Today I was engaged in a weekly process most people called managing the budget, balancing the check book, monitoring the portfolio. In our house the process is called bankrupting. For as many years as I have been doing, on a regular basis, there will be less cash in the portfolio than forecasted or otherwise perceived. Panic ensues and general cry of "we're bankrupt!" ensues. Emotional trials and tribulations ensue for a time and then we somehow get back to normal.
Today's bankrupting was going awesomely until I learned that a EUR 600 gas bill wasn't paid, and that a unplanned 300 euro beauty treatment I had ordered for my wife also didn't get paid. Both were unexpected pains last month and know I was reliving them a second time. I didn't have a total freak-out per se, but let's just say I almost left my wife in tears, and certain parts of my breakfast ended up in random places in and around the general area of our kitchen.
To try and gain some perspective I’m reflecting upon what Warren G says it in his Tina Turner sampling "what's Love got to do with it". I think this pretty well describes the web of relationships for anybody who's working for "the man". The man being basically the corporate world, but essentially any organization where we deal with faceless bosses and a non-human entity which is the essential character of the limited liability business structure. When we work for the man it also has an impact on our relationship with friends and lovers, as we compete against each other for money and prove ourselves acceptable mates for breeding, providing and protecting. Here are some of the lines that stand out for me:
. . .
Ain't nothin' you can do to make it stop
'Cause money makes the world go 'round and the panties drop.
. . . .
You say you had love, I said you need to quit.
It's all about the dough, so what's love got to do with it?
. . .
If you's a true homey, you would wish me well,
Not plot to see a brother fell, jealous as hell.
. . .
It's all a shame, homies'd jack you for your grip.
Ain't no love involved, because it's all about the chips.
. . . .
Sign the dotted line, put 'em on the shelf.
Break 'em off some crumbs, keep the rest for yourself.
. . .
90% business, 10% show.
Ain't no love in this game, 'cause it's all about the dough.
My wife thinks this process is totally crazy, and that I am nuts. Of course she is partially right but not entirely. Let's face we all need money to live and in the modern world the issue is fraught with complexity more than ever. I even read in MTM recently that credit scores are the new zodiac as in "what’s your sign" has been replaced with "what's your credit score." I think it fair to say for the population at large personal finances are an emotional issue, and when it comes to joint personal finances, both parties often bring baggage with them.
In my case the baggage is the result of my standard of living vs. my future expectations. An algorithm that ended up producing a sizable debt load early in my career. Phase one of this scenario was when I graduated from college, and with the help of family connections got a solid entry level job on a trading desk and a top tier investment bank. I was pulling in a mid-five figure salary, which was respectable enough in the early 90s. I lied somewhat large, including a bachelor pad with 2 roommates on Park Avenue south. It was a duplex that spilled onto the roof. Great for summer roof parties. Weekend house in the Hamptons. Dinners out, lots of travel, and needless to say, other then minimum 401 k contributions zippo savings.
I had never actually contemplate my career prior to landing on wall street and had really only landed there because the other things I had contemplated - being and architect, joining the marines, becoming a ski instructor - either didn't pan out or didn't hold the long-term potential I was looking for. Finding myself on Wall Street, after an initial adjustment, started to look pretty damn good. The way it seemed, a 5 figure salary would quickly become six figure and progress into the 7 figure range, whereby one would easily have enough to live and put enough aside an then retire by the age of forty. In the worse case, one could top out in the mid 6 figure and schlep to the office until one reached 50. I could live with that.
But as good as Wall Street was treating me I also felt the struggle and the competition to stay ahead. The place where I worked I somehow felt I arrived at the tail end of the boom and that meant I was somehow last in line for a promotion. So I decided at the suggestion and advice of my father to go to business school. He helped me quite a bit and I networked through his connections, eventually getting accepted into NYU (despite a crap undergraduate GPA). He even offered to pay. But I, being stubborn, and wanting to be free of the purse strings, politely declined.
Not having any cash I borrowed the full tuition and living cost essentially borrowing about $100k in student loans. And of course if that wasn’t enough I could always break out the credit cards from time to time. Well, essentially time to time became breakfast lunch in dinner. I transforming from a wall street junior associate to a student my life style essentially transformed from a junior associate to a less junior associate, borrowing the month al they way. It was OK, when I graduated I would be making 6 figures and then mid six figure and the 7 figures. I was all cool.
The stress of the bankrupting process hit me as soon as I landed the 6 figure job which actually took me 18 months longer than expected due to a quasi volunteer program run by US Aid which enable me to get into the emerging market world. My initial excitement at making more money than ever was immediately dampened by the USD 1000 a monthly payment, and even worse the $27k of credit card dept, ugh. After 2 years of that job - as a result of the ruble cash, Asian contagion, and the bursting of the emerging market bubble - I was essentially back on the street. What did I have to show for it - nothing! Virtually no more savings than the living expenses required until I was ready to start my next job, wherever that would be. But my credit cards were paid off at least
And so the story goes. One professor from b-school always warned us that forecasting, whether it your salary or the company’s revenue is not like clicking an dragging on a spread sheet cell, watching things go from point a to point B in a nice straight line.
Well the story ended well. Because I explained to my wife that the bankrupting process should help us have information to make decisions. We immediately sat down and discussed our finances and all of a sudden learned that we did not need to pay a EUR 1800 tax bill from the rental income we received from an apartment we rent out. Good surprise cancels out bad surprises.
Further budget reveals a small if sound portfolio of stock and real estate, 7 months of living expenses for a rainy (which could come sooner rather the later in the current economic environment), money for the new grill, enough to finish of the kid room and the bathroom, winter and summer vacation covered, cloth shopping for me and my wife, and a little left over for a nice present for my wife.
