A Tale of Two Winners

Posted on May 8, 2014 by Robert Ringer

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“Leo,” the centimillionaire guest for one of our Mastermind Sessions, shared with members his strategy for handling big paydays.  He said that throughout his career, whenever he received a big chunk of income, the first thing he did was carve out an amount sufficient to cover the income taxes he would have to pay on it and put the money in a special bank account.

The result, of course, was invisible, because the potential problem (having to cough up an unexpected number of dollars at tax time) never became an actual problem.  Leo explained that he would then set aside 90 percent of the remaining money to expand his ever-increasing financial cushion.  And with the remaining 10 percent, he indulged himself and his family with whatever luxuries their hearts desired.

I don’t believe I’ve ever known anyone who planned his financial life so carefully and followed through in such a disciplined manner.  Leo did, in fact, hit a string of crises in the mid-eighties that might have put most wealthy people under.  But thanks to his taxes-first, cushion-second, luxuries-third approach to allocating income, he was able to weather each and every storm.

Today, Leo lives in a $35 million oceanfront mansion in Bermuda.  Prior to moving to Bermuda full-time, he sold his home in Aspen for a cool $19.75 million, which The Wall Street Journal reported to be the biggest residential real estate sale in the history of Colorado.

Which brings me to a longtime friend of mine whom I had always placed in the same category as Leo.  Jack was the epitome of success — a go-go entrepreneur, always on the move, always making deals, always enthusiastic and positive.  Like Leo, he owned two magnificent homes, not to mention a fishing lodge in Panama.

Just as important, Jack was a superb human being — kind, honest, and gracious to a fault.  He was one of those lucky people who possess a natural quality that makes everyone instantly like and trust them.

Back in the early eighties, Jack and I were involved in a cellular-telephone deal together, and as one of the financial requirements for filing cellular-licensing applications, he was required to submit his personal financial statement.  It was an impressive $32 million — a very liquid $32 million — the equivalent of about $100 million today.

As the years passed, I moved abroad and got caught up in other matters, which resulted in my losing contact with Jack.  However, I did think about him from time to time, and wondered how his life was going.  But those “I’ll have to give him a call sometime” thoughts never manifested themselves into reality.

I vividly recall saying to my wife on one occasion, when Jack’s name happened to come up in a conversation, “Knowing what a magic touch Jack has, I wouldn’t be surprised if he’s tripled his net worth by now.”  Just the thought made me feel happy for him, because it couldn’t have happened to a nicer guy.

Recently, I received an e-mail from Jack’s youngest son saying that his father had recently passed away.  And what he told me about his father’s last years nearly took my breath away.

Jack, the epitome of vitality, affluence, and well-being, died penniless in a nursing home.  About seven years after my last contact with him, the IRS presented him with a huge tax bill that forced him to sell most of what he owned at the time, including his two palatial homes in Florida and Wisconsin.

Dementia had begun to set in, followed by a stroke, then confinement to a wheelchair.  The last several years of his life, Jack couldn’t speak at all and had to be fed and cared for by a nurse.

I was touched beyond words when his son told me about the last time he saw his father alive.  Family members had warned him that Jack was so far gone that he wouldn’t even recognize his own son.  But they were wrong.  Though he couldn’t speak, tears rolled down Jack’s cheeks when his son entered the room.

It is impossible for me to focus on a mental picture of Jack confined to a wheelchair, unable to speak, his brain stilled by dementia — and penniless, to boot.  But the way I will always remember him is as a warm, vibrant, prosperous human being.

I don’t know the details of Jack’s IRS problems, but sometimes the unforeseen circumstances Fate places in our path are just too much to handle.  In this regard, Jack’s sad ending reminds me of the words of Baltasar Gracian, the 17th century Jesuit priest who cautioned, “Place your winnings under cover when they are sufficient or large. … Fortune soon tires of carrying anyone long on her shoulders.”

The words on Forrest Gump’s T-shirt put it more bluntly:  “S___ happens.”  And it happens so frequently that a rational person has no choice but to recognize it as an integral part of life.

What’s especially irritating about it is that no matter how smart you are, no matter how successful you may be, and no matter how carefully you plan your financial affairs, sooner or later there will likely be unforeseen circumstances that will register 8.4 at your epicenter.

All anyone can do to prepare for a seismic life shock of such a magnitude is to never forget that Fate sits on the other side of the Table of Life, plotting her next move.  Make your financial moves very carefully, and never underestimate the unforeseen circumstances that she surely has in store for you.

Overconfidence is a dangerous card to play.  And arrogance is as close as one can come to playing a fatal card.  It’s a good idea to operate your life on the assumption that unforeseen obstacles are lurking in the shadows, just around the next bend.  No matter how well things are going for you, always keep in mind that that fickle trickster known as Fortune refuses to carry anyone on her shoulders indefinitely.

Robert Ringer

+Robert Ringer is an American icon whose unique insights into life have helped millions of readers worldwide. He is also the author of two New York Times #1 bestselling books, both of which have been listed by The New York Times among the 15 best-selling motivational books of all time.

12 responses to “A Tale of Two Winners”

  1. Virgil says:

    At one time I thought that a perspective like you're presenting here was just negative thinking. Caught up in a wave of people who "refused" so-called "negative thoughts," I now realize that many of the things I should have thought about more realistically – and seeing "Fate" on the other side of the table – if I had considered more carefully and planned for, I would be a multi-millionaire today. Sadly, I practiced the kind of arrogance and overconfidence (plus a way too low level of due diligence!) you described here, and lost almost everything in 2 business deals. I'm lucky to have my health still at 64, and am managing my affairs far differently than I was before I ran into your work and finally read it, devoured it, Robert. Thanks for your work and persistently valuable messages!

