Marley's Ghost Was Haunted by Regret

The following is a guest post from Marotta Wealth Management. Some may find it a bit "preachy", but I think his main messages (as I read it) of "money isn't everything" and "be sure to give back to others" are worthwhile.

"Marley was dead." That's how Charles Dickens's "A Christmas Carol" begins. Jacob Marley, dead exactly seven years to the day, is the real ghost in the story. We see Ebenezer Scrooge's life in light of his partner's death. Although the way the two men approached their finances may seem identical, when we take a closer look, subtle but important distinctions emerge.

In his book "Why Smart People Do Stupid Things with Money," Bert Whitehead describes different financial personalities. He depicts a "miser" as someone who is strongly motivated by fear but has a natural inclination to save.

Whitehead maps financial personality on two different scales. The first measures people's tendency toward greed or fear. As a miser, Marley is motivated by fear (low risk acceptance), whereas his longtime partner Scrooge tends much more toward greed (high risk acceptance). The second scale measures an individual's tendency to save or spend. Here both Marley and Scrooge are practiced savers.

When two portly gentlemen stop by Scrooge's office soliciting charitable donations, they discover that Marley has been dead for seven years. One comments, "We have no doubt that Marley's liberality is well represented by his surviving partner." The narrative continues, "It certainly was; for they had been two kindred spirits."

Liberality cannot come from someone who is personally fearful. Distrust drives out emotions like tenderness and compassion. Scrooge confirms this condition in Marley as he looks through his ghostly form and remembers ironically that it was said of Marley he had no bowels. Marley had no empathy for others because he was too anxious for himself.

To Americans celebrating a traditional credit card Christmas, the distinction between a scrooge and a miser may seem insignificant. Both types are cold skinflints who don't spend money to make merry at Christmas. Although their tendency toward frugality may match, however, their investment philosophies do not.

"Misers," Whitehead writes, "are champion savers, but they have little to show for it. They are fearful about investments, even straightforward ones that are simple to explain and understand. At the most extreme, these are the people who keep all their money in a mattress or cans buried in the backyard. More commonly, people with miser-like tendencies hoard their money in bank accounts and Treasury bills."

Unlike scrooges, misers are fearful, a trait they share with Whitehead's other personalities, bon vivants and spendthrifts. All three types worry there won't be enough money. Spendthrifts spend it before it's gone; bon vivants spend it, but only on themselves; and misers hoard it in case they need it later. However because risk and return often go together, playing safe generally does not lead to building real wealth. Wealth is not just what you save; genuine wealth grows from what you save and invest.

Marley may have been a good man of business, but Scrooge was such an opportunist that on the day of his partner's death he "solemnised it with an undoubted bargain."

Scrooge lives in Marley's former chambers. But where Marley saw security, Scrooge envisions opportunity. Scrooge stays in three of the rooms and rents out the others, both above and below his quarters, as offices. He even leases the cellar to a wine merchant.

Misers like Marley don't like to take any such chances. They prefer investments that are touted as secure and come with guarantees. For example, fear often motivates misers to buy life insurance as an investment. Salespeople tout the safety of their company and switch fluidly between guaranteed returns and rosier projections or illustrations.

Misers also buy annuities, which they believe are tax shelters or will guarantee an income for life. With immediate annuities, misers can be so enamored by the annual lifetime return of 6%, they fail to notice the guaranteed 100% immediate loss of their principal. They also generally don't factor in the incredible drag of inflation and the devaluing of the dollar.

It can take a while before misers understand the long-term effects of their actions. They can be shocked to find their financial institution bankrupt, their ultimate taxes higher than necessary and their cumulative return less than savings bonds.

Misers may sleep well tonight, but they won't eat well in 20 years. They are relieved not to have been invested over the past 14 months, although balanced portfolios have shown gains. They are especially glad not to be invested in emerging markets, even though that's the asset class with the highest gains. They are content earning less than 2% while the government devalues the dollar with inflationary spending.

Not taking any risks is a recipe for long-term regret. Some risks are worth taking in life, including calculated financial risks. The danger of a miser's long-term regret is easily avoidable. The solution, of course, is financial education.

There are many worthy long-term investments. But misers worry that much of the financial world is just trying to part them from their money. They need someone who sits on their side of the table to teach them. Misers have learned to love saving their money. Now they just need to learn to love investing. And misers can be very quick learners.

A second regret of misers, and the true moral of Dickens's story, is saving money without any purpose. Marley dies having translated very little of his money into anything of value. Dying having spent the smallest amount is even more meaningless than dying with the most. At least Scrooge invested his money. And after seven years he had probably doubled it.

Perhaps one reason why misers are tightfisted is because they haven't learned how to handle investments. They can't share from an abundance of wealth because they've been too cautious in handling their finances to afford such largess.

