"Ten trips sprinkled over sixteen months of a busy work schedule . . . It would be a pilgrimage to see what other folks were doing with their money as the century closed with a boom and to explore those possibilities in three dimensions, not just as data on one of my flat market screens. A pilgrimage, because you hear stories and because strange things happen." - From Chapter 1 of Squandering Aimlessly
I don't think nearly enough about money. Which is to say, I feel guilty about the fact that I never think about it if I don't have to. I don't read finance books; in fact, I don't know that I'd even been to that section of our store in the first year I worked at Powell's. I did take Microeconomics second semester freshman year, but the class met at 9 a.m., and if anything is clear about those years of my life it's that I've retained almost nothing that happened before noon.
David Brancaccio hosts Public Radio International's Marketplace, which I'd never heard, of course - it being about, I correctly assumed, money. But someone gave me a copy of Squandering Aimlessly about a month before David's visit, and I'd read only a couple chapters when I knew I wanted to see if he'd stop by a bit early to talk about the book.
Dave: Your book, in many ways, seemed eerily targeted toward me.
David Brancaccio: You have one of these consumption problems, do you?
Dave: No, not at all, actually. But I do have a problem in terms of being comfortable with money, and the consequence of that is that I've spent almost no time thinking about what I'd do with it if were I ever to have some. As a writer, I've never spent much time worrying what I'd do with a bunch of cash. It's never been much of an issue.
But now here I am, I'm thirty, and I have a business card that says Web Producer. I have a paycheck, suddenly, and benefits. I work for an independent bookstore so I'm not exactly raking it in hand over fist - but there's this booming job market out there populated by executives barely my age offering insane amounts of money to people with practically no experience in the field. It's very strange to suddenly find myself here.
Brancaccio: You are the poster child for this book. It's funny because when you get the wrong demographic for this book, they say, "I never had any questions about money. I just wanted more of it."
I got a letter at Marketplace a few months ago from an attorney in Maine, my home state, who didn't like the notion of public radio giving up a half-hour a night to - quote, "business news." His argument was that the whole world is reporting business and public radio should be a refuge from all of it. He asked me, "Don't you realize there's more to life?"
And I'm chuckling because he has no idea that my undergraduate major was in History and African Studies, that I don't have an M.B.A. I share his ironic detachment from this stuff. But the letter also made me wonder, "Who is this guy that can have a job that's completely outside the sphere of money? Is he independently wealthy? Is he a hermit?"
Money doesn't just go away. Even if you're an artist, you have to know something about marketing. My brother went to the California Institute of Art. They teach a whole class there in marketing your paintings and how to caption them so they sell.
Dave: You decided to structure the book around a series of trips. It's not a travel book, per se, but it owes as much to that genre as it does to the titles in our Personal Finance section.
Brancaccio: I wondered how I could come to grips with some of these things. I asked myself, "Is there a way to approach money on your own terms?" And I also thought I needed to get street-smart about this.
I have parents who took us traveling all the time. We talked about politics and we talked about history. We never talked about money. Hard work, sure, but not personal finance. How could I make up for that? I realized that one cool way would be to take a road trip.
Marketplace, where I work, has no windows, not a single one. It's like working in a submarine. I needed to get out of that place and be a reporter. If you stay in the hermetically sealed capsule, reporting from our dark bunker, it all becomes abstract, and that's exactly what we're not supposed to be doing on public radio, divorcing all this stuff from its human component.
Some people say the economy is booming. For others, it isn't. Well, how does that play out in people's lives? And if suddenly you have a surplus, some savings, is selling out the only thing you can do?
Growing up, I read a lot of narrative travel. Paul Theroux. I have a warm place in my heart for those types of stories. Because of my job I'm given practically every personal finance book that's written, and lots of them are good, but where they have a failing, for me, is that so many of them are bullet points and spread sheets. I don't retain information that way. I retain through narrative. I remember stories and folklore. So I wanted to go out and find the folklore about money.
