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As fate would have it, the movie Animal House came out a year before I went away to college. Not good. I actually embraced the fictional Deltas as role models, and my first round of college was characterized by far too much debauchery and far too little learning.
But despite its harmful affects on my budding intellectual life, Animal House was not completely devoid of merit. In fact, there was one line from the movie that could be a fitting mantra for all personal finance enthusiasts. Here it is.
“Fat, drunk, and stupid is no way to go through life.”
Yes, the evil Dean Wormer nailed it. In one simple declarative sentence he stated everything you need to know about personal finance. Let me explain.
Dean Wormer Meets Dave Ramsey
Suppose for a moment that we took Dean Wormer’s admonition against self-destruction and gave it a personal finance twist. Here are what fat, drunk, and stupid would be converted to.
Fat = Debt
Drunk = Materialism
Stupid = Unpreparedness
Now, if we take our converted concepts and reconfigure Dean Wormer’s memorable line, we get the following.
“Indebted, materialistic, and unprepared is no way to go through life.”
LOL! Isn’t that beautiful? I’m not ready to include financial Dean Wormer in my pantheon of unlikely financial gurus (see those gurus here, here, and here), but financial Dean Wormer is pretty damn savvy.
Let’s now see how you can avoid the three habits that financial Dean Wormer correctly says will deliver you to the gates of financial hell.
Mind Your Debt
According to Investopedia, lenders are very hesitant to give you a mortgage if the mortgage will push your debt-to-income ratio above 36%. Lenders, in other words, don’t want to give loans to people who are morbidly indebted.
So what’s a healthy amount of debt? My glib answer is zero. But that amount of debt isn’t feasible for most people, especially young people. A more reasonable debt-to-income ratio is 20% or less. Maintain that level of indebtedness and you’ll be in good financial shape.
Keeping your debt-to-income ratio below 20% won’t be easy. If you made $6K a month, your recurring monthly loan payments for housing, transportation, education, and all other debts couldn’t exceed $1,200 combined. That’s a tight budget.
But it can be done—as long as you purchase big-ticket items through the lens of human needs rather than pampered American needs.
To show what I mean by this, take a look at the following table.
| Big-Ticket Item | Human Needs | Examples That Meet Human Needs | Pampered American Needs | Examples That Meet Pampered American Needs |
|---|---|---|---|---|
| Housing | 250 sq ft per person. | A tiny home or a studio apartment for one person. A one-bedroom apartment for a couple. A small three-bedroom house for a family of 3 or 4. | 1,000 sq ft per person. | A two-bedroom apartment for one person. A 2,000 sq ft house for a couple. A McMansion for a family of 3 or 4. |
| Education | Skills that give you a reasonable shot at making or exceeding the average American's hourly wage, which is currently around $24. | A degree from a community college. A degree from a local state college. | The college experience plus a diploma that reflects your dreams or your desire for prestige. | A degree from a residential state college with resort-like amenities and a monster football team. A degree in graphic design that cost more than $100K. A degree from an Ivy League school. |
| Transportation | A reliable car that gets you safely from point A to point B. | A five-year-old Toyota Corolla or Honda Civic. | A vehicle that has all the bells and whistles of modern technology and tells the world that you're one awesome dude or dudette. | A Tesla. A BMW. A jacked up F-350. |
There’s a difference between what you can afford and what you need. Salespeople naturally prefer that you buy what you can afford. Society too pushes excess. How, after all, are you supposed to get a hot girlfriend if you don’t have a hot car? But if you can condition yourself to ignore all this pressure and default to purchases that meet human needs, you should have no problem keeping your debt-to-income ratio below 20%.
Don’t Be a Congo Dandy
About a month ago, I came across a YouTube documentary on something called the Congo Dandies. Check out the trailer below. What you’ll see is hard to fathom. Picture the worst abject poverty imaginable—no running water, no sewers, no paved roads, no household appliances. And in the midst of this jaw-dropping squalor, picture men who would rather spend a year’s worth of income on a suit than on something that might lift their families out of poverty. It’s freakin’ insanity.
