life or debt 2010 - w. johnson, stacy

LIFE OR
DEBT 2010
LIFE OR
DEBT 2010
A New Path to Financial Freedom
STACY W. JOHNSON, CPA
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Copyright © 2010 by Stacy Johnson
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Library of Congress Cataloging-in-Publication Data
Johnson, Stacy.
Life or debt 2010 : a new path to financial freedom / by Stacy W. Johnson.
p. cm.

Rev. ed. of: Life or debt. 2002.
1. Finance, Personal. 2. Consumer credit. 3. Investments. I. Johnson,
Stacy. Life or debt. II. Title.
HG179.J558 2010
332.024—dc22
2009042467
ISBN 978-1-4391-6860-8
ISBN 978-1-4391-6861-5 (ebook)
Thanks!
While it’s true that we come into this world alone and leave it alone, practically
everything else we do of any significance involves the assistance, cooperation, and/or
indulgence of other people. That’s certainly true of this book. Much of what went into
Life or Debt came from my own thoughts and observations, but often I confirmed
those thoughts by talking to people who were experts at this stuff. That includes
myriad people who devote their lives to helping people overcome debt dilemmas, like
the fine folks at Consumer Credit Counseling Service and other such organizations.
You know who you are.
I also learned a lot from reading other books. One I quote directly and
acknowledge in Life or Debt is The Millionaire Next Door. But there are many other
books that directly or indirectly influenced me in less specific ways. One I’d like to
both mention and recommend that you read is Your Money or Your Life by Joe
Dominguez and Vicki Robin.
You wouldn’t be reading this right now if it weren’t for the untiring efforts of my
agent Liza Dawson and my good friend at Simon & Schuster Anthony Ziccardi.
When I first wrote Life or Debt nearly ten years ago, I dedicated it to my parents,
Stacy and Betty Johnson. They’re both in heaven now. So this time out, it’s dedicated
to all the people in my life who provide me with emotional support, make me laugh
out loud, and don’t let me take myself too seriously… no matter how hard I try. The
list is long, but it most certainly includes my fabulous girlfriend, Sara Steinman; my
sister Sue Davis; Angela Puckett and her boy Chris; my cousin Nancy; my coworkers

Dan Schomtuch and Jim Robinson; and my many pals, including Greg Wager, Lee
Karsh, and two of the most wonderful people on the planet, Fred and Jayne Shaffer.
Contents
Introduction
Will the Circle Be Unbroken?
1 My Story
2 Who Wants to Be a Millionaire?
3 Life or Debt
4 Seven Days to a New Attitude
5 Goal Setting
6 Stop Creating More Debt
7 Rank Your Debts for Payoff
8 Create Your Debt Destroyer
9 Destroy Your Debts
10 Convert Your Debt Destroyer into a Money Machine
11 205 Ways to Save
12 Repairing Your Credit
13 Getting Help
Conclusion
LIFE OR
DEBT 2010
Introduction:
Will the Circle Be Unbroken?
Giving money and power to government is like giving whiskey and car keys to
teenage boys.
—P. J. O’ROURKE
I really hesitate to start our relationship by bitching, but I can’t resist telling you this:
If you’d read this book back when I first wrote it nearly 10 years ago, we almost
certainly wouldn’t be meeting like this today. Because if you’d followed the simple
steps in this simple book back then, by now you’d have no debt whatsoever. You’d

have no credit card debt, no mortgage, and no car loan. And you’d almost certainly
have money in the bank as well—maybe a lot. You’d have little fear of losing your
job, because you wouldn’t be living paycheck to paycheck. In other words, you’d be
well along the path to financial freedom.
But I’m guessing that since you’re reading this now, odds are good it’s for the first
time. That’s fine. The techniques that worked back then will work just as well today!
And there’s never been a better time to start a new life, one that centers a lot more
around working toward your personal vision of happiness and a lot less around
working your butt off just to keep the bills paid.
But before we start talking about your personal situation, let’s first look at the
situation our nation finds itself in today. It’s important for a couple of reasons: First,
because our problems as a country have a hell of a lot to do with one of our problems
as individuals, namely, debt. Second, because I really feel like blowing off a little
steam about the ridiculous and completely preventable situation we’re currently in. Do
you mind?
As I write this in the summer of 2009, virtually every industrialized nation on the
planet is scrambling to recover from a near meltdown of the world economy. And
every day, in every form of media, people from professors to pundits to politicians
pontificate about causes and solutions. What’s ironic—and moronic, if you ask me—
is that the answer to both couldn’t be simpler and can be summed up with the same
word: debt.
In the summer of 2005 I was waiting at a traffic light and saw a sign on the side of
the road that said something like 1% MORTGAGES!!! along with a phone number. Since I
make my living doing consumer news stories and had a minute to kill, I called the
number, expecting to generate a story about yet another fraudulent business. But the
story I uncovered while sitting at that light wasn’t fraud, just lunacy. The person at the
other end of that number was a mortgage broker and he was offering mortgage loans
whose monthly payments didn’t cover the interest on the loan. In other words, this
broker was offering mortgages that would be charging a normal rate, which at the
time was around 7 percent. But instead of paying the 7 percent interest that was

