters or a newset of golf clubs, you can use and enjoythem right now. And youll never opena monthly statement that says your FairIsle sweaters and Big Bertha clubs havegone down the tubes!

5. When youve maxed

out your credit cards,get new ones!

Credit-card application forms come inthe mail every day. Make sure you fill outevery one of them and acquire as manycards as you can. Dont even try to relate

your income to your use of credit cards oryour possession of them. Doing so would

be madness. Dont try to make your lifeinto a flow chart. I already told you, yourenot a machine. Just get the cards and usethem to buy what makes you feel good.Tis isnt just selfishness (as good as self-ishness is), its patriotism.

By the way, do you want to know agood test of whether or not youve over-


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used your credit cards and are carryingtoo large a balance? Well, if the banksand credit-card companies are still of-fering you applications for cards, thatshows that everythings fine and youhave plenty of reserve spending capacity.

Te fact is that the credit-card com-panies only want whats best for youre-ally. If they send you new credit cards, thatmeans that you need new credit cards and

that you can easily handle the load, so fillout those applications, mail them out,

and watch the credit cards pour in. And,closely related to this important directiveis the following rule...

6. Pay only theminimum each month

Youll be pleasantly surprised to seejust how little your minimum payment

is when you get your credit-card state-ment each month. In fact, you can chargehundreds of dollars and the minimumwill just be a paltry sum. You can chargethousands and your minimum might beas little as $100.

How can this be anything butgreat? I mean, why take on a burden

you dont have to take on? And thoselate fees and finance chargesthoseitems in small print that are listed atthe bottom of your statementwell,what about em? Why should they getin the way of your having a good time?Teyll never amount to much. Sowhat if it takes you 20 years to pay offa $1,500 balance? As long as youre onlymaking $20 payments each month, why

bother thinking about how much thecredit card company is making off you?

So, just pay the minimum and see howmuch your financial situation improves!

7. Dont think aboutretirement-its a LONG

way off

Te truth is (and you really need toremember this), that youre young and

vibrant no matter how old you mighthappen to be right now. You might be20 or you might be 40 or you might be60, but youre still light years away fromretirement In fact, its so far down theroad that you cant even see it. And

you know what? You never will be able



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to see it! ime passes very slowly, andyour youth, or relative youth, will go onforever. Plus, medical science is makingsuch amazing strides that youll be bik-ing 20 miles a day and playing five setsof tennis until youre 100.

So why do you need to think aboutwhat youre going to live on when youreold and retired? It aint gonna happenfor, well, forever. And youll be totallyprepared when the time comes anyway.How? Well, for one thing, the U.S. gov-ernment will take care of you. Or yourrelatives or friends will give you money.

Or just by virtue of being 65 years old,somehow money will appear from no-

where even though you never investedin anything and have no savings. Itsall too boring to even think about it, sodont. Retirement? Yawn. It just takescare of itself.

Now, lets change gears a bit Re-member how I told you that youshouldnt save anything or worry about

your future? After all, it puts lines onyour face. But what if someone hastalked you into worrying about money?What if some fool has made you be-lieve that you should invest in stocks orbonds or an IRA? Let me give you a few

words of advice if youve actually start-ed to begin some kind of investmentplan. Tis is important, so listen up...

8. Watch those late-night financial

success infomercials

Are you an insomniac? Maybe you workodd shifts and rarely get to bed beforethree in the morning, or perhaps youre

just a clever dog and know how the worldworks. Teres an old Italian saying thatgoes something like this: Money is madeat night. Now, this used to mean thatmoney was often gotten illegally and hadto be made while the sun didnt shineand people couldnt see what was goingon. But theres a different meaning thesedays. Nowadays, real wealth is made bythose who wait up until midnight orlater and then watch infomercials tellingthem how to make money.

Why are these shows on so late atnight? Because if they were on in the

middle of the day, everyone in the worldwould watch them and learn all thesecrets of making a fortune from noth-ing, and soon everybody would be tak-ing advantage of those deals. After all,how many gorgeous, pristine homes arethere in bankruptcy that you can buywith no money down? If the shows that



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told you how to acquire them were on at6 P.M. on CBS, theyd all be snapped up.So the late bird gets the worm in thiscase. Te late bird gets to stay up late,see whats what in the world of finance,and make real money while all the restof us lazy slobs are sleeping.

9. Dont just buy andholdrapid trading is

the key to wealth

If youve ever seen a movie about WallStreet (Wall Street is a good one!), you

know very well that at the heart of thiscity within a city lurk men and womenslaving at computer consoles, holdingone phone up to each ear, shriekingBuy! or Sell! Tis frantic pace exem-plifies how money is made in this world.It has little indeed to do with cautiouslybuying and holding.

Have you ever seen a movie aboutwealthy people on Wall Street who justsit quietly reading a novel while theinvestments they made ten years agoslowly grow in value? No, I dont think

you have, and I dont think you ever will.Clearly, as you can see in movies and

V programs about the stock marketreal money is made by trading frequent-ly. Tink about it: How many people do

you know who have quit their day jobsand then gotten rich just trading onlinea few hours each day at home with no

guidance except the innate genius theywere born with? Hundreds, Im sure!

Buy and hold may have been fine foryour grandfathers investments, but thisisnt your grandfathers market Tis isthe new, fast-paced world of tomorrow,and you can either be in it or out of it, ei-ther make money by furious trading, or

just be content being average by buyingthe indexes and large mutual funds andwatching your life drift by down that ollazy river.

