On my commute from work one day last month, I caught the tail end of a story on CFRB about a recently deceased gentleman who left the majority of his life’s fortune to those who provided for his care in his final days – in this case, the local hospital. The public interest component of the story is not so much the amount of the fortune, but rather assumption of the local town folk in Brattleboro Vermont that Mr. Read was a man of limited means. In fact, on occasion locals would pick up the tab at the towns breakfast diner to help a man who was assumed to be a man in need. A lifelong gas station attendant, Mr. Read could often be spotted in his familiar flannel shirt scrounging for scrap wood with which he could heat his home. Not surprisingly, it came as a shock when it was learned that through his limited salary, and shrewd investing, Mr. Read had accumulated an estate worth 8 Million dollars- the majority of which was bequeathed to the Brattleboro Hospital. It would be easy, but a shame, to let the story end there. Mr. Read’s life should serve as a reminder that we ought not judge a book by it’s cover- something which most of us have been both the victim and perpetrator of at some point in our lives. Above all however, Mr. Read ought to serve as a stark reminder, that when it comes to our finances, it is very rarely how much money we make, rather what we do with it that counts.
Latrell Sprewell’s final act as an NBA basketball player was the rejection of a three year, $21,000,000 offer from the Minnesota Timberwolves, famously claiming the offer was an insult and protesting I’ve got a family to feed. While the exact number of his dependants could not be confirmed for the writing of this article, I would venture to suggest with a bit of thrift, Mr. Sprewell and his clan might have managed to subsist on $7,000,000 a year. After all, this was not to be his first paycheck. In fact, his previous pay stubs amounted to over $97,000,000 – an amount unfortunately insufficient to prevent Mr. Sprewell from losing his yacht and two homes to foreclosure. While messrs Read and Sprewell stand on opposite ends of the financial responsibility spectrum, both offer lessons for those of us willing to learn.
We live in a world today that makes it exceedingly easy to be financially bled little by little on a monthly basis. Using my personal situation as an example, and having made the decision to live in an area in which internet service nor cable is available through traditional channels (anyone living in the country will know what I mean), my monthly obligations to maintain subpar internet service, satellite TV, and cellular service for myself and my wife ( I will leave my kids out of this for the moment ) amounts to roughly $300 per month. If I were to extrapolate the opportunity cost of these conveniences assuming an 8 % annual return and a 2% average rate of inflation, my connectivity will cost me in excess of $500,000 over the next 30 years- should I be fortunate enough to live that long. Even worse, is the situation that faces my kids. Considering only an iPhone that costs in the neighbourhood of $60 per month, using the same assumptions, but allowing for the possibility they will want to remain connected until they are at least 80 years of age, their iPhones will cost them in the order of $1,200,000.00. Sure, it is easy to see that technology will change in the interim in ways that we cannot begin to imagine. It is just as easy to imagine, that the Roger’s and Bella’s of the world will find a means by which they can siphon off as much as we can afford. They do not want a large amount of our money, rather they want small amounts on a monthly basis. They are looking after the pennies, with the understanding that the dollars will look after themselves. Or, looking at it in simpler terms – they are Mr. Read, and you can call me Latrell.
Thanks for reading,