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Life or Debt 2010: A New Path to Financial Freedomby Stacy Johnson
Anyone who lives within their means suffers from a lack of imagination.
This chapter is about me and my life. It's not necessary for you to know anything about me at all for this plan to work for you, so if you want to skip this part of the book, feel free. But I think it kinda makes sense for you to know the person you're getting advice from, so here's the abbreviated version of how I came to be writing Life or Debt.
Ever notice how practically all self-help or motivational books start out with the author revealing some sort of emotional catharsis that suddenly caused them to see the light? You know, stuff like "There I was, forty-five years old, living on the street, and eating from a Dumpster, when suddenly inspiration struck like a divine lightning bolt! All I had to do was follow the seven magic steps and I'd become rich beyond my wildest expectations! And sure enough, it's happened! Now I have a mansion in Malibu, fly my own helicopter, and party at the Playboy Mansion!" What the author often leaves out, of course, is how much of their newfound wealth comes from following the seven magic steps and how much comes from selling their books and DVDs on infomercials and home shopping channels.
Here's the first of many embarrassing admissions I'll make: While I have certainly made my share of stupid mistakes, I've never been poor, gone bankrupt, or had a sudden revelation that laid the "true path" to fame and fortune at my feet. Nor am I rich now, at least not in the beach-house-in-Malibu sense. And while I hope that I make money from this book (and get invited to the Playboy Mansion, for that matter), it's not really that big a deal to me one way or the other. Why? Because my life is just fine exactly the way it is. I'm doing precisely what I want to do, and what I make doing it is fine by me.
But that isn't how my life has always been. As you'll soon discover, there was a time, and not so long ago, that I forgot who I was and what I wanted out of life.
Here's how I came to be your humble narrator:
In 1973 I was 17 years old. For those of you who weren't alive at that time, trust me, it was an interesting time to be in America. By '73, the hippie message of love, peace, and togetherness may have been fading, but you couldn't tell it by talking to me. And another aspect of the love generation that I could especially relate to was the wholesale rejection of all things material. The idea of sharing with your brothers and sisters, i.e., everyone younger than 30, and thereby avoiding the traps that lurked in money, property, and politics seemed both reasonable and realistic. But I wanted to try it for myself. So promptly after graduating from high school, I left my middle-class home in Atlanta and hitchhiked across the country. My goal was to forget how my parents and society had taught me to view the world and instead to live life the way it was meant to be lived: with no obligations and plenty of adventure. And this wasn't a summer vacation we're talking about here. This was going to be my life. So, for several months, that's what I did. I experienced the ultimate in freedom. I went where I wanted, did what I wanted, and stayed as long as I wanted. For most of that time, I didn't have two nickels to rub together. I survived mostly by doing day labor, stuff like furniture delivery or unloading boxcars. Always something different, which was cool because I got to learn how to do lots of different things and had the opportunity to meet lots of different people. Then, when I'd satisfied my curiosity and earned enough to meet my meager needs, I moved on. My ultimate goal was to reach the mecca of my generation: San Francisco and Haight-Ashbury. That was the capital of this brave new nation where society was being reinvented, where free love and flower power were going to replace greed and war. When I pictured my future, I saw myself pitching in at a commune or homesteading in Alaska. Naïve? Of course, but hey, this is my story. So stop laughing and listen.
You can probably guess what happened during the course of my personal path to spiritual enlightenment. It didn't take long to figure out the love and peace movement was either nonexistent or so far underground I couldn't dig it up. What I did find a lot of, however, were pedophiles, con artists, and common crooks. That's not to say I never found genuine, kind, caring people. I did. But by the time I reached San Francisco, I understood that flower power was an idea whose time had either come and gone or had existed more in song than in real, day-to-day life. And I also had firsthand experience that many of the people living on the streets weren't poets and adventurers who had rejected the possession-obsession society; they were people who were rejected by that society and had no place else to go. So while I valued my experiences, I realized that this was not the life I wanted to lead.
