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Grown-Up Money (Gwen Moritz Editor’s Note)

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Sarah Catherine Gutierrez, whose Aptus Financial was hired to manage the 401(k) plan at Arkansas Business Publishing Group, recently tweeted a link to a blog called HumbleDollar, written by Jonathan Clements, the longtime personal finance columnist for The Wall Street Journal. In this particular blog entry, he listed 21 signs that someone is tuned into his ideas on “grown-up money,” including my favorite: “You have this nagging feeling you could have got it cheaper elsewhere.”

Gutierrez also introduced me to the concept behind Assistant Editor Kyle Massey’s story in this week’s issue: FIRE. It stands for Financial Independence/Retire Early, and I love its fundamentals even for people who don’t intend to retire early. “Enough is as good as a feast,” Mary Poppins said, and we know she was practically perfect in every way.

Nothing I’ve learned from nearly 19 years as editor of Arkansas Business resonates more than this: Wealth and the appearance of wealth are two different things. And yet we — lenders, investors, employers, journalists, even voters — fall for appearances over and over again. Some of the people who are living large are genuinely rich, some are deeply in debt, some are headed for federal prison. From the outside, you just can’t tell.

There was a time when I would have warned that your banker actually knows. But that was before a couple of infamous cases revealed just how lazy and/or asleep bankers can be. The first was Kevin Lewis, the Little Rock lawyer who specialized in creating improvement district bonds out of thin air and then selling them as investments (sometimes to banks) or using them as collateral on bank loans.

Then came Dennis Smiley, president of Arvest Bank’s Bentonville market, who took advantage of his position and his knowledge of weaknesses in bank lending to obtain more than $5 million worth of fraudulent loans from 23 different banks using the same half-million in collateral over and over again.

Bond fraudster Lewis didn’t explain his need for nearly $40 million more than he earned when he pleaded guilty to bank fraud in 2011. Smiley’s lawyer, however, filed a sentencing memorandum that described a man trapped for 30 years by an irresistible need to live a lifestyle he simply couldn’t afford. And the more successful he became in his career, the further in debt he fell.

“Over time, Smiley found himself unable to say no when it came to money. He could not say no to himself, his family, or to his friends,” Smiley’s lawyer told the court. The memorandum used words like “hopeless,” “completely delusional” and “total denial” to describe his state of mind.

Even after he pleaded guilty to bank fraud, his delusions continued. At 52 (in 2016), Smiley asked for a lenient sentence because he thought he could work another 25 years and earn enough to pay back most of the $5 million. (Do the math. No way.)

It was memories of the Smiley debacle — an embarrassment to Arvest, for sure — that made it especially nice to learn that one of his former colleagues, Lisa Ray, has just retired at 56. She and her husband essentially followed the FIRE philosophy of living far beneath their means even as she rose to one of the highest positions in the bank with the most deposits and branches in Arkansas. And that means not being hung up on appearances and competitive spending.

Gutierrez, who will appear in next week’s Arkansas Business as one of our 40 Under 40 honorees, told me that she is encouraged by the millennial generation’s rejection of conspicuous consumption, including those who have entered highly paid professions. I suppose this could be the result of good training at home or an attempt to avoid the mistakes they have seen their parents make. Either way, it bodes well for them and their children; another sign of a grown-up relationship with money, according to Jonathan Clements, is “you suspect your heirs will be pleasantly surprised.”

Also on Clements’ list: “When you worry about money, it’s about whether you’ve become too good at delaying gratification.” That cuts a little close to home for me, but I’m happy to report that by the time you read this, my husband and I will be finishing up the vacation in Jamaica (where he was born) that we’ve been talking about since we married in 1988.

And I’m trying not to worry about whether we could have got it cheaper.

Email Gwen Moritz, editor of Arkansas Business, at GMoritz@ABPG.com and follow her on Twitter at @gwenmoritz.
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