Neither Scrooge nor Marley ever asked what the money was for. Marley held on to his out of fear of not having enough. In contrast, Scrooge saved and invested, so he was more able to look beyond his counting house when the spirits haunted him. Marley, looking back on his life, was the first to warn Scrooge, "The dealings of my trade were but a drop of water in the comprehensive ocean of my business!"

We might well feel sorry for Marley. He did nothing wrong. He just wanted to be left alone. His sins were of omission, not commission. To paraphrase the words of the Book of Common Prayer, it wasn't that he did the things he ought not to have done. It was that he left undone the things he should have done.

As Jesus preached, Marley was like "the one who received the seed that fell among the thorns . . . who hears the word, but the worries of this life and the deceitfulness of wealth choke it, making it unfruitful" (Matthew 13:22).

Marley wanted to be left alone to deal with his business. But after death he laments, "Mankind was my business. The common welfare was my business: charity, mercy forbearance, and benevolence, were all my business." Marley saved money but never understood why.

Failing to ask what the money was for left Marley in death with "No rest, no peace. Incessant torture of remorse." And time matters for both investments and our lives. In the long run, we all will be gone from this life, so we must make the most of time, both for our investments and for our lives. The two, it turns out, are inexplicably intertwined. Our wealth is just a placeholder for what we value.

Marley tells Scrooge bluntly in the first chapter of the book, "Any Christian spirit working kindly in its little sphere, whatever it may be, will find its mortal life too short for its vast means of usefulness." And in the final chapter, Scrooge has learned the lesson and found the joy it brings. Having found his affections changed, he finds that "everything could yield him pleasure."

Work kindly in whatever sphere God has placed you. Know what the money is for. And remember Marley's admonition: "No space of regret can make amends for one life's opportunities misused!"

Comments

[Old Limey]

"A bit preachy" is a huge understatement.

I thought I was living in a country that had the separation of church and state boldly written into its constitution but it seems that you can't get away from religion either in politics, the armed services, on the financial pages, or even on our currency.

While we're on the subject of Scrooge and Marley from Charles Dickens writings how about bringing up the ultimate miser from William Shakespeare's writings - Shylock - the jewish moneylender in the Merchant of Venice, that if he couldn't get the money he was owed from the debtor, he wanted a pound of his flesh instead.

[FMF]

Old Limey --

Bah humbug to you too!

And as far as the Constitution goes, the "separation of church and state" is not as boldly written into the document as most think. The phrase is actually from some separate writings of Jefferson's:

http://www.usconstitution.net/constnot.html

And as for this blog, there is no such separation. If you haven't figured out yet that charity, helping others, and a spirit of goodwill toward all men -- and especially for those in tough situations (many of which are there by no fault of their own -- contrary to what you seem to think) -- is part of what's talked about here regularly, you haven't been reading very closely.

[MC]

I like the post.

I think the constant pressing theme of "Save every cent! Get wealthy!" of all personal finance sites can get unbalanced.

It is so important to be reminded of what we are saving money *for*.

I also really like the idea that we are always investing in *something*, even if we are just sticking our $ in the bank for ourselves, and to look at what the payback for our investments is in real terms.

[BD]

I loved reading this article. It was interesting, informative and helpful, no matter what religion one is (or isn't).

Don't let the naysayers get you down, FMF. Some of us get something out of articles like these.

[Ciara]

I really enjoyed this post. In fact, I'm inspired to subscribe. Thank you for the timely reminder of what is truly important in our short little lives.
Peace.

[Eric]

and FMF finally makes his reply! i was wondering where you were in the other thread ;)

[FMF]

Eric --

Ha! I was off work and out shopping much of yesterday (last minute stocking stuffers needed) and didn't get much of a chance to follow which of the two posts had the giving discussion going on. Any way, I'll probably link this one to the other one so readers there can see my response.

[Mike Hunt]

Now I feel bad about writing an article (that will be posted later) on not giving to organized charities.

I really think the work you do here FMF is outstanding, hopefully you have fun doing it as well!

As for this post, I think people should rise up and demand that inflation doesn't devalue your savings by 2% every year. That is unacceptable. Savings, that are created from work and earnings, shouldn't have to be devalued. The US dollar was pretty stable for decades. Taking wild ass risks (like the investment bankers) don't necessarily make you the opposite of a miser.

We need a plan to have the Fed phase out, as they have been the source of boom & bust bubbles and inflation that has only gotten much worse in the last 25 years.

-Mike

[Apex]

@Mike,

What do you propose to replace the fed with, Politicians?

You are aware that boom & bust cycles occurred prior to the fed right? The late 1800s are full of them. And they were often more severe and more frequent than we have now (except for the great depression of course).

