Friday, January 8, 2010, 8:32AM ET - U.S. Markets open in 58 mins..

Ben Stein How Not to Ruin Your Life

Ben Stein, How Not to Ruin Your Life

Here's What Works in Any Economy

by Ben Stein

Email this Page IM this StoryBookmark this StoryAdd to your Del.icio.us accountDigg this StoryPrint this Story
Very Good (553 Ratings)
3.698008/5
Posted on Monday, June 15, 2009, 12:00AM
I received an odd request by email recently; it came from a lecture bureau in Canada, where I often speak. The bureau wanted to know if I could speak to a certain commercial real estate group, but first I had to definitively answer several questions:

1. When is the recovery going to start?

2. Will it be a rapid or a hesitant recovery?

3. How much larger a role in the world economy will China play after the recovery?

4. Will workers or business owners get more of the benefits of the recovery?

5. What will the price of various energy commodities be at the end of the recovery?

Initially I tried to answer the questions as well as I could. I could tell my questioner a few basic truths about recoveries: Usually they are fast, but occasionally they are slow and then turn fast. I could also offer a basic truth about China: There are limits on how far and fast nations' economies can go, and China does not seem to have reached those limits yet. But after that, I gave up.

An Economist, Not a Fortune Teller 

I am an economist, not a fortune teller. I do not know what the price of any commodity will be in the future; I especially do not know what energy commodity prices will be. That market is wildly speculative and -- I believe -- subject to extreme manipulation regardless of basic trends of supply and demand. And I emphasize again that, while there are many encouraging trends in the economy -- especially in finance -- the timing and vigor of the recovery are as yet unknown. Certain data about the financial health of the consumer are still distressing.

In any event, since now I have told you a little of what is unknown and not knowable in advance, let me tell you a bit of what I do know. I hope that some of this is applicable now that Father's Day is approaching.

I knew my father my birth (well, perhaps a few years after my birth) until his death in 1997 on August 8 at 2:50 p.m. But who's counting? In all of that time, I cannot recall his ever giving off an air of worry about money. My mother, on the other hand, was worried about money every moment until she got into her sixties and realized she was extremely well prepared for any conceivable financial emergency. That's another story.

My father had lived through the Great Depression. He had known what it was like to not have enough money and to wonder how he would pay his bills. He had set up his life so that he always spent less than he earned. That meant he had lived in a home far more modest than he could afford. He drove modest cars -- Fords and Chevys, and even a Dodge. He did not show off his money in any way whatsoever.

Living Below Your Means

That had become a habit with him and stayed a habit even when he was a well-heeled guy in his latter years. After he reached retirement age, he still lived modestly. In fact, he often lamented that he lived too modestly and should have had better homes and more of them. (If you can read this, Pop, I have made up for it and then some.) But in 1979, he and my mother left their home in Charlottesville, Virginia, and moved into their modest pied-a-terre at The Watergate. Then they bought their last car, a Chevy. And they really did not spend any more money other than to give it to charities and to my sister and me.

They had savings, and my father once estimated that he and my mother lived on 20 per cent of their unearned income. That is, the sums coming in from dividends, interest, variable annuities (their most successful investment), social security, and pensions was roughly five times what they spent.

I would suggest that, even if there had been a Great Recession in their latter years, my parents would have breezed through it. It is this attitude that we know works. We know that modest desires are the foundation of economic security on a personal basis. There is no catastrophe worse than lavish desires, as a famous man once said. Our great president, Mr. Obama, cannot provide the rock of prudence upon which to build the cathedral of your security. But you can -- if you learn from my father and yours. Basic good sense means not spending more than you can afford and always realizing that calamity can lie ahead; these principles are your lifeboats in any flood.

But as I study my life and that of my friends, I am coming to realize that our fathers had a lot more sense than we do. This is depressing but true.