accruing every month, you only had to send in 1 percent. The 6 percent you weren’t
paying would then be added to your mortgage balance. Which means that instead of
reducing your debt every month, you were increasing it. Now, that may not sound like
a big deal to you, but I was genuinely shocked. Shocked that any lender would ever
offer a deal like this and shocked that any borrower would consider accepting it. So I
asked this mortgage broker if he’d be willing to repeat all this on camera and he said
he’d love to.
True to his word, when I arrived at his office the next day, the mortgage broker
excitedly explained on camera that only an idiot wouldn’t want a mortgage that got
bigger every month. In fact, this guy was even trying to convince me that I should
take one out myself. The reason they made so much sense, he explained, was that
even though you owe more on your mortgage every month, the value of the house
you were financing with this idiotic loan was going up even more. Which begged
what I hope is now an obvious question: What happens if the house stops going up?
He looked at me like I was a complete simpleton and responded with something like
“This is South Florida. Everyone wants to live here. Houses will always go up.” And it
got even better. He went on to explain that not only did you not have to pay the full
interest; you didn’t even have to make a down payment for these loans. You didn’t
have to prove you had income sufficient to make the payments, or even have a job for
that matter, because these were no-documentation loans, known to mortgage brokers
everywhere as “no-docs.”
Last year, on my way to one of the many foreclosure stories I’ve done since then, I
stopped and did a standup in front of his vacant office.
You don’t need to watch “experts” on CNBC to understand the underpinnings of
the world’s current credit crisis. It’s not at all complicated. It happened because huge
lenders offered stupendously stupid loans to hoards of people who apparently
believed that trees grew to the sky. You can’t really blame the people who took out
these loans. After all, home prices were going up at a rapid clip. And since they had
no money of their own in the house, the worst that could happen to them was they’d
move back into the apartment they came from and have a black mark on their credit

history.
Having been around the block a time or two, I knew this would be the fate of many
of those borrowers: that they’d lose their home. But since that’s the risk they were
taking by borrowing money they couldn’t repay, I felt little sympathy for them and
none for the companies stupid enough to offer loans like that.
What I didn’t know back then was just how widespread this lunacy was—that
thousands of stupid loans like this were being sold to unsuspecting borrowers
nationwide by mortgage brokers who were at best salesmen and at worst con men.
And that those loans were being bundled up by the billions and sold to blue-chip
businesses, even governments, all over the world. In short, I didn’t realize the extent
of the lunacy. Otherwise I most certainly would have sold my house back then before
the housing market crashed, and it was worth about twice what it is now.
In any case, thus began the snowball that turned into the foreclosure avalanche
now burying pretty much everyone: the lenders who underwrote these stupid loans,
the myriad people all over the world who invested in them, and of course you, me,
and everyone else who either owns a home, has a job, or pays income taxes.
The direct cost of this little adventure is now more than two trillion dollars. And
that’s just the price in the money our government is currently printing in an attempt to
prop up the economy and the banking system. The indirect cost is much, much
higher. Many of the companies that either made or invested heavily in these stupid
loans are no longer companies, having either failed entirely (Lehman Brothers), been
swallowed up by healthier companies (Countrywide, Wachovia, Bear Stearns, Merrill
Lynch, etc., etc.), or been taken over by the American taxpayer (AIG). And all that
failure has cost the livelihoods of many of the people who worked at these
companies, as well as the life savings of people who invested in their stocks. Because
of the resulting recession, 14 million Americans are now out of work. Virtually
everyone who owns a house has seen its value decline, many to the point where their
mortgage is greater than the value of their home.
Of course, not everyone has suffered to the same degree. Some have actually
benefited. For example, bankruptcy lawyers and credit counselors are staying busy.

