I don’t make a habit of taking financial advice from loan sharking gangsters. In fact, I don’t know that I’ve ever actually had a conversation with a loan shark. And I value my kneecaps far too dearly to ever actually solicit their services. But once in a while, even a scumbag hustler can have a remarkable piece of insight.
In case you haven’t seen it, The Gambler, which came out two years ago, is really an underrated movie. Mark Wahlberg is the lead, but his character – a degenerate gambler that resorts to taking loans from the underworld to fund his habit – is such a miserable person, he’s actually hard to watch.
The real star of the show is John Goodman, who plays a gangster that threatens to murder Wahlberg’s family if his debts aren’t repaid. The interaction between the two is priceless… if perhaps a little salty… and actually has some of the best financial planning and risk management advice I’ve ever heard.
Gangsters don’t exactly run your credit report at Experian before offering you a loan. But they do an assessment of sorts on their borrowers’ ability to repay. They are businessmen, after all… and the primitive forbearers of the modern banker.
So as Wahlberg approaches Goodman hat in hand for the loan, their conversation goes like this:
Goodman: You drink? I don’t remember if you drink. Of course, there’s drink… and drink.
I drink, but I haven’t been drunk since Reagan was president…
I need to know if you’ve got the f***ing brains to walk when it’s time to walk. People don’t, you know. Ball players that can’t play anymore. A**holes trying to maintain a standard of living that’s not possible anymore. A lot of those around. I’ve seen you half a million dollars up.
Wahlberg: I’ve been up two and a half million dollars.
Goodman: What you got on you?
Goodman: What you put away?
Goodman: You get up two and a half million dollars, any a**hole in the world knows what to do: you get a house with a 25 year roof… you put the rest into the system at three to five percent to pay your taxes and that’s your base, get me? That’s your fortress of f***ing solitude. That puts you, for the rest of your life, at a level of f*** you. Somebody wants you to do something, f*** you. Boss pisses you off, f*** you! Own your house. Have a couple bucks in the bank. Don’t drink. That’s all I have to say to anybody on any social level.
Think about it. When you owe money, you are effectively a slave. No, Bank of America is not going to murder your family if you default on a loan. But the existence of that debt limits your choices. It may keep you at a job you hate and prevent you from pursuing your dreams. The stress of having bills to pay may affect your marriage and cause discord at home. It may even affect your health. How many men literally work themselves to death trying to pay for a “standard of living that’s not possible anymore”?
The truth is that you don’t have to have millions of dollars in the bank to have “f*** you money.” In fact, wealthy neighborhoods are often full of high-income-earning people who are more miserable that the high school dropout making sandwiches at the Subway down the street because, no matter how much money they make, they can’t relax. They have very expensive bills to pay.
No, in order to have the Goodman power of f*** you, you simply need to live within your means, get your house paid off and avoid bad lifestyle habits like excessive drinking, drugs or gambling.
So my advice to you is this: with stock and bond prices looking elevated, don’t fixate on the stock market for now. Live within your means and use any excess cash flow to make accelerated payments on your mortgage. By making an extra payment now and then, you can turn a 30-year mortgage into a 20-year… or even less.
Get out of debt and avoid the temptation to upgrade to a bigger house. At the end of the day, you don’t really need it. In the 1960s, families of six somehow managed to live in 1,900 square-foot houses without killing each other. Your family of three really doesn’t need 3,500 square feet to live in, and it’s certainly not worth working yourself into an early grave.
Follow Goodman’s advice. Pay off your house. Avoid drinking to excess. And smugly give the middle-finger salute to the Man.