TIGHTFISTED - Brief Article - Interview

Kiplinger's Personal Finance Magazine, May, 2000 by Ed Henry

INTERVIEW | Public radio's DAVID BRANCACCIO admits it: Squandering anything drives him crazy.

DAVID Brancaccio is a familiar voice to millions of public-radio listeners. As host of the eclectic, award-winning Marketplace, his distinctive spin on financial matters distills the most complicated issues to their essence. He chuckles when he reports that some listeners consider him a financial guru: "If I were so darn clever, I'd be rich."

Lately he has been traveling the country flogging a book about traveling the country asking Americans--in the midst of the longest economic expansion ever--how they handle their wealth. Squandering Aimlessly: My Adventures in the American Marketplace (Simon & Schuster, $25) is an engaging collection of stories about his discoveries, at stops that range from a nudist colony to a shopping mall. We cornered the 39-year-old father of three recently to discuss what he learned on his odyssey and his own views about money.

KIPLINGER'S: Are Americans a bunch of spendthrifts?

Brancaccio: I didn't find squandering to be the rule, despite the name of the book. Americans are very wise about what to do with money. I found examples of squandering, but I also found a lot of examples of people saying wonderful things like "I've just won the lottery and I want to use the money to make the world a better place."

What about David Brancaccio? How does he handle his money? I'm actually a bit of a tightwad. I'm a person who shops insanely, a person who gets really upset if he wastes money or is taken in any way. So I invest a lot of time in being sure. There's a scene in the book where I want to buy a particular computer and I go completely out of control. I plot graphs. I do regression statistical analysis to figure out the optimum price and get a killer deal. And my brother says to me, "Dave, that's great. You saved 200 bucks. Is your time worth nothing?" One thing I realized writing the book is that there's some opportunity cost to spending too much time worrying about some of that stuff.

In your chapter "The Naked Truth About Money"--about your au naturel reporting in a nudist colony--you talk about holding a wad of cash in your hand so tight that your hand cramps. Is there some Freudian significance in that? I hadn't thought of it that way, but that's what a good critic like yourself notices. Yeah, maybe I need to let go a little bit.

What about the $17,000 in savings you went through when you and your wife pulled up stakes and moved to London in 19907 Was that money squandered? Reporting on this book proved to me that it was not a lark to go to London. It was a long-held desire; it was part of my career trajectory. I wanted to be a foreign correspondent, and the only way it was going to happen was to take a financial risk. Any financial adviser who told me I should have stuck that money in a 401(k) would have been wrong. We would have earned a decent return, but it wouldn't have risen as quickly as my salary went up.

On investing, tell us about what you call the opportunity cost of worrying about a portfolio. Look, if you're fooling with your portfolio instead of watching reruns of Laverne and Shirley, fine. But if it's instead of reading to your kids at bedtime, I've got a problem with that. People are spending a little too much time fussing with this stuff on a daily basis. But remember, the goal isn't to fuss with the portfolio; it isn't even to increase your money. The goal is something bigger: What do you want to do with the money? I hope Squandering Aimlessly will prompt people to realize that.

And you point out that excessive fussing with a portfolio isn't necessarily a good thing. I have this funny moment in the book about an experiment by a social psychologist from Harvard. He gave two groups of graduate students mock stock portfolios to trade. He gave one of them business news, things like Marketplace programs and an avalanche of back issues of Kiplinger's and Money magazine. The other group got no business news. And the second group did better.

What does that tell you? Like, wow. I thought we were a force for good. But insofar as some of us force people to get a little too involved with the sport of investing, we may be encouraging people to trade more. And you know there's this incredible suggestion that the more you trade, the worse you do.

Talk about how you think people can improve their quality of life with a windfall. When I was doing a speech in Minneapolis, a guy got up and asked for my opinion of what he called the Kovnowski investment fund. For a minute, a little voice in my head said, "Fake it. Make something up." But a benevolent voice said, "Admit your ignorance." So I asked the guy to tell me about it. He said, "My name is Kovnowski and we invest in our children." His idea was that if you get some extra money, a windfall of some kind, let it replace income you're getting from working on Saturdays or Sundays to free up more time for your kids. By spending more time with them, maybe they'll grow up more solid citizens and help you in your retirement. That was Kovnowski's safety net. I think that's a really good use of money, buying time to do good things, using a windfall to let you get rid of those extra jobs that are sucking up your life.