After returning to Atlanta, my life soon began to resemble those of my more traditional contemporaries. I went away to college. And since the freedom of the road hadn't lived up to my lofty expectations, I thought I'd try a more old-fashioned way of finding freedom: tons of money! My dreams of homesteading in Alaska were gradually replaced with visions of yachts, mansions, and Playboy bunnies. Seem like a major about-face? I guess it was. But considering my newfound cynicism about the hippie movement, and taking into account that virtually every mass-media, peer, and parental message I ever received was all about acquiring money, the speed of my transformation is not that surprising.
I started college intending to major in philosophy, but by my junior year I had decided that accounting would take me where I wanted to go a lot faster. In retrospect, I believe the reason I chose that particular degree went back to a casual dinner conversation I'd had with my father years before. I must have been about 12 or 13 years old. While talking about one of his old friends who was a CPA, he had casually mentioned that CPAs were never out of work and always made a good living. So there you have it! Security, money, and parental approval, all rolled into one. In any case, I graduated in 1977 with a degree in accounting, cut my hair, and took a job with the state of Arizona as an auditor.
Unfortunately, there was an integral part of accounting that my dad had forgotten to mention to me at that dinner years before. Namely, an accountant has to go to work and actually do accounting for eight hours a day, five days a week. While for some people this may be an exciting and rewarding way to occupy their working lives, for me it was like watching paint dry. Still, another thing my dad had taught me was that work wasn't supposed to be fun ("That's why they call it work!"). So I did it for a few years, picking up my CPA certificate along the way and trying to ignore the narcolepsy that had become a prominent feature of my working life.
By 1981, I had been an accountant for a few years and had come to the conclusion that I'd rather chop off my own foot with a dull ax than do it for a minute longer. In other words, my despair at being an accountant finally outweighed my fear of being unemployed. And besides, I had another idea that would further my ambition to become obscenely wealthy a lot faster. In the office building where I worked, there was a big EF Hutton office. And it looked really cool. A giant open space filled with desks and people, and a stock ticker dancing across the front of the room. There was even a place for spectators! Can you imagine an office job so interesting that people actually stopped to watch? You could practically feel the excitement just walking by the place. Bye-bye, crummy salary! Bye-bye, narcolepsy! And it went without saying that these guys would hire me. After all, investing in stocks was all about analyzing companies, and who could do that better than a CPA?
I'll never forget my first interview with the manager of EF Hutton. He peered at my completed application like it included a lengthy prison record. This was confusing. After all, I was a CPA! A master of numbers and financial analysis! Imagine my confusion when he looked up from my résumé and said, "I'd much rather have a used-car salesman sitting across the desk from me right now than a CPA." I was stunned. Potentially doomed by too much education and too little sales experience! But fortunately all the news wasn't bad. Because despite the embarrassingly inappropriate education and professional credentials I was saddled with, I was able to convince my tormentor that I did possess the one personality trait necessary to the success of any stockbroker: I was desperately greedy. He told me that after a few years of hard work (which, as he explained, actually entailed doing nothing more than using the telephone to unmercifully harass 60 or 70 innocent people every day), I could expect to make $50,000 a year, maybe more. And that was just about all the money in the world to me, since I was only making $18,000 at the time. I told him that there was nothing short of murder that I wouldn't do to make $50,000. And, despite the fact that I had drawn the line at capital crime (probably a mistake in retrospect), he decided that I at least warranted a test to see if I could actually sell. I passed and was subsequently hired, trained, and licensed in stocks, mutual funds, commodities, and life insurance.
