Many of the comments on my pro-green stimulus blogs have rejected my support for a federal shot in the arm. Instead, some of my readers are calling for more saving, less spending and the reinstatement of financial discipline. While I disagree with these readers on the best course for U.S. economic policy, I am firmly in their camp on the matter of personal financial conduct.
Financial responsibility was ingrained in me by my father, Melvin Oliver Aronson, who died in 2008 at the age of 96. I'd like to share some of my dad's principles with you in this blog. They're good life lessons that were widely applied 50 or more years ago, but which have been largely discarded in the easy credit economy of recent decades. And these lessons are sustainable.
 |
First, some context. My father was born in 1911. His own father had immigrated to the U.S. penniless, and built two successful businesses: Boston Royal Petticoat and New England Panama Hat. My father's family was steeped in the value of hard work, and my dad took his early lessons in frugality to heart. For decades, his signature fashion item was the wearing of maroon socks of an especially horrid shade. He'd purchased a gross on sale at Boston's Jordan Marsh and was determined to wear them out (which he did), fashion be damned. My dad's favorite article of clothing was the pocket watch that he had inherited from his own father.
Many of my father's daily practices are part of the new green lexicon. My dad commuted to his office "in town" (downtown Boston) by streetcar. (Today, we'd call him transit-oriented.) He didn't like running air conditioning. (Today, he'd be a fan of passive heating and cooling strategies.) He turned off the lights when he left a room, and chided everyone to do the same. My dad didn't know that he was reducing carbon emissions, but in many ways he was green before his time.
Now to my dad's financial maxims:
• "Take care of your money, and your money will take care of you." Save. Invest. Diversify. What you don't spend now will take care of you later on. My dad would be horrified at the state of today's market, but he would also have cash reserves on hand.
• "Don't get on the wrong side of debt." Keep your borrowing to a minimum. Make sure that your current income is sufficient to repay your debts and to support savings. The more you limit your borrowing, the more you'll have to save.
• "Live off interest; never touch principal." Keep your capital base intact; don't spend all of your returns. Keep adding to your reserves (see "Take care of your money," above).
• "The world doesn't owe you a living." You have to earn your way. Study hard. Work hard. Be a contributing member of society. Take care of yourself.
But also remember:
• "You're not a walking vault." This one surprised me, but it was part of my dad's belief system. Temper your saving and investment behavior with judicious risk-taking. Spend on a few important things. A comfortable home for your family. Your children's education. Charity, especially gifts that honor the memory of your parents.
My dad's words have shaped my conduct, and have served me well. His advice on work, saving and spending -- once core values for American families and businesses -- has been largely overlooked in recent years. Recent events suggest that it is time to revive these traditional norms.
Of course, my dad and I disagreed on a number of things. He would back my readers who are horrified of the notion of a federal stimulus, green or of any other color. Those readers should appreciate this column, and I hope that others will, as well.
Leanne Tobias is founder and principal of Malachite LLC, an advisory firm that specializes in the development, leasing, management, financing and certification of sustainable or green real estate on a global basis. Write to Leanne about your thoughts on jumpstarting the economy at greenstimulus@malachitellc.com. She'll share the best ideas in future posts.
Subprime
Companies involved in sub-prime lending should have been allowed to fail.
Well managed banks would have bought up the loans of failing banks. That would have been the reward for sound management.
Instead, we reward greedy, incompetent bank executives with bailout money.
What does this say to honest companies and honest, hardworking people? Your better off being a crook and a Washington insider, taking risks with other people's money and letting the tax payers pick up your tab when you fail.
I find it quite funny that Obama can't find Democratic candidates for the top posts in his cabinet - because their hands are so dirty.
The only way to clean up Washington is to send less money to Washington.
Some people believe our government must have a solution to every problem. I believe we should reduce the size of our government and have it focus on key issues like border control, national security and a fair and impartial judicial system.
The purpose of the government is to protect our life and liberty, not try to solve every social issue.
Many of these problems can be solved at the local level without federal government meddling.
Instead, we vote for more and more money to be sent to Washington to be spent on corrupt policitians who are influenced by corrupt lobbyists.
At some point people have to decide enough is enough, and put pressure on the government to stop spending and reduce taxes instead.
Re: Interesting
Response from Leanne Tobias:
My father strongly believed that private investment was preferable to public investment and was decidedly not a fan of government intervention in the economy. So I think it safe to say that he would be skeptical of our political leaders and their handling of the economy. (As I've mentioned in my column, my dad and I differed considerably on matters of national economic policy.)
What is an equally or even more interesting question to ponder is whether my father would be disillusioned about the private sector's role in the current financial crisis. The folks who were leveraging their firms without restraint and underwriting subprime residential mortgages without adequate controls were also in violation of his maxims.
From what my father told me about his memories of the lead-up to the Depression, he would likely have been skeptical of much of the recent activity on Wall Street. He was a stockbroker and cautioned me when I was young never to short securities on margin-- another rule in his playbook that has proved relevant and accurate of late. Goodness knows what he would have thought of the derivatives market.
Interesting
I wonder what your father would be saying if he were alive today?
Would he approve of the way our political leaders are handling the economy?
Sometimes we lose our "institutional memory" of our forefathers.
Our parents and grandparents fought wars, communism and fascism to keep us free - whereas the young people today find romance in those ideas.
Good, Old-Fashioned Advice
Very interesting article, Leanne! Not only did I enjoy this article but I have been challenged of Melvin Aronson's financial maxims and belief system that I have to try and adopt to his wisdom and would advise the same to my fellow readers. This might be the advice we all need to take us through these tough times and be able to tell our children/grand children of the lessons learned in difficult financial situations.
I got an opportunity to take care of Mr. Aronson before the end of his life, and indeed agree to all Leanne has shared with us in her blog. Of course I for one at that time thought that Mel was too frugal, but as Leanne said I witnessed Mel's belief system especially in the last pointer that was very interesting "You're not a walking vault". Mel tempered his saving and investment behavior with judicious risk-taking. He spent on important things and lived a comfortable life, his money took care of his family and himself especially in his old age, and he educated his children and contributed to charity.