In one sense, it’s hard not to feel contempt for the Congo Dandies. Any man who would sacrifice his family’s well-being for something as trivial as clothes is pretty despicable.
But in another sense, they’re doing something that is all too human. They want to show the community that they’re special, that they matter. And one of the time-honored ways for a person to showcase his or her awesomeness to the world is to buy stuff. Does this, dear inhabitant of the United States, sound familiar at all? Don’t many of us drink heartily from the well of materialism so we can impress others?
Don’t be a Congo Dandy. Don’t buy stuff to reap admiration. If you want admiration, DO SOMETHING THAT IS NOBLE OR HARD TO DO. Any yutz with a credit card can create the illusion of wealth. It is far more honorable to be mindful of your purchases—to buy just what is necessary to get the job done. A smartphone, for instance, is rapidly becoming a necessity. But you don’t need a $650 iPhone 7 to get into the wireless game. A $60 LG from Walmart is more than adequate.
One way to keep your ego in check is to limit your Congo Dandy purchases to no more than 5% of your take-home pay. Here’s how that would work.
Suppose you take home $35K a year. Multiply $35K by 5% and you come up with $1,750. Your annual Congo Dandy budget would thus be limited to $1,750. In other words, you can buy all the high-end products you want as long as the premiums paid for these products don’t add up to more than $1,750 (see table below). Once you reach your Congo Dandy budget limit, your remaining purchases for the year must be entry-level or mid-level products that will do little or nothing to enhance your prestige. “Oh, the humanity.”
| Product | High-End Cost | Entry- or Mid-Level Cost | Premium | Congo Dandy Balance |
|---|---|---|---|---|
| Smartphone | $650 - iPhone 7 | $60 - Straight Talk LG Treasure 4G LTE | $590 | $1,160 |
| Sneakers | $355 - Air Jordan 11 Retro | $48 - Converse Chuck Taylor High Top | $307 | $853 |
| Men's Suit | $500 - Brooks Brothers | $200 - Macy's | $300 | $553 |
| Polo Shirt | $180 - 2 Lacoste Classic polo shirts | $12 - 2 Faded Glory polo shirts | $168 | $385 |
| 10 Crossfit Workouts | $150 - Local crossfit gym | Free - In my garage | $150 | $235 |
| Vodka | $80 - Grey Goose VX | $16 - Three Olives | $64 | $171 |
Live Like You Don’t Have a Sugar Daddy Government
I don’t care what contemporary politicians have promised you about Social Security and Medicare. Old-age entitlement promises are only as good as the might of the underlying workforce. If future workers have neither the means nor the desire to honor those promises, those promises won’t be fulfilled. This doesn’t mean that Social Security and Medicare will disappear. We just need to be realistic. The federal government is already $20 trillion in debt. Our workforce is slowly being sapped by age, globalization, and robotics. How, then, can we reasonably expect Washington to be our sugar daddy in old age?
Since future old-age entitlements are likely to be less generous than today’s, you need to prepare. At the very least, you need to save the amount necessary to generate an average Social Security benefit. A DIY retirement benefit equal to the average Social Security benefit, plus whatever old-age entitlements the federal government is able to provide, should give you a reasonable shot at a dignified retirement.
The average annual Social Security benefit is currently $16,848. Assuming your future portfolio will generate a five percent return, your future portfolio will need to have $336,960 in it to produce that benefit.
The below chart shows what you need to save monthly in order to have $336,960 by the time you’re 65. If you can save more, by all means do it. And don’t forget to account for inflation. Forty-five years from now, $336K will not have the same purchasing power it has today. So increase your monthly investment every year by the rate of inflation.
| Age | Monthly Investment |
|---|---|
| 20 | $88 |
| 25 | $128 |
| 30 | $188 |
| 35 | $278 |
| 40 | $418 |
| 45 | $648 |
| 50 | $1,058 |
| 55 | $1,958 |
Final Thoughts
Up until I was 40 years old, I was indebted, materialistic, and unprepared. But then, largely because of Mrs. Groovy, I had my come to Dean Wormer moment. It suddenly dawned on me that being indebted, materialistic, and unprepared really was a horrible way to live.