In many ways, being a stockbroker was exactly what I had hoped. It was exciting, especially compared with auditing school districts. And my manager hadn't been exaggerating about the money either, probably because I had stumbled into the stock brokerage business with nearly perfect timing. When I started my career in 1981, the Dow Jones Industrial Average was around 800. And interest rates on risk-free money-market accounts were around 15 percent, so pretty much nobody wanted to invest in stocks. But in 1982, rates started to plummet and the stock market began what turned out to be one of the greatest bull markets of the century. And this rising tide floated all boats, including mine. Less than three years after being hired, I was indeed making $50,000 a year. As I closed in on my thirtieth birthday, I was working 90 hours a week but my income had grown to more than $100,000 a year. Not exactly rich, but I was certainly a success, especially when I compared myself to my parents and the friends I'd grown up with. And like many people who find themselves making big money, I honestly believed that I deserved it. After all, I was making a lot of money for my clients, wasn't I? And I was certainly making a lot of money for my employer. Therefore I must have been smart, and therefore deserving.
So since my hitchhiking days of all freedom and no money, the pendulum had gone all the way to the other extreme. The children of the 1960s are known historically as the "love generation" and the children of the 1980s are often called the "greed generation." For me at least, both labels fit like a glove. The sixties' altruism and idealism were distant memories as the eighties marched on and my income continued to rise.
Now I was making money, which I had exchanged for free time. But that was cool, because I enjoyed my job. In fact, let's be honest: I didn't just enjoy my job, I was my job. And my job was money. I made it, I borrowed it, I invested it, and I blew it. Just as I had in my hitchhiking youth, I took my cue from my peers, only this time the message was different. If you've got it, flaunt it! You can't take it with you! So I bought the big house with the pool, a few convertibles, and some rental property, and of course did a lot of investing and outright gambling in the stock market. I had debt, but it was a small fraction of my income, so it didn't matter. What did matter was that I was a big deal, and nobody would know it if I didn't look like one, act like one, dress like one, travel like one, and party like one.
I haven't been a stockbroker now for nearly 20 years, so I can't say what happens in that business these days. But I can tell you what it was like in the 1980s, and in many ways the picture isn't pretty. Stockbrokers were measured almost entirely by how much money they made for themselves and for the company. Money made for customers was incidental. Of course, the management of these companies would surely take exception to that remark, probably bleating something like, "That's a lie! Of course our clients are important! If we don't make money for them, we won't keep them, and therefore we are compelled to do right by them!" While that argument may be logical, the fact remains that where I worked, every morning the previous day's commission tally was displayed on a clipboard outside the manager's office so you could see not only how much you had made, but how much everyone else had made as well. Client profits, losses, and satisfaction were never displayed. Brokers generating the most commissions got the biggest offices, were held up as examples at sales meetings, and won luxury cruises. Those who didn't generate much in the way of commissions, regardless of what they did for their clients, were relegated to the small cubicles that made up the "bull pen" and in many cases were ultimately fired. To my knowledge, nobody was ever retained for treating customers well. At the same time, brokers who I absolutely, positively knew to be unethical were being heaped with recognition. While the argument that treating customers well is necessary to survive may sound logical, the truth is that replacing the customer was easier than replacing their poorly invested money. That's not to say that brokers, even unethical ones, would deliberately hurt people; after all, the more money your customer makes, the more you have to manage. But salespeople are by nature competitive, and recognition in the investment game is about commissions, not client profits. Of course, I didn't see that back then, at least not for the first few years. It took a long time, and some painful experiences, for me to learn this simple lesson.
Nineteen eighty-five was a banner year for me. That was the year I met my first wife and landed what's known in the sales business as "a whale." Soon these two seemingly unrelated events would combine to make my life a lot more interesting.
First the whale. The giant account that I landed was one of the largest Indian tribes in the state. It took me four years of on-and-off prospecting to land this Moby Dick, but the effort was well worth it. There was only one problem. At the very end of the last meeting before signing up my new client, the tribe's investment representative casually mentioned that I would have to pay him money under the table to get their business. While I knew this to be illegal, I agreed to do it. Why? Why do you think? Greed, of course! Although I was already making good money, I wanted more. And I wanted to be recognized as the best, which in my line of work translated simply as the best paid. Plus, although paying kickbacks was technically illegal, I didn't have to violate my personal ethics since it wasn't hurting the tribe. I was merely choosing to share money I was legitimately making with my client's employee. Or at least, that's how I rationalized it. But just to make sure, I asked my future bride what she thought. Of course, since she was every bit as greedy as I was (if that's possible), she agreed that the risk was well worth the reward.