And the people ultimately responsible for all these problem loans, the CEOs and other
high-level employees of the companies behind this mess, were already rich. So while
they may not make their milliondollar bonuses this year, unlike so many other
Americans, they won’t be facing foreclosure.
What makes this sad tale even more pathetic is that the government only has one
way to reverse the crushing crisis brought on by debt. That solution? Why, more debt,
of course! You’ve seen the stories: The government has poured billions into “getting
the banks lending again.” That’s what’s behind programs like TARP (Troubled Asset
Relief Program), TALF (Term Asset-Backed Securities Loan Facility), and “Cash for
Clunkers.” All these multi-billion dollar programs are about making it easier for us to
borrow money. Because the only way to get out of a recession and put people back to
work is for all of us to head to the mall, car dealer, and newest subdivision. And if we
don’t have any money, the only way we can buy is to borrow. So the government is
doing all it can to make the prospect of borrowing irresistible by offering incentives to
buy things (Cash for Clunkers) and houses (credit for first-time home buyers), and
lowering rates to as close to zero as they can get them. They’re begging us to borrow
to the hilt… which is, of course, precisely what got us into this mess in the first place.
And Uncle Sam is leading the way by borrowing himself. As I write this, the total debt
of the United States is more than 11 trillion dollars. That’s enough money to pave the
interstate highway system in 23-karat gold. Enough to build more than 16 million
Habitat for Humanity houses. Enough to double the size of every police force in the
United States for 32 years. It’s close to $40,000 for every soul in our country. And one
day it’s all going to have to be repaid.
But if the government had simply spent a mere billion or so ten years ago and
bought everyone in America a copy of my first book on this topic, they could have
saved the trillions they’re spending now, because odds are good that none of this
would have happened. After reading this book, you won’t begin to think of taking out
a mortgage loan that gets bigger every month. You won’t want more house than you
need or can afford. You won’t follow the herd and borrow to buy silly stuff you
neither need nor genuinely want.

But I digress: back to our nation’s current mess. While our circumstances today are
historic in size and scope, they’re not unprecedented. We’ve been on this ride before,
and we’ll be on it again. Because capitalism, while a wonderful thing, comes with
unpleasant side effects. And one of those side effects is cycles of boom and bust, of
regulation and deregulation, of misery and prosperity. It’s a circle that’s been
unbroken for hundreds of years, and since it affects your financial well-being, it’s
worth understanding.
My parents were part of what is now called “the Greatest Generation,” a moniker
they definitely earned by surviving both World War II and the Great Depression. The
late 1920s brought a huge stock market bubble, not unlike the housing bubble we just
went through. And it was followed by the Great Depression. In the 1930s,
unemployment approached 25 percent, more than twice what it is now, and there were
no unemployment checks. The stock market declined 80 percent. When banks failed,
and hundreds did, there was no FDIC to insure deposits, you simply lost your money.
So if you think it’s tough these days, imagine what that was like. But there was a silver
lining to that dark cloud: The Greatest Generation became tough. They learned that
life isn’t fair. They learned that even if you work hard and play fair, you can still lose
it all when the fat cats put their paws in the wrong place. They learned that their only
protection was to save a dime every time they earned a dollar and not to trust their
employer or their government for their financial security. They saw firsthand what
happens when good loans go bad, so they learned to borrow only in extraordinary
circumstances.
They also got behind legislation that changed the financial system so it would be
tilted more to the benefit of the have-nots. They created Social Security, a means to
help people when they become too old or sick to work. They created the FDIC, which
guarantees that nobody would lose money in a bank failure again, at least within the
insured limits. They created unemployment insurance at both the federal and state
levels. They passed laws to keep banks and brokerage firms separate so Wall Street
bankers couldn’t victimize people by manipulating markets or getting too big to be
effectively regulated. They passed laws making it easier to form unions, so that

