Financial Education in a Tub: Seven Women In A Hottub Talking Money
Meet Maggie, Linette, Rachael, Jane and Betty. One or more of them may remind you of your financial thoughts and circumstances and the need for financial education. We all soaked in the hotel at the Ranch and revealed stories.
Crimson-haired Maggie O’Neal is a twenty-twenty-five-year-old photographer’s assistant who looks even younger than her age and has a splash of freckles across her nose. Maggie earns $18,000 a year, and spares her cash by sharing an apartment with another young woman in downtown New Orleans. Unfortunately, she loves the smell of burning money and will yield to her indulgences in a minute—like the $200 boots she recently bought that almost ate up an entire paycheck. But she resents the intrusion of basic responsibilities, like rent, telephone bills, and credit card statements.
Maybe it’s because as a child growing up in North Carolina, Maggie didn’t have to work for anything. She never had a summer job (it was so much more fun to spend July and August hanging out with the lifeguards at the beach), and her only household responsibility was to occasionally clean her room. When she went off to study photography at Duke University, her parents gave her a checking account: They put money in, she took it out—and she was constantly overdrawn.
Today, Maggie’s parents continue to coddle their daughter by sometimes paying her bills. Each month, Maggie struggles to figure out how to pay her share of the rent and at least part of her ever-mushrooming credit card debt. I wondered how Maggie could afford her trip to the the Ranch. Maggie volunteered the answer: It was a twenty-fifth birthday present from her mom. Some months, if her parents won’t help her pay the bills by giving her a loan (really a gift, since Maggie never pays it back), she asks her boss for an advance on her paycheck.
Lynette Atwood is a thirty-eight-year-old New York marketing specialist and the mother of a ten-year-old girl. She is an attractive, athletic woman who boasts a buff body, elegantly braided hair, and chiseled cheeks. People sometimes mistake Linette for Angela Bassett, the movie star; this makes Linette feel both embarrassed and flattered. Sadly, she finds it hard to accept compliments. Linette has a low opinion of herself these days, especially after the breakup of her marriage. She and Marshall recently separated, and the divorce papers have just been ﬁled.
Linette is a successful businesswoman—she makes about $50,000 a year—and Marshall earns considerably more as vice president of a magazine chain. How much, Linette doesn’t exactly know. The couple’s financial picture isn’t clear to Linette because she left money matters up to Marshall. She deposited paychecks in their joint checking account and left balancing the checkbook to her husband. Marshall paid all the bills and made all the investments. Linette trusted him and never seemed to have any reason to question what he did. (And with Marshall’s temper, she wouldn’t have felt comfortable, anyway. Whenever she tried to discuss money, he became agitated.) Now that they’ve separated and their finances are gradually being disentangled, Linette is learning where their money has been going. The picture isn’t a pretty one. Marshall frittered away much of their money buying expensive “toys,” such as the $6,000 stereo system and the top-of-the-line gym equipment he had to have to furnish their beach house in the Hamptons. Even worse, Marshall dropped thousands of dollars on the Caribbean vacations he took with the twenty-four-year-old model with whom he’d been having an affair. Investments? The bank and brokerage accounts turned out to be shockingly small.
Linette was devastated, and her pride, enthusiasm, and self-esteem plunged to the cellar. Her future is uncertain, and she has spent many nights awake brooding about how her daughter will be able to attend college. She’s been visiting the Ranch for the past four years, and she hopes that a time of quiet reflection and meditation in a tranquil setting she loves will help heal her wounds and, maybe, give her some fresh insights into how to handle her unhappy situation.
Rachel Levine, a thirty-year-old assistant curator at a Dallas art museum, is a lusciously full-figured woman with short-cropped, dark brown hair that frames her soft blue eyes. She earns $30,000 a year. She and her husband, David, a contractor whose annual income is $45,000, live in an old, run-down ranch house they purchased for $60,000, intending to restore it. Their dream is to renovate the house and sell it for a handsome proﬁt. They devote their weekends to ﬁx-up projects, and they’ve been able to do much of the work themselves. But it’s a slow process: The front hall and two bedrooms are done, but the rest of the house is in many different stages of rebuilding. Just before coming to the Ranch, Rachel and David turned a closet into a bathroom.
An excellent cook, Rachel loves to entertain. She often invites friends over to help with renovation projects and serves elaborate dinners as a reward. She and David hope to start a family, but they haven’t found the time to seriously talk it over. That’s because when they aren’t working around the house or going to their individual jobs, they are playing tennis, scouring yard sales for antique fixtures and furniture, and chumming around with friends.
