‘All happy families are alike; each unhappy family is unhappy in its own way.’ – Leo Tolstoy from Anna Karenina 1877

The rich are all alike, to revise Tolstoy’s famous words, but the poor are poor in their own particular ways. – William McPherson

William McPherson, was a Pulitzer prize winning novelist and an editor at The Washington Post.

William McPherson, Pulitzer-winning book critic who chronicled his decline into poverty, dies at 84https://t.co/rBFtnUFlIB

— The Washington Post (@washingtonpost) March 28, 2017

Although, he tried in earnest, he did not become a man of means.

A career in writing does not often come with riches. Writing tends to be a labor of love.

The career you choose can determine your outcome. It could mean the difference between fulfilling your destiny or starving.

No one wants to be a starving artist. I am not a romantic when it comes to money.

That is why I occasionally write these Cautionary Financial Tales such as these:

From debt-free to owing $1 million in mortgage debt

Meet an orthodontist with $1 million in student loan debt

Why the Rents shouldn’t pay your rent

Before Mr. McPherson died, he wrote an article called Falling, that was published in 2014, regarding his descent into poverty. It was published in The Hedgehog Review.

He went from book critic, novelist, and an editor at The Washington Post to destitute. That is a far fall from grace indeed. Here is his story.

HOW TO GO FROM PULITZER PRIZE WINNER TO PENNILESS

William Alexander McPherson was born on March 16, 1933. His father worked as a plant manager and his mother was a homemaker.

He attended public schools and eventually went on to college. Between the period of 1951 to 1966, he attempted to get a college degree. He attended several universities during this time. Alas, the coveted sheepskin (college diploma), remained ever elusive as he did not earn a degree.

He married in 1958, but it ended in divorce.

By 1969, he started working at The Post.

As an editor, he was in charge of Book World for The Post and under his leadership, he turned that into one of the leading literary publication in the United States, which is no small feat. That is a tremendous undertaking, job, and responsibility. However, here in the real world versus in college, he thrived.

WINNING THE PULITZER

In 1977, he was awarded the Pulitzer Prize for distinguished criticism and the judged noted his large breath of literary and historic knowledge.

A Pulitzer Prize is a coveted award in literature. It first began in 1917. This prize is given out for achievements in magazine, newspaper, literature, journalism, and music composition.

The Pulitzer is named after Joseph Pulitzer, a famed newspaper publisher, that made his fortune in publishing. The award is administered by Columbia University in New York City. Either a gold medal or cash prize of $15,000 (increased from $10,000 in 2017) and certificate is awarded to the winners.

He wrote two published works. One in 1984 and the other, a sequel to the first novel, in 1987. A third was in the works, but was never completed.

At the age of 53, he decided to leave his job, and head to Romania, after the fall of the Berlin Wall. He stayed there for seven years. Mr. McPherson opted for early retirement at the ripe old age of fifty-three. He would not be eligible to receive his pension for 12 years; at which time he would be sixty-five. This is where things began to spiral downward.

Why not retire at 65, when you can receive your money? That just makes more sense. In my opinion, unless you have between $2.5 to $5 million in assets it will be tough for most folks to retire or even justify retiring early before you have access to 401(k)’s, IRA’s, Social Security and pensions.

THE FALL FROM MIDDLE TO LOWER CLASS

After choosing early retirement, having no real plan and giving little thought for his future income, he set out for an adventure overseas.

Although, he is a writer by profession, with age and the decline in his health, he is unable to sustain this way of earning a living. It is far different to be a man of twenty-two, eking out a living by writing than it is at seventy-two. He can long longer grind out the words as he could when he was a young man. He states this is one reason that he is poor.

Inflation would also erode the purchasing power of his money. From 1986 to 2014, inflation has gone up 109.7 percent. Meaning things have doubled in price.

His pension becomes worth half of what it once was and it not adjusted for inflation.

He receives Social Security, but having not worked formally for the last few decades means that this amount would not be very high.

Medical insurance has skyrocketed. It is a much higher cost to insure anyone, let alone a man in his golden years. It now costs him more monthly than he used to pay in a year.

He did not pay attention to his investments and bought stocks on margin.

In addition, he allowed advisors to manage his money and give him advice against his own gut instincts.

Eventually, his investments and brokerage accounts were empty.

FINANCIAL MISHAPS AND MISSTEPS

These are the things that caused Mr. McPherson to lose his financial shirt:

• No clear vision of a career
• No path to wealth creation ever established
• He did not complete his degree; after numerous attempts which is time and money wasted
• His only income consists of a Social Security check and a miserable pension
• He retired early without a financial plan
• Gave no thought to the future or inflation
• High cost of medical care never even considered
• Higher cost of housing not considered either (as news flash, things become more expensive not cheaper)
• Did not plan for health issues
• Divorced without having a financial net
• He invested on margin
• He spent his investment capital
• Took bad advice from advisors that told him not to buy shares in AOL and Apple
• Having fun was more important than getting his financial house in order (See my post on Aesop’s The Ants & The Grasshopper)
• He did not spend modestly
• Due to this he has to depend on the kindness of family and friends
• He couldn’t pay for $10,000 of dental work
• Did not have the money to attend a funeral
• He subsists on a HUD subsidy for housing and medical benefits
• Things got so bad, at one point, he only had a quarter to his name in his pocket and no bank account

POVERTY IN OLD AGE

He states by all standards of living that he is poor. Living in poverty is awful and humiliating he writes. Being poor is exhausting and time consuming. Waiting for buses and in lines at assistance offices takes all day.

His income is above $11,670 annually, putting him above the poverty line, as he receives more than that in Social Security. Even though, he has not ever had to apply for food stamps, welfare, or Medicaid he still has had to ask for government assistance.

He feels his younger self was delusional and naïve.

Although, he does not live in a homeless shelter, but living in subsidized housing isn’t exactly palace living. Many living there are poor as well.

The ailments that come with age are hard. Without good medical insurance, medical bills can be catastrophic to say the least. Medical debt has caused some to declare bankruptcy.

According to Elizabeth Warren, Americans are filing bankruptcy in record numbers. The main causes are job loss, illness, and medical bills. Women with children are also most vulnerable to file for bankruptcy.

The things he did that harmed his financial future were unable to be undone.

I share this story because the author had the fortitude to do so. I urge you to not just eliminate, but crush all of your debt and save at least 20 percent of your income because one day you may need it.