members could ask for and receive pensions, health care, decent wages, job security,
and safe working conditions. They passed laws that said if you went to war for Uncle
Sam, you’d get a free education, and if you got wounded, you’d be taken care of for
life. And as the twentieth century progressed, they added health care for the elderly
and poor in the form of Medicare and Medicaid.
In short, the Greatest Generation harnessed their collective power and changed the
United States in major ways in an attempt to ensure that a tragedy like the Great
Depression couldn’t devastate their children the way it had devastated them.
Fast-forward to today. While we’re not back to the days of the Great Depression,
when it was basically every man for himself, we’ve definitely taken a big step
backward from the security my parents had and the security they tried to leave for me.
When I was 17 back in 1973, the main thing that kept you out of college was bad
grades. These days a bigger problem is graduating with $100,000 in debt. When I was
a kid, one worker earning the minimum wage could actually keep an entire family
alive; that’s where it got the name “minimum wage.” Now, two adults earning that
wage together would have a hell of a time surviving. Good employer-paid health
insurance was ubiquitous 50 years ago. Now people are actually switching careers or
staying in jobs they hate because they’re justifiably afraid of joining the one in six
Americans who have no coverage at all. Virtually every employer used to offer a
pension plan: Now you’re supposed to fund your own retirement with a 401(k), and
more and more employers aren’t even providing a matching contribution. Today,
unemployment won’t even cover the rent, and the only way you might retire
comfortably on Social Security is if you’re planning to retire to a cardboard box. The
GI Bill no longer pays for a full education at the college of your choice, and the Army
has recently been accused of dishonorably discharging soldiers rather than paying for
the care of their stress-related ailments. There’s no such thing as job security: how
could there be when what was the largest company in the world, General Motors, filed
bankruptcy? And the regulations and oversight that were designed to keep Wall Street
from screwing Main Street have become so watered down over the decades that we
very nearly had Great Depression II.

So in many ways we’ve come full circle, close to the place we were 80 years ago.
Sure, the government’s talking about reinstating regulatory oversight and offering
health care to all. And we’re still not looking at busted banks and 25 percent
unemployment. But the truth is that no matter what anyone in Washington is saying,
the security my parents helped create and the baby boomers counted on no longer
exists and is unlikely to return. The reality being faced by young people today is more
like that of the Greatest Generation. The circle is unbroken.
So if you’re in your forties or fifties, don’t sit around waiting for things to return to
“normal.” Because the world created by the Greatest Generation wasn’t the norm, it
was the exception. Normal is the world they faced and the one we face today: where
even when you’re playing by the rules, you can lose. Where a group of CEOs who
wouldn’t think of inviting you to their country club can cost you your job, make your
house worth less than you paid for it, and trash the only retirement plan you have.
So how do you deal with this new reality? Stop whining and start acting. And the
actions I’ll suggest are the same as those that worked for the Greatest Generation.
Trust nobody—not the boss and especially not the government—with your physical,
financial, spiritual, or emotional well-being. Create your own version of joy by
carefully considering the relationship, or lack thereof, between material possessions
and happiness. And create your own version of financial freedom by living below
your means.
That’s what this book is about: finding freedom, both financial and spiritual. I want
you to have the freedom to quit your job and become self-employed. The freedom to
retire early and travel the world. The freedom to make a positive impact in the world
by offering your time and money to the people and causes that deserve it. To sum it
up, the freedom to pursue happiness, a right guaranteed to all of us by one of the
greatest documents ever written, the American Constitution.
An d Life or Debt is more than just this book. It’s also an online community
designed for people just like you. It’s a place to download some of the forms you’ll
find in this book, share stories, thoughts, and tips with other people in your situation,
and learn new stuff that can help you stay on track. I’m often online there doing live

webcasts, talking to people, and having fun. So stop by lifeordebt.org before, during,
or after you read this book and say hello! And if Twitter’s your thing, I’m
@MoneyTalksNews.
1
My Story
Anyone who lives within their means suffers from a lack of imagination.
—OSCAR WILDE
This chapter is about me and my life. It’s not necessary for you to know anything
about me at all for this plan to work for you, so if you want to skip this part of the
book, feel free. But I think it kinda makes sense for you to know the person you’re
getting advice from, so here’s the abbreviated version of how I came to be writing
Life or Debt.
Ever notice how practically all self-help or motivational books start out with the
author revealing some sort of emotional catharsis that suddenly caused them to see the
light? You know, stuff like “There I was, forty-five years old, living on the street, and
eating from a Dumpster, when suddenly inspiration struck like a divine lightning bolt!
All I had to do was follow the seven magic steps and I’d become rich beyond my
wildest expectations! And sure enough, it’s happened! Now I have a mansion in
Malibu, fly my own helicopter, and party at the Playboy Mansion!” What the author
often leaves out, of course, is how much of their newfound wealth comes from
following the seven magic steps and how much comes from selling their books and
DVDs on infomercials and home shopping channels.
Here’s the first of many embarrassing admissions I’ll make: While I have certainly
made my share of stupid mistakes, I’ve never been poor, gone bankrupt, or had a
sudden revelation that laid the “true path” to fame and fortune at my feet. Nor am I
rich now, at least not in the beach-house-in-Malibu sense. And while I hope that I
make money from this book (and get invited to the Playboy Mansion, for that matter),
it’s not really that big a deal to me one way or the other. Why? Because my life is just
fine exactly the way it is. I’m doing precisely what I want to do, and what I make
doing it is fine by me.

