Lessons from Literature 6: The Mandibles: A Family 2029 – 2047.

The Mandibles: A Family 2029 – 2047 by Lionel Shriver is one of the novels I was reading when I was away in North Korea and China. Kind of ironic, really, because it deals with what happens when the US government runs out of money to service their trillions of dollars worth of loans and defaults. Guess which country rises up to take advantage of the situation?

This is a relatively slow moving but gripping read. We see through the eyes of one reasonably privileged family what happens as their society gradually unravels at the seams. Shriver has clearly done her homework on how financial markets work and the implications and consequences when things start to turn pear-shaped. Most of us in the FI/RE community have started to scrape together a working knowledge of how the financial world works – you’ll find this novel VERY interesting indeed.

I loved it. I found it scary as hell, though the little titbits she puts in about other countries are very clever, particularly what happens to Australia and Japan. I think I gave it a 5-star review on Goodreads – it’s well worth using the link I gave at the beginning of this post to pop across and buy it. (I don’t get anything from it – I just provided it as a resource for Aussie readers. US readers will find it at Amazon.com)

I’ve put out another blog post on my trip, for those who are interested.

Day 2: Beijing. 

Advertisements

Lessons from Literature 5: The World According to Garp.

This was the novel that brought John Irving into the limelight. I first became aware of this story when I saw the movie – my first movie with John Lithgow. One of my favourite actors.

The World According to Garp, written in 1978,  is a quirky novel, with characters and situations that are still memorable today. Jenny Fields is a single mother who gets pregnant with her son, TS Garp, under very unusual circumstances. The novel follows Garp through his life, from his childhood with his incredibly independent mother, through to his marriage with Helen and his life with her and their kids.

  • Helen was at school every day; she had agreed to have a child only if Garp would agree to take care of it. Garp loved the idea of never having to go out. He wrote and took care of Duncan; he cooked and wrote and took care of Duncan some more. When Helen came home, she came home to a reasonably happy homemaker; as long as Garp’s novel progressed, no routine, no matter how mindless, could upset him. in fact, the more mindless, the better.

Garp chooses to be a writer, a SAHD while his wife is proud to go to work and be the major breadwinner. They chose their partners in life well… always a good thing to do to succeed both financially and in life. She was an English professor who had no ambition to be a writer – she liked to read – whereas all Garp wanted to do was to be a writer. Choosing a partner in life whose ambitions dovetail in with your own is one of the best ways to get ahead.

  • “You know, everybody dies. My parents died. Your father died. Everybody dies. I’m going to die too. So will you. The thing is, to have a life before we die. It can be a real adventure having a life. ” (Jenny Fields)

In other words, enjoy the journey, not just the destination. So many people appear to discover FIRE, get excited and then put all their energies into investing, retirement funds and getting out of debt while forgetting to take some time to smell the roses along the way. Both Garp and Jenny Fields lived life according to their own terms, particularly Jenny.

  • Death, it seems,” Garp wrote, “does not like to wait until we are prepared for it. Death is indulgent and enjoys, when it can, a flair for the dramatic.

What a great way to say that you should make sure to live while you’re alive.

Here’s the quote that matches up with the clip from the film. See opportunity when it presents itself to you and act upon it!

  • “We’ll take the house. Honey, the chances of another plane hitting this house are astronomical. It’s been pre-disastered. We’re going to be safe here.” Garp.)

Lessons from Literature 4: Washington Square.

I studied this in year 12 Lit, back in the day. How I loved this novel! It’s a short read, beautifully restrained and the quiet anguish of it all is never overblown or melodramatic. In 1949 it was turned into a movie called, “The Heiress’ and they did a terrific job. It’s worth hunting down the movie for a quiet afternoon in.

But what can we learn from the story of a thwarted romance between a fortune-hunter and a plain, dull girl from a wealthy family?

Dr Austen Sloper is a wealthy doctor in New York in the mid 1800’s. He is an intelligent man but has become emotionally crippled after the death in childbirth of his beautiful young wife and the death, a year before, of their bright young son. Unfortunately, his view of his daughter Catherine, now in her twenties, was that she was :

  • “… not ugly… was decidedly not clever; she was not quick with her book, nor, indeed, with anything else. She was not abnormally deficient… Doctor Sloper would have liked to be proud of his daughter, but there was nothing to be proud of in poor Catherine… Her greatest desire was to please him… What she could not know, of course, was that she disappointed him, though on three or four occasions the Doctor had been almost frank about it.

