i subscribe to the philosophy “if you don’t see it, you won’t miss it” and automate a lot of savings - maxing out 401ks (etc) even from the very beginning when I was the only job holder in our house. Working through how my mom managed money (so to speak), it’s abundantly clear that her starting point was “given that I have this much money burning a hole in my pocket, how do I want to live today” versus “how do I want to live long term and now let’s back that up to what I should be saving, and then let’s live on the rest.” I suspect Gabler followed that same format. I has to step in and handle my mother’s foreclosure for her, so clearly that wasn’t a great strategy.
@BunsenBurner, we were caught in one of those AMT situations. A significant part of dh’s compensation was ISOs and RSAs. Unfortunately, his quiet period for trading is extensive - I’d estimate more than 3/4 of the year. Employer’s stock tanked, dropping to less than 10% of its former value. If we’d sold every share we held (& not just the unrestricted ones) the proceeds would not have come close to paying the tax bill. We had to draw on a HELOC to pay taxes. The stock has not recovered much in the years since. It’s currently selling for less than 1/4 of its previous high. We had an uncomfortable couple of years but we scrimped and managed.
Dh has colleagues who were caught in similar circumstances. They refused to tighten their budgets or curtail their standard of living. All carry huge amounts of debt still. Several sent their kids to expensive LACs instead of state universities, and took on more debt to do so. One senior exec who makes 3X what dh earns was recently turned down for a relatively small loan and was furious. These guys tease/look down on dh for wearing dept. store suits and shirts (bought on sale) instead of bespoke and for driving a modest (paid for in cash) car instead of something pricey. Dh just shrugs it off because he knows that they’re all living at the edge of financial disaster while we’ve recovered and paid off all debts.
Seeing his resume, I’m even more appalled that he wrote this woe is me article. What the heck? If I were his wife, I’d want to strangle him.
I am in good financial shape at this moment in time. However, I can easily imagine an alternate universe where things went one way instead of another, things over which I really had no control, and I ended up in very dire straits. I’m not seeing much predictability going forward so I’m pretty much just crossing my fingers, and keeping some of my grandmama’s silver $$ in my freezer for good luck.
How about his children? He will be coming knocking on their doors before long. I’d cut him loose sooner than later.
Every one of his mistakes is understandable. We all made that kind of mistakes at one point in our lives. In his case, he didn’t stop at making one or two mistakes. He keeps on doing it. In fact, he doesn’t think they are mistakes. That’s the way his life is meant to be lived. Nice. I like finer things, too, and I splurge on my kid beyond reasonable. But I try to stop at one or two heist(?). He can live his life any way he wants as far as he doesn’t come begging or blaming his “misfortune” on others.
“am in good financial shape at this moment in time. However, I can easily imagine an alternate universe where things went one way instead of another, things over which I really had no control, and I ended up in very dire straits. I’m not seeing much predictability going forward so I’m pretty much just crossing my fingers, and keeping some of my grandmama’s silver $$ in my freezer for good luck.”
Should you end up in dire straits, come on here and we’ll tell you how to fix it! None of us knows what is in store for us in the future, but I’m hoping that as long as we haven’t lost our mental faculties that we can adapt to whatever new situation is out there. I hope we won’t be trying to hang on to our lifestyles while the house burns down.
busdriver: I probably won’t listen to anyone who knows how to fix it. A couple of decades back, if I’d followed the advice of supposedly savvy folks, presumed to be financial experts, I would be in dire straits right now. I thought I knew better. I guessed right.
That is sort of the theme of this thread. imho. guessing right or wrong.
eta: Maybe I should write a book giving advice because I guessed right 
I’m interested in the stories of those who guessed wrong. It’s good information to have. imho fwiw
You can’t go wrong handling your money conservatively. You really can’t.
I also like the saying “pigs get slaughtered.” The kind of “financial advice” that leads someone down the wrong path is invariably risky advice. Pay yourself first, avoid debt, and when you buy something buy quality that lasts a long time vs disposable.
Ah come on, you’d listen to us, wouldn’t you, Alh? From the sounds of it, we’re a financially conservative lot.
It is interesting to me to read about people who had financial issues, and how they fixed it. I always want to hear the ending being a good one. I suppose that’s why I don’t really care for this story, I wanted to hear that he fixed the problem.
PG: At one time in this nation’s history, and in the history of other nations, people who handled their money conservatively lost all their money. There are definitely historical precedents.
I hope it never happens to us. It could, though.
One way to get rich is to be a cheapskate and not pay your bills. Cry poverty and negotiate down your bills because it is a pain to collect.
You can’t go wrong paying off all debt, though, can you?
As structural engineers, we’ve found that we have the hardest time collecting from wealthy homeowners. They will nickel and dime us for design fees when they’re building an 8,000 square foot house. It doesn’t even make SENSE, because we can save them money in construction cost if we spend more time sizing structural members carefully. Oh, well.
MaineLonghorn, I think an issue is that people might think they are being overcharged because they have a larger home. It is really the norm, I have found, that people will charge you far more when they come to your home and it’s a pricier home, even though the service and time to work on an issue remains the same. It’s very unfair to the people who are charging a fair price, but I think people get paranoid of being overcharged.
That is certainly my philosophy because I don’t like to pay interest. However if I use all my cash on hand to pay off debt and then need to quickly buy gold, like dstark’s family, I may not have guessed right.
The guy who is supposedly worth $10 million and can’t come up with $5,000 in cash is essentially worth nothing because if he truly couldn’t come up with that cash on hand in an instant for some medical emergency or some such, he’s as good as penniless.
Anyway, I am pretty sure said guy puts more than $5,000 on a credit card every month and what the heck does he use to pay that off every month? Cash. Duh. (Unless he actually pays interest, which would mean he’s a complete fool.).