But that isn’t how my life has always been. As you’ll soon discover, there was a
time, and not so long ago, that I forgot who I was and what I wanted out of life.
Here’s how I came to be your humble narrator:
In 1973 I was 17 years old. For those of you who weren’t alive at that time, trust
me, it was an interesting time to be in America. By ’73, the hippie message of love,
peace, and togetherness may have been fading, but you couldn’t tell it by talking to
me. And another aspect of the love generation that I could especially relate to was the
wholesale rejection of all things material. The idea of sharing with your brothers and
sisters, i.e., everyone younger than 30, and thereby avoiding the traps that lurked in
money, property, and politics seemed both reasonable and realistic. But I wanted to
try it for myself. So promptly after graduating from high school, I left my middle-
class home in Atlanta and hitchhiked across the country. My goal was to forget how
my parents and society had taught me to view the world and instead to live life the
way it was meant to be lived: with no obligations and plenty of adventure. And this
wasn’t a summer vacation we’re talking about here. This was going to be my life. So,
for several months, that’s what I did. I experienced the ultimate in freedom. I went
where I wanted, did what I wanted, and stayed as long as I wanted. For most of that
time, I didn’t have two nickels to rub together. I survived mostly by doing day labor,
stuff like furniture delivery or unloading boxcars. Always something different, which
was cool because I got to learn how to do lots of different things and had the
opportunity to meet lots of different people. Then, when I’d satisfied my curiosity and
earned enough to meet my meager needs, I moved on. My ultimate goal was to reach
the mecca of my generation: San Francisco and Haight-Ashbury. That was the capital
of this brave new nation where society was being reinvented, where free love and
flower power were going to replace greed and war. When I pictured my future, I saw
myself pitching in at a commune or homesteading in Alaska. Naïve? Of course, but
hey, this is my story. So stop laughing and listen.
You can probably guess what happened during the course of my personal path to
spiritual enlightenment. It didn’t take long to figure out the love and peace movement
was either nonexistent or so far underground I couldn’t dig it up. What I did find a lot

of, however, were pedophiles, con artists, and common crooks. That’s not to say I
never found genuine, kind, caring people. I did. But by the time I reached San
Francisco, I understood that flower power was an idea whose time had either come
and gone or had existed more in song than in real, day-to-day life. And I also had
firsthand experience that many of the people living on the streets weren’t poets and
adventurers who had rejected the possession-obsession society; they were people who
were rejected by that society and had no place else to go. So while I valued my
experiences, I realized that this was not the life I wanted to lead.
After returning to Atlanta, my life soon began to resemble those of my more
traditional contemporaries. I went away to college. And since the freedom of the road
hadn’t lived up to my lofty expectations, I thought I’d try a more old-fashioned way
of finding freedom: tons of money! My dreams of homesteading in Alaska were
gradually replaced with visions of yachts, mansions, and Playboy bunnies. Seem like
a major about-face? I guess it was. But considering my newfound cynicism about the
hippie movement, and taking into account that virtually every mass-media, peer, and
parental message I ever received was all about acquiring money, the speed of my
transformation is not that surprising.
I started college intending to major in philosophy, but by my junior year I had
decided that accounting would take me where I wanted to go a lot faster. In retrospect,
I believe the reason I chose that particular degree went back to a casual dinner
conversation I’d had with my father years before. I must have been about 12 or 13
years old. While talking about one of his old friends who was a CPA, he had casually
mentioned that CPAs were never out of work and always made a good living. So
there you have it! Security, money, and parental approval, all rolled into one. In any
case, I graduated in 1977 with a degree in accounting, cut my hair, and took a job with
the state of Arizona as an auditor.
Unfortunately, there was an integral part of accounting that my dad had forgotten to
mention to me at that dinner years before. Namely, an accountant has to go to work
and actually do accounting for eight hours a day, five days a week. While for some
people this may be an exciting and rewarding way to occupy their working lives, for