For a couple of years, things went well with my new client and my new wife. I put the Indian tribe into good investments. They made money, my tribal contact made money, and of course I made money. Better yet, there was never a problem spending all this new money, because my wife went through it like a hot knife through butter.
Alas, neither relationship was destined to last. By 1987, I was separated from both my wife and the Indians' money. Both relationships ended by mutual consent, but both were still painful, and both would come back to haunt me. In the meantime, for a little salt in the wound, in October of that year the stock market crashed. About the only good thing that happened to me in 1987 was that I expanded into TV broadcasting. I was invited to do ongoing investment commentary during the morning news on a local television station, probably due to interest surrounding the stock market after Black Monday. It was a nonpaying job at first, but one that enhanced my visibility and credibility in the community — always a good thing for any salesman.
For some time things went pretty well. I was single for a while, then met my second wife in 1990. Also in 1990, my success as a stockbroker and visibility on the news helped land me a job managing the local office for Prudential Securities. I had met the right girl, I was a genuine vice president of a major brokerage house, and my earnings were now in excess of $200,000 a year. More important, I had also started maturing when it came to both money and ethical behavior.
About the time that I became a manager, I had finally begun to realize that showing off by driving the fanciest car and living in the fanciest house weren't all that important. In retrospect, perhaps I had an intuition that it was time to start preparing myself for a new life. Maybe it was because my subconscious was telling me that the inevitable collision between my personal ethics and the brokerage business was about to cut short my career. Maybe it was my conscious mind that told me that taking care of all this stuff I had collected was stressing me out and making me miserable. Looking back, I honestly don't know what changed me. But I do know that instead of expanding my lifestyle, I started selling off stuff and using my money to pay off debts and build up savings.
After 10 or so years as a stockbroker, I was beginning to have a hard time looking at myself in the mirror. It wasn't because I had ripped people off or anything. Even at my most greedy, I had always acted in a way that I honestly believed to be in my clients' best interests. Of course, the stock market itself, along with the stupid investment products pushed by the firms I worked for, had often overcome my good intentions, but I had done my best. The problem was that it was becoming increasingly apparent that the financial services industry stank to high heaven. I won't go into more specifics than I already have; this is my story, not theirs, and besides, that's a whole book by itself. Suffice it to say that a simple fact that should always have been obvious to me now became unavoidable: The investment business cares a lot more for its own bottom line than it does for its clients'. I was really starting to feel unable to carry on. My own greed, along with a healthy dose of ignorance, had allowed me to overlook that problem more often than not for years, but it just wasn't enough anymore.
As it happened, fate intervened and removed me forever from the brokerage business. Which is a good thing, because I honestly don't believe I would've had the courage to quit such a lucrative job, and I was rapidly approaching the same misery level I had achieved as an accountant.
Here's what happened. Remember my former wife? Well, it turned out that when we were officially divorced in 1988, she had decided to perform her civic duty and reveal to the world the seamy underbelly of my relationship with my Indian tribe client. So she simply picked up the phone and reported me to the authorities. And while the wheels of justice had been grinding exceedingly slowly, since 1988 they had been grinding all the same.
So, in 1990, years after my relationship with the Indians had ended, yours truly found himself in very hot water indeed. While I looked at my offense as basically victimless, turns out Uncle Sam didn't share my view at all. In exchange for my cooperation in the investigation of tribal corruption, I was never charged with a crime. But that didn't prevent both of my employers, the TV station I was on and the stock brokerage firm, from promptly firing me. And since my license was suspended, I was not only unemployed, I was unemployable. Kind of ironic, don't you think? Here I was having a mental dilemma about the morality of the financial services industry, and just like that, it was I who was marked as a person too immoral with whom to share office space.