The Levines are frugal with their household expenses, but the expenses for building supplies and the occasional professional helper—an electrician to rewire the house, for example—add up. Rachel started an individual retirement account (IRA) when she was twenty-four, and she has $10,000 saved in a joint money market account with David. But she confesses to feeling uneasy about her investments, which have been growing too slowly for comfort. And she finds herself bleeding her savings little by little in order to pay off credit card debts.
June Mendoza is a fifty-year-old Michigan housewife. She’s a tall, handsome woman who wears her age gracefully: a few fine wrinkles crease the corners of her bright, chocolate brown eyes; her graying hair loops into a casual bun. June, who never entered the workforce, married Steve thirty years ago, the day after her graduation from junior college. He works for a pharmaceutical ﬁrm and earns about $55,000 a year, plus bonuses.
June and Steve have three children. The oldest, Mary, lives in California. She’s married with a three-year-old son. The middle child, Steve Jr., works in Seattle as a deejay at a rock ’n’ roll club.
The youngest, Ellie, is twenty years old. She recently moved into her own apartment in Madison Heights, just a few miles from her parents.
June has devoted the past few years to Ellie, who has an eating disorder and other emotional problems. Ellie is doing better these days—family therapy with a gifted counselor has been a huge help—but the cost of her care has eroded the family’s savings. (Steve’s company switched their medical insurance to an HMO [health maintenance organization] four years ago, and somehow the benefits for psychological help have never been quite enough since then.) June doesn’t know the details because, as Linette did, she leaves all financial matters to her husband.
Now that Ellie is working and beginning to take care of herself, June is able to focus on her own life for the first time since her marriage. It’s a welcome treat to be able to think about her own interests, needs, and desires. Yet, paradoxically, she is finding life stressful, too. It used to be hectic and demanding, but predictable. Now she’s wondering where to channel her energy. And in the back of her mind, she wonders, too, whether Steve has made the right money decisions that will give them the freedom to travel and have adventures after all their years of hard work. But for June, to consider questioning Steve’s judgment in money matters would be disturbing—almost more disturbing for June than for Steve. After so many years of allowing Steve to handle their affairs alone, why make waves now—and possibly trouble the outward calm of their happy marriage?
Sadie Chung is a petite fifty-nine-year-old woman with stylishly bobbed ebony hair and the taut body of a woman twenty years her junior. As she sat in the hot tub, though, I noticed a slight puffiness to her face. Worry lines creased her brow. For a decade, she lived in Hong Kong with her investment-banker husband while working as a travel writer. Then he was transferred to Boston, where they lived until his death four years ago. Sadie still writes poetry and short fiction(her stories about life in China appear frequently in magazines), and she is occasionally a guest on TV talk shows.
From her husband, Sadie inherited $1.5 million in stocks, bonds, annuities, and insurance, plus some real estate. From her writing and other activities, she earns anywhere from $40,000 to $150,000 a year, depending on sales of her writing and the number of speaking engagements she accepts, although she’s beginning to slow down. Eventually, she hopes to rechannel her energies toward her literacy volunteer work with youngsters in the Roxbury area of Boston.
Sadie’s financial life allows her to live comfortably, yet she’s confused and overwhelmed by the cornucopia of investments her husband left behind. She finds it difficult to keep track of everything she owns, and she feels that her husband’s longtime broker (and sometime fishing buddy) is both intimidating and condescending. This irritates and offends her, but she isn’t sure what to do about it.
The last of the women is Betty Scott, a forty-two-year-old who lives in San Francisco. Betty earns $76,000 a year as a lawyer for a ﬁrm that specializes in environmental issues. An energetic blonde with an equally energetic personality, Betty has devoted her life to her career. Building her reputation, growing her client list, and making money have been the center of her universe, and everything else has been either pushed to the margins or simply put on hold, including some of the basic things on which her contemporaries have focused: settling down with a partner and establishing roots. The one special thing she owns is a Victorian house, which she recently bought and which she plans to renovate.
Even handling the money she’s earned is merely a footnote in Betty’s increasingly demanding professional life. She has an IRA (because it was easy and convenient to open), a 401(k) plan (which was set up by her ﬁrm), and a stash of cash in her checking account.
She wants to buy some stock—she hears the chatter at dinner parties about how dynamic the markets have been—but hasn’t found the time to figure out exactly which ones, or what else she could do with her money.
“Look, this is not tough stuff,” I offered the group.
“Oh, yeah, right,” Maggie interjected.
“No, really,” I continued. “It’s a matter of having some strategies, following through with them, and rearranging some old thinking regarding money matters. And the same basic principles of investing apply no matter where you are in your financial life. Anyone can invest, with any amount of money—and you can learn what it takes to have wise investing strategies.”
“Oh, I’m sure that’s interesting, but I don’t need any of that,” June said with a touch of disinterest. “I’ve got him.”
“Him?” I asked, somewhat perplexed.
