The (misleading) optics of money

People see money or poverty, but are clueless about your wealth.

Over the next few weeks, I plan to write about the meaning of wealth. Here I set the stage with two stories, and some learnings.

Millionaire Penny-pincher.

Curt Degerman spent his adult life sauntering through a small coastal town in Sweden on an old bicycle. He ransacked recycling bins for cans and bottles, which he sold to a recycling plant, and rummaged through the bins of restaurants for leftover scraps of food, earning him the moniker Tin-Can-Curt.

In 2008, he died of a heart attack at the age of 60. His estate was estimated at an eye-popping $1.4 million - a house, 124 gold bars, stocks, money in the bank, and cash at home. A cousin was the surprise beneficiary.

How did he make this money? The proceeds he earned from the recycling plant were invested. He was a regular at the local library, reading up on the market and stocks and mutual funds.

That effort, combined with a good dose of eccentricity, extreme frugality, no dependents, no debt, and absolutely no inclination to impress others, is what made him wealthy.

Millionaire Spendthrift.

At one time, Hollywood legend Johnny Depp was one of the highest grossing actors of all time.

Depp’s weakness was his splurge fest.

He sued TMG (The Management Group, run by his business manager) for negligence, breach of fiduciary duty and fraud. TMG retaliated by revealing Depp’s compulsory-spending disorder. His ultra-extravagant lifestyle was sometimes in excess of $2 million per month. A 45-acre chateau in the South of France, private islands in the Bahamas, houses in Hollywood, penthouse lofts in downtown Los Angeles, 41-acre estate in Kentucky, luxury yacht, 45 luxury vehicles, 70 collectible guitars, penchant for exclusive wines flown in from across the world, and travel by private plane.

His net worth, once close to $650 million, is now estimated to be a relatively meagre $150-200 million.

Though both are extremes, here are some takeaways.

Johnny Depp was rich. The world knew it. What they did not know was that his bank balance was haemorrhaging.

Curt Degerman was a tramp. The world knew it. What they did not know was that he was incredibly wealthy in terms of assets owned.

• Being rich is visible. It is evident in the clothes you wear, the accessories you flaunt, the holidays you take, the car you drive, and the places you eat. It’s also very addictive.

• Being rich is cool and impressive. It validates your self worth. It opens doors and makes you feel like a million bucks (literally and figuratively). It can also leave you really fragile.

Income is not a good barometer of your financial position. Being rich does not mean you are wealthy. What’s seen is the money made. What’s unseen are the choices made. And it is the latter that will determine wealth.

Like I said, more on this next week.

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