When Catherine meets the dashing and handsome Morris Townsend, who immediately pursues a romantic relationship with her, the doctor views the whole situation with a jaundiced eye:

  •  I am told he lives upon [his sister]… lives with her and does nothing for himself… The position of husband of a weak-minded young woman with a large fortune would suit him to perfection!

The bitter irony of this novel, and one of the reasons that it’s so good, is that the doctor isn’t unreasonable as such. He doesn’t necessarily want his daughter to marry a rich man. He knows she will have money enough for two. What he doesn’t want is for his fortune that he so carefully earned to be given away to a man who only values Catherine for the money she brings. He sees Morris Townsend as the adventurer he is, unlike his naive daughter, and he is unwilling to simply hand over his fortune.

Totally fair enough.

So far I think we can all agree that Dr Sloper is in the right. Not one of us would want a lazy, unemployed, money-hungry son-in-law to walk in and start living in our spare bedroom with a hungry young family at his heels. Dr Sloper has every right to protect his share portfolio, property and superannuation from a guy like Morris.

However, it’s his cold, almost surgical analysis of the situation and the total lack of empathy for his daughter’s distress that takes the ‘personal’ out of personal finance.

  • And as she pronounced her lover’s name Catherine looked at him. What she saw was her father’s still grey eye and his clear-cut, definite smile. She contemplated those objects for a moment, and then she looked back at the fire; it was far warmer.

Catherine was unfortunate not have the internet at her disposal. A quick google of his name or a scroll though his Facebook profile would probably have revealed much that Mr Townsend would rather have remained hidden. As we all know, careful selection of a mate is imperative for a solid financial underpinning of a relationship. Being on the same page is a must.

Unfortunately for her, however, the men proceed to play an almost cat and mouse game with absolutely no regard for her feelings and affections. As time goes on, Catherine develops a much clearer vision of what the two men are like and what she herself values in life.

  • From her point of view the great facts of her career were that Morris Townsend had trifled with her affection, and that her father had broken its spring. Nothing could ever alter these facts; they were always there, like her name, her age, her plain face. Nothing could ever undo the wrong or cure the pain that Morris had inflicted on her, and nothing could ever make her feel towards her father as she felt in her younger years.

In her later years, her father threatens to drastically reduce the money that he will leave her in his will unless she promises him that she will not ever marry Morris Townsend. However, Catherine has gained the wisdom to know that she will have ‘enough,’ (an extremely valuable part of becoming FI), and so she refuses to submit to his bullying and emotional blackmail. When, after he dies, she is advised to contest the will after she is left only 1/5th of her father’s estate, the rest being left to charities, she tranquilly replies that she:

  • “…like[s] it very well.

She, like all of us who are working to attain financial stability, has learned not to be swayed by others’ expectations and has attained a dignity and purpose in life that suits her. She could have been far wealthier, but she chose to remain true to her values instead of selling her soul to ‘The Man’.. in this case her father. She calmly told him that she wouldn’t tell him this, turned her back on his expectations and quietly went her own way, determined to live her life on her terms, just like someone who has amassed their “F U money’ and doesn’t have to put up with an untenable situation.

The novel and the movie end on two different images. The novel sees her settling into the parlour and picking up her embroidery after telling Morris he’s dreamin. (That’s a little ‘The Castle’ reference for the Aussies reading this.) The movie has her lighting a lamp and going up the staircase, away from Morris who is banging on the door. Her face gets steadily more resolute and serene as she rises.

Catherine has reached the stage of being a perfectly independent woman, sure of what she wants to do and how she wants to live, knowing that she has the means to live that way. She has attained self-knowledge and a quiet dignity because of this, which means that she will no longer be a plaything to be pushed around. The Man has no hold on her and she is free to do whatever she wishes. Her home is paid for, she has enough investments to live a comfortable life and her needs are few and easily paid for with the resources she has at her disposal.

Sounds like FI, doesn’t it?

 

 

 

Lessons from Literature 3: The Neapolitan Novels: The Story of a New Name.

