When people fantasize about cars, an American made 1972
shiny red Ford Pinto is not usually what comes to mind. It wasn’t what came to
my mind either when dreaming about my first vehicle, but that’s the one my
hardworking IBEW electrician father made me buy (mostly with my own savings)
when I received my license at 16 in 1978. It was sitting with a “For Sale” sign
at the Chuck Morris Standard Oil service station on the corner of Westwood and
National (next to Pronto Market…which became the 2nd Trader Joe’s
store) in West Los Angeles, and though I was horrified by the prospect of
driving a rig that came equipped with an exploding gas tank upon rear-end
impact, my dad liked the idea that the car had low miles, was in impeccable
shape and had been mechanically maintained by the fastidious crew-cut owner of
the old-school service station.
To be fair, I’m pretty sure we were unaware of the built-in
flare feature when we got the car. We purchased it for about $900 as I
recall (my dad chiseled Chuck down from $1200), and at the end-of-the-day (we
bought it in the afternoon), my dad felt confident that the car provided a very
good value.
I never really understood his odd emphasis on prudency. Like
most families in our Wonder Years neighborhood, it seemed to me we were living
well as my dad’s IBEW collectively bargained wages and unparalleled work ethic
blended well to provide us a what seemed to me like a very comfortable
existence. Other than our home, we never purchased anything on credit. He
finally broke the no-credit code and partially financed a brand-spanking new
Gold 1972 Oldsmobile Ninety Eight Regency (with black velour interior and 8-track
quadrophonic stereo) and I remember my mom telling me she didn’t sleep for a
week wondering how they’d ever manage the roughly $90 monthly payments over a
period of 3 full years. (They kept that car for at least 10 years…and passed it
down to me sometime in about 1983).
Even when I dropped out of UCLA to join the IBEW
apprenticeship and started making what seemed to me like big dough at the time,
my dad was always on my case to save at least some of the money. I remember one
time after telling him I’d dined at the famed West Hollywood restaurant Chasen’s
yet again, he grimaced and asked how many times I’d gone to the place (he only
ended up going twice in his entire life…once when they burned their mortgage
and again when I graduated from the apprenticeship), and I responded by saying
something like “I don’t know…five or six times.”
He asked how much dinner had cost (seems to me it was about
$70 or so), and suggested I try to take a little of my high-living money and
set it aside in a bank account. I remember laughing at the concept…telling him
(even pointing my finger at his face…not sure why I’m still alive) that he was
mired in the Depression and those “brother can you spare a dime” days were gone
forever. He encouraged me to take just $50 a month and put in the bank or
better yet…invest it in the stock market…but I laughed telling him that would
amount to only $600 bucks a year and that it would make no difference in my
life.
“But in ten years that will be $6,000,” he said… “with
interest…it will be more than double that (you could get double digit interest
in those days) and you’re going to need to have something for a rainy day.” But
at the wise old age of 18 I knew better, and certainly didn’t need my
conservative Depression era dad mapping out my already bright financial future.
Several years later I was riding with Uncle Donald (my Mom’s
older brother) in his beat up old Ford up Highway 75 just north of Breckenridge
Minnesota after a Sunday night fried Walleye supper at the Eagle’s Club. As we
rode along the farming countryside toward the town of Kent, Minnesota, my uncle
asked how much I had to “give” for petrol in Los Angeles.
I’d only been driving for a couple of years at that
point…and I didn’t have a clue how much I was paying for gas. “I don’t know” I
replied.
“What do you mean you don’t know?” he asked.
“I mean I don’t know” I shot back. “More importantly,
though, I don’t care. Gas is gas…what do I care whether it’s 55 cents a gallon
or 58 cents?”
“Well in Breck (short for Breckenridge) you can get
high-test for 49 cents at the Texeco station by Piggly Wiggly and at the Pro
Gold station in Kent you have to give 52 cents just for Ethyl.”
“So what” I shot back. “Who cares? Why do you even
care? You own farmland worth millions.”
“Well it isn’t worth millions...but how do you think I got
what I have?” he inquired.
