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During my public service days, I had a very interesting co-worker named Tony. To the casual observer, we were very similar. We were both the same age, worked in the same department, and had the exact same titles. We were both construction inspectors.
But beyond those superficial characteristics, we were very different. I, for lack of a better term, was SAT smart. Tony, for lack of a better term, was compound-interest smart. Here’s the skinny on our differences as they stood way back in 1997.
Me
| Education | Bachelor's degree, just enrolled in graduate school. |
| Government Salary | $42K. |
| After Work Activities | Read a book, sleep. |
| Marital Status | Single, no girlfriend in sight. |
| Housing | First foray into home-ownership, a one-bedroom condo. |
| Money Habits | Save when necessary, but mostly live paycheck to paycheck. |
Tony
| Education | Associate's degree. |
| Government Salary | $42K. |
| After Work Activities | A side-hustle landscaping business he started just after high school. |
| Marital Status | Newly married to a fabulous girl. |
| Housing | Nice single-family home in a nice neighborhood. |
| Money Habits | Spend wisely and save for the future. |
Now before I explain two additional differences between Tony and me, I just want to make clear that Tony wasn’t a dolt. Yes, I could out score him on the SAT and other standardized tests. But it wouldn’t be a total blowout. If we both prepared for the same standardized test, I would rank in the 80-85 percentile and he would rank in the 65-70 percentile. Defining myself as SAT smart was just a shorthanded way of saying I had a slightly greater aptitude for things such as calculus, statistics, and programming.
Okay, with that important qualifier out of the way, here’s the first additional difference between Tony and me that needs to be addressed: our respective net worth.
In either 1995 or 1996, I forget the exact year, I was on an asphalt job with Tony and we broke for lunch. Before we headed to All-American Burgers, however, Tony needed to stop by his bank to make a contribution to his mutual fund.
I don’t remember what bank it was, nor do I remember what mutual fund Tony invested his money in. All I know is that he showed me his account balance and it was over $900K. Nine hundred freakin’ K! By the time 1997 rolled around, he was surely a millionaire. I on the other hand had a net worth around $10K in 1997. Pretty pathetic.
And speaking of something being pretty pathetic, here’s the second additional difference between Tony and me: I was a snob and he wasn’t.
Tony was the embodiment of the Millionaire Next Door. And I didn’t just work with him, I was friends with him. Heck, we even played ice hockey together. So did I ask him how he amassed such a fortune at the tender age of 36? Hell no. After all, what could someone with a lowly associate’s degree teach me? In my warped mind, wisdom only came from those with an elite credential. And since Tony didn’t have one, I chalked up his wealth to luck. He surely had the benefit of a large inheritance I concluded.
Tony, on the other hand, didn’t believe in credentialized wisdom. His father only had a high school diploma. But his father was very savvy when it came to personal finance, and he taught Tony everything he knew about saving, mutual funds, and compound interest. And because Tony wasn’t in thrall of a fancy piece of paper with Latin words written on it, he didn’t sneer at his father’s uncredentialized teachings. He embraced them—with gusto.
Tony, in effect, mastered the money game before he was even out of high school. Is it any wonder then that he was a millionaire as the 90s came to a close and I was a broke loser?
Final Thoughts
In 2003, I had my financial come-to-Jesus moment. Mrs. Groovy introduced me to Dave Ramsey. And it was only after reading his Total Money Makeover that I had the sense to start picking Tony’s brain.
Tony’s financial rise wasn’t the result of an inheritance. It was the result of work, discipline, and faith. He lived on his government paycheck, poured every dime he made from his landscaping business into his mutual fund, and let the magic of compound interest do the rest. It was as simple as that. Nothing fancy or highfalutin. And certainly nothing beyond the grasp of the Average Joe or Josephine.
But it was beyond the grasp of my supposedly high-powered brain until I was in my early 40s.