The Neapolitan novels by Elena Ferrante are a series of 4 novels following the friendship between two girls in 1960’s – 70’s Naples. I’ve just finished the second novel and this passage stood out to me. This is when Elena visits Lila, her friend who married a wealthy (to them) shopkeeper when she was 16.

  • Maybe the wealth we wanted as children is this, I thought: not strongboxes full of diamonds and gold coins but a bathtub, to immerse yourself in every day, to eat bread, salami, prosciutto, to have a lot of space even in the bathroom, to have a telephone, a pantry and icebox full of food, a photograph in a silver frame on the sideboard that shows you in your wedding dress – to have this entire house, with the kitchen, the bedroom, the dining room, the two balconies, and the little room where I am studying, and where, even though Lila hasn’t said so, soon, when it comes, a baby will sleep.

Keep your expenses manageable and take pleasure in the small, everyday ‘luxuries’ and appreciate them. Sounds very ‘Mustachian’ to me!

Lessons from Literature 2: Sense and Sensibility

Ahhh, Jane Austen. What an amazing writer. One of the best days of my 2015 trip to Europe was when I went to her house in Chawton, which is now the Jane Austen Museum. It’s SO much better than the more famous one in Bath, as this place has so many of Jane’s own things. I blogged about it here.

‘Sense and Sensibility’ is the quintessential “A Man is not a Financial Plan” guidebook. None of the story would have happened if the second Mrs Dashwood had had her wits about her. In her youth, well before the novel begins, she married a widower, Mr Henry Dashwood, who already had a son from his previous marriage. Under the laws of his estate, the vast majority of the land, house and money legally have to go to the first son when Mr Dashwood dies. She will be left with virtually nothing.

Now, the second Mrs Dashwood has no visible means of supporting herself. She has no real education, no career path and no income of her own. But she blithely marries Mr Dashwood anyway because YOLO ain’t love grand,  spawns 3 daughters and then is perturbed to realise once she’s a widow that her husband, although he had years to get his financial affairs in order in order to provide for his daughters, had instead spent his money on a lavish lifestyle, keeping up with the Joneses and keeping a large stable full of expensive, Ferrari-like horses. Serenely expecting her stepson to do the right thing and cough up some of the money he inherited, she’s dismayed to discover that he has no such intention.

Consequently, she can’t financially support her daughters, (all of whom are equally untrained to forge a career path) and it’s only through the generosity of a distant cousin who offers them a cottage in the boondocks to live in that she’s even able to put a roof over her daughters’ heads.

She didn’t even have an emergency fund in place, let alone a share portfolio or a tidy sum tucked away in index funds. Talk about immediate gratification-type thinking coming back to bite you!

Listen to this passage, which describes Mrs Dashwood’s attitude when they move to their new rental:

  • “As to the house itself, to be sure,” said she, “it is too small for our family, but we will make ourselves tolerably comfortable for the present, as it is too late in the year for improvements. Perhaps in the spring, if I have plenty of money, and I daresay I shall, we may think about building. These parlours are both too small for such parties of our friends as I hope to see often collected here; and I have some thoughts of throwing the passage into one of them with perhaps a part of the other, and so leave the remainder of that other for an entrance; this, with a new drawing room which could easily be added, and a bedchamber and garret above, will make it into a very snug cottage. I could wish the stairs were handsome. But one must not expect everything, though I suppose it would be no difficult matter to widen them. “

She has clearly been watching too many home improvement shows. I’m surprised that a granite bench top and ensuites for all the bedchambers weren’t on the list as well. However, Austen is onto it. Look at what she says in the very next paragraph:

  • In the mean time, till all these alterations could be made from the savings of an income of five hundred a year by a woman who never saved in her life, they were wise enough to be contented with the house as it was…

By the end of the novel, Mrs Dashwood resigns herself to staying in the inadequately-sized cottage and her daughters are well-looked after. Phew! It all worked out well in the end but Mrs Dashwood had to go through a steep learning curve to be able to learn how to live within her means. Of course, once Elinor and Marianne were off her hands she only had Margaret to feed and house. I can tell you from experience that feeding one child is FAR cheaper than feeding 3 of them in their 20’s. They eat like horses. Mrs Dashwood’s grocery bills would have been through the roof before the girls moved out.