Now it is our task to get ourselves off the pity pot and into sound financial practice. I know what you're thinking: Let him who is without extravagance among you cast the first stone. But maybe we can learn together, you and I, from our fathers, whether they are here or not. I am not a teller of the future, but I can tell you that thrift and sensible financial practice always work, no matter what mistakes or sensible acts presidents, treasury secretaries, and Fed chiefs make.

We are slow learners, Pop, but we're getting there.

Email this Page IM this StoryBookmark this StoryAdd to your Del.icio.us accountDigg this StoryPrint this Story

Rate This story

Very Good (553 Ratings)
3.5/5
Sign-in to rate!

163 Comments

Showing comments 6-35 of 163<< PreviousNext >>
Sort: first to last

  • Larry - Thursday, July 23, 2009, 11:36AM ET  Report Abuse

    • Overall: 3/5

    I like Ben

  • KirkH - Monday, July 6, 2009, 11:40AM ET  Report Abuse

    • Overall: 3/5

    I respect Ben Stein as I believe he has a balanced perspective and isn't preaching get-rich-schemes (ie: "Buy Silver" or "Buy a House and make 50% per year returns"). However, I have to wonder if the "save" philosophy really works in this country. Do you really believe our Government is going to take care of you? I certainly don't. Medicare and Social Security are broke and will continue to deteriorate until there's nothing left for anyone to retire on. You DO know that your employer pays as much as you do for you for Medicare/SS, right even though its not on your paystub? Whether you think so or not, its coming out of YOUR paycheck because its a cost that's directly related to having you employed. And the Government bail out? Do I have to say it? Who benefits from this and who's paying the bill? CEOs, Board members and stock holders benefit while WE the working-class pay the bill and will continue to pay the bill for years to come with each new tax implemented. There are other countries where it makes more sense to play it conservatively. Sure, you'll pay most of your paycheck to taxes, but you won't have the absurdly high medical bills and you'll actually be treated as a human being and able to retire at the appropriate age. This is America, land of opportunity and those opportunities DO exist, but they require risk and effort. Do you really think making $50k-$80k makes you "middle class" when the rich make what you make in a year in a single day? You have to have something more than your day job. You need to take your dreams and start working on them. Heck, I've faced every financial problem imaginable, but I managed to get through it and will continue to work on my "Plan B" (and "C" and "D") until I'm either rich or dead. Maybe you should consider doing the same.

  • James - Wednesday, July 1, 2009, 4:31PM ET  Report Abuse

    • Overall: 1/5

    I'm wondering why we have economists if all they know is what worked 50 year ago. The fact that it was the past isn't the point, the point is that we all have parents or grand parents who lived through the depression and were very thrifty. My grandparents were millionaires with a lot of farm property and investments. You would have never guessed it from the way they dressed for the cars they drove. I don't think they remodeled their house once in my entire lifetime until they died. I don't need an economist, whatever that means, to tell me stories about how people lived after the depression. We all knew it and we all ignored it so here we are again. Some of us will learn from it and change. A lot more will have no choice because their credit is gone and so they have to live within their means. In about 70 years, it hardly anyone alive will remember, corporations will get their way, and it will happen all over again unless something drastic changes to end the cycle. If you want to know the future, look to the past.

  • Lin - Wednesday, July 1, 2009, 10:34AM ET  Report Abuse

    • Overall: 4/5

    resposibity for you and your country

  • Billie M - Wednesday, July 1, 2009, 8:33AM ET  Report Abuse

    • Overall: 5/5

    I can't see how any critic can say that this is bad advice. Go ahead and play with your toys and when the bank comes and takes them away and you wonder what happened ' you might kick yourself for not heeding Ben's advice. And you say our fathers didn't work as hard as you do? I know my dad did!

  • oceanair - Friday, June 26, 2009, 5:27PM ET  Report Abuse

    • Overall: 1/5

    More BS from Ben, NOW you say you are not a teller of the future, but you sure have been in the past, and always WRONG !! You are such a shmuck.