The good news is that once I stopped being “normal,” and once I started using my functioning brain to vanquish debt, askew frivolous purchases, and make retirement savings a priority, my financial prospects quickly turned for the better. Nothing could stop my advance toward financial independence—not the politicians in Washington, not the thieves on Wall Street, not even the evil One Percent.
Okay, groovy freedomists, that’s all I got. What say you? Is financial Dean Wormer right? Does he belong in my pantheon of unlikely financial gurus? Let me know what you think when you get a chance. I’d love to hear your thoughts. Peace.
I love Animal House! It’s awesome how you tied your content to something I can relate to and make it so engaging. You definitely have some great words of wisdom in there for someone who is just entering the “real world” as well. I’m doing my best not to be “fat, drunk, and stupid” haha! Thanks for sharing!
Had never heard of Congo Dandies until now. They represent all people who are directly opposite to Stealthily wealthy! I think Financial Samurai would agree : )
I think you have nailed it on bringing out the problem of consumerism
Agreed. We all have an inner Congo Dandy that we must subdue. Stealth wealth is surely the way to go. As Sam would no doubt attest, a much more honorable path for one’s life. Thanks for stopping by, Arun. I really appreciate your thoughts.
I think it’s a bit of a leap to get from a one-off quote from Dean Wormer totally unrelated to finance in any way at all to “don’t be a Congo Dandy”. I think it’s also a bit of a leap to view that video alone and take away some of the conclusions you arrived at. Perhaps you did additional research aside from a single Russia Today video that is not mentioned.
This video is appears to be an inspirational one that shows that there is a tradition of men dressing up in this area. Because of poverty in the area, it is difficult. The older generation has made poor decisions about spending on these clothes. The younger generation is learning to carry on the tradition in innovative ways such as making their own clothes and only making expensive purchases they can afford. The main person being followed around is an entrepreneur who teaches a class on La Sape, which is what they refer to this tradition as. Another is a published author. Another is a civil servant who’s living conditions are beyond my own – nice flat screen TV, polished hard-wood furniture, A/C, the works.
Some quotes from the video:
“Normally, if I hadn’t bought this pair (of shoes), I would have bought a plot of land.”
“Now young people know they don’t have to make sacrifices to buy expensive things. They understand La Sape isn’t the same as buying expensive clothes.”
“La Sape isn’t synonymous with expensive clothes. It’s not!”
I won’t disagree that these could largely be seen as frivolous expenses, and consumer debt several of them used is a terrible thing, only that this may not have been the most productive way to demonstrate your point. Take, for example, the opposite view point on personal finance. From a “Dandy” perspective, what kind of financial fool would buy a car or any sort, used or new, when you have two perfectly good feet, bikes are far cheaper, and public transportation borders on free? I see no fiscally reasonable answer to this question.
The most common I hear is that someone chose to live in some remote place that isn’t walkable or bikeable and doesn’t have public transportation. So, in other words, this person purposefully chose the socially and fiscally irresponsible “Dandy” place to live; the one that would unnecessarily increase transportation costs, insurance costs, tax liability, commute times, impact on their environment, impact on personal health, etc… Best case, they chose this because they didn’t look at all of the dependency costs when they decided the house in the burbs was cheaper. More likely, they’re a victim of the American nightmare and while this person has started down the path of financial responsibility, has yet to overcome the idea of a house in the burbs with a white picket fence being the only place to raise children.
Or, from a “Dandy’s” perspective, why would you waste even $10k on a community college education if earning potential is your primary motivator? If you want to make 2x-5x the national average, you can do that straight out of high school by getting into tech. A single certification that involves reading a free book from a library and paying as little as $100 to take a 60 question test can get you a job starting in the low $40,000 range pretty much anywhere, or in the low $60,000 range in any major city. With a couple of years of experience, you’ll crack $100k in any large city working in tech.
I would argue that rather than Dean Wormer who had literally nothing to say about finance, perhaps you should choose the “Dandy” who is teaching young people to find ways to responsibly practice La Sape as your unlikely financial guru.
