The Labor Day Holiday and Santa Claus is Coming to Town

The Labor Day Holiday and Santa Claus is Coming to Town

"This is for all the lonely people thinking that life has passed them by."

-America

On a long holiday weekend, like Labor Day, it is easy to forget about people who don't have family or close friends.

Several years ago, I lived on a rural road and a divorced man lived nearby. On every holiday or long weekend, he would lock himself in his house and play loud music all day. He never played music any other time.

He was trying to ignore the holiday.

We always invited him to our house and he always refused. It was easier for him to ignore the day instead of spending it with people having a good time.

He was my reminder that holiday weekends are not joyous for everyone.

Some people never have a family connection. Every Thanksgiving, Christmas, and Easter, my late father would go to a "sleeping room" hotel in downtown Cincinnati and hand out cheap bottles of champagne.

The men (I never saw any women) were poor and usually drunks. Dad had come from a similar neighborhood and had done well. The men were proud of Dad's success and appreciated that he remembered them.

Dad took my sister and me to glimpse a world quite different from our suburban home.

Dad's gift was often the only one the men received. I'm not sure giving champagne to alcoholics was a great idea, but it was something they appreciated.

It always struck me that those poor and lonely men loved the seasonal holidays. They would dress up in their nicest clothes and come down in the lobby or hang out on the street.

Dad's gesture meant a lot to men struggling to get through life.

It's easy to forget that there are people who would be thrilled to have a bottle of $3 champagne.

My father also made holiday visits to one of the richest men in Cincinnati. He was also one of the loneliest. He had flunkies but did not have any friends. He had alienated his children and was a tough guy to get along with.

Dad visited him on a regular basis.

Dad would bring him a copy of the Racing Form, and they would discuss the horses. The few minutes of human interaction made the man's day. He would occasionally turn off his gruff persona and become sweet and kind.

My father was practically an orphan, and it gave him an appreciation for the people society had forgotten, on both sides of the tracks. Lonely people often put on a tough exterior and it is hard to reach them.

It is definitely worth the effort.

Giving and paying homage is what every holiday, even the "minor" holidays, are supposed to be about. The giver gets more than the person who receives.

When I was very young, songwriter Haven Gillespie used to frequent my father's bar. Gillespie wrote many famous songs including, "Santa Claus is Coming to Town."

If a child sang "Santa Claus," Mr. Gillespie gave the child a silver dollar.

I sang the song every time I saw him. It was a sure money maker but even at age 6 or 7, I realized that Mr Gillespie took great joy in giving the silver dollar.

He liked that his song was famous, but he really liked that he had money to share. Giving is what made the holidays for him.

More people die of loneliness than any disease. Reaching out to someone could make a major difference in their life. It is also a blessing for the giver.

During the holiday weekend and all year round, we need to show lonely people that life has not passed them by.

The Poll

The following are the results from last week's poll:

1. Should tournament poker games be legal or illegal?
Legal - 76%
Illegal - 16%
Undecided - 8%

2. Should prostitution be legal or illegal?
Legal - 60%
Undecided - 24%
Illegal - 16%

This week there are two poll questions:

1. Have you ever invited a neighbor to share a holiday with you?

2. What is your favorite holiday?

To vote in this week's poll follow the link below. The poll will be on the left hand side of the web page.

Weekly Poll

UPDATE:

Son of a Son of a Gambler: Winners, Losers, and What to Do When You Win the Lottery

Son of a Son of a Gambler is on its way to the publisher. We will release information next week on how you can own a copy of a limited first print copy of the book.

Don McNay is the Chairman of the Board for McNay Settlement Group in Richmond, Ky. He is author of the soon to be published book: Son of a Son of a Gambler, Winners, Losers, and What to Do When You Win the Lottery. You can write to him at don@donmcnay.com or read other things he has written at www.donmcnay.com. Don's award winning column is syndicated to over 200 publications.

The 9/11 Widow and the Wasted Settlement

The 9/11 Widow and the Wasted Settlement

"How do I live without you?
I want to know;
How do I breathe without you?
If you ever go;
How do I ever, ever survive?
O how do I live?"

-Trisha Yearwood

Kathy Trant attracted worldwide attention a few years ago by quickly spending the $4.7 million she received for the death of her husband who was killed in the September 11, 2001 World Trade Center attack.