Dave: You've probably noticed from walking through our office that Powell's isn't a very business-like environment, at least not in the traditional sense. I think most of us here are in the same boat: money is a fact of life, and yet we're awkward around it. We feel like there's something wrong with it, or certainly, that there's something wrong about striving for it. I'm not sure that many of us have even defined exactly what's wrong with having money, but that's the point. We don't even like to think about it.
Brancaccio: Looking around, I think there'd be a consensus here that you don't want to be materialistic. You don't want a raise just to buy more stuff. So you think, "I don't want a lot of extra money because then I'd have to worry about all the stuff that would imply." But many of us haven't thought through to the point where we ask, "If it's not stuff that money could get you, what would it get you?" It turns out there are wider possibilities.
Real estate, for instance. But I always worried about real estate, that it turned you into a creep - at the point that you bought the house, you'd turn into Ward and June Cleaver. You suddenly become middle class and adopt suburban values. That's not what I found when I went to the place where it would have shown up if it ever did, Levittown on Long Island, the cradle of suburbia. For better or worse, there are problems in Levittown, but there's a real community. Home ownership allows you to connect with other people in a way that a rental doesn't.
And the chapter that I liked the most, reporting it, was when I asked, "Is it really irresponsible to use money to follow a long-held yearning?" That's what I had done with money once. We used our savings to quit our jobs and move to England so I could become a big time foreign correspondent - which was great except that Marketplace paid me $250 a week in American funds, and the exchange rate was terrible. The money disappeared in nine months.
A financial advisor would have had a heart attack if I'd walked in and said, "This is the most money we've ever seen and we're going to dispense with it in nine months. No, we don't own a house, actually we have no net worth except for this, but we're going to follow this lark in England."
But you know what? It was an investment. There's no way I'd have this job if I hadn't taken that risk. So it did have a return on investment that turned out to be very high.
Dave: In the book, that's the chapter where you visit the country music school in Texas.
Brancaccio: I met people who'd quit good jobs in medicine and advertising to pick banjo. Were they insane? No, they weren't. You should have seen their faces. They're really digging it. And they don't all go to Nashville with their new Associates degree in commercial music. Some do. But some leave the school much more centered about their place in the universe, what they're doing, what their goals are, and satisfied, knowing they've done something they really wanted to do - in this case, play.
If you think of money as only buying a sport utility vehicle or a really nice camera, you say, "Why do I need more money? I'll turn into one of those people who just buys stuff." But there are wider possibilities.
And if you don't think this through, other people's agendas take over. If you walk into a meeting with a financial advisor unprepared, they'll sell you whatever they want, whereas if you tell that advisor, "I really want to spend a year in China. This is how much money I think I'll need. How can I save this much? How long will it take?" that person is much more likely to help you achieve a meaningful goal.
Maybe it's just that you want a bigger house. Regardless, I think it's self-evident that money is power. I got to age thirty-six before I'd ever considered this stuff. People who are uncomfortable with the notion of waking up and reading The Wall Street Journal, . . . well, that doesn't have to happen.
Dave: You don't say anywhere in the book, "This is how to make the most money." Instead, you present the arguments for and against spending money in a variety of ways. For me, that's the value: you present various options in an objective way so readers can decide for themselves which is best suited to them. You can invest in socially responsible companies, you can start your own business, you can buy a house, you can go to Vegas or blow it all at the mall.
For instance, you write toward the end of book about a man from Idaho who sells his business and spends the money on a sailboat, which, taken out of context, might seem like a short-sighted use of a big wad of cash. But you conclude,
David's boat passes what I am finally realizing is the important test for a surplus: he can answer "yes" if asked if he expects his use of his money to have a lasting positive impact on the rest of his life. . . [The boat] is something he has wanted for a very long time and is an expression of who David Hunt is. Brancaccio:
It isn't about what I
would say. What I would do with the money isn't what you should do with it. You don't need to ask experts what the right
thing to do with money is; you should sit down and discuss your options with the people involved, your wife, whomever. Yes, a 401K plan, on paper, is a great deal for lots of people, but I have no idea if you have something eating away at you that you just really want to do. I just can't know that.