So I found myself at a turning point in my life. (Of course, at the time I didn't see it as a turning point; I saw it as a disaster of epic proportions. But viewed in life's rearview mirror, a turning point is exactly what it was.) Doors had been closed to me. What door was I going to open next?
I thought long and hard about what I had done up to then with my life. I had started with the idealism typical of youth, then abruptly done the opposite and focused only on myself and my needs. It was time to find a new path.
What I decided to do was start over, only this time to do it the right way. The "right" way is a choice as unique as each of us, but for me it was to do something that I enjoyed that was also worthwhile. Something that I could feel good about, have fun at, and still get paid for. Which for me meant doing TV. I loved telling the truth about money to people who appreciated hearing it, rather than forcing some financial product down the throats of unsuspecting people trying to eat dinner. And, since giving good, honest advice obviously has value, sooner or later someone would write me a check for it. Plus, I was eminently qualified, having collected a slew of credentials and spent my entire adult life in the business of money.
So at the age of 35, I started my life over. I went out and started selling television stations my very own news product: "Money Talks." I could take this risk because I had reined in my spending, had pretty much paid off my debts, and had money in the bank. And 20 years later, I'm still doing it. I'm on the air in more than 80 cities, as well as on major websites. I tell the truth, live beneath my means, and am a much, much happier person.
It's too early to tell whether you're going to get anything valuable from this book. But I can promise you this: You wouldn't be reading it in the first place if I had lost my job with lots of debt and no savings. Fact is, if I hadn't started marching to my own drummer and had instead continued to follow my peers by living up to my spending and borrowing capacity, I wouldn't have had the time or the money to even think about what my destiny was, much less been able to move toward it when I was separated from my job. And while I hope that you're never forced to start over like I was — especially due to your own mistakes — I do hope that you'll have the ability to. Maybe you've got something valuable to say, something that I and millions of other people really need to hear. I can't stand the thought of you being so consumed by supporting an unrewarding lifestyle that you don't have the freedom to sit down and help others by sharing your experiences and advice. And that, gentle reader, is what this book is all about.
So that's been my journey thus far. Here are a few thoughts that summarize some of the lessons that I've learned along the way.
The first I expressed above: Simple choices about borrowing and spending that you're making right now can have an extremely far-reaching impact, not just on your life, but on the lives of those around you and beyond. Living without debt makes it much more likely that you'll have the freedom to fulfill your destiny.
Lesson number two: There's nothing wrong with being your job, provided your job reflects who you really are. If it doesn't, then if you're lucky you'll fail. If you're unlucky, you'll succeed and as a result quite possibly waste your life doing something that isn't you. You'll be miserable, and there's no amount of money that will take that misery away.
Lesson number three: Money buys things, not happiness. And each thing you have comes with its own invisible ball and chain. Attach enough of them to your life, and you'll feel like a prisoner, because that's exactly what you'll be.
Lesson number four: Every person or company you owe money to owns you. Why? Because they have a say in the most intimate details of your life. When (or if) you retire. Where (or if) your kids go to college. How you use (or if you ever have any) leisure time. Buying and borrowing forces you to use your time to earn money. And working, especially in an unrewarding job, could separate you from your destiny and thus from happiness.
In a way, my life has been circular. My teenage visions of a world of peace, love, sharing, and caring may have been naïve, but as I reflect back, they were much closer to my version of true happiness than the greed and possession obsession that characterized the first part of my adult life. Today I've found a happy medium. I don't sleep in underpasses and forsake all things material. But I also don't squander my precious time or personal integrity so that I can resemble people in TV commercials. I do what makes me happy, and I stay as free as possible by not owing my time to anyone.
Wanna join me? It's easier than you think!
Copyright © 2010 by Stacy Johnson
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