I'm not surprised about Trant's story. I have seen the same story played out hundreds of times with larger and smaller sums of money.

Trant called the money, "blood money." Her spending sprees are a sub-conscious and probably sometimes conscious effort to run through the money.

It is a common feeling amongst widows and widowers.

Some people use drugs and alcohol. These people use "blood money."

Many people think that if they get rid of the money their lives will go back to normal.

Often, I see a grief-ridden person influenced by family and friends.

I have had a number of widows and widowers remarry quickly and then turn all financial decisions over to the new spouse. Usually, the new spouse and the money run out at about the same time.

Many years ago, I had a client whose wife was killed in a car accident. He received a $500,000 settlement. I invested his money, but every month, the new wife would come to my office wanting to withdraw more. Each time, she was sporting new jewelry, a mink coat, and other expensive items. I finally went to their house and told them they were going to run out of money.

They moved their money to another broker.

Within six months, she had spent the entire $500,000 and left town.

Putting money in a structured settlement and giving victims a monthly payment is the only real solution I have.

I started out using structured settlements as a financial planning tool and became a true believer.

It is hard for someone who has gone through hell to think clearly about their money. Someone who has just lost their spouse has no chance.

There is a small window of time before people actually receive money to set things up right. After that, pressures and people get in the way.

I feel sorry for everyone involved. I feel sorry for the widows and widowers. Not only have they lost their spouses, but after they run through the money they are worse off financially than ever.

I also feel bad about the spouses who died thinking that their families were taken care of. People buy life insurance because they want their loved ones to achieve life goals. They don't pay for life insurance so that someone can take six "friends" to the Super Bowl.

A lot of widow and widowers wake up every day asking "how can I live without you?" I'm not sure how, but they eventually start to cope with their situation.

Kathy Trant has been through hell. If her attorneys, advisors, or friends had insisted that she needed to put her money in a structured settlement or a trust, she would be able to live a comfortable life; now she won't.

She can't get the money back from the six leeches that she took to the Super Bowl. People who prey on grieving widows don't have the money or conscience to help her. I suspect she subconsciously thinks that getting rid of the money will bring back her husband and her old life.

Her husband is not coming back. She, and others like her, need to answer the question, "How do I live without you," by answering, "With great memories and the money you left to help me through this."

Don McNay is Chairman of the Board for McNay Settlement Group in Richmond, Ky. and author of the upcoming book, Son of a Son of a Gambler: Winners, Losers, and What to do When You Win the Lottery. You can write to him at don@donmcnay.com or read other things he has written at www.donmcnay.com.

Business Lessons from the Fake Dry Cleaners

Business Lessons from the Fake Dry Cleaners

"They'd call us gypsies, tramps, and thieves
But every night all the men would come around
And lay their money down"

-Cher

I learned about outsourcing in the 1970's, during my teenage years.

I worked at a dry cleaning business that had no dry cleaning equipment. It had two clothing racks, a counter and a cash register and nothing else. There was no drive-thru window and no parking lot.

The business was located in the roughest section of Newport, Kentucky, which was one of the most economically depressed cities in America.

My father said that "gypsies, tramps and thieves" was an accurate description of the neighborhood.

The shop's location did not cater to an upscale clientele. Living conditions were bad and the crime rate was high.

I witnessed armed robberies, streetwalkers, numerous fist fights, and a car jacking. I watched a woman run over her soon-to-be ex-husband with a car.

A house of prostitution operated a few doors away. I never wanted sex bad enough to do business with the women who worked there. One offered me her services in return for a carton of cigarettes. Even though cigarettes were only four dollars a carton, it would have been a bad deal.

Their pimp did not fit the pimp stereotype. He was a pot-bellied, retired steel worker who drove a 15-year-old station wagon which looked like it had been salvaged from a demolition derby. He used an old clothes hanger as his car radio antenna.

He had a second job faking illnesses and going to a host of doctors for pain medicine. He sold the pills to his patrons until an unhappy customer decided to kill him.

There was a diverse mixture of cultures and personalities in that neighborhood. None of them seem concerned about owning neatly pressed, dry-cleaned clothes. They bore no resemblance to the people who lived in the suburb that I lived in.

There was one factor that made the dry cleaners a smart business decision. In its back room there was a gambling operation and an ongoing card game.