Haha! I love it, NatPhorU. Have you ever considered starting a blog, my friend? You make some very valid points. And you’re absolutely right about college being a Congo Dandy expense (see my post today). We are far too frivolous with our education dollars. But I still think my Congo Dandy reference is valid. Yes, there are certainly responsible Sapes, but giving the dire circumstances of the Congo today, spending one’s time, effort, and money on clothes to impress others is the height of egotism and lunacy. Wouldn’t such energy be better used trying to make the Congo government less corrupt and the Congo living conditions less squalid? I truly appreciate your defense of the Congo Dandies. But I just haven’t found your arguments convincing enough to change my take. Thank you for stopping by, my friend. I hope I hear from you again.
Holy cow, I’m in shock from those Congo Dandies. Insane.
My big cutback this year has been my garden. I’m working in it, but put myself on a pretty tight budget. No going bonkers on lots of extra tools that I don’t really need right now. Make cement footpath stones instead of looking for stone. As much DIY as possible. And I’m checking out the local swap lists for stuff I need.
Still early in the year, but I’ve been getting results!
Agreed, Gila. The Congo Dandies prove unequivocally that human beings are highly irrational. And good luck on the garden this year. It’s not hard to let the budget for that endeavor get out of hand. As you so aptly pointed out, DIY is your friend.
Love this post!
This is just perfect – “Indebted, materialistic, and unprepared is no way to go through life.”
Another great lesson Mr. G!
Aw, Amy, you’re too kind. I don’t know why, but I was thinking of that classic Dean Wormer quote and the personal finance connection just hit me. So all that alcohol I consumed in college didn’t destroy the creative portion of my brain. How fortunate! Thanks for stopping by, Amy. It’s always a pleasure hearing from you.
This is awesome! I’m surprised you didn’t work any motivational quotes from Niedermeyer in here. “You’re all worthless and weak!”
I love the table of comparisons on what’s reasonable for most human beings vs our entitled view is what we deserve.
The Congo dandy thing is so sad, but if we are truthful, most of us in the USA are spending as much or more wastefully – the poverty in the world just isn’t as visible for us so the contrast isn’t so stark.
For those of us living in countries like ours, we should be grateful for where we were born and show that gratitude by being responsible with what we’ve been given.
“You’re all worthless and weak. Now add 5% to your 401k contributions.”
LOL! In all honesty, Niedermeyer quotes weren’t foremost in my mind. I was thinking about working in, “Thank you, sir. May I have another.” But I didn’t want to get too carried away.
Thank you for stopping by, Chris. You comments on the Congo Dandy disease were spot on. A lot of wisdom there, my friend.
5% sounds so small, but when I think of spending that percentage of my income on extravagances, it seems huge! Thanks for the idea. I guess that means we’re more frugal than I thought!
Haha! I was thinking the exact same thing as I was formulating the guideline. Then when I saw what 5% of 35K was, I started having some reservations. $1,750 a year for frivolous or extravagant stuff is kind of steep. I’m going to start running a experiment and see how much of a premium we spend on stuff. My guess is that we’ll come in under 5%. We’ll see. The plot thickens. Thanks for stopping by, Julie. Always a pleasure hearing from you.
The Congo Dandies are incredibly fascinating. I can’t imagine living in abject poverty and spending a year’s worth of salary on a suit, when I could buy a plot of land that would potentially allow my children to get ahead. Not trying to be too judgmental but this blows my mind and seems crazy to me.
I hear ya about the Congo Dandies. They are crazy and it’s hard not to be judgmental. But in their defense, I will say this. The advertisers who push the cult of materialism are new to the underdeveloped world. We lived with the cult of materialism for several generations and are only now realizing that more stuff doesn’t equal more happiness. Thanks for stopping by, MSM. It’s always a pleasure hearing from you.
Great advice. You definitely need to be able to splurge on those things that make you happy. And now that I am out of debt, I feel less anxiety about that. I have no desire to be a monk. Unless I get to live on a cliff in Ireland, staring at rainbows and illuminated manuscripts all day. In which case, I’m in.
