Courageou$ Money

Courageous Money Questions:

   1.    What are your earliest memories of how you learned the value of money?

I remember being toted around a grocery store with my mother. Like any child I would ask constantly for things. Her reply was "I don't have any money for that, to which I would respond, "Just write a check!". This seemed to be a repeat performance at various McDonald's, Dunkin Donuts, and Rexall Pharmacies replete with rows of candy.

Once a year or so we would go to the local grocer called Great Scott!. My mother would corner the shopping cart with my little brother, Keith, sitting in the basket leaving me as sentry until her return. She would disappear behind dented steel doors with the butcher only to reappear moments later with him in tow, hoisting a case of Tropicana orange juice frozen from concentrate over shoulder. This sweet nectar would serve with our morning breakfasts for as much as a year, one shot glass serving at a time. When requesting a second glass it was always met with a dismissive "Have milk instead". While those PVC tubes that held the concentrate would pyramid across our kitchen counter to eventually double as drinking glasses for our outside adventures.

My father worked very hard to provide a good and stable lifestyle for us all. My mother worked ever harder to make sure every dollar her earned gave us far greater value.  She was the master of the weekly circulars that published the latest and best deals for local retailers. Even if we had already made the purchase, she would promptly load us up in the car, rushing to the merchant to demand the lower advertised price or return said item. Only to revisit that locale and repurchase the item later if her demands we not swiftly and politely met.

   2.    What were your lessons learned from these events and how did they shape your thoughts and actions toward money today?

For one thing I love Orange Juice. And I never carry a checkbook for anything.

But I learned far more about commerce and money and the value of a thing from those and a myriad of other experiences growing up. Today in my personal life as well as professional life I almost abhor paying retail for anything. In fact much of our weekly grocery routines are regulated by the stores discounts, and deals. With so many choices it is just easier to look for those Buy One Get One stickers to caste a weeks menu of about 100 meals. 

I really believe that you must learn to use money to the very best of your ability to support the lifestyle you choose, but in a miserly fashion. Work harder at spending (or not spending) it than you do at earning it. And I am certainly not suggesting being cheap, just smart.

   3.    What 3 words come to mind when you think about money? Explain why.

Luxury of course, Equity (net worth), Responsibility.

Luxury, firstly because money is what defines luxury for each and every person on Earth individually. Most people that believe private jets, and sports cars, and mansions are a luxury and if you have the resources they can become a reality. Some people on a different level think of a big screen TV and a new pickup truck to take up to the lake as a luxury that many cannot afford. But there is also a segment of the population that find a warm dry blanket to sleep upon or a cold glass of clean water to drink a luxury. How much money one has access to is ultimately how high up on Maslow's Hierarchy of Needs one is placed.

Equity, is perhaps a much more personal perspective for how I view money. I have always maintained that I am not a "paycheck" guy. In my earlier business dealings I preferred a stake in the venture I was participating in over a weekly/monthly stipend. I was about 18 or so when my CPA told me about P/E ratios (Price to Earnings). If you get that steady (hopefully) $100 paycheck that is all you are "worth". But if you own a business that makes a profit of $100, you also have the ownership of that organization that could be worth $3,000 ($100 X 30P/E).  I have never cared about having a lot of money, but I always wanted to maintain 100% ownership in my business. In 30 years I have also never taken any money out of my company to survive.

I know an investment banker that is a few years older than I am. He graduated from the University of Michigan and immediately went to work for a big bank in New York City earning a base of $500,000 salary plus bonus. After 20 years of this career edging up higher in income consistently he decided to change careers to become a fashion photographer. Other than some money put away for his kids college, he was virtually broke. He burned through almost $15 million. And yet he never flew on a private jet, wore a Rolex, owned Picasso or raced around Milan in a Ferrari. Somehow he managed to burn through many lifetimes of income with nothing to show for it including no equity in any business or real estate.  And this is a man with advanced education in finance working for the place you secure your own income. During that same period, my lifetime has been lavish with those events and occasions, having never taken that kind of income personally.

