Who’s the Smartest Section 8 Tenant?

That would be Pulitzer Prize winning journalist William McPherson. Last fall he wrote an essay disclosing his wretched financial state and his housing subsidy.

"What happened? It was a long, slowly accelerating slide but the answer is simple. I was foolish, careless, and sometimes stupid. As my older brother, who to keep me off the streets invited me to live with him after his wife died, said, shaking his head in warning, “Don’t spend your capital.” His advice was right, but his timing was wrong. I’d already spent it. He sounded like the ghost of my father. Capital produces income. If you want to have an income, don’t dip into your capital."

This is one section 8 tenant that landlords should surely listen to. McPherson made some bad choices about personal expenditures, entrusted his life's savings to a bad stock broker, and developed a heart condition that he says diminished his ability to be a productive writer. That is a very sobering thought. We know people who do physical labor cannot be productive late into their lives, and the same applies for knowledge workers. Consider especially the risks of dementia and other neurological impairments. You cannot count on your ability to keep working.

McPherson is an educated person and can see what has happened that led him to such a plight. But his example also shows that financial education is one of the great failings of our nation.

A recent study shows 44% of American households have less than $5,000 cash. (Technically the study reports an ability to "subsist at the poverty level for three months with no income." For a household of 3, the poverty level is $19,790, or $4,947.50 per quarter. Single people with less cash and larger families with more cash would all fall under this 44%. The $5,000 mark is an average.) Still, that's nearly half of our fellow citizens who are nearly broke.

Think about how much cash you have access to as a landlord. You have taken care of your capital, and hopefully will continue to employ it to provide for yourself even in those later years when health becomes an increasing burden. Thank you for everything you've done. Because of your hard work, your burden will not become that of the state.

There is a difference between knowing facts and being intelligent. Many people full of facts are not smart, and many people who are intelligent have the facts wrong.

This is a lesson we as a nation should take to heart. We must improve financial literacy. We must impress upon our children and one another the simple fact that your life will be better if you learn to manage money well.

In so doing, we can back ourselves away from the edge of the true financial cliff that may lie ahead. Can we afford to live in a society where over half the people are net consumers of public subsidy? Can't we find a way to encourage investment and business in a way that helps many more provide for themselves? No one will guarantee you a job, but you can guarantee yourself a financial future by saving, investing wisely, and living beneath your means. This is the lesson that McPherson teaches us. Even smart people slip through the financial literacy cracks and into public subsidies.