ICONO CLAST'S ECONOMIC HISTORY
Your teacher asked me
to speak to you because you come from the same background as I. I guess
that means you're working class because I come from a working class
family and have made my living as a proud blue collar worker with a
strong and honest union.
1982, I lost my full time job. I got another job, working about half of
the time, and lost that when the company went bankrupt in December of
1988. I worked about half of the years 1982-84,
about four months in 1985, 1986-88, about two weeks 1989, less than two
months in 1990-91, about three months in 1992, and eight or nine months
was “retired” but not collecting Social Security or a pension. So, how
did I live?
answer that. But first I want to tell you a few things about how I came
to be in the position that I am. And I'm
also going to tell you what I think is the most important of all bills
that you must pay.
I was 13, I decided I wanted to buy a car. You know that you can't have
a car when you're that young and I knew it, too. I also knew that cars
cost money and I got an after-school job, at minimum wage, opened a
savings account and, three years later, paid cash for a seven year old
Chevrolet. Today, a seven year old Chevrolet costs about $2,500. The
insurance cost as much as the car, but I had
money for that, too.
made money other ways, too. Suede jackets
were very popular when I was in high school. I found a manufacturer who
sold them to me for $12 (don't laugh, it was a lot of money then), and
sold them for $18, four dollars below the normal retail price.
MMMI also bought phonograph records
that had been
used in juke boxes for 5¢ and sold them for 10¢.
I'd developed the habit of saving money while dreaming of a car, I
continued to put money in the bank after that goal had been achieved.
I was 17, I needed a new suit. I went to a major department store and
found the suit I wanted. Although I had enough money in my pocket to
pay for it, I opened a charge account and took my suit home for $10. I
paid off the balance at $5 a month and, guess what?, I had established
a good credit reference. When the first bank cards came out I got one
using the department store as a credit reference.
was still working after school and still saving money even though I had
all of the expenses of owning a car and even though I had, for a year
or two, not asked my parents to buy me any clothes or
provide me an allowance. I was meeting all of my own expenses and even
my mother the down payment for her new car.
know what my expenses were: lunches at school, snacks before and after school, going to
movies, dances, clubs, concerts and all of the things that you do that
MMMBefore graduating from high
school, I had my own apartment and a girlfriend living with me.
After graduation, I worked full time.
MMMAnd I was still saving money. I
didn't know what for, but my bank account just kept on growing. One day
I decided that I wanted to go around the world. No, not that. Travel
around the world.
MMMThe last two week vacation I took
was to New Orleans. I hitch-hiked from here East to Saint Louis, South
to New Orleans, and back through Texas, New Mexico, and Arizona.
MMMThe following January, on Friday
the 14th, I quit my job. The next day, I picked up a drive-away car,
three passengers to share expenses, and headed for New York.
MMMAfter about two weeks in New York,
boarded a ship for France. I hitch-hiked from France to Gibraltar where
bought a motorcycle and drove up to Copenhagen and down to Athens. I
sold the bike in Athens, 8½ months after debarking in Le Havre,
for the fare for a ship back to New York.
MMMI was broke when I got off the
ship but found a minimum wage job and saved enough money to hitch-hike
across the country. I spent Christmas in Dallas, saw the Rose Parade on
New Year's day and arrived at my girlfriend's apartment that night. I
was gone for fifty weeks and was, when I got back, broke once again.
MMMFor the next two years, I found
few jobs but could keep none. It was a difficult time, but I survived
MMMSo, how do I live now?
MMMOne day, I overheard a
conversation that an employer was thinking of hiring a messenger. I
jumped in, called the guy, and got the job.
MMMWhile still a messenger, I felt
that I was paying too much in taxes and looked around for a way to
reduce the bill. Real estate seemed to be the answer so I bought a house and rented it.
MMMThere I was, a bicycle messenger
living in a two-room apartment smaller than this class room and owning
an investment property.
MMMA couple of years later, a house
that I'd always admired was for sale. I bought it. Not having enough
money for the down payment, I floated a second mortgage on the first house and bought the
messenger job became an apprenticeship in a trade for which I had a
talent and from which I derived much pleasure. I was incredibly lucky
to find work I not only did well, but loved doing.
trade, it's customary when an apprentice becomes a journeyman, for the
to say: “OK, now that you're a journeyman, go out and learn the trade.” The deal on that
closed two weeks before I was unemployed.
MMMI wasn't worried, though. There
was a small three-room house behind the eight-room house as part of the
deal. I moved in to the little house and rented the big house. I lived
there for nine years and, in 1980, bought another where I lived for
eleven years. That house is now rented and I live in the big house in
front of the little one where I used to live.
MMMBecause of rent control, the rent
on the first house came to be so low that I asked the tenant to
voluntarily raise her rent to a more reasonable amount. She refused to,
so I sold the house and bought a building with three flats.
MMMAnd that's where I am right now. I
the property with the big house and little house, the house I used to
in, and the three flat building.
MMMAfter paying all of the expenses
for my properties, I have enough to live on. Now that I'm retired, I'm
receiving Social Security and a pension from my union.
Now I'm going to
tell you what I think is the most important of all bills that must be
MMMIt's a bill that should take
precedence over all other bills. And it's an amount that, once decided,
should regularly be increased but never reduced. It's a payment that
must never be missed no matter what.
MMMIt is from you to you. When you've
what your income is, and what your expenses are, there should be an
left over. It doesn't matter whether that amount is $5, $50, $500 a
or what. Once you've learned what that amount is, put it at the top of
list of bills to be paid and pay it before any other. If it's too high
occasion, reduce your expenses somewhere else, but don't reduce that
important of all bills.
MMMWhat you'll find is that, as if by
(Albert Einstein said something like “The only true miracle is compound
you'll be able to buy whatever you want. You might not want to spend it
on a car, as I did; travelling as I did; investing, as I did. But
have it to get whatever is important to you.
MMMYou must never use that
money to meet your regular expenses. It must be used for the big things
in life, the things of your dreams, your hopes, your desires. It's big
money, special money, the money that will relieve whatever drudgery you
find in your life. It's the money that will give to your life the
quality you want.
MMMAnd that, simply, is the secret of
MMMCan you do it? Well, you certainly
pay that most important of all bills, the one from you to yourself. But
will face problems that I didn't. Times are different now.
MMMFor example, when I bought my
first house, it cost about what the average working person earned in
three years. Today, that same house costs about seven years' wages,
more than twice
MMMBut, interestingly, investment
property still costs about the same now as it did then: about ten times
the property's gross income. That's still a possibility for you if you
decide you want give the service of housing to others.
MMMYou'll have to do your own
research to find the best way for you to go. But, no matter what you
decide, no matter what you do, the secret is still to pay the bill to
yourself before any other. It's a discipline that you can start right
now and continue for the rest of your life. It is one that you will