You Are Not Your Money

Joe S. sent me a recent New York Times editorial from Ben Stein, who describes being approached by representatives from Bernard Madoff. Madoff ran a Wall Street hedge fund which reportedly “never lost money”. Stein thought it sounded fishy, and he didn't take the bait.

“I have never heard of an entity that could make money in all kinds of markets consistently, year in and year out,” Stein writes. “I have never heard of a financial manager who promised to be able to defeat the markets anytime he chose and who, in fact, was able to do so.” He points out that even Warren Buffett lost 32% in 2008.

Turns out Stein's gut instinct was correct. Madoff, it was recently revealed, had essentially been running a giant Ponzi scheme, a stock-market pyramid scheme. He was bilking investors out of money. As is always the case, there's no real way to get rich quickly. The true path to wealth requires slow and steady effort.

Stein ponders the myth of easy money, and why it's so appealing. He concludes his essay with a lovely meditation on what I think of as True Wealth. He writes:

We are more than our investments. We are more than the year-to-year or day-by-day changes in our net worth. We are what we do for charity. We are how we treat our family and friends. We are how we treat our dogs and cats. We are what we do for our community and our nation. If you had $100 million or $100,000 a year ago and now you have a lot less, you are still the same person. You are not a balance sheet, at least not one denominated in money, as was explained to me recently.

Losing and making money are not moral issues so long as you are being honest. You may have a lot less money as this year ends than you did two years ago. But you are just as good or bad a person as you were then. It is a myth that money determines who you are, and if you have gotten over that myth by now, then 2008 will have been a very good year.

Amen, Ben.

Over the past few months, many people have asked me how I can remain so calm during the economic crisis. There are several reasons, actually:

  1. Worrying does no good. I can't control the national economy. I can only control my personal economy. To that end, I continue to watch my spending, to save, and to invest for retirement. If I'm doing what I believe is right, that's all that matters.
  2. The more I read, the more I think that market crashes are simply part of the process. I expect the economy (and the stock market) to recover. I don't have much invested right now, so this is more an opportunity for me than a disaster.
  3. I understand that I am not my money. I grew up poor. I lived most of my adult life deep in debt. Now I'm actually building wealth. But through it all, I am the same person I've always been.

As we head into 2009, I encourage you to set financial goals, and to pursue them with vigor. I think it's a good thing to want to improve your financial fortune. But at the same time, don't lose sight of what's important. Remember: you are not your money.

More about...Psychology

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Fabulously Broke
Fabulously Broke
11 years ago

Oh Ben Stein. A fountain of wisdom.

I loved him on that one trivia show “are you smarter than ben stein”.. hilarious!

bg
bg
11 years ago

“Worrying does no good. I can’t control the national economy.”

WORD! It’s alright to give it a thought and use it was motivation to save&prepare for possibly upcoming hard times, but it’s completely useless to panic about it and spend lots of time reading articles about just how bad everything is.

Problemsolverblog
Problemsolverblog
11 years ago

I also remember that all crises give me a chance to figure things out creatively. I also feel like this crisis might change some major things in the world and the country. I might have to shift how I think about the future so it doesn’t make sense to worry now. When things settle out, I’ll rework my plans. Until then I’m saving as much money as I can, working slowly to be out of all debt, including car and house, and just breathing in and out.

Rhea
Rhea
11 years ago

Great ideas, but I’m afraid that some people are so caught up in their money that there will be many people doing drastic things (having heart attacks, defenestrating themselves, etc.).

Denise
Denise
11 years ago

Double amen. My hubby was really down in October-November because he was freaked out about the market, the economy, all of it. I told him we can’t control what happens in the world, we can only control what we do. That seemed to cheer him up. It also led us to have our very first conversation on budgeting ever in our 7 year marriage. We also embarked on our first ever No Spend Month,which was a huge success. We are trying to be more self sufficient, save as much money as we can while we are both working, etc. That’s… Read more »

Michelle
Michelle
11 years ago

Very well put …

E. Floyd
E. Floyd
11 years ago

Great post. We are the summation of our decisions and integrity. Markets have ebbs and flows, just like our individual lives do.

Thanks for sharing this post and Happy New Year!

Tootie
Tootie
11 years ago

I enjoyed this post and Ben Stein’s article. His lesson is so simple, yet I think that (sadly) so many people forget. Thanks for the reminder!

Ron@TheWisdomJournal
11 years ago

Good old Ben!
I saw an interview with Donald Trump, who was also approached by Madoff. He said Madoff repeatedly tried to get him to invest in “his fund” but Trump said he kept saying to himself, “Who IS this guy?” Trump passed on the opportunity, but said he had one friend in particular who was taken for $50 million … and was thankful that it was “only” $50 million.

The lesson: either invest in something you know inside and out, or stick to index funds.

Rick Cain
Rick Cain
11 years ago

You are your money when you don’t have any, because thats all you will be thinking about.
Nowadays even dog food costs more than regular food, so you can’t fall back on that in financial crisis.

I remember months before the housing crash had begun, Stein said that one should invest in the overvalued real estate because its a great hedge against inflation….at least until those investments dropped 25-50% in value.