Some nitwits are probably going tosay that theres a big difference between

the way that major banks and broker-ages trade, and the way that you woulddo it as an individual. Teyll probablysay that the big banks and brokerageshave hedges, immense capital backingthem up, and far more informationthan youll ever be able to access. Non-sense. Te computer and the Internet

are the great equalizers. You can doeverything the big boys can do... anddo it better and more nimbly. Dont bescared off by those horror stories aboutpeople who traded actively and lost ev-erything. Tat will not happen to you.You have luck and (in fact) genius on

your side, and they dont. Plus, they are

not you, and that makes all the differ-ence in the world.


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10. Put all your eggs inone basket. Only sissies

diversify

Now, get this straight. You, with the helpof that broker you met on the Internetand your innate luck, are not about topick stocks that go down. Yours are go-ing up. Knowing that, whats the pointof diluting your gains by diversifyingand buying lots of different stocks? Whygive yourself a lot of confusing things tothink about and a lot of extra lines on

your financial statements?

No, put all of your eggs in that bas-ket thats marked For Winners Only!Maybe do the thing thats easiest andinvolves the path of least resistance:Put all of your money into the stock ofthe company that employs you. Often,that company will sell you its stock ata bargain rate, considerably below the

market price. And you know its a goodcompanyotherwise you wouldnt bethere! So, yes, definitely put all of youreggs in that one basket and watch themhatch and turn out golden geese!

11. Bad investmentresults? keep doing

the same thing

anyway

You might have heard the old saying, Ifnothing changes, then nothing chang-es. Tat means that if you keep doingwhat youve been doing, then youll get

the same results youve always gotten.Some might tell you that this applies inspades to your investments. If you keepdoing the same thing, you might keepgetting the same results. But thats nottrue for you. If by some weird fluke yourinvestments (recommended by yourbroker, your friends on the Internet

newsletter writers, infomercial spokes-persons, and the tips you overheard atthe gym) dont do well for a few years,

just keep doing the same thingthatis, investing based on suggestions fromthose same sourcesand sure enough,those investments will turn the cornerand start rocketing up. With the excep-

tion of the ones that have gone bank-rupt and stopped trading, of course.So just go with the flow, and dont

worry, be happy. Wait a few more yearsto check on how youre doing. In themeantime, let it flow, let it flow. And thisleads to the next item, as vital as anyother for ruining your financial life...

12. Is your financiallife overwhelmingnow? Just put it off

for a few more years.

Teres this old myth that says youshould get movin right now on accom-plishing your goals, because the moretime you have to work on them, themore likely you are to attain them. Andthen theres some old saw about how a

journey is more likely to get finished ifyou start early in the morning. What aload of bull! Didnt the idiots who cameup with those maxims realize how


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much fun it is to sleep late? Didnt theyknow that some days are just for kickingback and watching the sunset?

It takes a lot of mental effort totake charge of your finances. If it seemsa bit burdensome right now, just waita while until it seems like it would beless of a bother. Only when youre re-ally and truly up to it should you get

yourself in gear to make plans for yourfinancial future. Dont worry about thetime that passed while you were getting

yourself organized. Im sure it was goodfor somethingif only for sleeping late.

Afterword

Well, all-righty then. If youve readthis far, its just possible that you havesome idea what youre doing wrong. It

just may be the case that youve no-ticed youre doing a lot of the afore-

mentioned ruinous things that spell-R-O-U-B-L-E in your financial life.It could be that youre not saving regu-larly. Maybe you plunk down moneyon stocks based on overheard tips andrumors. Most likely, you simply haveno plan whatsoever and prefer not tothink about your finances at all.

Well, let me assure you that if youjust keep on doing what youre doing,things will only get worse. Ive said itbefore in this book and Ill say it again:If nothing changes, nothing changes.If you keep doing even a few of the 55things Ive mentioned, youre going towind up in drastic circumstances downthe road or youll remain there ifthats your situation now.

But if you just start doing a few ofthe following, you might be amazed atthe difference it makes in your life:

Save as much as you can on a

regular basis.

Invest conservativelyfor example,

in very broad stock-market indexes andshort-term broad-based mutual funds.reasury or high-grade corporate bonds.

Buy your own home, buy your own

home, buy your own home, buy your

own home, buy your own home. Avoid doing business with people un-less they have a good reputation for pro-bity and integrity, and if you cant findout anything about them, dont let themanywhere near your money!

Remember that spending is not a sub-stitute for saving.


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Remind yourself continually that lifegoes by with stunning, breathtakingspeed, and you will want to prepare forthe day when you no longer have thestrength to workor at least to work ashard as you did when you were youngand such preparation primarily takesthe form of saving.

Leave fancy gimmicks to stupid people.

Know that there are no free lunches

anywhere once your parents die, thatyou are the primary person responsiblefor you, and that caring for your family

is a moral dutyand this includes be-ing careful with your money.

Or, to boil it all down to an even densersoup, here are two final pieces of advice:Te first one is from my father and he saidit to me with loveand just the fact thathe thought I would understand it was ahigh tribute. Benjy, he said, live pru-

dently. I dont do it often enough, but 1do it occasionally.

Te other remark, even simpler, is

from Bernard Baruch, that Wise Manof money who advised Presidents onfinancial matters for 40 years. AfterWorld War I, he was asked what advicehe had for Americans in the new post-

war world. He replied simply, Workand save.

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2009 Issue 2 - How to Ruin Your Financial Life - Counsel of Chalcedon