1998/2018: Whatever 20/20, Day Two: Money

Over the last twenty years I’ve had an interesting relationship with money. It’s been mostly positive, to be sure (spoiler: these last twenty years I’ve been generally financially secure), but I’ve had a lot of time to think about money and what it means to me and my life. So let’s go ahead and dig right into that.

First, a little relevant history, which is that I grew up mostly poor with high volatility within a certain range of income. There were stretches of middle-class comfort, largely related to when my mom was in a functional relationship, and longer stretches of actual grinding poverty when she was not. Every now and then we would be (briefly) homeless. I caught a number of breaks in there, most notably getting a scholarship to the Webb Schools, a private boarding high school, and then admission to the University of Chicago (with additional scholarships, grants and loans). These two places gave me stability in an unstable time and did what education was supposed to do, which was punt me into a middle-class, white collar existence. I’ve not been poor by any estimation since I left college.

Which is not to say that I didn’t have my moments of doubt. And in fact in September 1998, financial things, if not exactly precarious, were also not exactly stable, either. In March of 1998, I had been laid off from America Online, where I had been the in-house writer/editor, and rather than look for another tech job in the Washington DC area where I lived (or a journalism gig, which might have been a possibility at the time), I decided to do freelance work. AOL shed people like a dog sheds fur, and they would go to other tech companies, and then need copywriting work done. Very often, I would be the first writer on their list to contact because I was in fact the only writer they actually knew. I didn’t mind.

Freelance work can be profitable, particularly if you’re doing marketing and PR work for tech and financial services firms, which I was doing. But it’s not stable; you don’t know when the jobs (and therefore, the money) would come in, or where from. It’s difficult to budget and difficult to estimate how much money you might make in a month, or a year. I did well financially from freelance writing when I had work — but who knew when and if that work would go away?

Fortunately for me, and us, we had two solid advantages going for us in 1998: One, when I was laid off at AOL, the firm where my wife worked part-time was so worried about losing her that they put her on full time and gave her full benefits, giving us a middle-class income and safety net to work with. Two, in 1998, Northern Virginia real estate prices had not yet become absolutely ridiculous, and I had an uncle who would co-sign a mortgage. We bought a house that it was possible to finance month-to-month under Krissy’s sole income, along with most of the essential bills (i.e., electricity and water and groceries). We used my income for things like Internet and cable and other optional expenditures, and socked away the rest of it into savings and retirement accounts, as a hedge against when (not if, when) my freelance work dried up.

The whole “live within Krissy’s income” concept was one that has lasted us, at least in theory, through to the present day. Krissy has always had a full-time middle-class job with benefits, which has served as the bedrock of our financial planning. If we had to, we could still live within Krissy’s annual income, since her income could pay for the things we can’t live without (food, electricity, heating oil, gas for the cars, property taxes on the house, which is — hooray! — paid off). We would have to cut back on expenditures like travel and other optional spends, rather significantly, but it could be done. I should be very clear that we have always been fortunate that Krissy has been able to find and keep those middle-class jobs, which meant that my income, whatever it was in any given month or year, could be the engine of our long-term savings and our short-term, less-than-absolutely-necessary expenditures.

Krissy and I have also benefited over these last twenty years from the idea of “sufficiency” — the idea that a certain standard of living was enough. Both Krissy and I grew up without a whole lot of money, so the lifestyle that we have now, which tracks with “upper middle class,” is more than enough for us. We buy nice things, and then we keep them until they have to be replaced, which is why our current cars are a seven-year-old Mini and a fifteen-year-old Honda Odyssey (absolute honesty requires me to admit I buy more digital gadgets than I need to, but in my defense even then I’m drawn to value over flash, which would explain the relative lack of Apple products in the house). We shop at places like Kohl’s and Krogers. We live well for us, and we also live well within our means. Which again means that we can take much of the money I bring in and sock it away, for retirement and as a hedge against bad times.

But surely there are no bad times coming! You’re a millionaire now, Scalzi! You’ve made it! Sure, and we can all go down a list of people who have millions to their name and have lost it all. Some of those people are people who have stories not too dissimilar to mine: They’ve come out of poverty, and then gotten themselves some money. They then didn’t know how to manage that money or the temptations that come with it, and soon enough found themselves out of money. This is an endemic story for lottery winners, professional athletes, and other celebrities. Money is really easy to spend; that’s what it’s meant to do. It doesn’t matter how much of it you have; if you’re not careful you’ll lose it all. We’re careful with it, and we have to remind ourselves to be careful with it.