You are also no doubt aware that inflation of 2% per year is far below the 100 year average inflation in the U.S. no? Perhaps you could point us to the currency and financial system that is operating or has operated anywhere in the world that has eliminated the march of inflation. (The gold standard didn't stop it either by the way). 2% inflation is a gift not a malady. We have been greatly historically blest to have the low inflation we have had the last 20 years. It will likely not be that low in the next 20.

[Apex]

@Limey,

Why do you attempt to apply the constitution to private speech? You know that doesn't apply. And you can get away from religion, stop coming to sites that reference it. This site has made no secrets about it and yet you are here. If your view of religion cannot tolerate others referencing theirs, you should hide yourself from those who so invoke such a profound reaction in you by the mere quotation of a passage from a religious book.

Regardless of your view of religion and how it motivates people, I find it encouraging that it motivates many to help out their fellow man. I noticed that you proudly announced on a previous post that if you got a windfall, zero of it would go to charity. It's interesting that you felt compelled to explicitly point that out.

[Mike Hunt]

Hi Apex,

I am aware of the booms & busts that happened in the 1800's.

We haven't had 2% inflation, if we did that would mean the purchasing power of a dollar would be 4 times lower than it was in 1940, I believe it's more like 30 times lower than it was in 1940 so that would equate to an annualized inflation rate of about 5-6% or so. Is that still a gift to you?

There is the control issue of who would run the money supply, but I don't see the FED doing the right thing. Look at the present situation, the US dollar is being used to finance a huge carry trade, replacing the Yen. Just raising the interest rate to 2% would pop the carry trade yet there is no push to do this. The FED has been blowing bubbles during the last 25 years, with each one creating a worse disaster when it pops. What about when this gov't debt bubble pops? It's going to be a huge mess, one that makes the previous housing bubble look pretty tame.

Not sure I have the best answer on what to replace the Fed with but their mission of 'price stability' and 'maximum employment' is a total joke. What we have in place isn't working.

-Mike

[Terry]

I find this to be a great post and quite thought-provoking. More text I need to revisit.

[Apex]

@Mike, the 2% number was not a number I was claiming, but one I took directly from your post when you said the following:

"I think people should rise up and demand that inflation doesn't devalue your savings by 2% every year"

Also I referenced specifically inflation of the last 20 years. I don't think it probably averages out to 2% over the last 20 years probably like 3% or so. And yes, I think that's still a gift.

Your reference to inflation since 1940 is why I think its a gift. Inflation in the high teens in the 70s and other high periods in our past history has been common. And the long term reduction of inflation in the last 2 decades started when Volker and the Fed killed inflation in the early 80s. Since then global pressures have worked to help hold inflation down, but the Fed is what initially gave us low inflation.

I also do not disagree with you that they have had a tendancy in recent recessions to try to ease the pain too much. I would hope to see another Fed Chair on the order of Volker who was leaning more towards the inflation mandate.

But here is my problem with everyone who wants to get rid of the Fed and with Ron Paul who wants to put oversight on the Fed. If we get rid of the Fed, some body must eventually make money supply and interest rate decisions for the US banking system. It is not possible to suggest getting rid of the Fed without a plan that replaces it. Without an independent Fed it seems this falls to Congress. I do not think you would likely find that Congress in its desire to spend tax payer dollars on easing the pain would be less accomdative than the Fed. In fact everytime the Fed embarks on an interest hiking policy, the Fed Chair has to sit before Congress and listen to Senators tell them that they are costing jobs and causing unemployment by increasing borrowing costs. Congress never cares one bit about inflation.

So if not Congress then who? And if it is someone other than Congress, then isn't that just a different name for what we already have, namely the Fed. Frankly I love the Fed. Without the Fed, I don't know how we don't have monetary chaos.

The only answer I have ever gotten in response to this was go back to the gold standard. Of course this doesn't really do anything. We had a Fed when we are on the Gold standard. We still had inflation. And we don't have enough Gold in the world to back our currency anymore.

I am sure there are probably some proposals out there to do something different from the Fed, but I have never never met anyone who wanted to abolish the Fed who could articulate one to me (other than the Gold Standard which I already addressed).

So even if you don't know what to replace the Fed with, you must have some idea of why having no Fed is better than having a Fed for inflation. And if you haven't thought through how that works out I would suggest that might be a good thing to try to think through.

Simply stating that the Fed has made some poor decisions isn't enough. Our government has made some poor decisions. I think a lot of poor decisions. I suggest we abolish the whole constitutional system we have. Taxes are too high, we are losing freedoms, too much beurocracy interferring in my life etc. Clearly this representative form of government isn't working. I don't know what to replace it with but anything has to be better than this. Just abolish it and see what happens.

A little hyperbole perhaps, but I don't see how abolishing the Fed and leaving a vacuum is much different.