Ain't nothin' you can do to make it stop
'Cause money makes the world go 'round and the panties drop.
Today's bankrupting was going awesomely until I learned that a EUR 600 gas bill wasn't paid, and that a unplanned 300 euro beauty treatment I had ordered for my wife also didn't get paid. Both were unexpected pains last month and know I was reliving them a second time. I didn't have a total freak-out per se, but let's just say I almost left my wife in tears, and certain parts of my breakfast ended up in random places in and around the general area of our kitchen.
To try and gain some perspective I’m reflecting upon what Warren G says it in his Tina Turner sampling "what's Love got to do with it". I think this pretty well describes the web of relationships for anybody who's working for "the man". The man being basically the corporate world, but essentially any organization where we deal with faceless bosses and a non-human entity which is the essential character of the limited liability business structure. When we work for the man it also has an impact on our relationship with friends and lovers, as we compete against each other for money and prove ourselves acceptable mates for breeding, providing and protecting. Here are some of the lines that stand out for me:
. . .
Ain't nothin' you can do to make it stop
'Cause money makes the world go 'round and the panties drop.
. . . .
You say you had love, I said you need to quit.
It's all about the dough, so what's love got to do with it?
. . .
If you's a true homey, you would wish me well,
Not plot to see a brother fell, jealous as hell.
. . .
It's all a shame, homies'd jack you for your grip.
Ain't no love involved, because it's all about the chips.
. . . .
Sign the dotted line, put 'em on the shelf.
Break 'em off some crumbs, keep the rest for yourself.
. . .
90% business, 10% show.
Ain't no love in this game, 'cause it's all about the dough.
My wife thinks this process is totally crazy, and that I am nuts. Of course she is partially right but not entirely. Let's face we all need money to live and in the modern world the issue is fraught with complexity more than ever. I even read in MTM recently that credit scores are the new zodiac as in "what’s your sign" has been replaced with "what's your credit score." I think it fair to say for the population at large personal finances are an emotional issue, and when it comes to joint personal finances, both parties often bring baggage with them.
In my case the baggage is the result of my standard of living vs. my future expectations. An algorithm that ended up producing a sizable debt load early in my career. Phase one of this scenario was when I graduated from college, and with the help of family connections got a solid entry level job on a trading desk and a top tier investment bank. I was pulling in a mid-five figure salary, which was respectable enough in the early 90s. I lied somewhat large, including a bachelor pad with 2 roommates on Park Avenue south. It was a duplex that spilled onto the roof. Great for summer roof parties. Weekend house in the Hamptons. Dinners out, lots of travel, and needless to say, other then minimum 401 k contributions zippo savings.
I had never actually contemplate my career prior to landing on wall street and had really only landed there because the other things I had contemplated - being and architect, joining the marines, becoming a ski instructor - either didn't pan out or didn't hold the long-term potential I was looking for. Finding myself on Wall Street, after an initial adjustment, started to look pretty damn good. The way it seemed, a 5 figure salary would quickly become six figure and progress into the 7 figure range, whereby one would easily have enough to live and put enough aside an then retire by the age of forty. In the worse case, one could top out in the mid 6 figure and schlep to the office until one reached 50. I could live with that.
But as good as Wall Street was treating me I also felt the struggle and the competition to stay ahead. The place where I worked I somehow felt I arrived at the tail end of the boom and that meant I was somehow last in line for a promotion. So I decided at the suggestion and advice of my father to go to business school. He helped me quite a bit and I networked through his connections, eventually getting accepted into NYU (despite a crap undergraduate GPA). He even offered to pay. But I, being stubborn, and wanting to be free of the purse strings, politely declined.
Not having any cash I borrowed the full tuition and living cost essentially borrowing about $100k in student loans. And of course if that wasn’t enough I could always break out the credit cards from time to time. Well, essentially time to time became breakfast lunch in dinner. I transforming from a wall street junior associate to a student my life style essentially transformed from a junior associate to a less junior associate, borrowing the month al they way. It was OK, when I graduated I would be making 6 figures and then mid six figure and the 7 figures. I was all cool.
The stress of the bankrupting process hit me as soon as I landed the 6 figure job which actually took me 18 months longer than expected due to a quasi volunteer program run by US Aid which enable me to get into the emerging market world. My initial excitement at making more money than ever was immediately dampened by the USD 1000 a monthly payment, and even worse the $27k of credit card dept, ugh. After 2 years of that job - as a result of the ruble cash, Asian contagion, and the bursting of the emerging market bubble - I was essentially back on the street. What did I have to show for it - nothing! Virtually no more savings than the living expenses required until I was ready to start my next job, wherever that would be. But my credit cards were paid off at least
And so the story goes. One professor from b-school always warned us that forecasting, whether it your salary or the company’s revenue is not like clicking an dragging on a spread sheet cell, watching things go from point a to point B in a nice straight line.
Well the story ended well. Because I explained to my wife that the bankrupting process should help us have information to make decisions. We immediately sat down and discussed our finances and all of a sudden learned that we did not need to pay a EUR 1800 tax bill from the rental income we received from an apartment we rent out. Good surprise cancels out bad surprises.
Further budget reveals a small if sound portfolio of stock and real estate, 7 months of living expenses for a rainy (which could come sooner rather the later in the current economic environment), money for the new grill, enough to finish of the kid room and the bathroom, winter and summer vacation covered, cloth shopping for me and my wife, and a little left over for a nice present for my wife.
Ain't nothin' you can do to make it stop
'Cause money makes the world go 'round and the panties drop.
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