Now to the most important word I can think of, Responsibility. It would be easy and obvious to speak of the necessity to pay your bills and provide well for your family and future. What I am referring to is your obligation to give back to your community and those less fortunate. While it is important to earn hard and spend hard, you also must learn to give back hard. Find a way that your gifts of time and money can do the most good for the most in need.  Something that is personal to you or those that you love. Because besides paying for that Champagne & Caviar, or putting a roof over your head, you can use it to eliminate the pain in someone else's life. There really is no better word than that.

   4.    What do you believe is your core internal value or message about money? Where did the value/message come from?

My father was a career executive at Ford Motor Company. He worked hard and often. Much of my childhood was spent with him leaving in the morning when it was dark and returning in the evening, when it was dark again. The fedora and trench coat was his uniform as he left each day armed with his attache' case. That dedication and daily drudgery quite often through snow really taught us how important it was be consistent and loyal to your responsibilities. Of course those decades of hard work became the foundation with which both my brother and I built our own careers and identities. 

His position as liaison between Ford Motor Company and the various trucking and railroad companies under contract allowed us to be introduced to many levels of people and lifestyles.  He achieved this position after he got his business degree from University of Detroit (night school) while our Mother worked to support their ambitions. My brother and I had great exposure to the Teamsters and the United Auto Workers all the way up to the billionaire owners of the companies. It was a priceless gift.

 At the same time, our Mother, an elementary school teacher, created the environment we needed to understand that you have to work harder on managing money than you do to earn it. Theirs is a true marriage, a partnership that lifted them out of a middle class beginning and enabled them to retire in country club fashion in Naples, FL. Incidentally, our Mother still works as a full-time substitute teacher at 82.

 Our family history has been marked with a saying perhaps most famously said by Aristotle Onassis. "Always have a suntan and always have an address in the best part of town, even if it's a broom closet." Our Mother pushed my father to move out of the city and to buy property for our home in what would become the most affluent county during the 1980-1990s in the United States. They saved each year to vacation in California and Florida.  Coincidentally where we all have lived during the last 20 years. 

   5.    Do you identify as a saver, spender, investor, or giver? Explain why. (Could be one or more)

Thats a bit complex of a question. As money is primarily a tool of life. I once read an interview of Angelina Jolie that said that she saves 1/3 of the money she makes from her film career. The rest she splits between spending and charity evenly.  Now obviously most people don't have that luxury.  Wouldn't that be incredible? Sadly, most people in today's economy are blessed if they have one months expenses in the bank. 

I have religiously followed the markets and from a teenager been an investor/buyer of businesses. That goes back to the topic of equity. I really have not ever had as much faith in those running other companies as I have had in myself. So I prefer to invest in myself over anything else. But at the same time I do not like to have partners or investors either. I do not believe I would sleep very soundly if I had to be responsible for someone else's money especially if I had little or none of my own into a project or company. 

Back in the day it was called "skin in the game" and was a high requirement to get anyone to put money behind you. Today, apparently anyone with a smart phone can come up with an idea worth a bazillion dollars. But there is a fail fast culture these younger generations are bred into.

I love saving money when I am spending. My business portfolio is composed of brands that have earned over $250 billion over the last century. That is an enormous amount of earning as well as spending. In fact it is due to so much over-spending that we were able to purchase them. It is often called distressed debt.  Like buying a home at auction that the owners defaulted on for a small fraction of what it is worth. 

So in my personal life I manage money in the same fashion. I love going to auctions to buy certain things. As I said, I love to save money while spending. At the same time, keeping as much money in my business as possible is how we "save". It goes back to equity. That equity or the value of the company, the stock I hold, is our savings/retirement fund.  If we choose to sell a piece of the business, go public with the stock, or start pulling funds out of the business itself. 

I have not owned a brand new vehicle from a dealership since 1989. Its in my blood. I just can't pay full price. Only to lose tens of thousands of dollars immediately out of the parking lot. I enjoy the hunt of finding the car I want with the least amount of miles for the cheapest price.  In fact I have my eye on a Bentley Continental Flying Spur with 13,000 miles on it for about $50,000. It retailed for $220,000. Where did $170,000 goes?