The back room had far more traffic than the dry cleaners ever did.

I was the "manager" of the dry cleaning section. Since I was the only employee, there was not a lot to manage. However, the experience at the dry cleaners was a better lesson in business than studying for an MBA.

I learned business techniques that were far ahead of their time:

1. Outsourcing. The dry cleaning business was the ultimate outsourcing operation. It seemed that two out of three people a week would wander in actually wanting their clothes dry cleaned. I would take their clothes to a real dry cleaner and have them cleaned.

We did the marketing and someone else did the work. It is a model that many businesses now follow.

2. Locating in a business-friendly location. In Joe Nocera's book, A Piece of the Action, he wrote about credit card companies locating in South Dakota because that state looked favorably upon the credit card business at a time when other states heavily regulated it.

Many companies look for a "business-friendly" climate with a lax regulatory environment and economic incentives.

Although gambling was against the law, Newport was a favorable business environment for the dry cleaning and gambling operation.

With far more serious crime taking place, enforcing gaming laws was not a high priority for the law enforcement community. The dry cleaners provided a legitimate business cover.

Policemen would occasionally visit the dry cleaners and on one occasion they went flying out of the building, guns blazing, when an armed robbery was attempted across the street. It was like watching a real life version of Kojak, even though I "witnessed" it hiding under the store's counter.

3. Keeping operating expenses low. The dry cleaning business did not have equipment and was located in a low rent district. I was the only employee and was paid minimum wage. Low operating expenses made the overall business a success.

Everyone involved in the dry cleaners are now dead. Their lifestyles as "gypsies, tramps and thieves" cut into any chance they had to live to an old age.

They were good business men. None were well educated but every night when the men would come around, they had plenty of money to lay down.


Story Behind the Song

Gypsies, Tramps, and Thieves

This song seemed to stay in my mind every day when I drove into Newport.

http://www.cher.com/

The Poll

The following are the results from last week's poll:

Which Democrat would you like to see as the nominee for President?

John Edwards - 53.8%
Hillary Clinton - 23.1%
Another Candidate - 15.4%
Barack Obama - 7.7%

Which Republican would you like to see as the nominee for President?

Another Candidate - 60.0%
Rudy Giuliani - 20.0%
John McCain - 13.3%
Mitt Romney - 6.7%

This week there are two poll questions:

1. Should tournament poker games be legal or illegal?

2. Should prostitution be legal or illegal?

To vote in this week's poll follow the link below. The poll will be on the left hand side of the web page.

Weekly Poll


Note from Don

The following link is an article which follows up on my recent column about David Edwards.

Powerfall


Don McNay is the author of the upcoming book: Son of a Son of a Gambler: Winners, Losers and What to Do When You Win the Lottery. His column is syndicated to over 200 publications. You can write to him at don@donmcnay.com or read other things he has written at www.donmcnay.com.

Don't Do Anything Stupid

McNay on Money

Don't Do Anything Stupid

The stock and credit markets have been going crazy. I worked during the 1987 crash and every major panic in the past 25 years. What I learned is to stay calm.
If you were smart enough to sell all your real estate last year and all of your stocks on July 19th, you are a genius; sit tight and pat yourself on the back.
If you did not, do not do the stupid thing and panic.

I own a couple of pieces of real estate that I would love to sell. I am going to sit tight with them until the market bounces back or someone offers the correct price. There is no reason to panic and sell into a bad market.

I had about 400 clients when the 1987 market crash occurred. Four sold the next day even though I urged them not to; they got hurt. The other 396 did very well over the long haul.

As my dad would say, the key is to be zigging when the others are zagging.

I blame a lot of what is going on with the market on the stupidity of Federal Reserve Chair Ben Bernanke. I would like to say I was wrong about Ben, but I was not.

Here is what I wrote earlier:

Big Shot Bernanke

Nice Guys Make Lousy Senators

Frank Haddad: The Man to See

Frank Haddad: The Man to See

Frank, who was definitely "the man to see" for people in trouble, will be profiled in my upcoming book.

"Send Lawyers, Guns and Money, and get me out of this"
-Warren Zevon

Some well-funded Washington lobbyists are airing a media attack on trial lawyers.

Many people hate lawyers until they need one. As Thomas Wolfe said in The Bonfires of the Vanities, "A liberal is a conservative who has been arrested."