All of the trauma and heartache the girls go through in this novel could have been avoided if Mr and Mrs Dashwood had followed these few simple rules:

  1. Pay yourself first – take at least 10% of your income and tuck it away into investments.
  2. Don’t go into debt.
  3. Spend less than you earn.
  4. Have some splurge money, but don’t go crazy.
  5. Invest all that’s left.
  6. Don’t believe handsome young men who flirt with your daughters are always eligible husband material.

Austen isn’t usually thought of as a personal finance writer, but I believe she has many observations that still hold true today. Perhaps she should be looked on as the first FI writer?

 

 

Lessons from Literature #1 – Laura Ingalls Wilder biography.

I grew up reading the ‘Little House on the Prairie’ books by Laura Ingalls Wilder. I have a clear memory of sitting on the front porch when I was in grade 2, reading ‘Little House in the Big Woods’ and being enthralled. I worked my way through the list but got bored when she reached teenage years and I stopped reading them. Fortunately, I picked them up again once I reached high school and devoured the whole series all over again.

I have no idea how often I’ve read these books, but it would be a very large number. Last year my sister Kate scored me in the family Kris Kringle and she went with a friend to a bookshop to get something. Her friend is a reader and was suggesting this novel and that novel while Kate dithered, not knowing what  I’d like. Then she saw this biography of Laura Ingalls Wilder and said, “THIS is one Frogdancer will like!”

She was correct. I polished it off in two days. But something struck me as I was reading it. The lessons of personal finance hold true no matter which era you’re living in.

Debt was the scourge of Laura’s married life. It wasn’t until very late in her life that she and her husband, Almanzo, were financially secure. See these quotes from the book about their first farm, which they moved into at the end of ‘These Happy Golden Years’:

  • Before [Almanzo] owned a mowing machine, he had to pay threshers and hire workers to cut his hay and wheat. After selling 95 bushels of wheat and setting another 80 aside for seed, he had ” a little over $40 to live on for another year.” At a time when an unskilled labourer could expect to make over $400 a year, this was unsustainable.
  • Expecting their first child in December, the Wilders now found themselves in financial straits. Notes on the farm machinery were due, and they needed to buy coal for winter and seed for next year’s crop. It was at this moment that Almanzo revealed to his wife the debt on their new house: an additional five hundred dollars that she had not known about. That was a small fortune to them, worth over thirteen thousand dollars today. Laura was crushed by the news.

The danger of counting one’s chickens before they’re hatched is just as dangerous today as it was back then. Carrying too much debt puts people in an incredible risky place. The quote goes on to say:

  • The fact that her husband had kept this debt from her – he hadn’t wanted to bother her with it, he said – comes up again and again in Wilder’s drafts and letters. It affected her deeply, and for many years. It still rankled when she was writing her memoir, Pioneer Girl, in 1930: “I was to learn that we owed $500 on the house, which we were never able to pay until we sold the farm.” In her manuscript from several years later she was even more pointed, squarely placing the blame on her husband and saying that she had started to wonder” how much could she depend on Manly’s judgement.”

Money fights and money issues are supposed to be the biggest reasons people split up. Even though the Wilders stayed together, it’s obvious that this all put an enormous strain on their relationship.

Laura was 19 when all of this was going on. A few years later, her parents Charles and Caroline Ingalls had to make a decision.

  • …Charles Ingalls’ struggles with farming were over. In February 1892, he had sold the De Smet homestead for $1,200 and moved his family to town. The sale, however, dd not represent much of a gain; after the mortgage was subtracted from the total, he was left with $400. Like so many thousands of others, he had succeeded on paper, proving up and claiming the land. But he could not make a living as a farmer. For a man who preferred open, unpopulated spaces, it must have felt like defeat.

Decades later, their granddaughter wrote about them at this stage of their lives:

  • It may have seemed, Rose wrote later, that calamities had befallen the Ingalls at every turn, but she recalled them as sublimely content with their lot. “The truth is that they didn’t expect much in this world”, she wrote, “and they just shed thankfulness around them for what they had.”

Being content and thankful for what you have, instead of fruitlessly wishing for things that can never be, is key to living a happy life. By all means, strive for things that you want, but also notice and focus on the people and things around you. It makes you far happier, and also probably far nicer to be around!