Growing up, every year my Father had a new Lincoln in the garage. This was at a time when gas was less than a dollar a gallon. He would constantly update us boys as to which intersection gas station was offering the best price as we headed out the door.  Even if it was 7 miles away he would encourage us to fill up there to save that $.05/gallon. It adds up.

At the same time, one of my biggest pet peeves is with Philadelphia Cream Cheese. I love the stuff! I use it in mashed potatoes, desserts, and of course on bagels. But the price of those creamy bricks swings bigger than oil on a holiday weekend. Anywhere from $.99 to $2.50 throughout the year. I was taught, if you watch your pennies, the dollars will take care of themselves.

   6.    What monetary items did you consider to be status symbols growing up (i.e. car, house, vacation, jewelry, watch, phone)? How did having it (or not having it) make you feel about money or behave with money?

We grew up in an affluent community but it was supported by the Big 3 Automakers. Being the 1980s and a boy in Detroit, cars were a big deal.  Believe it or not you would be hard pressed to see Porsche, Ferrari, Lamborghini, or Maserati on any of those streets. The television shows and movies of the time were all about fast cars. Miami Vice, Dukes of Hazard, Knight Rider, Magnum P.I. you name the show and chances are there was a great car featured in it. I was definitely affected by those programs. 

Fashion was the same way as it played a unique character in the entertainment media. Films such as Beverly Hills Cop and American Gigolo made me long to live on Rodeo Drive cruising in a Mercedes 500 Sl convertible. If I named off many of my favorite films they almost certainly have a sports car in them, even if they are terrible movies.

So as a teenage boy I plotted that if I was able to put $1,000 in the bank each month in tens years I would be able to buy a new Lamborghini Countach ($120,000). I constantly scoured used car lots for hidden gems and would take nightly cruises at 2 am just to window shop at the only exotic dealerships around 45 minutes in one direction or the Rolls Royce dealer 30 minutes the other way. Back then, Porsche was the only brand that had a presence in my hometown. One night I found a 1988 Porsche 930 turbo slantnose worth $150,000 stashed in their backlot fenced off. I was in love. It would take more than a decade, but that would be my first exotic car, with the Ferrari Testarossa from Miami Vice next in line. Never got the Lambo though, and they cost almost $1 million today.

Miami Vice Don Johnson wore Ray Ban sunglasses, Italian loafers with no socks and a gold Rolex President. He cruised the streets in a white Ferrari.  That snapshot was integral into the trajectory my life took at a very early age and to this day. When I first started to make some real money, I wanted that Rolex President. So my broker directed me to DuQuet Jewelers, a 50 year old fine jewelry retailer just a few miles away from my house. I walked in there with the Ray Bans and the loafers and an attitude shooting off my mouth about how much money I had just made and the reason for my call. Incidentally, I was driving the Mercedes 500SL from American Gigolo. 

The owner escorted me back to the diamond room an regaled me with stories of the diamond and jewelry business. So after several hours I emerged from that room having made my first investment in the world of luxury. It took me several years to get my watch though.  It occurred to me that there is far more prestige in owning the business that sells the Rolex, than simply having the watch on your wrist.  I realized then that I didn't want to just spend money on luxury goods I had coveted for so long. I wanted to own the businesses that sold them to everyone else.

   7.    Tell us about one of your first purchases where you used your own money (from a job, an allowance, money you earned, etc.).

My parents were fantastic negotiators for my brother and I.  Anything we wanted to could have but it was just out of reach of them giving it to us. We would have to earn the money to make up the difference. But first, I had been given a new bike for Christmas. It was fantastic. A 1977 Green Huffy Thunder Trail. In my youthful angst one day, I left the garage door open and my bike wasn't locked. Someone made off with it. So as they say "The first ones free...." I had to cut lawns and shovel snow to be able to buy a bike of my own. Its a real lesson in responsibility that I think many of today's youth don't always learn. You take better care of something you earn. Red Spree Scooter. Martial arts class and weapons.

   8.    When it comes to money or money management in your own life, what is the No. 1 issue that you would like to solve? If there are no “issues” why do you think that is?

