People who give personal finance advice tend to give the same advice over and over. That’s because it works. And one of the most basic ways to start getting a grip on your finances is to keep a small notebook and write down every single thing you spend money on for a month, ranging from the rent to quarters for parking meters. It’s usually a revelation: you see exactly what you needed to buy, but also exactly how you spent money that you did not have to spend.
I don’t think that Rod and Patti Blagojevich kept careful track of their spending, but the IRS audited them in order to help establish a motive for Rod’s alleged crimes as governor of Illinois, specifically trying to sell a U.S. Senate seat. The idea was to head off a defense that would argue that the governor really didn’t make that much money, not with his legal bills and a mortgage in a nice Chicago neighborhood. Unfortunately for the defense, the audit showed that Mr. and Mrs. B spent $400,000 on clothes over seven years, more than they spent on house payments and private-school tuition. That works out to $57,000 per year.
The Illinois governor receives a base salary of $150,700 per year, and the job comes with free housing and transportation. Not bad, especially when you consider that the median household income in Illinois is $56,230 — less than the Blagojevich clothing budget. But it’s also not that much, especially because the Blagojeviches never moved to Springfield. They live in an affluent but unassuming neighborhood, filled with professionals who shun ostentation but still want to live in a nice house. Their daughters’ school is the type of private school popular with people who don’t trust the Chicago Public Schools but aren’t looking to show off or groom their offspring for boarding school. In other words, they had a lifestyle that should have been affordable but not cushy at $150,700 per year.
In this prolonged recession, a lot of people with income similar to the Illinois governor’s feel the pain of paying for their mortgages and their children’s education. They certainly aren’t poor, but they aren’t rich enough to buy everything they want. Wouldn’t everyone like a raise? Families in similar straits to the Blagojeviches are coping by making do with an old suit, buying new clothes on sale, and avoiding the types of complex legal problems that lead to keeping high-priced defense attorneys on retainer. And, most of them have the perspective to know that they are better off than most people.
Money should be nothing but a tool — a darned important tool, but nothing more. Instead of using it to buy the things they need, too many use it to exercise power or ease various psychic pains. I’m certainly guilty of indulging in a little retail therapy now and again, but it tends to involve the Boden season clearance catalogue more than a trip to Saks Fifth Avenue, and my child has a college fund. It may not be enough to cover all the costs when his matriculation rolls around, but I’m not in so much panic that I would try to break several state and federal laws in order to try to get money for college and a fancy wardrobe.
The big differences between the finance gurus are in their personalities and approaches. Suze Orman, Oprah Winfrey’s goddess of money, talks about money as a psychologist would, encouraging people to honor their wealth and respect their cash. I would love to see Suze Orman meet with the Blagojeviches and figure out the pain that caused them to overspend and the tragedy that it led to. Unfortunately, the Blagojeviches weren’t content damaging their own family — they have also damaged the state of Illinois.