Old School Money Tips That Stand the Test of Time
April 02, 2012“Are you in entertainment?” I asked the older gentleman next to me as we got news from the pilot we were in a “holding pattern.” The flight was from LAX to Salt Lake City with a stopover in Las Vegas. I was headed home to Utah but the gentleman sitting next to me was obviously going to get off in Vegas. He resembled a mix of Johnny Cash with his dark black hair and leather suit jacket with a black shirt and a cast member of the Godfather with the way he carried himself. In other words, I did not mess with him – no one did.
Turns out I wasn’t far off. He replied,” I get that a lot” as he explained that he was in the movie Casino (because of the people he knows) and then named a list of movies and people that I didn’t know. He was an Italian from the streets of New York, owned a boxing gym (provided photos of him with Ali and Liston as well as other celebrities) and made a fortune in construction in Las Vegas. Once he found out I was in financial education, he started sharing “old school” advice on life, love and money. Well, not really love but it sounds better than life and money. After being on this planet for over 50 years, I know when to talk and when to listen so listen I did.
I’ll share some of the money tips with you – the life ones, I’ll keep to myself. Here they are:
On business: “You don’t need a college degree to do well in business. I don’t have one and I have four guys working for me that do. Business is common sense. Learn about people and how to read them, be honest, and keep your word.”
My take: He has a point that a college degree isn’t for everyone. These days with the cost of tuition rising steadily and a reported $1 billion in student loan debt, going to college straight out of high school may not always make sense. A student may want to start in a career and work their way up or even start a business. Knowledge is a valuable commodity as well as ambition and drive. A college degree in no way guarantees success.
On retirement: “Start saving now.”
My take: I don’t think he realized how old I am. Good advice nonetheless.
On retirement (another thought): “No one is going to fund your retirement but you. Don’t count on anything but you.”
My take: This is a great philosophy to have and I have adopted it over the years in my former life with financial planning clients and now as a full-time financial educator. Plan your retirement without taking Social Security into account. Don’t count a company match in your contribution percentage to your retirement plan. If your company provides a match = gravy.
On material success: “You want true friends, not ones who want to keep up with the Joneses or whatever. Buy a house because you like it or a car because you enjoy it not because of any other reason. You’ll do well then.”
My take: Examining the motives behind where you spend money is important. You may be spending money on things that bring you no real value because you perceive they will. A financial planner friend of mine once bought a BMW thinking it would bring him prestige from perceived success. It worked against him when his clients, who were farmers, perceived him as “slick” instead of successful.
On important choices: “The choices you make as a young man shape your life. Make good choices in your 20’s and 30’s.”
My take: When we are young, we feel that we have time on our side but if we make good financial choices during our early working years, it reaps benefits later. My son who will be 24 this year, started saving 10% a year in his 401(k) (some of the things I tried to pound into his head stuck) and he will be grateful later when he has solid retirement savings.
Pay cash. “If you can’t afford it, don’t buy it. When I was a kid, I couldn’t afford shoes. I was on the street at age 12 and some New York “wise guys” took me in (he showed me the pictures right out of the Godfather movie). If my shoes had holes, I put a piece of cardboard inside. Now I have a closet full of shoes maybe because I couldn’t afford them as a kid. I paid cash for my house. If I can’t afford it, I save up and buy it or build it a piece at a time.”
My take: Since the mid 1940s, when the first credit card was introduced, our collective mentality has changed from “Can I afford this?” to “Can I make the payment?” It seems like a general philosophy of “cash only” is a good one overall. I am not a general contractor however so I couldn’t build a house with cash or barter nor could I have afforded to buy my Subaru Outback with cash. I’ll take my 3% auto loan any day. Overall, yes, stick with “if you can’t afford it, don’t buy it” and that would serve you well.
When the plane landed and my new friend got up to leave, he laughed and said, “I won’t charge you for this session.” Thinking back on his take on money as well as the other advice he gave me on life (from the boxing ring), whatever he decided to charge me would have been worth it. I can guarantee you though, no matter the payment, he would have only taken cash.