me it was like watching paint dry. Still, another thing my dad had taught me was that
work wasn’t supposed to be fun (“That’s why they call it work!”). So I did it for a
few years, picking up my CPA certificate along the way and trying to ignore the
narcolepsy that had become a prominent feature of my working life.
By 1981, I had been an accountant for a few years and had come to the conclusion
that I’d rather chop off my own foot with a dull ax than do it for a minute longer. In
other words, my despair at being an accountant finally outweighed my fear of being
unemployed. And besides, I had another idea that would further my ambition to
become obscenely wealthy a lot faster. In the office building where I worked, there
was a big EF Hutton office. And it looked really cool. A giant open space filled with
desks and people, and a stock ticker dancing across the front of the room. There was
even a place for spectators! Can you imagine an office job so interesting that people
actually stopped to watch? You could practically feel the excitement just walking by
the place. Bye-bye, crummy salary! Bye-bye, narcolepsy! And it went without saying
that these guys would hire me. After all, investing in stocks was all about analyzing
companies, and who could do that better than a CPA?
I’ll never forget my first interview with the manager of EF Hutton. He peered at my
completed application like it included a lengthy prison record. This was confusing.
After all, I was a CPA! A master of numbers and financial analysis! Imagine my
confusion when he looked up from my résumé and said, “I’d much rather have a
used-car salesman sitting across the desk from me right now than a CPA.” I was
stunned. Potentially doomed by too much education and too little sales experience!
But fortunately all the news wasn’t bad. Because despite the embarrassingly
inappropriate education and professional credentials I was saddled with, I was able to
convince my tormentor that I did possess the one personality trait necessary to the
success of any stockbroker: I was desperately greedy. He told me that after a few years
of hard work (which, as he explained, actually entailed doing nothing more than using
the telephone to unmercifully harass 60 or 70 innocent people every day), I could
expect to make $50,000 a year, maybe more. And that was just about all the money in
the world to me, since I was only making $18,000 at the time. I told him that there was

nothing short of murder that I wouldn’t do to make $50,000. And, despite the fact that
I had drawn the line at capital crime (probably a mistake in retrospect), he decided
that I at least warranted a test to see if I could actually sell. I passed and was
subsequently hired, trained, and licensed in stocks, mutual funds, commodities, and
life insurance.
In many ways, being a stockbroker was exactly what I had hoped. It was exciting,
especially compared with auditing school districts. And my manager hadn’t been
exaggerating about the money either, probably because I had stumbled into the stock
brokerage business with nearly perfect timing. When I started my career in 1981, the
Dow Jones Industrial Average was around 800. And interest rates on risk-free money-
market accounts were around 15 percent, so pretty much nobody wanted to invest in
stocks. But in 1982, rates started to plummet and the stock market began what turned
out to be one of the greatest bull markets of the century. And this rising tide floated all
boats, including mine. Less than three years after being hired, I was indeed making
$50,000 a year. As I closed in on my thirtieth birthday, I was working 90 hours a week
but my income had grown to more than $100,000 a year. Not exactly rich, but I was
certainly a success, especially when I compared myself to my parents and the friends
I’d grown up with. And like many people who find themselves making big money, I
honestly believed that I deserved it. After all, I was making a lot of money for my
clients, wasn’t I? And I was certainly making a lot of money for my employer.
Therefore I must have been smart, and therefore deserving.
So since my hitchhiking days of all freedom and no money, the pendulum had
gone all the way to the other extreme. The children of the 1960s are known
historically as the “love generation” and the children of the 1980s are often called the
“greed generation.” For me at least, both labels fit like a glove. The sixties’ altruism
and idealism were distant memories as the eighties marched on and my income
continued to rise.
Now I was making money, which I had exchanged for free time. But that was cool,
because I enjoyed my job. In fact, let’s be honest: I didn’t just enjoy my job, I was my
job. And my job was money. I made it, I borrowed it, I invested it, and I blew it. Just

