Honestly, we could name 500 obstacles to financial independence. Such is the world we live in.
But for the sake of simplicity and brevity, let’s hold it to five, and avoid those on the road to being new Old Money.
In no particular order of importance, they are as follows:
- Trouble with the law. As Sonny Curtis once lamented in his classic rock ‘n’ roll song, “I fought the law and the law won…” Nothing can knock an asteroid-sized hole in your savings like an arrest for driving while intoxicated or the always-very-clever-and-in-fashion possession of a controlled substance. You may be acquitted, but you’ll still have to pay legal fees. If you’re found guilty of a crime, it may cost you your job. Probation officers make poor job references. So err on the side of boring: don’t be foolish.
- Unplanned pregnancy. When I turned 16, my father offered some sage wisdom: don’t even date a girl you wouldn’t consider marrying, because things happen. At the time, I didn’t quite grasp the full substance of the statement, but I followed the advice anyway. Now, in hindsight, it served me well. Today, contraceptives and abstinence are obvious and preferable to being an unwed mother or a father making child support payments.
- Divorce. This predictably follows having a child before you’re emotionally or financially prepared. Once again, say hello to my little friend, legal fees. The preventative measure for this overturned wagon in the middle of the road is a long courtship. I suggest three years of exclusive dating. Plenty of interaction with the extended family, because you will be marrying them, too. You’ll have a chance to see how your potential partner for life handles disappointment: in three years, something will probably not go their way, and their response will be revealing. How you step up to support them during a difficult time will also be revealing. The same goes for a big success. How will it changes things between you? You’ll also get to transition into the “partnership” aspect of life together, which is different from the “violins, roses, and sunsets” period when you first start dating.
- Substance abuse. I should re-name this category abuse of any kind, but alcohol and drugs are the two main culprits here. A fairly legendary bon vivant friend of mine goes stone cold sober for two weeks every three months. His reasoning: he parties hard, but he wants to make sure he never gets addicted to anything. So for 14 days, four times a year, he cuts it all out. If he ever had a problem with being sober, he told me in a dead serious tone, he’d cut it out 24/7/365. So if you find yourself “needing” a drink at the end of a long day, think about it and go without it.
- Peer pressure. This may seem like a mild vice, but it’s still deadly in this keep-up-with-the-Jones’s society we live in. Just because your posse spends money like drunken sailors on shore leave doesn’t mean you have to. So don’t. Make a budget and stick to it, regardless of what your coworkers, relatives, or friends spend or buy. If they’re really your friends, they’ll know how you roll and respect your choices. If they don’t, find some other friends.
That’s my five. Feel free to add yours to the conversation.
- BGT
Sound advice, Byron. I am reminded of a couple of things. The late Sen. Edward Kennedy used to stop drinking every year from January 1st to his birthday on February 22nd. But I like your friend’s approach of stopping for two weeks every three months even better. The other thing is, in “The Millionaire Next Door” the authors report that many of the millionaires they interviewed said that their wives were even more careful about spending than they were, sticking determinedly to budgets and even, in some cases, clipping coupons before going shopping.
To the list, I would add: Develop regular habits. A chaotic, erratic lifestyle is not conducive to accumulating or maintaining wealth. And buy only what you need. We are bombarded at every turn with entreaties and opportunities to buy things we don’t need. Many of these things are very inexpensive individually, but it adds up.
Thanks for another good post!
Good point, Amy. The routine does keep the spending in check because you see where the money is or is not going day in and day out. I didn’t know that about Senator Kennedy. I really appreciate your contributions, and I know other readers do, too. Thank you! – BGT
Thanks for the great content. Especially since these kinds of lifestyle-choices often get overlooked in the typical personal finance blog, where many times only the fifth obstacle is discussed. Looking forward to read your new book!
Greetings from a Swedish student!
Thank you, Lucas. Hope you enjoy The Old Money Book! – BGT
These things are all so very expensive. But the problem with substance abuse is that people think it’s small. The other problems are obvious big ticket items (i.e. everyone knows kids are expensive and lawyers cost thousands), but no one seems to grasp how quickly $10 a week for a pack of cigarettes or $50 a month for a bottle of vodka can add up. The small ones cause damage at a slower pace but adds up to thousands over time anyway.
I would add “lack of planning” for mine. Time really is money, if not worst since you can never get it back, and if you don’t plan ahead you’ll waste time and money. EVERYTHING is more expensive at the last minute. The first thing that comes to mind is student loans. Kids who go to school without knowing what they want to study. That degree turns into a 5 or even 6-year stay costing them more over time in tuition. The interest adds up, the debt grows and the disadvantages snowball as they aren’t able to save or invest because of loan payments and accrued interest on high balances.
You raise some good points, Blogmother. But as Mr. Tully has pointed out, education is a top priority in most old money families. Is it worth it to get an education if you have to go into debt? Should you get an education even if you don’t yet know what you want to do with your life? These are valid questions, but as Mr. Tully has also observed, old money values education as worthwhile in and of itself, and not merely as a form of advanced vocational training. My feeling is that a well rounded education is always worth the investment of time, effort and money, but of course we all have to evaluate our own circumstances and make our own decisions.
Great comment, Blogmother. Lack of planning is huge! – BGT
Great post, and I often think the same when I see people encountering these obstacles.
Unfortunately when I comment on it to other people they think I’m heartless and say things like “we’ll they didn’t plan to get divorced you know”. It’s not worth arguing with them about it, but I then think “we’ll they didn’t think very far ahead did they, and failing to plan is as good as planning to fail!”.
Good call, Insider. It is difficult to talk with people these things. It’s tricky terrain. Do you have to have difficult conversations with clients? I’d be interested to know what subjects you have to cover and how you handle it. Thanks for the comment! – BGT
Yep, plenty of difficult conversations with clients, but sometimes it’s almost best to steer clear of some conversations if you want to actually keep them as a client!
Some of the harder topics include divorce, client relationship issues (I don’t have a psychology degree, but it would come in handy!), shonky tax-dodgers (we’ve had to fire some clients before because they were blatantly breaking the law) and handling issues between generations of family businesses. All of them can be quite difficult, and while I have my own thoughts on each situation sometimes I can’t be as honest as I would like!
Thanks for the insight. I don’t envy your position, but keep up the good work! – BGT
Just discovered this blog today. Great stuff! I agree with most of what the author has written over the past few months. I graduated from Harvard College, where I spent considerable time among OM people, and live with my family in Newburyport north of Boston. That said, I am not crazy about preppy style (is “preppy style” an oxymoron?). I do think it is possible to embrace the OMG principles while dressing in a variety of different styles. There: I said it. Not a profound thought, but the best I have to offer at the moment, with dinner just put on the table.
Thank you, Timothy. And welcome! Yes, the “preppy style” can go a little too far sometimes, just like any other form of dress. You’re absolutely right: Old Money is about the principles. The clothing tends to simply be a result of that. Hope you enjoy the blog and the book. – BGT
Student loan debt and no jobs to utilize skills is a real prosperity killer.
Forgive me, turns out others have made the same points about debt and education far better than I have.