In pondering the main takeaway from this post, I couldn’t help but think of some lyrics from a Brooks and Dunn song called Red Dirt Road. Here they are:
I learned the path to heaven
Is full of sinners and believers
Learned that happiness on earth
Ain’t just for high achievers
And here’s the takeaway (thank you, Messrs. Brooks and Dunn):
Wealth on earth ain’t just for high achievers. You don’t need a PhD from Wharton or a law degree from Harvard to get rich. You can get rich even if you have a crappy government job. But you got to have a stomach for work and a fondness for saving—like my friend Tony. And most importantly, you got to be compound-interest smart. Just like my friend Tony.
Okay, groovy freedomist, that’s all I got. What say you? Is it better to be compound-interest smart than SAT smart? Or are you screwed in today’s America if you’re not Ivy-League material? Let me know what you think when you get a chance. Peace.
The SAT vs Compound-interest smart distinction brings to mind the human tendency to pretend to be what one is not.
The last person to learn anything is someone who knows everything. (That was me when I was in grad school and just out.) Likewise, the last person to create wealth is someone who “acts rich.” The pretense of knowledge and pretense of wealth is how deity humbles the proud. Shaking off that pretense is the first step of exalting the humble.
“The last person to learn anything is someone who knows everything.”
“The pretense of knowledge and pretense of wealth is how deity humbles the proud.”
Holy crap, my friend. You have one high-powered brain sitting in your skull. Made my week, Steve. One of the most profound comments I’ve ever read. Cheers.
I’m not sure it has to be either/or (SAT or Compound). A dash of both can go a long ways.
P.S. I haven’t heard or seen the word “dolt” very often. Kind of funny to me. My wife introduced me to the word. She jokingly refers to herself and her sister as a couple of dolts from St. Louis. Please don’t tell them I wrote this. 🙂 Tom
Haha! I don’t know why I chose to use the word “dolt.” It just came to me. And don’t worry about disclosing the secret of your “doltish” wife and sister-in-law. My lips are sealed.
Really wondering how Tony is doing now!
My SAT scores were bad… like a C on a test if I recall…just more reason to prove it wrong someday 😆😆
Tony’s doing great. He reached called me on Tuesday this week. What a freakin’ coincidence! I had this post sitting in the hopper for a while and started putting the finishing touches on it Monday. I was thinking of telling Tony about his being featured on my blog, but I don’t want my former colleagues to know about it. I don’t often have nice things to say about them. Anyway, like I said, Tony is doing fine. He bought a new Ford pickup truck with cash. The price? 52K. Thanks for stopping by, Lily. It’s always great hearing from people who didn’t nail the SAT but nailed life. Cheers.
Ideally, one would be both SAT-smart and compound interest-smart, but if you have to pick only one, I think compound interest smart will take you further. Like you, I wish I had gotten compound interest-smart earlier, but better late never.
So true, my friend. I have cousins who are both SAT smart and compound-interest smart. They both went to Dartmouth and both had a strong affinity for modest living and saving. And I distinctly remember one of these cousins telling me in the late 80s to invest in an S&P 500 index fund through Vanguard. But I was too SAT dumb to heed that advice. Sigh.
Compound-interest smart is the way to be! Great post!
Agreed, Jack. No one ever got hurt being compound-interest smart.
I appreciate your term “credentialized wisdom”, though guessing that is meant to be ironic, as credentials indicate knowledge or experience, not necessarily wisdom.
In the search to make things measurable and thus comparable, academic degrees are the standard. Yet what has become the system doesn’t mean the system is always right.
My favorite example is Huck Finn, if you recall the book. Huck was constantly told, and believed, he was stupid because he was not book smart and didn’t follow social conventions. Yet he could swim in the Mississippi without drowning, navigate on it, survive by hunting and fishing, and make moral choices on his own. Seems pretty wise to me.
“In the search to make things measurable and thus comparable, academic degrees are the standard. Yet what has become the system doesn’t mean the system is always right.”
Nice, Louise. You have a very keen mind. Have you ever considered blogging? And thanks for bringing up Huck Finn. Haven’t read it in years. Perhaps it’s time to reacquaint myself with that classic.
Oh, wow, Mr. G! If I ever move to blogging, I will attempt to match your welcoming spirit. I admire the way you carefully consider the words and thoughts of your commenters.