Dave: There's also a theme of prudence in the book.
Brancaccio: This is supposed to be a great golden age - again, if you're lucky enough - and yet people are not saving. They think it will get even more golden, and they're borrowing against the bigger paychecks they expect to be ahead.
But you don't know what's going to happen. The economy is looking great - the Dow was up about 300 points when I checked last - so we never need emergency money for anything because everything is just fine, right? That situation worries me.
If it's not self-evident what you should be doing with money, hold onto it. It's no crime to save it. You know that when the whole thing comes tumbling down Marketplace is going to be doing a million stories about people who feel cheated, people who lost a lot, people who are heavily invested in volatile investments and needed their money quick, which is a crazy position to put yourself in.
There's a whole industry that's risen up, inasmuch as the market is a participant sport - it's not like watching a hockey game, it's like playing a hockey game - and people want to play at home. CNBC is merging, in terms of style of diction, with ESPN. Yet there's credible research, controversial but pure review, that suggests the more you trade, the worse you do.
Dave: Also, the more you know, the worse you do. You mention a Harvard study in the book that concluded, "Investors who listen, watch, or read business news make less money than those who don't."
Brancaccio: But it's the same principle: the more the media covers it moment to moment, the more likely you are to act moment to moment. So what do you do? When you hear everything is going to hell in a handbasket, you sell, and you when you hear everything is looking great, you buy - which is pretty much the exact opposite of what you should do.
Dave: Powell's is an independent bookstore, but Powells.com operates in the e-commerce world. It's a weird, in many ways entirely contradictory position.
About a year ago, an ad guy from a major worldwide service provider came in here and insulted us to our faces, basically, because we told him, no, $40,000 a month for banner ads on his browser seemed a bit steep without any kind of guarantee the people seeing those ads would buy a single book - and that was the smallest ad package he was offering. He was wearing a suit, and I think we threw him off with our shorts and sandals, but mostly he was put off by our refusal to simply hand over the money. I don't think most e-companies think twice before spending that kind of cash.
We're always dealing with young Internet businesses, and seven out of ten of them have very little idea what they're doing. They just got millions from a venture capitalist but they're completely unorganized. It's painfully obvious, moreso when we have to work with them in some capacity. Some catch up quickly, but it's not a perspective that lends much confidence in the industry. It's exciting to watch all this happen from the inside, but it's a little bit frightening, too.
Brancaccio: Maybe Powell's has the last laugh - the one thing that can't happen to you is that your share price evaporates overnight. Yes, a lot of these e-companies, they say, "Oh, I'm so liquid so now," they want to pay for anything. But someone's going to notice that these business plans don't produce a profit in the foreseeable future.
Still, the e-commerce space isn't going to go away. The revolution has happened, and it's not going away. But the texture of it is going to radically change. It would be very cool if the clever strategy in e-commerce is to be a privately held company that doesn't actually have to suffer when the day of reckoning comes.
Or maybe there is no big day of reckoning. Maybe there's lots of little bubbles that pop on different days. On the other hand, it seems like it's a little overdone.
The example that I've often given is this. Edward Chancellor wrote a book about the history of financial speculation, published just last year, in which he talks about the wave of financial speculation that built the US railroads in the nineteenth century. All these people invested in the railroads, so they built the railroads. And they all went bust. Those investors - boom! - they lost their shirts. But those investments built the railroads which built the country.
It's not that speculation is bad - and it could be that this wave of speculation is building an incredible new infrastructure, which will persist - but woe is the investor who got in early and with the wrong companies. That's going to be the problem.
Dave: Is there a business book similar to yours, or even completely different, which you'd recommend?