Trial lawyers deal with people who have big problems. There are some people with troubles that lawyers, guns and money cannot help.

Kentucky's greatest criminal attorney, Frank Haddad Jr., once declined a potential client, saying, "He doesn't need a lawyer; he needs a hacksaw."

There were not many people too hopeless for Frank Haddad. People in serious legal trouble often found their way into Frank's Louisville office.

A biography of Washington trial lawyer Edward Bennett Williams was entitled The Man to See. In Kentucky, the man to see was definitely Frank Haddad.

Frank was a friend of mine, but he had thousands of other friends too. His funeral in 1995 was one of the largest in Kentucky's history. He grew up poor, but when he died he was a multi-millionaire who had never forgotten his roots.

Frank was humble but not afraid of anything. He was quick-witted with a magnetic personality.

He had a great sense of who he was. I once called him on a trivial matter telling him that I needed his help. His immediate response was, "Don, you must really be in trouble if you need my help."

He was even liked by the prosecutors he battled in court. His sense of humor helped his clients. A federal prosecutor told me that once when Frank represented a reputed pornographer, he brought boxes of popcorn and candy for the prosecutor to eat as they watched the movies in evidence. The prosecutor admitted that Frank's funny gesture lightened the tension of the plea negotiations.

Frank had a personality that commanded respect. I frequently had lunch with Gary Hillerich, who practiced law with Frank, and occasionally Frank would join us. Once we wanted to go to a popular restaurant and heard there was an hour wait for a table.

Frank picked up the phone and said, "This is Frank Haddad, and I will be there in five minutes." Five minutes later, we walked in and were immediately taken to a table large enough for 8 people.

When my dad would enter a crowded restaurant, one of my father's friends jokingly would yell, "Someone had better get up, Joe's here."

I told dad that when Frank Haddad wanted a table, someone really did have to get up.

Frank was loyal to his friends both rich and poor. He surrounded himself with a number of talented lawyers, including his brother Robert Haddad. They did more free legal work than anyone I have ever met.

It would not be unusual to see a famous politician or millionaire sitting patiently in the law firm's lobby while the firm was doing pro bono work for a janitor or someone from Frank's old neighborhood.

He had the perfect voice to be a lawyer. It was a booming voice that could both command a courtroom and calm a nervous client. People who call criminal lawyers, or any kind of trial lawyer, are scared and want immediate help. Frank had a voice that gave people confidence in his ability to solve their problems and he usually could.

If Frank could not help them, they probably did need a hacksaw.

The Kentucky Academy of Trial Attorneys (KATA) gives an award for great lifetime achievements. The award is named for Peter Perlman, the only Kentuckian to be named president of the American Trial Lawyers Association.

At the presentation of the first Perlman award, I was sitting at Frank's table when KATA President Bill Garmer started reading the biography of the man selected as the first honoree.

About halfway through the presentation, Frank realized that Bill was talking about him and began to cry. Frank then got up and accepted the award with the humility, humor and the commanding presence that he always had.

I have always thought that Frank's life story would make a terrific biography. If trial lawyers circulated Frank's compelling life story, it would go a long way in responding to the media's attacks on them.

Frank was a role model that average citizens could admire and other lawyers should emulate.

I have worked with hundreds of lawyers but none quite like Frank.
He was definitely "the man to see."

The following is an incredible profile of Frank Haddad that was written by Bob Hill and published in the Courier-Journal Magazine. I hate that it does not have the wonderful pictures but Bob Hill did a terrific job of capturing Frank's personality.

Courier-Journal Profile of Frank Haddad

Story Behind the Song

Lawyers, Guns and Money

Warren Zevon is one of my most frequently quoted artists and one that has an incredibly hard core following. He was one of the great songwriters of his generation and quite a character.

His ex wife wrote a recent biography of him, I'll Sleep When I Am Dead: The Dirty Life and Times of Warren Zevon. Although it is filled with the angst of her being married to a less than model citizen, it is a fascinating glimpse of his life, the people who crossed through it and the music business.

It is worth reading, although I would have preferred a more impartial source. I really do not want my ex-wife to write a biography of me, although we apparently get along a whole lot better than Warren and his ex did.

Warren was an Excitable Boy in the literal sense. I just write about excitable boys; a subtle but distinct difference in our personalities.