Good Job Ben, you were the stock market’s cheerleader now you pretend you saw all this coming.

Winawer
Winawer
11 years ago

After the lying, disgusting hatchet job that Ben Stein fronted in the form of the movie Expelled, I’m saddened to see that the New York Times is still publishing anything by him. I’ve read Get Rich Slowly for quite some time and enjoyed it thoroughly, but I urge you to re-evaluate your position on Ben Stein; what he writes in this article seems valid enough, but given how financially well-read you are I’d be surprised if you couldn’t find someone else to say it.

Franklin Bishop
Franklin Bishop
11 years ago

I am my money though.

Bill M
Bill M
11 years ago

Very True.

J.D.
J.D.
11 years ago

@Winawer (#11) I do not have a “position” on Ben Stein, nor on any other person I write about here. My goal is to share useful and edifying information about personal finance, regardless the source. In the past, I have shared instructive material from all manner of people with whom I disagree. By doing so, I am not endorsing their other projects. I am merely trying to provide my readers with the best available writing about money. It is a common mistake in our society to discard all that is produced by a person just because we disagree with a… Read more »

Pieter
Pieter
11 years ago

JD, this is a tad off-topic, but your comments raises a question for me. I actually appreciate much of what Ben Stein has produced, so this is more of a hypothetical question.

Can a person be so bad that we should discard EVERYthing they produce? At the risk of invoking Godwin’s Law, let’s say Hitler (a teetotaler) had penned the world’s foremost thesis on the perils of overindulgence. Should we disseminate such a thesis despite the author?

Dave
Dave
11 years ago

Whether or not you discount Ben Stein for his ridiculous stance on science, I would think twice before turning to him for any financial advice, purely on the basis of his ridiculous track record *in that specific domain*. See this video (http://www.boingboing.net/2008/11/24/in-2007-pundits-scof.html) or look at any of his articles on Yahoo finance. I’m not sure a single prediction he has made has ever come to pass (in fact, most have been 180 degrees wrong).

I’m not sure how he conned anyone into believing he is any kind of financial expert.

Tyler Karaszewski
Tyler Karaszewski
11 years ago

From wikipedia:
The fallacious nature of reductio ad Hitlerum is, however, most easily illustrated by identifying X as something that Adolf Hitler or his supporters did promote but which is not considered unethical, such as watercolor painting, owning dogs, or vegetarianism.

http://en.wikipedia.org/wiki/Reductio_ad_Hitlerum

We really don’t need a debate about Ben Stein’s politics here.

shadox
shadox
11 years ago

Winawer, people can be ludicrously wrong and obnoxious on one issue yet be completely “on the money”, so to speak, on many others.

CarrieK
CarrieK
11 years ago

A post like this is why I read your blog!!! Your words are words I needed to hear. Thank you for the reality check.

Katrina
Katrina
11 years ago

I don’t think the point is about Ben Stein, so get off it. J.D. always, always, is intending to write about the larger issues at hand. See the forest through the trees, people, and stop sweating the small stuff on this blog.

What is being said is you aren’t the “issues” associated with money; whether you have some, a lot, or none.

Finally Frugal
Finally Frugal
11 years ago

I recently logged into my 403b account for the first time in six months, only to find that the value has dropped 30% during that time! It is now worth less than I’ve actually put into it. After some initial shock, I rallied, and realized that this could be an opportunity—I increased my contributions to 15% of my gross salary and hope to take advantage of the current low stock prices. If it works out, great. If it doesn’t, well, at least I didn’t panic and sell at a loss. The point–for me–is that if we measure our worth in… Read more »

Andy
Andy
11 years ago

This post may not be about Ben Stein, but my reaction to his name is still one of revulsion, thanks to Expelled. And that just distracts from the real point of the post.

J.D.
J.D.
11 years ago

I find the reaction to this post interesting. I’ve been reading the Autobiography of Benjamin Franklin (which is fantastic), and one of the points that he makes repeatedly is that your reputation is one of your most valuable assets. He wrote, for example: It takes many good deeds to build a good reputation, and only one bad one to lose it. I think Ben Stein is in this situation. Many people — myself included — have always liked the guy. He’s smart, funny, and self-deprecating. We remember his “anyone, anyone, anyone” from Ferriss Beuler. We remember his game show. We… Read more »

slowth
slowth
11 years ago
I question Stein’s recent activities, but in this post his words are spot on. If you discount everyone you disagree with, then you’ll find yourself alone in the coat closet while everyone else is enjoying the party.

We are fallible; therefore, sometimes we produce gems and other times we just produce trash. When listening to others, rational thinkers keep the treasure and discard the refuse. Don’t isolate yourself, and don’t be irrational.

Winawer
Winawer
11 years ago

@J.D. – Let me clarify. I’m not disagreeing with the advice he gave – as I said above, it seems valid enough – but my problem with Ben Stein is a moral one, since I think that he is a bad person (his work on Expelled is not just a “blunder”, it was an unprovoked attack on an entire group of people; he called us murderers for being scientists, and told us that we’re all Nazis). Having said that, I was wrong to bring it up on your blog and I apologize for that. I should have used my own… Read more »

Valerie
Valerie
11 years ago

This post illustrates a lesson that all of us have to learn again and again – that having a lot of money doesn’t make you admirable, and that losing money is not in itself a failure.