    • Shankar says:

      God bless with good luck and good health.
      Your words more touching after reading the article. I am convinced that I should be more careful than what I am today. Thanks again.

  2. Scott theczech says:

    There is ageless wisdom and truth in this piece. Wealth is such a relative temporary thing! But sound stewardship and proper perspective makes it much more manageable.

  3. Murray Suid says:

    This is first-rate advice, Robert. But I wonder about one sentence in the piece: "Jack was a superb human being — kind, honest…"

    If he was honest, how come the IRS was able to shock him with a tax bill so large that he lost all his wealth. I've had a few big bills myself, but they didn't shock us because we knew we would be taxed. I understand that you don't know the details of Jack's plight, but I get the impression that this wasn't a bill for a single year. Or to put it differently, it seems as if Jack didn't pay what he owed…and the IRS caught up with him.

    One other point: While Leo was a good steward of his wealth, he also was lucky in that he wasn't knocked down by illness. I think there isn't much we can do about things like senility. Leo was not only smart–and truly honest–but also lucky. If only there were a bank where we could store up our good fortune to be used in times when bad luck comes a-calling.

    • laird hamilton says:

      good gawd, murray. if you're of the mind that (m)irs(a) sets the bar for honesty, you may have a fever…mirsa was prolly the man's major illness, the rest opportunistic aftershocks.

      as for that aspen property, the guy who hit the bid would appear to be of the goldman-sachsie group of viruses. selling for cash to viktor kozeny mighta' been lucky. mighta' been something else. but somebody's tryin' to recover some of the cyprus-diverted booty that bought those digs.

      unless some other aspen abode also went for 19.75…..

    • Jean says:

      There are a number of reasons a wealthy individual can wind up with a tax bill from the IRS that is outrageous, none of which automatically include dishonesty on the part of the individual. Try asking a question during tax season of an IRS employee – you'll get six different answers from five different people. That's because even within the agency, there is NOT ONE person capable of actually comprehending all of the provisions of the tax code. Secondly, most wealthy people outsource much of their financial management to others – accountants, lawyers, trust administrators, etc. Any one of THEM could have failed at one point or another to file a critical piece of paper. Even though it may have taken the IRS years to figure that out, it is the taxpayer who becomes responsible for the interest and penalties that accrued during the interim. And defending against IRS incursions often costs more in legal and accounting fees than the penalties. The IRS actually counts on this when it goes after alleged tax liabilities of those with significantly less wealth. If you want to do some research to discover how easy it is to incur a tax liability, look at the reason Bud Abbott and Lou Costello went from riches to rags after having lucrative radio – film – television careers for over 30 years.

      There is a Yiddish saying, "little money, few worries; lots of money, big worries." I suspect that in the case of Jack, this saying applied in spades.

      • laird hamilton says:

        and then there are high profile "object lesson" cases made of the inadequately connected, "un-made", not good enough fella's (& gals). wesley snipes, for example.

        really, tho, any & all alphabetism spectrum disorders are distinctions w/o merit. ali was stripped of his title, banned for 4 prime years, could have wound up in prison, by the slice of s-s-s-spectrum that congealed & constricted around him. martha stewart "went away" within the coils of some other section of samsnake. etc, etc, ad nauseum…(ali to stewart is about as sprechen sie snake spectrum end to end as you can get, isn’t it?).

        so, maybe the original s-s-s-stockholm syndrome to refer to is eve, in the garden…….except that prohibitions against "knowledge", & sanctions imposed for pursuing it, for "using it instead of losing it", are way beyond terrestrial reptilian – flashing on sigourney / ripley & the "alien" here.

        besides, i was an amateur herpetologist in my boyhood; snake-maligning is purely psychological/emotional – malum projective vomitus-prohibitum, not malum in se. buddhist mirror metaphors, platonic cave wall shadow parables – you gotta' keep an eye on your eyes, since they transmit AND receive…a tale of 2 ears, one mouth is one that most are familiar with, can “see” the wisdom of… but all these tales of 2 eyes & 2 brain hemispheres, uh-oh: four-eyed tinted (& not just rose, either) projectopia AND all the more prosaic four-in-hand noose knots like myopia, presbyopia, coke bottle bottoms, radial keratotmists, etc ad nauseum infinitum…well, mack the knives in eyes, meet Macbeth: “it is a tale told by an idiot, full of sound & fury signifying nothing – & old Mackie isn’t back in the towncave, cuz he never left it to begin with….

    • Scott theczech says:

      Ah…the income tax! Such a convoluted, confusing confounding thing. Preparing an income tax return is as much art as it is science. Deductions, credits, deferments, adjustments, straight-line, accelerated, etc., etc. That the IRS would confiscate someone's wealth should not necessarily lead us to assume that the individual did anything wrong – he may have just run out of money to fight them.

  4. 2muchGummint says:

    A centi-millionaire is worth $10,000. Do you mean hecto-millionaire (worth $100,000,000)?

  5. R Van Der Voort says:

    Yes, recently a fellow ex-pat, American, died in the Philippines, leaving his much younger wife very well off. In a short time, her relative wealth went to her head. Finally, she became downright abusive, and once screamed at a neighbor complaining about late night "music", "I will do what I want! I have more money than you." She had been a "nice person" back with my friend was alive and in control of his money. Disappointed in her, I sent her a message suggesting that she keep in mind, "The Lord giveth, and the Lord taketh away." Fate, or whatever. She, I believe, is testing Fate with her new arrogance. Time and experience, as always, will tell the final story.

  6. Robby Bonfire says:

    "It's not you people don't respect, it's your lack of money."

  7. DOL says:

    MY MOM USED TO SAY YOUR POCKETBOOK IS YOUR BEST FRIEND. OR YOUR ONLY TRUE FRIEND.