The Poll

The following are the results from last week's poll:

Do you buy lottery tickets?

47.1% - Sometimes
35.3% - No
17.6% - Regularly

Would you hold a news conference if you won the Powerball lottery?

100% of respondents said No!

This week there are two poll questions:

Which Democrat would you like to see as the nominee for President?

Which Republican would you like to see as the nominee for President?

To vote in this week's poll follow the link below. The poll will be on the left hand side of the web page.

Weekly Poll

Don McNay is Chairman of the Board for McNay Settlement Group in Richmond, Ky. You can write to him at don@donmcnay.com or read other things he has written at http://www.donmcnay.com/. His book, Son of a Son of a Gambler: Winners, Losers and What to Do When You Win the Lottery, will be released later this year.

Income Annuities

McNay on Money

Mark Walstrom, a structured settlement consultant in Arizona, runs an excellent blog and pointed readers to a Wall Street Journal article that I found interesting.

I have been a big fan of income annuities for 25 years but they are just starting to catch on with the general public.

The Case for 'Income Annuities'

By JEFF D. OPDYKE August 8, 2007; Page D3

Strategies outlined in a new study could sharply lengthen the amount of time a nest egg survives in retirement.

The study, soon to be released by the University of Pennsylvania's Wharton Financial Institutions Center, finds that so-called income annuities can assure retirees of an income stream for life at a cost as much as 40% less than a traditional stock, bond and cash mix. The study was co-sponsored by New York Life Insurance Co., which sells annuities.

Income annuities are insurance contracts designed to pay back not only a return on investment, but also a portion of the original principal with each payment. The payout occurs over your life expectancy, but if you live longer, you continue to receive payments. Those who die earlier than their life expectancy effectively subsidize those who live longer.

What it means is that retirees who need a nest egg of, say, $1 million, can live the same lifestyle with as little as $600,000 in an income annuity. Looked at another way, $1 million in an annuity will currently generate about $86,000 a year in income for a healthy 65-year-old male, while the same amount invested in a traditional securities portfolio would currently generate between $40,000 and $50,000 annually, depending on the annual withdrawal rate.

That news could offer hope for the millions of workers about to retire with inadequate retirement savings.

"At 65 years old, you're going to need money, on average, until you're 85," says David F. Babbel, an insurance and risk-management professor at the Wharton School who co-wrote the paper with Craig B. Merrill, an insurance and finance professor at Brigham Young University. "But the problem is that 'on average' means half of the people will need continuing income between the ages of 86 and maybe past 100. That's where [retirement-income planning] breaks down."

To ensure that you have a stream of income that lasts for as long as you breathe generally requires an inordinately large beginning value -- and even then, there is no guarantee your account won't run dry, depending upon your ultimate spending needs in retirement.

An income annuity is the only asset class the two professors found that most effectively addresses the risk of outliving your nest egg, because it generates a permanent stream of income, unlike a typical nest egg of stocks, bonds and cash. Meanwhile, the study notes, investors who place retirement wealth in mutual funds "are subjected to greater risk, typically higher expenses, and returns that are unlikely to keep pace with annuity returns, when investment risk is taken into account."

Yet the study also found that consumers have been tepid buyers of income annuities to this point. Many worry about costs, illiquidity in a financial emergency and the bad reputation the industry as a whole is often saddled with because of well-chronicled and dubious sales tactics with some variable annuities.

Prof. Babbel says the insurance industry is addressing these issues by building new contracts that are inexpensive, allow access to cash and don't have the problems associated with other types of annuities. The best strategy, Prof. Babbel says, is to invest enough in an annuity early in retirement to cover basic fixed costs. That allows you to invest the remainder of your portfolio more aggressively.

David Edwards: Another Lottery Loser

David Edwards: Another Lottery Loser

"The world's original hard luck story and a hard time losing man."

- Jim Croce

In light of increasing media cost consciousness, news outlets can save money by pre-arranging a "fill in the blanks" news story.

It would say:

Powerball winner ______________ is in trouble with the law again. This is the _____ time the jackpot recipient has been arrested.

There are reports that he/she has spent all of his/her money in _____ years. There have been ______ lawsuits filed against him/her and family members in the past year.

The media should have the story ready. They are going to use it over and over again.