That’s awesome to hear about Tony. I try to tell the teens and family members in their young 20s I talk with to invest and save for the future.
The best thing they can do at that age is to avoid debt, instead of financing a tricked out truck (or two new cars for you and yours) because you’re finally earning a real paycheck.
Awesome reference with Red Dirt Road as well. Brooks and Dunn is another great remnant that started in the 90s.
Hey, Josh. Couldn’t agree more about Brooks and Dunn. And I couldn’t agree more about avoiding debt at any age, especially if you’re young. Money saved and invested in your 20s rather than going for a tricked out truck will literally become a hundred grand or more in your 60s. Why do the young fight us on this? Must they always learn the hard way?
My SAT scores were terrible and my current job has nothing to do with my Bachelors Degree. BUT I earn a decent salary and will be graduating from The Corporation many years before my Ivy League colleagues.
I guess that’s a vote for compound interest!
Thanks for this post, Mr. G. I agree with J. Money – let’s buy Tony a beer!
“I earn a decent salary and will be graduating from The Corporation many years before my Ivy League colleagues.”
Made my day, Mrs. G. Guile and financial discipline works regardless of one’s SAT score. Hail the Tonys of this world. And, yes, the next time I’m up on Long Island, Tony will get a number of beers curteous of the FI community.
As a public employee, I completely agree. It does take longer than our private working peers to amass the same lumps of money, but patience, diligence and time work in favor and we don’t easily get lost in spending beyond our means (because we’re not rolling with big spenders in public employment). Good for Tony, I only wish I was like him 10 years ago and we’d be in a much better spot!
Hey, Kate. Now I like you even more. There’s a special place in my heart for all public employees (even though a lot of them catch my verbal wrath). Are you familiar with Ed Mills, the Millionaire Educator? He’s a teacher who taught mostly in rural Georgia. And like Tony, he’s very savvy when it comes to money. Check out his blog when you get a chance. If someone can become a millionaire on a teacher’s salary in rural Georgia, there’s hope for all us.
I want to buy Tony a beer.
Love the way your mind works, J$. He definitely deserves one.
Can I be smart at both? How is Tony doing today? I hate to admit it, but I was a bit of an NY Snob too, frowning about others, because of things like education. I’ve changed my ways now. I owe a lot of it to the humble pie I ate during our rock bottom moment and the $109K worth of debt we carried. Glad to have seen the light and the betterr in all kinds of people.
Haha! I’ll find out how Tony’s doing tonight. He actually called yesterday while Mrs. G and I were out and left a message. Haven’t heard from him in about three years. He must have known I was writing about him. Thanks for stopping by, Brian. It’s always great hearing from a recovering NY snob.
It’s best to be SAT smart and Compound-Interest smart. You’re there now. I’m sure we all wish we were compound interest smart when we were young.
Tony had a great advantage with a financially savvy dad. I hope to teach our kid about personal finance before he goes off on his own. It’s a very important skill to have.
As a side note, I was SAT smart and frugal when I was young so it worked out pretty well for me. I’m getting less SAT smart everyday, though. The old noggin slows down a lot as I get older. I think it runs in the family.
Oh, man. Imagine being young, SAT smart, and compound-interest smart? Talk about the world being your oyster. And I love your admission that you’re getting less SAT smart everyday. Same here, my friend. Years ago I used to know all my credit card numbers by heart. Now I have trouble remembering the first four numbers. Oh, well, no ever said aging was going to be easy. Thanks for stopping by, Joe. It’s always great hearing from you.
I used to be the same way. I don’t know when the epiphany hit, but at some point I recognized that everybody knows more than me about something. Everybody has their own lived experience and their own set of passions and interests in which they are knowledgeable. There’s nobody in the world that you can’t learn something from.
“There’s nobody in the world that you can’t learn something from.”
Lot of wisdom there, my friend. Thank you. Why do I always feel like I gained some brain cells after reading one of your comments?
Hey Mr. Groovy!
I’m not sure if it’s the same exact concept, but I’ve heard of it as being book smart versus street smart.