“Um, yes. My husband. He has things under control,” June responded. “Maybe someday I’ll want to learn about investing and my own money choices, but right now, I’m off for a massage.” She climbed out of the tub, quickly slipped into her robe, and hastily padded away.
“Well, I’m not afraid to admit that I do need to hear about this stuff,” Betty remarked. “I’m so glad you’ll we’re talking about this. I’ll be right there in the front row when you speak tonight. You know, I’ve been meaning to talk to someone like you. I’ll be honest—I’ve never really thought beyond today because I’m too busy with work. I have the feeling that my money ought to be working for me, too.”
“Yes, that’s important, dear,” Sadie offered.
“Well, I guess I’m just zoned out by it all,” Maggie admitted.
Linette chimed in with a knowing laugh. “You’re not alone,” she said. “I handle million-dollar accounts with some of the world’s biggest corporations, but I don’t know an annuity from a mutual fund. I really feel dumb.”
“Linette, I think you’re being too hard on yourself. If you ask around—talk to other women—I think you’ll discover that very few of them know all that much about investing. Truth is, we haven’t been taught,” Rachel said in a soothing, quiet voice.
“That’s very true,” Sadie said. “It took me years to realize that my brother learned things I didn’t as a child. Maybe that’s why he was always more financially aggressive than me. In my day, that was true with most women.”
“Amen,” Linette said. “No one ever talked to me about my finances when I was growing up. And you know something? I don’t think I ever really talked about money with my girlfriends. Why have we waited so long to discuss this? Now I’m embarrassed to say I’ve done very little with my money.”
“Oh, please don’t be embarrassed,” I said. “Many of us have done very little. Lots of women are just beginning to learn about money matters. You’re actually ahead of the curve because you’re beginning to raise questions.”
“Unfortunately, it looks like June isn’t interested,” Rachel said.
“Right now I guess she’s being led by some out-of-date thinking,” I suggested. “She seems to think that having a husband to handle her money will solve everything. Perhaps she’ll be open to discussion at another time in her life. Let’s hope so. But the important thing for you, for all women, really, is to envision a financial future and to take steps toward it. Hey, we don’t want to be bag ladies after leading such productive lives, do we?” I said.
“Whoa! Homeless. No way,” said Maggie. She lifted herself out of the water, wrapped a robe around her body, and sat on the tiled edge of the tub, her feet dangling in the water. She was a scarlet vision, her freckled skin reddened from the heat.
“But things are a little rough right now,” she admitted.
“Rough how? Paying bills?” Betty asked.
“Yeah. I’m in hock. Big time,” Maggie replied. “The worse thing is that I feel paralyzed. I don’t know how to get out from under, let alone invest. What money I have, I feed to Visa and MasterCard.”
“That’s the worst feeling,” said Rachel. “I remember those days well. Right after college, when I first started working, I was constantly strapped. But then I found another job that paid more, and I promised myself that I’d never again be so desperate. After that, I saved some money and began buying penny stocks—you know, those stocks that sell for a dollar or two. My first one was Sunshine
Mines, and I made a little money.”
“So do you still use your credit cards?” Maggie asked.
“Yes. Very, very carefully.” Rachel laughed. “And we try to pay off the entire balance each month. But it’s still not easy. Most of the cash my husband and I make goes back into work around our house.”
“You’re fixing up an old house?” Betty said. “I just bought one of those old Victorians. It needs some work, but not much. Mostly restoration. I’m having so much fun peeling back wallpaper and chipping off paint to find old brick. You guys must be having a ball.”
“Ours is a carpenter’s nightmare,” Rachel replied with a grin. “Here, feel my hand.” She stretched across the tub and exposed the layer of calluses on her palm.
“So almost all of your money is tied up in the house?” I asked Rachel.
“Just about,” she replied. “Why? That’s not a good idea?”
“Let’s talk later—your home is not really an investment because it’s not going to pay you cash in the future,” I said.
“My husband and I do have some questions about how we’re using our money, and right now, we’re asking ourselves if we have enough cash left over to move on to really ‘important’ investments,” Rachel said.
“I hear the lawyers in my office talking about more sophisticated approaches for their money, and some of it sounds good,” said Betty. “Problem is, it seems like there are so many options, and I’m not the kind of person who blindly jumps into things.”
“How about somebody like me? . . . Where do I start?” Maggie asked. “I’m not like the rest of you guys. I don’t have any money to invest.”
“Believe it or not, you do, Maggie,” I said. “You’d be surprised how you’re being influenced to spend your money right now instead of holding on to it.”
The questions, comments, and concerns of these women are universal. I hear similar ones from women who are stretching their investment muscles. All too often, women feel bewildered by money matters and wrongly assume solutions will be difficult. Believe it or not, as you will learn here, the answers and approaches are within your reach.