Because that’s the other thing which people don’t appreciate, but which I, because I was a freelancer, and because I lived through streaks of both middle-class living and poverty, am very aware of: Nothing really is stable when it comes to money. The money can be there one year and not another. The contracts can be there one year and not another. The book sales can be there one year and not another. I’m three books into a thirteen-book contract that (provided I publish on schedule) will regularly keep money flowing to me for a decade — but who knows what happens then? I’ll be in my mid-50s when that contract is over. There is still all the rest of my life after that. Think of the “big name” authors (or actors, or musicians, or whomever) from a decade ago who you have casually wondered what has become of them. And the answer is, oh, they’re still around. Hopefully they saved their pennies.

I should also be clear that I never expected the kind of money I have now, in part because I know intimately the realities of making a living as a writer and a freelancer in the United States, and I’m aware of just how much of my success as a writer, from the beginning, has been due to luck. In 1998 I expected that I would be working as a freelance writer for tech and financial firms, and occasionally magazines, newspapers and online sites. If I wrote books — if I ever wrote books — it would be as a sideline. I didn’t expect that writing novels would ever be my full time gig and that I would do as well financially as I have done with them. Old Man’s War, the first novel I ever sold, went for $6,500 in 2002, and I thought that was pretty nifty. It was well below what I was getting for non-fiction books (I got paid three times that for my online finance book in 2000), and knowing what I did about fiction writing, I didn’t expect to get much more than that, ever. I was wrong about that, but I wasn’t wrong for assuming that I would never get rich from writing novels. Most novelists don’t, even some of the bestselling ones. You couldn’t trust it.

And I suppose that’s the thing about money for me, over the last twenty years: I’ve been lucky in the getting of it, but ultimately I’ve never trusted it. I think of all the ways it could easily go away — and likely will — and it makes me more careful with the money I have been fortunate enough to get during that time. Some of that distrust comes from having been poor. Some of it comes from being a writer. And some of it, I think, just plain comes from knowing what money is and how we’ve tuned our world to make the acquisition of it — a thing that is ultimately a fictional construct of value — a paramount goal, to the more-than-occasional exclusion of sense and sanity. I know that money, to the extent it can be said to want anything, wants to leave me. Part of my job is getting it to leave on my terms, not on its own nor anyone else’s. This is a part of my job I didn’t know I was going to have.

27 Comments on “1998/2018: Whatever 20/20, Day Two: Money”

  1. Yes. So much of financial security is a combination of timing, sufficiency, and sheer luck. We’ve been through all of that, and yeah. Never had a yearning for the big-ticket expensive items (boats, trailers…well, except for a horse trailer, which is relatively cheap to maintain) except for a good horse and I’ve always been pretty cheap on that front as well.

    But it only takes one really bad medical crisis to wipe everything out….

  2. Thanks for sharing on such a tricky but important subject, John. Your story maps pretty well to the points made in Stanley and Danko’s The Millionaire Next Door. It sounds like a get rich quick book but they were sociologists / market researchers reporting on people (including many public school teachers) who accumulated (key word) lots of assets. It’s filled with a lot of practical wisdom and worth anyone’s read. And many of the people they profiled drove old cars (sometimes good old cars, but old nonetheless), wore Timexes, etc.

    One other thing I remember is that they said is that in high accumulation couples, both parties think their spouse is more frugal than they are.

  3. There was a book published in 2003 called “The Two Income Trap”. Everyone in a both-of-us-work partnership would benefit by reading it if they haven’t already, EXCEPT FOR YOU, JOHN, because you obviously already get it.

    The book was authored by none other than Elizabeth Warren and her daughter, Amelia Warren Tyagi, and it was a clear, and sobering exposition of exactly why “two income families” fail economically at an amazing rate. (“Fail economically” defined as lacking savings for the future, lacking a cash cushion for emergencies, having unhealthy levels of debt, etc.)

    John has just given us a Cliff’s Notes-summary-length epitome of Warren’s major argument, which is that unless two-income families set it up so they can afford to live within ONE of their incomes, they’re courting all kinds of problems. Essentially, once you add up the costs of keeping two adults working (especially if they both have outside-the-home jobs), you end up with a much smaller net than anyone anticipates, and very few of us have the discipline to keep our expenses well within that net.