I certainly know folks who have $10 million in land (at least theoretically) and don’t have $5000 cash. Land rich/cash poor is a big deal where I come from. Sometimes the bank will loan to you and sometimes not. But they probably won’t give it to you on the spur of the moment. A cash advance on a credit card? Maybe a possibility.
I’m guessing anyone who hangs out with farmers much could easily believe dstark’s scenario.
Fortunately (or unfortunately) we’ve never had a high enough household income to be hit by the AMT, and stock options & phantom gains are something we’ll never see in our lifetimes (although our daughter might, I suppose).
I’m not trying to change your mind @dstark but I was thinking more about NG’s radio interview and where he and I are similar, and where we are different. We’re a household of comfortably middle class professionals. Both of us could have opened our own businesses/practices/etc (I actually did for 7 years at one point), but we generally opted to work for organizations which meant a lower, but more steady income. We’ve never remotely approached 2x the amount Gabler says is necessary to be middle class, but we have been consistently over $130K for the last 15 years or so. Even with low inflation factored in, income has remained flat, or, 2% - 3% increases at best, some years. I’m pretty sure Gabler’s household has made more over their careers than we have over ours.
Here are some observations from the interview.
The car. He says, “I drive a 1997 Toyota with a 160,000 miles on it,” in a tone of voice that is implying, hey, this shows how poor I really am. What he doesn’t point out is that this is a trait he doesn’t just share with stretched middle-class families, it’s a trait he also shares with the millionaire next door (someone upthread mentioned this great book). I happen to drive a 2004 Toyota with 205,000 miles on it. I drive it because it is a great, reliable car and it’s been paid for since 2008. (But in full disclosure we also have an Acura in the garage that I don’t drive so much, except for long trips. I have to wonder what the other car is in Gabler’s garage, but he hasn’t said because he picks and chooses his facts.) Gabler seems to bemoan that he is forced into driving an old car.
Vacations. He says he hasn’t had a vacation in 10 years. What he doesn’t point out is that many of us do most of our travelling: 1) to visit/care for relatives; and, 2) in relation to work, such as conferences, etc. One can assume he travels in relation to his research. Could he write a book on Streisand and Disney without travelling out to California? I doubt it. Or a book on Kennedy without going to Hyannis? Three of our nicest trips (Puerto Rico, Germany, Hawaii) were directly related to work, with time added on for family. I suspect Gabler has had many similar trips, but would insist they weren’t really “vacations” because he also used time to research a book or article.
House. The house has been a big burden for him. Our family moved from the Northeast to the Midwest, for employment purposes, during the height of the housing crisis. We couldn’t give our house away. So we found renters for it. The best we could do was rent of about $200 less each month than the mortgage we were paying, so we were losing $200 per month. In our new location we found an okay house, not ideal, where the rent was actually $400 per month less than the cost of our mortgage payment. During the 2 years we couldn’t sell the house in the Northeast we ended up pocketing $200 per month. Once we sold that house we stayed in the rental an additional year just to keep saving some money. We eventually bought a house we really like, within our means, but it meant delaying gratification.
Education. This one gets me the most. He enrolled his daughters at the most expensive colleges, at terms he understood, and he turns around and calls the colleges “extortionists.” Extortion is the practice of obtaining money through force or threats. It’s ludicrous for him to suggest that he was “forced” to send his daughters to Emory, Stanford, Harvard and the University of Texas (out-of-state tuition) under threat. Statements like that are insulting to everyone in the middle class who sends their children to the fine SUNYs, directionals, and community colleges that are available. His elitist sense of entitlement is jaw dropping. He might at least have a little credibility if says he had opened a 529 plan like many of us middle-classers. But one gets the impression that maybe he felt a 529 was somehow beneath him. And nowhere have I seen him express any appreciation for the free Oxford education his daughter received as a Rhodes scholar.
Here’s one final difference with Gabler. Around 20 years ago my dad, my amazing dad, gave DW two shares of stock in a DRIP account for her birthday. It was worth about $60, maybe the cost of a really nice flower arrangement. It was a multinational company–anyone who drives a car would recognize it–nothing fancy but it paid a nice, reliable dividend that we consistently reinvested. Through the years we would throw a little money into the account when we had some extra, $60 or $70 here and there. When stocks plummeted during the financial crisis we threw a little more into it.
We always had three rules: no matter what, don’t touch the retirement, the 529, or the DRIP account. You can imagine what that $60 looks like today–it’s going to pay for D’s first year of grad school, if she decides go. So I guess, in a sense, my dad will have paid in part for D’s education just as Gabler’s parents did, but in a different way.
I fully recognize that we, the Gablers, and most middle class families are just one significant financial event away from catastrophe–a serious illness, a divorce, an unpredictable job loss. But Gabler had none of these things happen (his job was in a high-risk profession where job losses are the norm). He had choices, and he made pretty much the wrong financial choice consistently for 31 one years, while keeping his wife and children in the dark about it. Our choices haven’t always been successful, but we’ve worked hard to have our successful choices balance out the bad ones over time. This has meant spending less than we earn, delaying gratification, disregarding prestige, favoring the long-term over the short term, and prioritizing the needs of our child and extended family over our own.
“That is certainly my philosophy because I don’t like to pay interest. However if I use all my cash on hand to pay off debt and then need to quickly buy gold, like dstark’s family, I may not have guessed right.”
If you have to buy something quickly its probably something the non millionaires shouldn’t be buying.
The way I’m understanding the story, I think they had to buy that gold quickly (probably with cash not credit) whether or not they were millionaires, in order to survive.
My family has always kept some cash in the mattress, so this isn’t a novel idea to me.