  • Yahoo! Finance User - Friday, June 26, 2009, 3:01PM ET  Report Abuse

    • Overall: 3/5

    Be careful about responding to any of the sponsored links below Yahoo Finance articles. If you give out your e-mail address to the sponsors, you may end up with lots of spam e-mail, after the sponsors have sold your e-mail address to other businesses. I guess Yahoo, like newspapers and late night television, does not screen its advertisers very well. Mr. Stein, your parents lived through a golden age for well educated retirees. They paid very little into Social Security and even less into Medicare, which only started around 1965. You will not have it as good as they did and I suspect your children will fare even worse. If we are lucky, we will avoid a currency collapse similar to what befell Russia in the early 1990's and Germany in 1923. If we are not, we may even lose our democracy. In the meantime, you should take your own advice and get rid of the second home in Palm Springs and the fancy car(s). One doesn't need a Phd from the University of Chicago to know that one should spend less than one earns. Your hero, George Bush, started the country a terrible road and we will pay for his mistakes for decades to come. While you rarely fail to mention variable annuities in your columns, I think your father would have done better in low cost funds like Vanguard.

  • JamesM - Friday, June 26, 2009, 1:43PM ET  Report Abuse

    • Overall: 1/5

    I certainly respect my father and grandfather.. But they never had a tenth as much fun as I have on my toys.. I'll have you know this generation works alot harder and plays alot harder.. The older generation wanted to pass on money to their kids.. We want to live life to it's fullest!! Think about that one!!

  • Tiger - Friday, June 26, 2009, 7:42AM ET  Report Abuse

    • Overall: 5/5

    My dad it the very same way and thats what i am doing right now. Guess what it still works.

  • Yahoo! Finance User - Thursday, June 25, 2009, 8:27PM ET  Report Abuse

    • Overall: 5/5

    Great article Ben, You have put forth great truths. Your father would be very proud of his son. While sense itself cannot be taught, reminding people of the concept is a fine idea.

  • Mister Moose - Thursday, June 25, 2009, 1:23PM ET  Report Abuse

    • Overall: 5/5

    Well put, Ben. Hard work, living below our means, keeping debt-free, and delaying gratification are the answers to financial security. I would like to add one more: Keeping ourselves in good health.

  • misterblue - Wednesday, June 24, 2009, 7:25PM ET  Report Abuse

    • Overall: 1/5

    Very safe recommendations. I'm very glad you aren't giving dangerous advice like when you urged people to buy financials right before they collapsed. Still, I have a hard time listening to advice from someone who believes the earth is only 5000 years old...and then makes a movie promoting that idea! You were obviously not divinely inspired in your pre-crash advice. You were positively, absolutely, 100% wrong!.

  • El Viejo - Wednesday, June 24, 2009, 6:14PM ET  Report Abuse

    • Overall: 3/5

    this is when I thank God for my Mennonite roots :)

  • Yahoo! Finance User - Tuesday, June 23, 2009, 7:29PM ET  Report Abuse

    • Overall: 4/5

    Well said. And Dylan T is on the spot. Goal for me now is to increase savings and going to costco with a list. I have been noticing that they have made me spend more than I would have liked to.

  • Yahoo! Finance User - Tuesday, June 23, 2009, 3:47PM ET  Report Abuse

    • Overall: 5/5

    Ben, I also have lived below my means, just like your parents did, and today I don't have to worry about mortgages, helocs, credit card payments or any loans whatsoever. In fact, I'm writing this comment from my office while drinking coffee and thinking only about where to go for vacation. I don't live under a bridge. I own my house. I drive a Ford Focus and the title is collecting dust in my house. I also payed for my children's education from kindergarten trough Masters. My wife and I were able to do all this because we are responsible people. The most important questions is: How many people like your parents and us are there in the country...? Very few!. We, as a society, are sinking fast and there is no other way than DOWN. JLQ