Brancaccio: Well, the one that's similar but certainly generationally different is Investment Biker by Jim Rogers. He gets on a motorcycle with - and this is his quote, not mine - "with a woman half his age," and they go cruising around the world. As he confronts different things on motorcycle, different cultures, different countries, he talks about his philosophy for figuring out what a good company is in which to invest and also about emerging markets and so forth.
Travel is a good vehicle to explain something because of its narrative power. Outside the realm of personal finance, Bill Bryson taught me an awful lot about the Appalachian Trail [in A Walk in the Woods], as funny as he is, and as impressionistic and hapless. It's a wonderful way to communicate ideas, the travel adventure.
Peter Bernstein has a really good tome about risk called Against the Gods. It teaches you probability in a very compelling way and puts it in a historical context.
And the Motley Fools are fantastic because they really do show you that personal finance and investing isn't that complicated. We differ a little bit in theory, but the Fools, in their own way, are really useful.
Dave: Toward the end of the book, you visit a "retirement campus" in Tucson affiliated with the University of Arizona. You describe it as a community "for the sort of folks who might have 'emeritus' in their title or for artists, writers, and other interesting professional people." You write, "It will be assisted living for people with active minds who want to continue using their minds in retirement in a Medicare-approved setting. . . . But money alone won't get you in . . . people who have lived the kind of lives that were long on accumulating a surplus and short on community involvement may have trouble getting in."
It occurred to me while I was reading that chapter that after high school and college, when we're finished padding our resume with French Club and all the rest, in most lines of work there's very little incentive to be a good person in the community, other than whatever personal satisfaction it may bring.
It seems interesting, first, that a university would make this effort to harness the experience and wisdom of older generations for their students, but also, that they would judge applicants largely on the basis of community involvement. It sounds like an interesting idea.
Brancaccio: Well, they've started building the houses, though they've changed some of the structure since I wrote the book. It was more co-op in nature when I was there - you'd pay a co-op fee and you wouldn't have to mow your lawn or cook your own meals and the rest - but people putting down money for those houses wanted to cook their own meals, thank you very much, so the initial plan has evolved somewhat.
But as to your broader point, yes, this is one of the great American tragedies. You go to many a suburb and there is a real lack of community involvement. There are no seeming rewards for getting involved. You have houses built that only a present a garage door to the street, and it's very clear what that says.
Dave: That's a big issue here in Portland, actually. They're called "snout houses," and there's an ongoing political debate as to whether contractors should be permitted to build them.
Brancaccio: In the charity chapter, I go to a town that hasn't had a business relocate there in twenty years, Hawthorne, Nevada. They also have a terrible teen pregnancy problem. And meanwhile, they're trying to win the All-America City competition! You have to ask, "How?" Well, it turns out that it's civic involvement they're promoting. The citizens are getting out of the house into public spaces, and they're talking, trying to figure out how they're going to solve their problems. In the end, they don't win the contest, but what they gain in the process of organizing their campaign is pure social capital. They're building community.
It's true: money is the scorecard. There's no scorecard for civic involvement. It's a huge problem. For example, parents who feel like they don't have to ever get involved in the public schools at all, yet they complain bitterly about the public schools. At what point are people going to make the connection?
As for retirement, I don't know about you, but I really never could fathom it. It seemed morbid, like death, like writing your will. And also, my parents haven't retired yet, so why would I think about it, right? But you'll never save for it until you've at least thought it through. What will you need to get there?
It's not necessarily a profound point, but it was for me, when I realized there are two phases of retirement. There's the groovy, wonderful phase when you can do all the stuff your job had always kept you from doing. And there's the part when you get infirm. There's an old folks home in all of our futures in that sense. How much will that cost? How much will it cost to get there? At my present level of savings, do I get there? The answer in my case was, "No way."
David Brancaccio visited Powell's City of Books (for the first time, actually) on February 28, 2000. He asked for a picture of the storefront sign bearing his name to send down east to his parents in Maine, so we had some fun playing with the cover of his book and an actual photo of our main entrance. Oh, the joys of Photoshop 5.0!