My personal finances have never been better. We don't carry the overhead we had a few years ago and no debt. Thats always been the most important to me.  Back in the late 1990s, the internet had made its debut and everyone was getting rich off of anything dot com. A dear friend of mine, former CFO of Kmart Corp. was going to introduce me to the CEO of Zale Corp, which was then the largest jeweler in North America.  We were discussing the converting of my jewelry businesses online and a possible merger. 

At the time, a company called Ashford had gone public with a valuation of $1.5 billion, only $40 million in sales and huge losses.  I suggested that if we plot the same course, I would instantly become a billionaire. Not only that, but I would become a billionaire at an earlier age than Bill Gates had become one. They put the brakes on my ambition, stating that I needed to have the discipline to play the long game here and to demonstrate several years of consistent profits before any IPO.  Disenchanted by this advice it would not take long before the whole internet house of cards would collapse proving them right. 

I always follow the stock market especially within the markets that I participate like jewelry, luxury, and furniture.   I would have the opportunity to participate in the bankruptcies of Montgomery Wards, Service Merchandise, and Heilig-Meyers Furniture. All three were legacy brands with multi-billion dollar balance sheets that had been overextended by shortsighted executives.  We walked away with Heilig-Meyers, then the largest furniture company in the world. The company had $975 million in receivables and $850 million in debts when it filed. The company was also considered one of the top jewelers in the United States earning over $300 million a year from a thousand locations.

Almost two decades later and the acquisition of dozens of other brands in equal distress, it is money management and the elimination of debt and reduction of overhead that has allowed some of America's most iconic brands to re-flourish.

During the COVID-19 pandemic of 2020 thousands of companies and tens of millions of people got really hurt financially. This created a deep pool of opportunity for us to buy competitors, suppliers, and others. If I had been willing to borrow money, go into debt, in order to buy up these organizations, we could have become the largest jeweler company in the world. But I am unwilling to risk it all to take that shot. I don't wish to make my old friends right again. So we continue a steady pace keeping our morals and values close by our side.

   9.    Where could you exercise more courage with money?

I believe that I could be more courageous with my giving. Because I always feel like we are saving our pennies for the next deal, I am not as generous as I would like to be with others. While we do participate in a multitude or charity events around the world each year I just wih I could do more personally.  Throughout the last decade since 2008 economic downturn, my responsibility to the business and its supporters has grown. I no longer feel like it is appropriate to live in such a lavish and loud manner, especially while others are having such a hard time.

When we bought DuQuet Jewelers, the company was deeply ingrained in the local charity circuit. I learned a great deal about the benefits of giving back to the community. It was very satisfying.   As the business grew so did our opportunities. It started with Finlay’s support of Breast Cancer Awareness and Treatment and then George Clooney Tsunami Relief in 2005. But I am most proud of Heilig-Meyers for their help in raising tens of millions of dollars for Cystic Fibrosis over the years.

Those institution to institution transactions just aren't very intimate. While I was in Russia for the G20 we were able to visit the hospital and local school we had raised money for and see all of the work that had been accomplished.  I was able to meet those that had been most touched and benefited by that program. Everyday there are people launching Go Fund Me pages for individuals that need support and help. I wish I was able to assist in filling all those coffers for the people that directly benefit from those efforts. Something more than "Just write a check".

   10.  If you could help women and children in the area of having more courage with money, what would you do or what advice would you give them? If you are a woman, what advice would you give other women?

My advice to anyone is to manage your overhead and debt very carefully. I know so many people that once they start a new position or get to a point in the beginning of their finances that immediate borrow and spend. It takes so many years to get out from under that. But the temptations are so great in the retail environment especially with all of those credit card facilities at each store offering so many perks. 

So many people don't give themselves a chance to be successful. I have a family friend that just graduated from high school and was working as a hostess at Ruby Tuesday while she was figuring out her future.  When the Corona Virus came, her plans for school dissipated along with her job as businesses shuttered to stave off the spread of the infection. She became a 19 year old new Mommy by the New Year.

