I know a couple who lived through the Great Depression. One of them did not have a winter coat as a child, and was unable to go outside for recess at school during the winter. They still save and re-use things like aluminum foil, and they don’t waste a bit of food. Everything is eaten, nothing is wasted.
I have a Great Depression Story too. It didn’t happen during the 1930’s, but it is just as meaningful to me.
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When I was in pharmacy school in 1985, I had a job working at Thomas Jefferson University Hospital as a pharmacy intern. If I worked a shift on a holiday weekend, one of the perks was a meal card at the hospital cafeteria. I would get my free meal (cheese fries and a soda), and that was my big meal for that day. That meal card was one of the reasons I took those holiday weekend shifts. I had nothing at the time, and a free meal was a big deal for me.
One summer during pharmacy school, I had two full time jobs at the same time, while taking a course in Biochemistry. That’s right- I worked 80 hours a week in order to save for tuition, and I took a really difficult class. I had no money, and I was at risk of not being able to pay my pharmacy school tuition.
After I graduated from pharmacy school, Theresa and I moved in together. It was 1988, and we still had nothing. I had just graduated from pharmacy school, and my net worth was a big red number (including about $20,000 in school loans, which is like $100,000 in school loans today). We found an apartment that was convenient for both of our jobs, and we moved in. We had an option to rent a one- or two-bedroom apartment. The two-bedroom apartment was an extra $25 a month, and we could not afford that, so we rented the one-bedroom apartment.
We could not afford furniture when we moved to this apartment. We had no bed, no box spring, and no mattress. For the first couple of months, we slept on the floor of our apartment in a sleeping bag. Once we could afford a mattress, we purchased it- but without a box spring or a bed. We only purchased what we could afford to pay cash for, so we did without things that people normally have in their homes and apartments.
We learned some important lessons in those years. One lesson is that we learned how to do without things that we wanted, like furniture. We learned some other lessons, too.
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We made career changes: When we first started dating, we were both working for the federal government. I was working in a research lab, and Theresa was working for a division of the U.S. Navy. Both were worthwhile jobs, but they didn’t pay well and did not have a career path. Within a year or two of meeting each other, I started pharmacy school, and Theresa transitioned into the financial sector.
Those risks paid off. It is now almost 30 years later, and our combined income is about 13 times what it was then. Each one of us has had two career changes. We took career risks, and those risks paid off.
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We invested in our education: We both come from families that consider an education the greatest gift that can be given to someone. Theresa has multiple certifications in her field, and I have three degrees. Theresa works for a company that educates and trains its employees, and she takes advantage of that.
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We became ruthless savers: We save about 20% of our pre-tax income, or about 40% of our after-tax income. I use the word “ruthless”, because that means that we make choices. Every decision that we make is a choice.
For example, we choose to drive well-used cars. Our cars have more than 400,000 miles on them. I want shiny new cars, but i am reminded that that is a bad idea. Our cars are nothing more than tools that we use to move around.
We save because we never know what we are going to need and when we are going to need it. We also save because we remember what it is like to have nothing at all, and we don’t want to go back there.
We learned to invest wisely and fearlessly: We keep our investing costs at zero. We don’t pay for unneeded financial advice, we don’t pay any brokers or advisers, and we don’t pay any commissions. We haven’t spent any money on commissions or fees in over a decade.
I’m going to borrow a marketing line from the company my wife works for: “Costs Matter”. They really do. I know people who give away 1-5% of their portfolio every year on commissions and fees, in an attempt to “beat the market”. They pay thousands of dollars a year in an attempt to do this. Instead of paying other people to invest my money, I keep it and invest it myself.
I have a secret to share with you-Theresa and I are the market that other people are trying to beat. We invest in ultra-low cost mutual funds (like S&P 500 funds). We don’t pay any fees or commissions to do so. Our taxes are deferred until we retire.
You cannot beat the market over time. You may be able to beat the market for a year or two if you’re lucky, but you’re just lucky. I encourage you to be the market, keep your costs at a minimum, and reap the rewards over time.
We learned that our house is not an investment: Our house is where we live, but it is not an investment. In spite of what you may have been told, houses do not appreciate much in value over time, after inflation. Don’t believe me?
Exercise one: Take the purchase price of your home. Add in what you pay in real estate taxes every year. Add what you pay in maintenance every year. Add what you’ve paid for upgrades. Now look up the current estimated price for your home. Deduct the costs of real estate taxes, maintenance costs, and upgrades since you’ve purchased your house. Calculate the annual gain. Now compare that annual gain to the annual rate of inflation.
Not much difference, is there? The idea that “houses will always go up in value” isn’t true. Find a chart that shows the inflation-adjusted price of houses, and it looks flat over time. A lot of people make money from the myth that houses are great investments. Real estate agents, mortgage companies, contractors, furniture and appliance companies, banks and lenders. No one is paid to tell the truth about the value of housing.
Exercise two: Still don’t believe me about housing value? Find a one-percenter. Ask them what the source of their wealth is. It isn’t their house.
We are incredibly lucky: We are not “self-made”. We received an education from our parents, and great parenting. Our parents taught us really important values, both in word and in deed.
We also have been very lucky in many of our choices. We changed careers, and those changes worked out well. But there are no guarantees in life-sometimes changes don’t work well.
We have really good employers. Both of us work for companies, and people, who care about us and our families. So far, we have been able to work all of the days of our lives. We are healthy enough to do so, and we have employment that is rewarding and challenging.
We know that we aren’t responsible for any of that. We both know people who work just as hard, and are very good and decent people- but they have not been as lucky as us.
We recycle, re-use and repair: And at least one night a week, dinner is Leftover Night. Very little goes to waste. Not for someone who lived on cheese fries.
We don’t forget where we came from: Theresa and I had nothing at all. We come from families that had to scrape just to get by. We try not to forget where we come from.
We give our time and our money to organizations that help people in need. We like organizations that combine “feed a man a fish” (help someone right now), with “teach a man to fish” (help someone help themselves, so that they can help someone else later on).
We remember who we are, where we are now, and where we were 30 years ago.
Sleeping in a sleeping bag.

File May 03, 6 39 11 AM
Hal