When recessions/depressions hit, people go bananas:

  • “Ruin seems to be impending over all,” Henry Adams wrote at the beginning of the Panic of 1893…”If you owe money, pay it; if you are owed money, get it; if you can economise, do it; and if anyone can be induced to buy anything, sell it. Everyone is in a blue fit of terror and each individual thinks himself more ruined than his neighbour.”
  • He was thinking of his own social class, but no person in America would instinctively heed that counsel more closely than Laura Wilder. Over the coming years, struggling with the constraints of poverty, she would step by cautious step seize control of their circumstances. She would prove adept not merely at penny-pinching, but at finding ingenious ways to generate income, husband their minuscule resources, and protect their assets. As in the schoolyard, she would assume the role of leader, guiding the family on the long and taxing climb to security.

I love this quote. Anyone who’s been in the position of having to scrape together every penny and slowly haul the family out of the pit of poverty will find that this resonates. I’ve had my experience with it and I tip my hat to Laura and her grit and determination.

Forty years later, Laura had a similar economic situation to live through. The economy moves in cycles. This time, she showed that she had learned from her previous experiences.

  • “… the economic apocalypse was upon them. In the first week of 1933, [Laura] scraped together all the money she could find and paid off the outstanding balance on the federal farm loan on Rocky Ridge: $811.65c. This time, no matter what happened, she would not lose the farm. She was left with around $50 in cash.

I had a similar experience when I paid off our first house. I logged on one morning and realised I had $10 more in savings than I had owing on the mortgage. I knew we’d have a lean few months until I built my emergency fund back up again, but I couldn’t resist the siren call of being debt-free. Both Laura and I were looking for security for our families.

However, by 1939 the Wilders’ financial affairs had stabilised, thanks in no small part to Laura’s side hustle of writing the ‘Little House’ books.

  • While continuing to economise by writing on the backs of old letters and burning wood rather than running the furnace, [Laura] was finally achieving a sense of security. She told her daughter that she had escaped from the nightmare that once troubled her: “I haven’t gone alone down that long, dark road I used to dream of, for a long time,” she wrote. “The last time I saw it stretching ahead of me, I said in my dream,’ But I don’t have to go through those dark woods, I don’t have to go that way. ‘ And I turned away from it. We are living inside our income and I don’t have to worry about the bills.”

However, it wasn’t all fun and games. The Wilders had only one child, their daughter Rose. Over time, they fell into a bewildering financial spider’s web with loans and payments and counter-loans gradually sinking into a chaotic mess:

  • Earning a salary from the Red Cross and income as a freelancer, [Rose] made a commitment to her parents to furnish them with a payment of $500 a year, so they could retire from farm work… How badly they needed it is difficult to judge, in the absence of almost any records dealing with the Wilders’ finances. [Laura] was fifty-three, working at two paying jobs. Almanzo, with his disability, doubtless finding it increasingly arduous to plough, care for livestock and do the hundred other tasks involved in maintaining farm equipment, fields and fruit trees. Certainly they needed money, but they may not have required that much. Indeed, they pointed out to [Rose] that they had a comfortable home and plenty to eat.

I suppose it’s nice that her heart was in the right place. However, Rose’s money management skills were appallingly bad. She ranged from what seems like insane levels of expenditure when times were good to living like a pauper when the funds ran out. She’d send money to her parents, (often moaning bitterly about it in letters to friends, even though it was all her idea to do so), and then she’d borrow back money from her parents. By 1924:

  • By this point, the question of who was supporting whom was hopelessly entangled. It was becoming impossible for the Wilders or their daughter to extricate themselves, even if they wanted to.

I guess the lesson here is to not lend money to family, or go guarantor on loans. It can get very messy and can ruin what should be close family relationships. Don’t over-commit yourself financially to anything, no matter how generous you want to be. Unlike Rose, make sure your own financial house is in order before you try and help anyone else.

Thankfully, after a lifetime of struggle, both the Ingalls family and the Wilder family ended their lives in peace and security. ‘Prairie Fires’ by Caroline Fraser not only looks at Laura’s life, but Fraser broadens the focus by looking at the economic, social and political events that were happening at the time, and how all of this impacted Laura’s life. It’s a very interesting read, but it certainly makes me glad I was born here and now, and not back then. Life was a lot tougher!