  • Dylan T - Tuesday, June 23, 2009, 12:08PM ET  Report Abuse

    • Overall: 4/5

    Well put, the aveage cost of a new car is up...but it's not difficult to live within your means in a sense of numbers, it's difficult in a sense of self-control. People just need to realize that there is some things you just can't afford. I just graduated college and have my first job as a professional and I am pulling in a whopping $30K. I know with that type of salary, I'm not going to be driving a brand new car. My car currently has 150K miles on it and I am in desperate need of a new one, but I will keep driving this one until I can't drive it anymore. Our problem now-a-days is that very few of us have real self-control in anything. Ben Stein may be beating a dead horse, but if everyone already knows this info, why are only a few putting it into practice? Seriously people...

  • James - Tuesday, June 23, 2009, 9:58AM ET  Report Abuse

    • Overall: 1/5

    It seems that every other column Ben has written this year has the "Live within your means" theme. (Even though he admits that he's not very good at practicing what he preaches) Wonderful advice, (although a bit late in the game for many people, unfortunately) but hardly unique and the trips down memory lane are getting older than Ben. Ben, how about doing some actual work instead of plugging GM and Insurance companies and actually come up with some suggestions as to how people can save money in the current economic environment? (Still not new, but more usefull than walks down memory lane.) Although, back in the 80's the average gross income was in the low-20's and the average midsize car cost about $4,500, or about 20% of annual gross income. Today, the average gross income is $51,000 and the average midsize car costs $23,000 or 45% of annual gross income, so, all things being equal, it's tougher to live within your means now than it was in the 80's.

  • Lee - Monday, June 22, 2009, 5:03PM ET  Report Abuse

    • Overall: 1/5

    Strange - first you were a speech writer for Nixon and now you are an economist. What will you be next week, maybe a judge on Star Search? Jack of all trades - master of none.

  • MarkT - Monday, June 22, 2009, 9:44AM ET  Report Abuse

    • Overall: 5/5

    People forget that there's a limited amount of advice to hand out in a recession: cut spending, rebalance your portfolio, build up an emergency savings fund, and keep investing because the market is cheaper. The difference is that Ben Stein started handing out this advice before October. The fact that his advice sounds boring and repetitive is, if anything, a credit to the fact that he changed it and started handing it out sooner than other financial advisors.

  • Yahoo! Finance User - Monday, June 22, 2009, 8:59AM ET  Report Abuse

    • Overall: 5/5

    only spend less and work hard can save american people and government.

  • Jeff - Sunday, June 21, 2009, 10:22PM ET  Report Abuse

    • Overall: 1/5

    Being an economist is easy. You just declare yourself to be an economist and it must be true. And the hack advice: "live below your means. I don't."

  • Ancient loadsmasher - Sunday, June 21, 2009, 3:27PM ET  Report Abuse

    • Overall: 5/5

    The American public, and specifically the Boomers (heretofore the "me" generation) have gotten exactly what they deserve. The current economy reflects an adjustment from an unsustainable "investment" in real estate financed by excessive lending, excessive borrowing to finance consumer goods, and excessive borrowing by government to supply services to everyone in sight. You aren't "worth" a million dollars anymore? Your second home will have to be sold? Tough beans.

  • John - Sunday, June 21, 2009, 2:35PM ET  Report Abuse

    • Overall: 5/5

    Spot on as usual. Some things are just true and there's no need to complicate them.

  • Yahoo! Finance User - Sunday, June 21, 2009, 1:09PM ET  Report Abuse

    • Overall: 4/5

    it's good but many authors have offered this sort of financial advice and something new must be added

  • Dan - Sunday, June 21, 2009, 10:57AM ET  Report Abuse

    • Overall: 1/5

    I am not an economist, but I could have TOTALLY written a better article. This is plain common sense, and it is the kind of advice appearing on every single personal finance magazine nowadays.

  • Philipn - Saturday, June 20, 2009, 10:36PM ET  Report Abuse

    • Overall: 1/5

    More BS from a guy who regularly admits he doesn't know what he's talking about.