as I had in my hitchhiking youth, I took my cue from my peers, only this time the
message was different. If you’ve got it, flaunt it! You can’t take it with you! So I
bought the big house with the pool, a few convertibles, and some rental property, and
of course did a lot of investing and outright gambling in the stock market. I had debt,
but it was a small fraction of my income, so it didn’t matter. What did matter was that
I was a big deal, and nobody would know it if I didn’t look like one, act like one,
dress like one, travel like one, and party like one.
I haven’t been a stockbroker now for nearly 20 years, so I can’t say what happens
in that business these days. But I can tell you what it was like in the 1980s, and in
many ways the picture isn’t pretty. Stockbrokers were measured almost entirely by
how much money they made for themselves and for the company. Money made for
customers was incidental. Of course, the management of these companies would
surely take exception to that remark, probably bleating something like, “That’s a lie!
Of course our clients are important! If we don’t make money for them, we won’t keep
them, and therefore we are compelled to do right by them!” While that argument may
be logical, the fact remains that where I worked, every morning the previous day’s
commission tally was displayed on a clipboard outside the manager’s office so you
could see not only how much you had made, but how much everyone else had made
as well. Client profits, losses, and satisfaction were never displayed. Brokers
generating the most commissions got the biggest offices, were held up as examples at
sales meetings, and won luxury cruises. Those who didn’t generate much in the way
of commissions, regardless of what they did for their clients, were relegated to the
small cubicles that made up the “bull pen” and in many cases were ultimately fired. To
my knowledge, nobody was ever retained for treating customers well. At the same
time, brokers who I absolutely, positively knew to be unethical were being heaped
with recognition. While the argument that treating customers well is necessary to
survive may sound logical, the truth is that replacing the customer was easier than
replacing their poorly invested money. That’s not to say that brokers, even unethical
ones, would deliberately hurt people; after all, the more money your customer makes,
the more you have to manage. But salespeople are by nature competitive, and

recognition in the investment game is about commissions, not client profits. Of
course, I didn’t see that back then, at least not for the first few years. It took a long
time, and some painful experiences, for me to learn this simple lesson.
Nineteen eighty-five was a banner year for me. That was the year I met my first
wife and landed what’s known in the sales business as “a whale.” Soon these two
seemingly unrelated events would combine to make my life a lot more interesting.
First the whale. The giant account that I landed was one of the largest Indian tribes
in the state. It took me four years of on-and-off prospecting to land this Moby Dick,
but the effort was well worth it. There was only one problem. At the very end of the
last meeting before signing up my new client, the tribe’s investment representative
casually mentioned that I would have to pay him money under the table to get their
business. While I knew this to be illegal, I agreed to do it. Why? Why do you think?
Greed, of course! Although I was already making good money, I wanted more. And I
wanted to be recognized as the best, which in my line of work translated simply as the
best paid. Plus, although paying kickbacks was technically illegal, I didn’t have to
violate my personal ethics since it wasn’t hurting the tribe. I was merely choosing to
share money I was legitimately making with my client’s employee. Or at least, that’s
how I rationalized it. But just to make sure, I asked my future bride what she thought.
Of course, since she was every bit as greedy as I was (if that’s possible), she agreed
that the risk was well worth the reward.
For a couple of years, things went well with my new client and my new wife. I put
the Indian tribe into good investments. They made money, my tribal contact made
money, and of course I made money. Better yet, there was never a problem spending
all this new money, because my wife went through it like a hot knife through butter.
Alas, neither relationship was destined to last. By 1987, I was separated from both
my wife and the Indians’ money. Both relationships ended by mutual consent, but
both were still painful, and both would come back to haunt me. In the meantime, for a
little salt in the wound, in October of that year the stock market crashed. About the
only good thing that happened to me in 1987 was that I expanded into TV
broadcasting. I was invited to do ongoing investment commentary during the morning

news on a local television station, probably due to interest surrounding the stock
market after Black Monday. It was a nonpaying job at first, but one that enhanced my
visibility and credibility in the community—always a good thing for any salesman.
For some time things went pretty well. I was single for a while, then met my
second wife in 1990. Also in 1990, my success as a stockbroker and visibility on the
news helped land me a job managing the local office for Prudential Securities. I had
met the right girl, I was a genuine vice president of a major brokerage house, and my
earnings were now in excess of $200,000 a year. More important, I had also started
maturing when it came to both money and ethical behavior.
About the time that I became a manager, I had finally begun to realize that showing
off by driving the fanciest car and living in the fanciest house weren’t all that
important. In retrospect, perhaps I had an intuition that it was time to start preparing
myself for a new life. Maybe it was because my subconscious was telling me that the
inevitable collision between my personal ethics and the brokerage business was about
to cut short my career. Maybe it was my conscious mind that told me that taking care
of all this stuff I had collected was stressing me out and making me miserable.
Looking back, I honestly don’t know what changed me. But I do know that instead of
expanding my lifestyle, I started selling off stuff and using my money to pay off debts
and build up savings.
After 10 or so years as a stockbroker, I was beginning to have a hard time looking
at myself in the mirror. It wasn’t because I had ripped people off or anything. Even at
my most greedy, I had always acted in a way that I honestly believed to be in my
clients’ best interests. Of course, the stock market itself, along with the stupid
investment products pushed by the firms I worked for, had often overcome my good
intentions, but I had done my best. The problem was that it was becoming
increasingly apparent that the financial services industry stank to high heaven. I won’t
go into more specifics than I already have; this is my story, not theirs, and besides,
that’s a whole book by itself. Suffice it to say that a simple fact that should always
have been obvious to me now became unavoidable: The investment business cares a
lot more for its own bottom line than it does for its clients’. I was really starting to feel