Give yourself a chance to find out what the world has to offer and what you are good at. No one really needs a new spoiler on their Honda or the latest $1,000 Iphone. Open up a bank account and start shoveling as much as you can into it as early as you can. When you see that Philadelphia Cream Cheese is on sale buy it!

   11.  In preparing for the debut journey through Money National Park™: Where have some of your most influential money impressions come from – gender, generation, tragic events (death, divorce, illness – even of your parents), bad decisions, social upbringing, etc.?

I have to say I was surrounded by great wealth and extreme mediocrity in my life. There is a stark difference in behavior by both groups. I have always felt that my parents ceiling was my floor. That it was my responsibility to take the gifts that they worked so hard to provide and do the very best I could with them. I should be more because they gave me the tools and opportunities to be more. Most people will never taste caviar, sunbathe on a yacht, or smoke cigars with Presidents and Diplomats. Nor do most even care to do so. But why not create the option for yourself? Perhaps instead of memorizing sports statistics you read up on how the owners of the teams became successful. 

Over my adult years I have encountered and/or befriended about 100 of the Forbes 400, while through my ownership of the Beverly Hills Cigar Club as many celebrities and VIPs.  I have seen these people as they skyrocket like Elon Musk and some of them as they implode like Brazilian billionaire Eike Batista.  If you chase money, you'll never have any. Your intentions have to be more altruistic than that. It is very true that money doesn't make you happy. Not having any doesn't make you happy either. Happiness is not a function of money. That has to come from some place else.

Becoming a millionaire or a billionaire is really a title earned from having done something that many, many people needed or wanted.  Thats where the true value of money comes in, not the balance in a bank account. 

   12.  What are your childhood memories of family vacations (where did you go, what did you do, where did you stay, who paid for what, could you afford vacations, etc.)? What do your vacations look like now (outside of Covid19)?

Each year we had vacations. My parents had planned for us to visit California and Florida throughout our childhood years. Much was centered around the Disney Theme Park experiences where we got 1 day passes for the park. We would dress in sport coats and ties and fly from Detroit to our destination. There was an elegance to air travel back then. A reverence to the process and we were expected to follow it. 

While in California, we would also stay in Palm Springs where we rode ATVs in the mountains and through the desert land. My parents were very generous with their time off allowing us access to all of the various theme parks and tourist destinations like Knotts Berry Farm, Universal Studios, or Hollywood. We were introduced to a lot of exotic fare especially for our age and background. At 16 years old I had been accepted to California Institute of Arts which was founded by Walt Disney. It was the year of the summer Olympics in Los Angeles so while on our trip we also visited the CalArts campus to see if I would like to study there the following school year.

Our trips to Florida were decidedly different. We spent much more time on the beaches and deep sea fishing. Running the coastline down to Key West.  My Father's business associates would provide us with a chauffeured coach that would chaperone us throughout the states attractions. He was also armed in case there was any need. My parents would continue to encourage us to try all manner of foods like snake, alligator tail, and turtle soup. I was always game, my brother being 4 years younger was more of a cheeseburger fan.  The coach was also provided for us on trips to the East Coast like New Yorks Theatre District. We also spent one two week vacation in a 4 story rented beach house in Ocean City with close family friends. It was like being in the Hamptons for the Summer. 

I have designed my life to where I live in some of the most beautiful places in America.  In Bel Air, CA I have had a home there in Holmby Hills for almost 20 years. Just down the street from the Playboy Mansion and about a mile from Rodeo Drive and the Beverly Hills Hotel.  In South Florida we have a wonderfully private modest home that allows us to walk the Key at sunset or swim in our pool at midnight. The community has about 800 people sharing 7 miles of beach during the off season.  So where do you go when you live in paradise?

I have traveled around the world for business including about 500 flights in the last decade. Moscow, Milan, London, Paris. So the thrill of travel isn't quite the same for me. Private jets to exotic ports of call are very nice. We were recently invited to Richard Bransons Necker Island. If desired, my business would take us to ever film festival, yacht show, red carpet VIP charity event in the world. But the real benefit of money is being able to choose to stay home with the ones you love.

 We’re looking forward to hearing from you and receiving your story.