We have to watch out for the shame that comes from losing money, because it makes our reasonable fear of deprivation much worse, and may keep us doing what we need to get help.

Carla Golden
Carla Golden
11 years ago

An excellent book to supplement your brilliant points:

The Soul of Money by Lynne Twist

TosaJen
TosaJen
11 years ago

One of the most important things I learned during a year of therapy was to cut myself a break if I did the best I could in a certain situation given what I knew and the tools I had. So, my reactions to watching our investments drop by 40% or so . . . Did I know about the repackaging and selling of bad mortgages as cash equivalent instruments that triggered the credit crunch? Not until everyone else did. Given what I knew at the time (no hindsight allowed!), would I have pulled our money out of the market when… Read more »

Matt
Matt
11 years ago

Ben Stein has a lot to recommend him. Much like Warren Buffett, he never mistakes the forest for anything other than something composed of many individual trees.

Money, I think, is a blank slate. A mirror, if you will. It means nothing more or less than what we each make it mean.

Stefe
Stefe
11 years ago

Good article! Good,thoughtful debate as well as interesting. I am very thankful to have had a Philosophy Prof, Dr. Watts, who opened my eyes and mind to ALL ideas in order to manage my own from a unique perspective. Whether I agree, disagree, like or dislike what someone says or has done, I want to hear it and decide for myself! There is much to learn from everyone, even if we disagree with how or what is said. What a great country and blog!!

Lily
Lily
11 years ago

I’d never think money determines who I am. That is very American.

Kim Kinrade
Kim Kinrade
11 years ago

I liked the post.

I was around in 1973, 1987 and the other times when the TV was rife with doom and gloom about the economy. This too shall pass but until it does, love hm or hate him, Ben Stein provides another way of looking at things.

PennySeeds.com
PennySeeds.com
11 years ago

‘One of the most important things I learned during a year of therapy was to cut myself a break if I did the best I could in a certain situation given what I knew and the tools I had. ‘

Excellent insight, and something I try to do on a daily basis. You can’t always be right, but you can always make the best of it.

It’s a new day – Time to get up, and make something out of it. : )

Andrew
Andrew
11 years ago

The only people who say “You aren’t your money” are poor people or people who just lost a lot of money who are trying to justify the loss. Money is power and power is everything.

Chris
Chris
11 years ago

I like your three comments at the end. I have no shortage of friends who are saying “Thank gods this shitty 2008 is over… Let’s kick it in 2009!” Well, the funny part is that they all have jobs (and had them in 2008), none of them every wanted for food or shelter, and everyone is still alive and safe. I understand that a lot of people’s IRA’s tanked. I understand that some people lost their jobs and that a handful of our friends are under pressure with their mortgages. The bottom line is that this whole situation is way… Read more »

Nick
Nick
11 years ago

I don’t think any smart persons believes they are their money. Everyone is themselves, money or not. That being said, I don’t think any smart person would rather live without money, than with it.

Janet Meiners Thaeler
Janet Meiners Thaeler
11 years ago

One thing that has been on my mind – is can we build a sustainable economy that is not based so much on consumption? Is our lack of spending and saving more mean less jobs and opportunities, making matters worse? Then last night Nightline talked about the glut of recycled materials that have no market or lost considerable value. It’s as if doing the right thing (living more modestly and recycling) hurts us as a whole. This article summed up what I’ve been thinking and which has troubled me… http://online.wsj.com/article/SB123120525879656021.html I agree that worrying about the bigger economy is not… Read more »

JenK
JenK
11 years ago

Something I have been reiterating to the husband and friends lately is that we have not actually LOST any money in this stock market this year. How can I say this? Easy. 1) Our long-term investments are long-term. Short of Vanguard going under or catastrophic illness, we do not plan to sell those investments for over 20 years. 2) Our long-term investments are in index funds instead of, oh, a company that’s gone under. 3) Our emergency fund is split between credit union savings, a money market fund, and a short-term bond fund … all of which are paying interest.… Read more »

Johnny
Johnny
11 years ago

Given how much importance we give to money, it’s good to be reminded that money is just a tool we use to live our lives. It’s an important tool, but making money isn’t what defines us as people. That idea is something I’ve had to wrap my head around after years of being conditioned into thinking that increasing my net worth as much as possible was utmost importance. Letting go of that silly idea makes life a lot more pleasant.

pam munro
pam munro
11 years ago

I can’t say that money and power are not significant factors – but staking your entire life on those pursuits is a very high stakes game. Alexander and Napoleon and Hitler went for it – but they all died ignominiously and before their time. It’s your choice. To me your fortune is mostly in your head. That, short of dementia, no one can take away from me. (Ha! one of the best compliments a student gave me is that I was as smart as Ben Stein, who had impressed him greatly…He is a witty man, not that I agree with… Read more »

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