    And very few people add in to “the costs of keeping two adults working” the services and conveniences that have to be purchased from income because there is no one with time to do them for everyone else, in the home. I.e., there was an ‘unpaid homemaker’ available to do them when only one adult worked. Everyone says “we’ll keep up” but before you know it, you’re picking up take-out, hiring the lawn service, getting the laundry done along with the dry-cleaning (and having them delivered to you), paying a housecleaner, etc.

    I’m glad I read the book when I did, and having had similar life trajectory to John’s (child of single Mom, things were good when she was married and lots of red flannel hash and Goodwill school clothes when she wasn’t) I grasped the message immediately.

    Things have only gotten worse since 2003, in the rise of the “gig economy” wherein even wage earning from a regular employer carry fewer of the benefits that tend to security.

    When I was a child (I’m older than you by a chunk, John) the American economy was striving toward and had *almost* reached a state of equilibrium wherein one person working a full-time (40 hours per week) job could comfortably support a family of three or four, ensuring all the basics such as health insurance, defined benefit retirement, etc. Of course, getting those good Union jobs wasn’t always easy if you were, say, brown… or female…

  4. Another route to a similar place: no wife (or girlfriend), no house, no car, no student loan, & Ubuntu…. a spartan life but mine own.

    It is possible to budget freelance income. I set up a system that worked pretty well. But now I’m officially retired. Social Security and Medicare really are life savers, though I estimate I’ll be looking for a cozy dumpster to live in some six to twelve years from now.

  5. It is SOOOO refreshing to read a millionaire NOT say, “The only reason I have money and you don’t is that I’m smarter, more disciplined, and all-around better than you. Luck plays absolutely no role whatsoever.”

    I’ve seen people BORN to wealth w/ this attitude. In fact, I intend to vote against one such person in 2020

  6. Good post. Good attitude toward wealth. Good luck on your writing. Keep thanking your wife for her support and help.

  7. I am a spinster looking at retiring in 5 years. I have always been very frugal and debt averse. I have one credit card and have never paid interest on it. I lucked into the opportuity to buy a share in family property when I was younger. When I sold it a few years ago I was able to pay off the remaining mortgage, buy an apartment and put the rest into retirement savings. I am also lucky enough to be Canadian and never have to worry that I am one diagnosis away from disaster. I work hard and spend carefully but I am incredibly lucky.

  8. Something I note here is the “social capital” that you often find in the stories of people who moved from lower or lower-middle class to upper middle or upper class (I’m in this boat myself). John’s sister stayed with him, his uncle co-signed a mortgage, etc. The economic advantages of stable relationships with a sense of frugality are invaluable, not only financially but socially as well. We don’t talk about these family safety nets enough. It’s not the only reason marriage is imprortant but it is one of the reasons. Many of the people I know lived with or near relatives when they were in college to save money and cut down on loans, or when relationships were ending and there was no where else to go. Family friends might provide emergency cash. I remember Tim Russert talking about a friend of his father’s loaning him money for college (which he paid back). The social fabric is important. It’s why block parties, holiday dinners, and family reunions are important.

    I really enjoy reading this blog. There are a lot of really thoughtful posts here.

  9. I agree with what John and everyone else said about money. And with the person who noted she was lucky to be Canadian. No American, not even John, is truly financially secure.

    Whatever happened to Floored By Scalzi’s Awesomeness? You see these names on various web sites and when they disappear you don’t know if they changed their pseudonyms, lost interest, or for that matter died.

  10. This explains why you don’t buy satellite internet and just complain about your slow landline.

  11. Guess:

    Actually, I don’t buy satellite internet because these days it has data caps that I would blow through in about three days, and also what’s available to me is not notably faster than what I already have.

  12. I remember well the dot com boom where even basic tech writers like me could make .50 to $1 a word for basic tech articles.

    Yes, I mean per =word=. Look on that now, new journalists, and weep.

    One other thing you don’t emphasize but I’m sure you know is, for the most part, rich people and especially rich people in rich corporations, are working very hard to ensure that most of the money continues to sweep into their pockets. They are actively sequestering the wealth of this world and it’s a moral horror. I wish we could find the will to stop it.

  13. Family safety nets are all well and good right up until your safety-net person decides they have better things to do and suddenly you are getting a second job while in college full-time and have a food/cleaning supply/personal needs budget of ten dollars a week.

    For a year.

    Thankfully, I am in a much more stable place now but anytime I buy something, I compare it to my ten-dollar-a-week budget and then, more often than not, decide not to buy it. Be careful who you trust with your financial well-being.