  • Yahoo! Finance User - Saturday, June 20, 2009, 8:58PM ET  Report Abuse

    • Overall: 5/5

    Why do some people always freak out at Ben's advice? This is pretty tried-and-true advice: spend more than you make. Anyway, I like it and I follow it.

  • Dan - Saturday, June 20, 2009, 7:21PM ET  Report Abuse

    • Overall: 1/5

    This conservative extremist and Rush Linbough's sponsor!!!

  • John - Saturday, June 20, 2009, 4:14PM ET  Report Abuse

    • Overall: 4/5

    Nice article but it could have emphasized balance more. Balanced budgets, both national and personal. Balanced trade. Stable money supply etc. Addressing the problems with Medicare and Social Security. Balance has no constituency. We as a nation will continue to have SEVERE problems until we learn.

  • Yahoo! Finance User - Saturday, June 20, 2009, 1:27PM ET  Report Abuse

    • Overall: 3/5

    Has anyone else noticed that the relentless mantra of 'save your money', 'spend less than you earn', most often comes from those that earn A LOT of money for essentially doing nothing? They are also the same folks that sing the 'We've worked hard' song. (More often than not these people have never in their lives worked a physically demanding job.)

Showing comments 6-35 of 163<< PreviousNext >>
The columns, articles, message board posts and any other features provided on Yahoo! Finance are provided for personal finance and investment information and are not to be construed as investment advice. Under no circumstances does the information in this content represent a recommendation to buy, sell or hold any security. The views and opinions expressed in an article or column are the author's own and not necessarily those of Yahoo! and there is no implied endorsement by Yahoo! of any advice or trading strategy.

More From Ben Stein

The Baby-Boom Retirement Crisis And How to Beat It

Let Ben Stein show you how! Stein outlines the steps you can take today to assure your future tomorrow.

Don't leave middle age without it!
Only $16.77 plus S&H

More from Yahoo! Sources

  • CNN Money
  • Consumer Reports
  • Kiplinger
  • The Motley Fool
  • Business Week
  • Wall Street Journal

Sponsored Links

Free 2010 Credit Report and All 3 Scores
Free 3-bureau Credit Report – includes Transunion, Equifax, Experian.
FreeCreditReportsInstantly.com
Financing - Bank of America®
Take Advantage Of Low Refi Rates For Home Loans Up To $3 Million.
www.bankofamerica.com
Refinance Now at 3.7% APR
$160,000 mortgage under $752/mo. Free. No Obligation. Get 4 quotes now.
MortgageRefinance.LendGo.com
Super Cheap Car Insurance
Get Discount Car Insurance Quotes Online – Rates from $15 / Month.
Discount-Car-Insurance-Rates.com
Need Affordable Health Care?
Get Affordable Health Insurance Quotes Online - Plans from $30 / Month
USInsuranceOnline.com
Obama Urges Homeowners to Refinance
APR as low as 3.616%! Calculate New Mortgage Payment Now.
www.SeeRefinanceRates.com

Historical chart data and daily updates provided by Commodity Systems, Inc. (CSI). International historical chart data and daily updates provided by Morningstar, Inc. Fundamental company data provided by Capital IQ. Quotes and other information supplied by independent providers identified on the Yahoo! Finance partner page. Quotes are updated automatically, but will be turned off after 25 minutes of inactivity. Quotes are delayed at least 15 minutes. Real-Time continuous streaming quotes are available through our premium service. You may turn streaming quotes on or off. All information provided "as is" for informational purposes only, not intended for trading purposes or advice. Neither Yahoo! nor any of independent providers is liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. By accessing the Yahoo! site, you agree not to redistribute the information found therein.

Yahoo! Answers is provided for informational purposes only, and no Q&A is intended for trading or investing purposes. Yahoo! shall not be responsible or liable for the accuracy, usefulness or availability of any Q&A information, and shall not be responsible or liable for any trading or investment decisions based on such information. View Complete Answers Disclaimer.