As I’ve come to realize over time, being book smart (SAT smart?) can take you down a pretty good path if you just get your degrees and follow a standard career track. The more advanced the degree, the more money (and prestige) you’ll have. Add some basic financial know-how, and you’ll be fine, at least money-wise.
However, to shine beyond that, you need street smarts (compound-interest smart?). These are the risk-takers and entrepreneurs, the people who build businesses and hustle.
Of course, lots of people have a combination of the two. But to your point, I think that if one only has SAT smarts, then it’s hard to move beyond a standard career track, however satisfying or unsatisfying that may be.
So, as with most things in life, I think it’s best to have plenty of both. How they’re used I think depends heavily on the goals and personality of each individual.
“I think that if one only has SAT smarts, then it’s hard to move beyond a standard career track, however satisfying or unsatisfying that may be.”
Damn, Miguel. You summed up the crux of my post far better than I did. Have you ever considered starting your own blog? Haha! I love it, my friend. Thank you for your awesome comment.
Why thank you my man, and awesome post!
Love this story. Thanks! Going to share it with my young nephew. Love your blog, by the way…
Thank you, Lisa. Made my day. Hope it helps your nephew. Young people really have a chance to do some amazing things–they just got to get their minds right. Cheers.
This is great. I love it. These are the folks that are everywhere and you just gotta find them.
Great story and super simple to do, not really that easy.
As for the Mrs down there. Saving more than you earn is quite a feat!!!! Ha
Hey, Mr. WoW. Just took care of Mrs. WoW’s little faux pas. We all get done in from time to time by Mr. Keyboard.
I love this story! 🙂
I think a healthy combination of both is ideal haha. I’m definitely SAT smart but wasn’t Compound Interest smart – really – until recently. Hopefully that makes for a potent combination in the future.
Nailed it, Dave. Compound-interest smart: great. SAT smart and compound-interest smart: priceless.
I definitely agree that you don’t need a fancy degree or a ton of initials after your name these days to make it big. With the growth of social media and internet, so many people are making it big without a degree, hell some of them aren’t even out of high school yet. Bottom line: spend way less than you earn, invest the rest and you’ll be alright.
And now I have that song stuck in my head for the rest of the day!
It’s where I drank my first beer
It’s where I found Jesus…
LOL! I’m watching it on YouTube right now.
Its a classic!
And I totally just watched the video too, thats a keeper!!
Thank you for sharing your honest thoughts and such a great story, Mr. Groovy!
I totally know what you mean when it comes to SAT smart v. compound -interest start. I did relatively well on the SAT and GRE but saw with my own eyes how other people with lower scores do SO MUCH BETTER in life than I have.
That’s when I realized tests are just tests, and they don’t embody the whole spectrum of intelligence. I think I just did a lot of practice tests, and that somehow paid off.
Other than that, I’m always amazed at how smart other people are and wonder what’s so different about their brains that make them so outstanding.
Sometimes modesty and an early education (formal or informal) can go a long way!
“I did relatively well on the SAT and GRE but saw with my own eyes how other people with lower scores do SO MUCH BETTER in life than I have.”
Haha! So true, Mrs. FAF. I don’t even think my brother took the SAT. And he always made twice what I made.
Great story, Mr. G. As my Dad once said, “It’s easy to get wealthy. Just spend less than you make, and do it for a long time.” It’s not rocket science, but it doesn’t happen automatically. Unfortunately, most of our culture is more like you were than how Tony was.
I’m happy that Mrs G led you to Dave R, and that you had that followup chat with Tony. I hope Tony finds your post, it’d be cool to know what’s happened with him since.
Thank you, Fritz. Here’s one for you. Tony actually called me yesterday while Mrs. G and I were out. What a freakin’ coincidence! I had this post in the hopper and decided to go with it for today’s post on Monday. I’m debating whether I’ll tell him about his starring role in my blog. I don’t know if I want any of my erstwhile co-workers to know about my blog. They’re government employees, you know, and I don’t write too favorably about them. We’ll see. I have until 7 p.m. tonight to decide. Damn these first-world problems.