    (and there’s no shame in stealing toilet paper from public restrooms to use at home)

  14. I agree with much of what you say about money. The Bible talks about “the deceitfulness of riches” and you seem to be in alignment with that notion.
    One thing I want to say in response to your mild slam at Apple gear is this: I have had both Windows and Apple machines, and I’ve found that Windows machines do not last as long as Macs. The current Mac I’m typing this on is now about 4 years old; back when I was using Windows, I found that they went sour at about the 2 year mark. For example, I never was successful at installing new versions of Windows on an existing machine and always had to buy a new machine to get the latest version. Since I made my living as a software engineer, I don’t think my issues were due to being challenged technically. Maybe you’ve had a different experience from that, but even if Apple gear seems more expensive at first, I think the longevity of their machines outweighs the up front expense.
    I also appreciate that Macs are built on a Unix kernel, and I’m a Unix geek at heart.
    I will grant you that iPhones and other Apple kit are pricey, but again, my feeling has been that the quality of the hardware is worth it. I just admire Apple as an engineering company, and my household is All Apple. Several computers, iPads and iPhones, with some matching accessories.
    So what, you say? I do my best not to waste my money, but I guess my calculus about what computer gear to own results in a different choice than yours. A lot of that is due to my personal history (I worked for Apple for a time, and had bad experiences with Windows machines). Moneywise, I think it’s a wash unless you absolutely can’t afford anything but the very low end gear. But neither you or I are in that position.
    While I do have some worry about the “deceitfulness of riches” and how easily an economic downturn could wipe me out, I don’t think my choice of computer gear is ever going to make any significant different to whatever outcome transpires.
    I do drive old but good cars, though.

  15. Getting a serious illness in the prime earnings years has a HUGE limitation on my lifetime earnings, causing a shift in my career. I wonder who will hire a 50 year old career switcher?
    Thankfully, I read The Wealthy Barber and The Millionaire Next Door, in my early 20’s.
    Getting rich is to spend less then what you make, no worries, and to save early and often. I maxed out my contributions to my 401k for 15 years.
    The effects of compounding interest are highly beneficial.
    I make more a month in unearned income then through labor.
    The difference between the wealth of between the top 90% of Americans and the top 95%, is several million dollars. Most people do not know how much wealth the really rich people do own. I will not break throught that into that top rank.
    Getting old and sick in America is expensive at $120,000 a year. This nursing home care will quickly deplete a lifetime a savings.
    How to pay for the baby boomers nursing home expenses is a difficult position. I do not want to live in an America where old people are wheeled into the snow banks when their money runs out. Yet I have meet poor Americans who think this ‘Man in the High Castle’ solution is acceptable.

  16. You were right not to trust the money. I thought I was safely in the upper middle class when the combination of a premature child with ongoing needs and then a difficult divorce catapulted me out of there. I went back to school, got a PhD, found a solid job in 2010 when the economy was in the toilet, and have now paid off my $90k in debts and made significant contributions to my retirement fund. What it took was continuing to live as I had in grad school even though my income had more than doubled. I don’t feel deprived of anything, but things like cable TV are a luxury I don’t have, vacations are few and far between, and I just finally bought a new car. I managed to raise my two boys with a middle class lifestyle and live in a safe area of town, and paid it back later with my earnings. It wasn’t easy, but I’m glad I did it for my boys.
    The hard thing is trying to now get past the sense of scarcity. It makes it difficult to ever spend any money on “luxuries.” But hard work and determination got me out of the financial hole I was in and my boys are both grown now and doing great, so it was definitely worth it!

  17. As someone who is currently writing as a sideline, and whose largest advance has been less than $2,000, it’s very encouraging to read about a version of you who expected that “sidelined” was all your fiction writing would ever be. Thank you for sharing this.

  18. I’m the child of immigrants who came to the US with $20 and the promise of a job, and gave two kids a childhood straight out of Normen Rockwell (just a different color palette). We both learned the resulting lesson about how to live within your means and building a budget.

    The corollary, which I wasn’t sure was intended, was that we also learned to value money not in and of itself, but for what it could do. Money is a tool, and like most tools it can be used in many ways for many tasks. Living within your means is considerably easier when you have both large means and low desires.

  19. Once your savings pass the threshold of 1 Million and you invest it conservatively, securing a 5%/year turn over (inflation free, after taxes), you should be financially independent. Doesn’t mean you’ll not have money worries; everyone who has money, has money worries. They’re just of a different order then the money worries of those who have difficulties to meet the end of the month with their paychecks.