“Not by worrying about what you pay for gas” I smartly
replied. “I wouldn’t drive across Wilshire Boulevard to save five
cents a gallon on gas, even if it was for super. You’re just like my dad…stuck
in the Depression. I just don’t understand why you think this nonsense over a
couple of pennies matters.”
“Well” he said, “if you ever had to stand in a bread line…it
would become instantly clear to you. Trust me…over the long haul…it matters…and
if you think things will always go smoothly, you need to know they can come
crashing down in a heartbeat. It’s wise to save for a rainy day.”
About ten years later I was walking along a meandering
trophy trout river in Alaska during a high-end corporate fly-fishing trip
(if you’re wondering why I was there…it’s a long story) with
a cat named James J. LaBlanc. He was the President of a New Orleans drug store
chain called K&B Drugs (think purple signs). He was the quintessential
self-made guy, who started at the Big Easy institution as a Pharmacist in the
70s before slowly working his way up the ladder to the chain’s very top spot.
As we made our way up the picturesque shoreline in this truly epic fishing
paradise on a perfect afternoon, I asked Jim if he’d be kind enough to pass
along some financial wisdom that might be helpful for a young guy like me. He
stopped and grinned, at which point I asked him what he smiling about.
“Well, first off” he said, “nobody’s ever asked me that
before and I’m kind of amazed that you just did.” Then, after smiling some
more, we had an exchange that went pretty close to the following…
“You know, just hearing you ask that makes me wish I’d
inquired in a similar way when I was about your age…but I never did. If I had,
and knowing what I know now, I’d have put my head down and worked. Then, I’d
have taken the most amount I could afford at the time and plopped it into
a mutual fund each month that mirrors the S&P 500. That would have allowed
me to dollar-cost-average my per share purchase price, and overtime, had I
stuck with it, I would have cleaned up.”
“But I can probably only afford to set aside a couple of
hundred bucks a month” I responded… “that won’t amount to anything.”
“Well, I’m guessing you can set aside more than you think.
For instance, how often do you eat out at restaurants?” he replied.
“Well, almost every night” I shot back.
“Skip it two nights a week and make a sandwich at home. Take
the extra money and set it aside in some index fund like Vangaurd 500 with a
low expense ratio, and always keep adding the new money. You will experience
the miracle of compound interest” he said with a smile… “It’s the new money
that makes the difference, and if you stick with it over time, it will change
your life. If you want to take it a step further…buy on the lows and pull some
money off the table when things seem too good to be true. You may want to think
about buying some dirt too…God ain’t making any more of it.”
“It just doesn’t seem like it will make much difference” I
responded.
“Oh but it will” he said with an even broader grin, “and had
I followed that very same advice when I was your age…I could have bought the
state of Alaska by now. “Besides,” he said, “it’s just smart to do…you never
know when you’ll have a rainy day.”
Shit. Shit. Shit. What’s with these successful people and
rain? When am I going to run into some well-to-do self-made man or woman that
advises me to spend discretionary money like a drunken sailor on new Cadillacs,
big screen TVs, fancy dinners at Bobby Van’s steakhouse and high-end bottles of
Silver Oak Cabernet?
About 15 (maybe 20) years ago I read a book called something
like “The Millionaire Next Door.” The premise of the paperback was that the
flashy young couple next door to you with the new Beamer, maid and gardener
that is mortgaged to the hilt often isn’t the one with the bread. It’s the
understated old cat standing across the street watering his lawn with the hose
in plaid pants, a windbreaker, and an old baseball cap with an even older Olds
Cutlass parked in the driveway that probably has the millions.
Even though I got a late start, thankfully I heeded a little
of Jim’s advice (still spend way too much trying to prove my Silver Oak theory). If I had only listened more to my dad and my Uncle Donald…I’d
be sleeping in today. Thanks to the American labor movement I am sleeping in
tomorrow though…and the next day too. Have a great weekend, and if you can, spend some time doing the things you enjoy with the people
that matter most to you. Nothing stays the same forever...so enjoy the sunny
days while you can.
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