die broke

“Die broke.” This is the central idea behind a book of the same name written several years ago by Stephen Pollan — and it’s a good one. In fact, the four pillars of the book — “quit today”, “pay cash”, “don’t retire”, and “die broke” — form quite a solid personal finance system, when you get past the shock value and dig into what he’s actually advocating. I’ll go over the basics in this post, and then next week we’ll take a look at implementing the system.

Quit today. Pollan doesn’t mean that in the literal sense. Rather (and here he’s speaking more to baby boomers than to later generations), he’s admonishing the reader not to try and find ultimate fulfillment at work. Work is “just a job” — ultimately, it’s there to pay the bills, not to answer the questions of Life, the Universe, and Everything. Your employer is mercenary, and while you should do your job well, you should be mercenary, too. (I have a slightly different take on the subject, but I’ll save that for another time.)

Pay cash. Again speaking more to boomers — many of whom came of age during the 70’s, when rampant inflation encouraged consumer debt — he points out that debt is a nasty trap for the unwary, while avoiding it allows you to stay financially flexible, which is more important than you might think. And using literal cash makes it painful and difficult to spend money, such that you’re more likely to make sure that what you buy is worth it. (Agreed!)

Don’t retire. Pollan is fond of the metaphor of the Ulyssean adult: the person who forges their own destiny, moving from one adventure to another. As he says, “the only finish line is death”. Now, he strongly encourages socking money away in tax-sheltered retirement plans — but he advocates using that money to allow you to make your own rules, to work your own hours. And yes, he really means don’t ever retire; Pollan is firm in his belief that leisure cannot be more fulfilling than work. (While I personally agree, I met several retirees at a recent “Boglehead” meeting that would argue otherwise!)

Die broke. Pollan presents several arguments for the idea that hoarding for a legacy is a bad idea: it damages your present quality of life, hurts society by locking up your assets, strains families by inserting economic self-interest into emotional decisions, and even erodes your own character by killing your motivation and drive to work. Rather, he says, “your last check should be to the undertaker — and it should bounce.” Want to help your children, or charities? Do so while you’re still alive. Both you and they will appreciate it more!

So now that we see what exactly he’s saying, next week we’ll dig more into What It All Means.