  20. “knowing what money IS…” – a tangential comment on this: as a child I would watch my father empty his weekly pay envelope of the cash inside and transfer varying amounts into old tobacco tins labelled “electricity”, “gas”, “car tax”, “council (property) tax”, etc. I made the connection between the physical money and the monthly/quarterly bills – money had to be set aside for these; you planned and you budgeted and if you didn’t have it, you couldn’t spend it. Yes, there was HP (hire-purchase) but that involved a weekly meeting/handover of money with a person. And, as soon as I was legally able to, I worked part-time; I could keep all the money I earned from the Saturday job, but when I graduated to full-time work during (high) school holidays my mother ‘charged’ me for my keep (of course, looking back, I realise that the money I so begrudged handing over, actually all came back to me later).

    Then came electronic money and online short-term loans and credit cards and the instant gratification culture and people either lost or more importantly, never *learnt* how to plan and budget. For a lot of people growing up money was just numbers on a screen, no different than your score in whatever the latest fad game was. The weekly supply of physical and finite cash no longer existed.

    About twenty years ago, a flatmate of the time asked if her boyfriend, who was living with us at the time and so contributing to the rent, could skip paying his share of the rent in January because they had spent so much on Christmas presents for *each other*… I really wish I had asked her how she had come to the conclusion that it was more important to buy each other presents than make their rent payments rather than just boggling to myself and saying “Uh, NO”.

    In short, kids would hugely benefit from being introduced to the concepts of saving (rainy days, people!) and budgeting and delayed, not instant, gratification (“No, we can’t afford that right now, but if you save your pocket money for x amount of time…) at a very early age – ideally both at home and in school. (NB: I’m not talking about financial disasters that are out of your control or people whose *essential* outgoings match or exceed their income here.)

  21. Your money posts are always thoughtful and generally helpful (to those inclined to pay attention). It sometimes amazes me how cavalier and downright stupid so many people are about money. We were lucky enough (I consider it lucky) to be born in the early Baby Boom generation in two parent families smack in the middle class. We have no kids (by choice) and never bought a house (again, our choice). Also, luckily, my wife’s mother pushed her and her two sisters into teaching (she was a teacher herself) at a time where New York City public school teachers were just starting to make a decent living (and benefits), and my wife stayed in the field for 34 years. When her friends who had retired before her told us that they were taking home MORE money after retirement than when they were working, frankly, I didn’t believe them. Now I do. Once we got to the point where we had no credit card bills we couldn’t pay off every month, the world changed for us big time. Your whole attitude changes when you don’t have to worry about money clearing in the checking account so you can pay your bills. I know people always assumed we were doing great – and by many standards we were. We went to England (and occasionally beyond) every summer for over 30 years, for instance (the aforementioned no kids/no mortgage had something to do with that, of course), but since my income was the second, iffy one, we never knew when the money would come in. But since we had health care and dental coverage, etc. we knew that barring disaster, even our not so great financial planning would be good enough in the end. We are now in a position not many we know are – we can do whatever we want for the most part, but what we want are certain comforts for us, rather than yachts or eating at five star restaurants. We live well, within our means, we spend the winter in Florida in a nice hotel, we still can travel when we want (though we stick to this country and Canada these days, by choice). Life is good, but we know it can go sour at any moment. We’ve had too many friends and family get sick and die, and November 2016 was a disaster this country may take a decade to bounce back from, if it ever does.

  22. A very nice thoughtful post about the pitfalls and practicality of money (earning, having. semi-losing). For better or worse, I’d managed to pick up some budgeting tips from my late father that I still use to this day. Having been a one income family for the better part of 11 years (wife was laid off in ’08 and never found a replacement job) as well as a guv’ment employee whose paycheck is given to me but 26-27 times a year, the budgeting skills that I’d learn have been both a blessing a curse sometimes.

    Still, I’ve managed to weather most of the local financial storms in my home state quite well. I rarely go on a long vacation (which leads to plethora of earned time that simply gathers dust); I have people who tell me I should with all the time I got, but instead I’ve spent the year donating some to other co-workers who need it.

    How you treat money can be directly traced to how your parents treated money. Lessons learned in youth can often be, for good or bad, stuck with us until the end of time.

  23. I hope you continue to make enough as a writer to continue to lead a very secure, comfortable life, but not enough that you can afford to quit writing!

  24. re Apple quality – this Macbook Pro is 9 + years old, still serves me well. I’m one or two OS upgrades behind because every one seems to slow it a bit, and I’m waiting for the new Macbooks to be released. But quality, real quality, endures.

    My experience with Toyota is not quite so positive…