Die Broke: A Radical Four-Part Financial Plan
Stephen M. Pollan and Mark Levine
HarperBusiness, 1998
Die Broke may not be as cozy a read as curling up with a Jane Austen novel, but as nearly every Austen heroine knows only too well, money matters. Indeed! What a pity that Miss Dashwood’s father did not have the benefit of Stephen M. Pollan and Mark Levine’s sage counsel.
The title may conjure up images of shop-till-you-drop hedonism, a green light on credit card turpitude, but in fact the book is a guide to commonsense personal finance, requiring the reader to exercise self-discipline, initiative, responsibility, logic, and old-fashioned good character.
Most people begin their financial education with the fable of the grasshopper and the ant, or some other suitable cautionary tale. Later, they may receive an allowance and hear the oft-uttered golden monetary rule of childhood: “Money doesn’t grow on trees!” The last big rite of fiscal passage is probably the opening of a savings or checking account. From there, people are pretty much left to flounder.
But no matter. Even if most people’s financial education is dreadfully lacking, Die Broke proclaims that the old rules for financial success have changed. The authors give a nod of approbation to those Gen-Xers who seem to understand what the Boomers have not: The financial values that work today more closely resemble the success strategies of the Boomers’ grandparents. Pollan and Levine believe that a job is about getting money not fulfillment, that people should pay cash, that today’s workers should not plan on retiring in the conventional sense, and that the idea of leaving money to the next generation is neither realistic nor necessarily healthy.
Die Broke challenges the conventional wisdom. Why should workers be loyal to companies that aren’t loyal to their employees in return? The authors suggest that in these days of mergers and downsizing, workers should take their cues from the professional athletes—the free agents. These guys are performance oriented and give their best to their teams; but they don’t lose sight of the bottom line: money.
So the first piece of the Die Broker’s credo should be “quit today.” That is, psychologically divorce yourself from your job. Staying with the same company until retirement is counterproductive since Die Brokers won’t be retiring. They should be constantly checking out what’s out there, keeping sight of the “show me the money” axiom.
The second piece of the overall philosophy is “pay cash.” Such prudence may seem quaint, but the authors convincingly argue the horrors of credit card dependence and the merits of making “spending difficult and uncomfortable.” They suggest developing a personal relationship with a bank, going once a week to withdraw what one needs, and leaving true emergencies to the plastic, which should be kept out of reach in the closet.
In the third part of the Die Broke financial plan, the authors describe retirement as “the impossible dream.” After commenting on the increasing scarcity of traditional pension schemes, and limited prospects for receiving Social Security or an inheritance (the latter decimated by taxes, fees, and the medical expenses of aging parents), they make four arguments against retirement. Sixty-five, an age they claim was picked when life expectancy averaged just 63, just isn’t that old. Neither can a case be made that a life of leisure is always superior to a life of work. Couple those two notions with the fact that the Boomers won’t have to make room for younger workers, and that older workers are often superior employees. All things considered, why retire?
Finally, they ask: What’s the point of inheritance? Most people design their financial lives around leaving money to their children. Pollan and Levine offer an alternative that allows people to live fully now, and enables parents to give to their adult children while everyone is still alive to enjoy the results. Is it better to give one’s grown-up children a downpayment on a house now or enable them to take a cruise after mom or dad’s funeral?
The book is nicely organized, with sections on both theory and practice. The first part is devoted to the authors’ four-point philosophy, the whys and wherefores. The second part alphabetically lists the topics one needs to understand in order to master the Die Broke philosophy.
From “Accountants” to “Wills,” they lucidly and succinctly explain the intricacies of 72 associated subjects. Why is disability insurance so important? How does one go about finding the right bank, accountant, financial planner, or insurance salesman? How can a charitable donation become a tax-protected “stream of income”? What about funerals? How does one avoid going into debt during such difficult times? How does one check the potential long-range health of a company when preparing to make a large investment?
One strength of this book is its readability; another is its understanding of human nature. One vignette deals with someone standing at an ATM:
Since this isn’t a machine from your own bank, you’re going to get hit for a $1 service charge. If you took out only $20, that would be a 5 percent fee, but since you’re taking out $100, it’s only a 1 percent fee. Besides, the money won’t go to waste. Pleased at your financial acumen, you pocket the cash and head over to Starbucks.
Die Broke would be an excellent textbook for the young, and it would make a great gift for the newly independent or the perpetually confused. It might also make a superb book club selection. Instead of discoursing on the tribulations of some needy character, the group could discuss how to avoid becoming more like him. There’s plenty to debate, share, and delight in in this little gem of a book.
Lydia N. Smithers teaches high school English in Annapolis, Maryland.
