I am what I am

By DAVID MOON, Moon Capital Management
January 9, 2005

There is an old country adage about the futility of trying to teach a pig to fly: it can't be done and it just irritates the pig. The advice is also relevant to how you interact with your money. It's taken me a while to figure this out, but some of the most miserable people are those who are trying to do something for which they aren't naturally suited. They are pigs trying to fly.

I have a client who is 70 years old and has accumulated several million dollars. He lives in a $120,000 house and drives a used car. His most extravagant expenditure is an occasional paperback book. He is a multi-millionaire, but lives like a poor man, because it is the only way he knows how to live. He would be miserable on a cruise or eating in an expensive restaurant. He shops at Dollar General. As a youngster, he learned to read and write at school. He learned social skills with his playmates. He developed habits, including the way he thinks about money, by watching his parents. It doesn't matter how much money he has, at his core he thinks poor.

Another man is in his early 30s. He makes enough money to live a nice lifestyle in Knoxville, but is constantly in debt and having problems with cash flow. He makes $100,000 a year; his wife has no income. He lives in a $500,000 house, which he was able to purchase because a family trust provided a substantial down payment. He drives a Mercedes; she a BMW. His suits are tailored. She has a closet full of fashionable shoes. The kids attend an expensive private school. They belong to the country club and wouldn't dream of quitting ' even though they have to borrow money to pay the property tax on their home.

Their problem isn't income, expenses or debt. They struggle because as kids they only learned how to be wealthy. As adults, however, they aren't wealthy, but they don't know how to live otherwise. But it is the only way they know how to act. Asking them to 'think middle class' is impossible.

The author, ee cummings, said that it takes courage to grow up and become the person you truly are. To do that, however, you have to know who that person is. To effectively and healthily deal with money, you have to figure out how you relate to financial issues. The yuppie couple living beyond their means is not necessarily doomed to a life of financial struggles. The miser in the first example doesn't have to continue to deprive himself. If they are going to change, however, it is going to have to be intentional. People don't make drastic changes in their lives by accident. If each person will realize why they treat money the way they do, they will be healthier, happier and more able to deal with one of the most intimate things in most people's lives.

David Moon is president of Moon Capital Management, a Knoxville-based investment management firm. This article originally appeared in the News Sentinel (Knoxville, TN).

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