unable to carry on. My own greed, along with a healthy dose of ignorance, had
allowed me to overlook that problem more often than not for years, but it just wasn’t
enough anymore.
As it happened, fate intervened and removed me forever from the brokerage
business. Which is a good thing, because I honestly don’t believe I would’ve had the
courage to quit such a lucrative job, and I was rapidly approaching the same misery
level I had achieved as an accountant.
Here’s what happened. Remember my former wife? Well, it turned out that when
we were officially divorced in 1988, she had decided to perform her civic duty and
reveal to the world the seamy underbelly of my relationship with my Indian tribe
client. So she simply picked up the phone and reported me to the authorities. And
while the wheels of justice had been grinding exceedingly slowly, since 1988 they had
been grinding all the same.
So, in 1990, years after my relationship with the Indians had ended, yours truly
found himself in very hot water indeed. While I looked at my offense as basically
victimless, turns out Uncle Sam didn’t share my view at all. In exchange for my
cooperation in the investigation of tribal corruption, I was never charged with a crime.
But that didn’t prevent both of my employers, the TV station I was on and the stock
brokerage firm, from promptly firing me. And since my license was suspended, I was
not only unemployed, I was unemployable. Kind of ironic, don’t you think? Here I
was having a mental dilemma about the morality of the financial services industry,
and just like that, it was I who was marked as a person too immoral with whom to
share office space.
So I found myself at a turning point in my life. (Of course, at the time I didn’t see
it as a turning point; I saw it as a disaster of epic proportions. But viewed in life’s
rearview mirror, a turning point is exactly what it was.) Doors had been closed to me.
What door was I going to open next?
I thought long and hard about what I had done up to then with my life. I had
started with the idealism typical of youth, then abruptly done the opposite and focused
only on myself and my needs. It was time to find a new path.

What I decided to do was start over, only this time to do it the right way. The
“right” way is a choice as unique as each of us, but for me it was to do something that
I enjoyed that was also worthwhile. Something that I could feel good about, have fun
at, and still get paid for. Which for me meant doing TV. I loved telling the truth about
money to people who appreciated hearing it, rather than forcing some financial
product down the throats of unsuspecting people trying to eat dinner. And, since
giving good, honest advice obviously has value, sooner or later someone would write
me a check for it. Plus, I was eminently qualified, having collected a slew of
credentials and spent my entire adult life in the business of money.
So at the age of 35, I started my life over. I went out and started selling television
stations my very own news product: “Money Talks.” I could take this risk because I
had reined in my spending, had pretty much paid off my debts, and had money in the
bank. And 20 years later, I’m still doing it. I’m on the air in more than 80 cities, as
well as on major websites. I tell the truth, live beneath my means, and am a much,
much happier person.
It’s too early to tell whether you’re going to get anything valuable from this book.
But I can promise you this: You wouldn’t be reading it in the first place if I had lost
my job with lots of debt and no savings. Fact is, if I hadn’t started marching to my
own drummer and had instead continued to follow my peers by living up to my
spending and borrowing capacity, I wouldn’t have had the time or the money to even
think about what my destiny was, much less been able to move toward it when I was
separated from my job. And while I hope that you’re never forced to start over like I
was—especially due to your own mistakes—I do hope that you’ll have the ability to.
Maybe you’ve got something valuable to say, something that I and millions of other
people really need to hear. I can’t stand the thought of you being so consumed by
supporting an unrewarding lifestyle that you don’t have the freedom to sit down and
help others by sharing your experiences and advice. And that, gentle reader, is what
this book is all about.
So that’s been my journey thus far. Here are a few thoughts that summarize some
of the lessons that I’ve learned along the way.