Great point, Linda. Life is definitely better without debt. You sleep better at night and you don’t feel guilty over the occasional splurge. And I’m with you about living on a cliff in Ireland. I would just need one more thing to make me happy: an unlimited supply of Guinness.
I wouldn’t have agreed 25 years ago, but today I say “Dean Wormer is right!” Investopedia, however, is wrong. Many mortgage companies are happy to lend up to a 45% DTI. It’s a cryin’ shame, but it’s the truth. I did it many times myself while in the mortgage biz (although that was pre-recession) and we just got ourselves approved for a mortgage with a 46% DTI a mere 4.5 years ago. I fear they will never learn, those banks. Luckily, we have, and like you are changing our path. Another stellar post, Mr. G.
My bad. The Investopedia article actually says that 43% is the highest DTI that some lenders will tolerate. But since most lenders have a DTI cutoff of 36%, I went with that percentage for our discussion. Thank you for pointing out that error. And I’m totally with you about Dean Wormer. Thirty-seven years ago I thought he was a rat fink. Now I’m having second thoughts.
Wow – I can’t wait to watch that documentary. I remember watching City of God (2002) and thinking how unfortunate the slums of Brazil were. The premise is 2 best friends growing up together but one makes his way out and the other joins the gangs becoming a drug dealer. 2 lives/2 paths. Though the path to FI isn’t quite as drastic, once you are on it you see how differently you think compared to others. Things lose importance, life/time/freedom gain meaning.
Fat, Drunk, and Stupid…I would also like to add gluttonous. It is one of my favorite words to describe our society as a whole. I can’t pretend I was never that way, wasting time/money/calories (!) as if they were a never ending resource. Thank goodness I got wise… Thanks, Dean Wormer!
One last thing…having that movie come out a year before college had to be insane! Which character did you relate to most…I know you have one! 😉
For a while, I fancied myself as another Eric Stratton. But I just didn’t have it in me to take “liberties with [my] female party guests.” I had too much of a conscience. So I guess I was more like Pinto, a good-natured sot with a penchant for doing right. Thanks for stopping by, Miss M. Your two-path analogy was point on.
Ha! I am in favor of anything that can tie Animal House to personal finance. Nicely done.
My advice to you, Matt, is to “start drinking heavily.” I always knew you were a righteous dude. But now that I know you’re an Animal House fan, my esteem for you has grown substantially. Thanks for stopping by, my friend. It’s always great hearing from someone with such refined tastes.
Love the Congo Dandy budget. Most of us love a little excess somewhere in our life, whether it be cell phones, hair stylists, good bourbon or nights on the town. Saying “Hey, limit those upgrades to a reasonable percentage!” is a good way of making sure you don’t go overboard.
Exactly! A little Congo Dandy never hurt anyone. Like you said, Emily, as long as you don’t go overboard, a little excess is fine.
Where, oh where, did you discover those Congo Dandies? Sad but also hilarious. And such a great metaphor for the way so many live their lives across the world. Who needs food when you’ve got a snappy yellow (gulp) suit.
Since retirement I haven’t ‘invested’ in any new clothes and shorts, t-shirts, and thongs (aussie flip-flops) are my uniform of choice. And long may that be so.
PS. who the hell pays $350 for a pair of sports shoes anyway???
“Who needs food when you’ve got a snappy yellow (gulp) suit.”
LOL! That says it all, my friend. And I’m totally with you on the $350 sport shoes. I actually saw Air Jordan’s as high as $750. It’s insanity. Anyway, I much prefer your sartorial tastes. Give me shorts, a t-shirt, and a pair of flip-flops over a snappy yellow suit any day. Thanks for stopping by, Martin.
Are those Congo Dandies for real? It’s so hard to believe they’d do that, until I take a good look around me and see people at the food bank with designer bags and manicured nails. Anyway, I think you’ve made a great case for Dean Wormer the financial expert, complete with detailed charts! I would just add that being prepared now with emergency funds and appropriate insurance is just as important as being prepared for retirement.