The most recent chance to "fill in the blanks" came from Powerball winner David Edwards, who hails from Ashland, Kentucky.

Ken Hart at the Ashland Independent newspaper has written a number of articles about Edwards and his wife Shawna.

Edwards won a $41 million Powerball and took home $27 million in August of 2001. Six years later, the money was apparently gone.

Edwards was evicted from his $1.2 million home in Palm Beach Garden, Florida for not paying his association dues. Shortly thereafter, Edwards was evicted from a storage unit that he was apparently living in. The items in storage were auctioned to pay Edwards' storage fees.

His wife was arrested for not paying $17,000 in back child support. She was released and then arrested again; she missed a court date and failed a drug test.

You would think someone who won the lottery would get it right.

About a week after Edwards won the lottery, I watched him on television and predicted that he would run through all the money. He had every red flag for disaster. An out-of-work ex-con, Edwards immediately acquired an entourage and went on a buying spree. He was all over the media, and I remember him saying that he was going to meet with financial advisors.

If I had been Edwards' financial advisor, I would not put it on my resume.

I am not sure that even the best advisor could have kept Edwards from running through the money. However, there would have been several options to try. Before Edwards started spending like a drunken sailor, an advisor could have placed some of the money into a trust and some into annuities that would have paid over Edwards' lifetime.

It did not happen, and Edwards became another "shake your head" kind of story.

I saw Edwards on a show called The Curse of the Lottery. The show's premise was that winning the lottery was a curse, not a blessing.

Receiving a life-changing amount of money is not a curse as long as the receiver takes steps to keep him or herself under control.

Most people have built-in controls on their finances. They work for a paycheck and pay their bills. They have a budget based on the steady amount of money coming in.

When people get "sudden money" from an inheritance, lottery or other source, they often do not know how to handle it.

It makes them easy prey to family and friends wanting a "loan" and prey to the temptation to spend their money on unnecessary items.

There is a whole economy built around people who let money run through their fingers.

I have noted a ton of advertisements aimed at "helping" people spend their tax refunds. A tax refund is not manna from heaven. A refund means that the government took more money out of a person's paycheck than needed. People should be saving that money for a rainy day instead of blowing it on a trip to Las Vegas.

If people cannot handle a tax refund, imagine what they would do with $27 million.

It is actually easier to handle a large amount of money than to manage a small amount. With large amounts of money, there is a point where all your immediate needs can be met. You can buy a nice house and car and not have any debts. You can go anywhere you want and do what you want.

After that, everything else is just showing off.

It is the showing-off part that gets lottery winners into trouble.

The less flash they have with their money, the less likely they are to be part of a "fill in the blanks" media story.

Edwards is another lottery hard luck story and a hard time losing man.


Story Behind the Song

The Hard Way Every Time

Jim Croce is one of my favorite songwriters. He died in a plane crash in 1973 but his stuff sounds fresh and new today. He, like Steve Goodman, another writer who died too young, could do deep songs, silly songs, romantic songs and songs that made you laugh. I do not use Croce often but could probably find a lyric of his to match every column I write.

Croce will best be remembered for his hits like Bad Bad LeRoy Brown and I've Got A Name but some of his lesser known songs like Age, Lovers Cross, Hey Tomorrow, and The Hard Way Every Time, are the ones I like best.

http://www.jimcroce.com/


Note from Don

Al Cross runs an outstanding blog as part of the Institute for Rural Journalism and Community Issues based at the University of Kentucky. I get a lot of ideas for columns from the blog.
The enclosed story headlined, "Gonzales aide told OxyContin prosecutor to slow down, put him on hit list" is an absolute must read. It is based on a front page story in the Washington Post.

http://www.uky.edu/CommInfoStudies/IRJCI/blog.htm

The Poll

The following are the results from last week's poll:

How many books did you read last year?

More than ten - 79.2%
Six to ten - 12.5%
One to five - 8.3%
None - 0.0%

This week there are two poll questions:

Do you buy lottery tickets?

Would you hold a news conference if you won the Powerball lottery?

To vote in this week's poll follow the link below. The poll will be on the left hand side of the web page.

Weekly Poll

Don McNay is author of the upcoming book, Son of a Son of a Gambler: Winners, Losers and What to Do if you win the Lottery. You can write to him at don@mcnay.com or read other things he has written at www.donmcnay.com.