Agreed. An emergency fund coupled with appropriate insurance are indeed musts. And it’s scary what you’ve observed at the food bank. I guess there’s a little Congo Dandy in all of us. But it’s really depressing when you see the least among us exhibiting that lunacy. Sigh. Thanks for stopping by, Gary. It’s always great hearing your perspective on things.
Hee hee hee. I’d care to hear more about that college debauchery, Mr. Groovy. 😉 Toga, Toga, Toga!
I always felt so bad for Dean Wormer (I only recently saw Animal House myself). Some days I feel like I’m the fat, drunk, and stupid one. But as long as you do your best to stretch yourself and make good decisions, it’s okay to have a bit of impostor syndrome.
LOL! Yeah, I had my share of toga parties. But the really debaucherous stuff occurred my sophomore year when we embraced the movie Deer Hunter for some bizarre reason. We actually had parties where everyone–including the ladies–were dressed in fatigues and covered in mud. We would then play “beer hunter” with a cap gun. Anytime the cap gun went off against your head, you had to chug a beer. Thank God we didn’t have the ubiquitous cellphone cameras back then.
Too funny! Glad you lived through it to tell the tale!
Thank you, Amy. Not my proudest moment. But we did add a certain degree of sophistication to our drunkenness.
With our crew of 7 and our lovely 1650sf house, I think we fall within your guidelines. Although one day we might spread our wings a bit with 300sf per person. You know, so we have enough space for when the Groovies come visit!
Just imagine how luxurious those extra 300 sq ft are going to feel! Strategic minimalism is truly the stuff of happiness. Thanks for stopping by, Ms. M. And thanks for showing America that living modestly and living well are not mutually exclusive.
My new catch phrase “Don’t be a Congo Dandy” unreal! Financial Dean Wormer is dead on, not sure bluto would agree, but hey we all had our moments in college or for 15 years after.
It’s straightforward, common sense, the trick is avoid the trap and don’t let debt, materialism, and unpreparedness creep up on you.
Haha! I love it, Brian. Yeah, I’m sure Bluto’s finances in adulthood were as atrocious as his study habits in college. But he did go on to become a U.S. senator. As you said, Brian, it really is straightforward common sense. Keep a lid on your ego; think about the future; and forever be wary about debt and materialism. Do those three things and you should be fine. Thanks for stopping by, my friend.
Great, entertaining analogy!
I really like these charts too. My graduate degree is definitely one of the big reasons that we still have so much debt, but we’re doing pretty well to make up for that by continuing to live in our three-bedroom house, when we will have five kids.
Never heard of the Congo Dandies before, but WOW! I’m actually really proud of the way that we’ve changed when it comes to those luxury purchases . . . they are pretty non-existent these days. Mr. Smith and I laugh about the way that people must perceive us, as strange or weird, because we don’t spend money on “normal things.” We wear it as a badge of intelligence 🙂
“We wear it as a badge of intelligence.”
LOL! Mrs. Groovy and I wear our weirdness as a badge of intelligence too. I don’t know where or when it happened, but something inside us clicked and we came to realize that on most big-ticket items modesty was luxurious enough. Our future home, when we downsize to 1,200-1,400 sq ft, will be better than 90% of the homes on the planet. Our 13-year-old Camry gets us back and forth from shopping as well as any BMW on sale today. Since I won’t be competing against Lebron James anytime soon, my Walmart sneakers are perfectly adequate. It’s amazing how easier life gets when you stop buying stuff to impress others. Thanks for stopping by, Harmony. You made my day.
I love that you take pop culture references and modify them for personal finance. And I totally agree with the quote, no matter how much of a square Dean Wormer is 🙂
Doing the math is so important….it’s crazy to me that 5% of 35k is $1750. That’s still a lot to spend on toys/fun stuff every year. Or perhaps I’m just cheap!
I’m with you, Kate. I was a little surprised at that number too. Five percent certainly gives the average person enough play money for fancy stuff. But remember, it’s just a guideline. Most people, as long as they try, should be able to stay well below that threshold. Thanks for stopping by, Kate. It’s always great hearing from a fellow “cheapskate.”