SUNDAY, JUNE 21, 2015 | WEST HAWAII TODAY
6C
Bob Weidner likes to play a game
when he goes to a high-end outlet
store like Brooks Brothers: How
many things can he buy with
$100? On his last visit, the answer
was seven. “Every year, we go up
to the outlets and find a deal,” he
said. “It’s worth it.”
His wife, Angela Marchi, who
chides him for darning his socks,
prefers to buy her clothes twice a
year when her favorite stores put
last year’s styles on sale.
You wouldn’t know it from their
shopping habits, but Ms. Marchi,
56, a senior health care execu-
tive, and Mr. Weidner, 57, a senior
researcher at a large nonprof-
it company, are worth millions
of dollars. And while they own
three homes — condominiums in
Naples and Boca Raton, Fla., and
a house in Lebanon, Pa., where
they grew up, none are huge.
While the popular perception of
millionaires is that they are more
ostentatious than frugal, recent
research shows that single-digit
millionaires are far more mindful
about how they save, spend and
invest their money. “It’s about
paying attention to what makes
you happy and not just doing
what our society tells us to do,”
said Donna Skeels Cygan, a fi-
nancial adviser in Albuquerque
and the author of the book “The
Joy of Financial Security.”
“They look upon money as a
tool,” she said. “It’s an important
tool. They don’t neglect it, but
they also don’t worship it.”
A recent report from UBS
Wealth Management found that
people with more money are hap-
py. “I would say that millionaires
in general are very happy,” said
Paula Polito of UBS Wealth Man-
agement Americas.
What piqued my curiosity was
how conflicted the respondents
seemed to be about the source
of their wealth. They often have
jobs that entail long hours, high
pressure and working vacations.
“Part of this pressure to keep
going is less about greed and
more about insecurity that might
be self-imposed,” Ms. Polito said.
“If you ask people, ‘If you knew
you had five more years to live,
would you act differently?’ they
say they would. That’s a show-
stopper.”
I talked to people who had
what I considered an attainable
level of wealth. They had wealth
starting at several million dol-
lars. These were people who had
made the money as much by sav-
ing, investing and spending care-
fully as by making large salaries.
Steve Ingram, a lawyer in Al-
buquerque, said he and his wife
simply didn’t care that much
about material possessions. “We
have some nice things, but I drive
a car for 10 years and then trade
it in and get another car for 10
years,” he said. “We like to trav-
el, and we’ll spend the money for
that because it’s worth it having
a real experience together.”
Why the habits that helped
many of these people save mil-
lions of dollars persist when they
are wealthy is hard to say. They
may want to leave money to their
children. Or they may simply not
want for more than they have.
“Whether or not they realize it,
they pay attention to what makes
them happy,” Ms. Cygan said.
“They have selective ways to
spend on extravagances.”
Or they may not be comfort-
able spending because they have
worked and saved their whole
lives, said Sandra Bragar of As-
piriant.
Either way, this group learns
from its mistakes. Ms. Marchi
said she and her husband had not
been immune to the siren song of
a large, beautiful home. They lost
money on two such houses when
they had to move for work.
She never imagined having
three homes, she said. Naples is
their permanent residence; the
home in Lebanon is close to fami-
ly. They bought the condo in Boca
Raton, where she works, cheaply
and pay less than they would pay
in rent. And while she said she
expected to lose money on their
home in Lebanon when they were
ready to sell it, she did not consid-
er that a mistake. She liked being
able to stay close to her mother.
It’s an example of spending on
something that matters.
But are millionaires who darn
their socks just cheapskates? Or
are those habits part of the rea-
son they have achieved a level of
financial comfort?
“It’s interesting because it’s
less about greed,” Ms. Polito said.
“They’ve come from the middle
class, the working class, and they
still believe they’re part of the 99
percent, no matter what, because
that’s how they identify them-
selves.”
SKETCH GUY
CARL RICHARDS
A tendency to value
experiences more than
possessions.
YOUR MONEY
PAUL SULLIVAN
Staying mindful about
spending, even when
you don’t need to be.
Millionaires Who Are Frugal
Stop Keeping Up
With the Joneses
Rates Low,
U.S. Bonds
Lose Favor
‘White Lies’ Are Hurting Lenders
Government savings bonds ar-
en’t meant to be blockbuster in-
vestments; they are intended to
be safe havens for cash. But late-
ly, rates have been anemic.
New Series EE savings bonds
are earning 0.3 percent according,
to the latest update from the Bu-
reau of the Fiscal Service, which
sets rates for savings bonds on
May 1 and Nov. 1 each year. Series
I savings bonds — whose interest
rate combines a fixed rate set for
the life of the bond with a rate that
varies based on inflation — are
earning zero. “There’s not a lot
of motivation to buy them right
now,” said Mckayla Braden of the
Treasury Department.
Savings bonds also have be-
come less attractive to people who
liked giving paper versions as
gifts for birthdays or graduations.
Now, saving bonds are digital and
must be purchased through the
TreasuryDirect website, which
many users find cumbersome.
You can give electronic bonds
and print out a certificate to give
something tangible to the recipi-
ent, but, said Jane Bryant Quinn,
a personal finance expert, “It’s
not as appealing as it used to be.”
Still, the value of savings bonds
currently outstanding is about
$158 billion, according to the
Treasury Department. For older
Americans, in particular, “sav-
ings bonds are part of their cul-
ture,” Ms. Bryant Quinn said.
When deciding to cash in sav-
ings bonds, don’t simply cash in
the oldest bonds first, since they
may be paying higher interest
rates than newer ones, Ms. Bry-
ant Quinn said.
You can check a bond’s interest
rate and value on the Treasury-
Direct website, or on sites like
SavingsBonds.com.
Another reason to pay atten-
tion to timing when you cash in,
Ms. Bryant Quinn said, is to avoid
missing out on a scheduled inter-
est payment.
The interest earned on savings
bonds is subject to federal tax
when the bonds are redeemed,
but is exempt from state and lo-
cal taxes, according to the Inter-
nal Revenue Service.
In general, you must hold sav-
ings bonds for at least one year,
with some exceptions. If you hold
savings bonds for less than five
years, you’ll forfeit the most re-
cent three months of interest as
a penalty.
Q & A
¶
Does it make sense to buy
Series I bonds now, with
rates at zero?
Katie Bryan, a spokeswom-
an for the America Saves
program, acknowledged that
it’s difficult for consumers to
get enthused about savings
bonds when rates are so low.
But inflation may pick up.
Timothy Flacke, who runs
a nonprofit group that
promotes savings, said that
while I bonds bought today
won’t earn interest for the
next five months, at least,
it’s “highly likely” that over
the course of holding the
bond, it “will pay more than
zero percent.” He added,
“Even if you buy an I bond
at zero now, you still have
that inflation protection.”
¶
Do savings bonds ever
stop paying interest?
Both EE and I bonds stop
paying interest after 30
years. If your bonds have
matured, you should redeem
them. While most new sav-
ings bonds must be bought
electronically, you can still
redeem paper bonds at
many financial institutions.
John Gugle, a financial
planner in Charlotte, N.C.,
suggests checking with
your bank first. Mr. Gugle
said a client found that his
bank didn’t offer redemp-
tion services and had to
seek out an institution that
would redeem bonds he had
bought when his children
were small.
¶
Is there any way to buy
paper savings bonds?
Since 2010, taxpayers have
had the option of using part
or all of their federal income
tax refund to buy paper
I bonds. The minimum
purchase is $50, and the
maximum is $5,000. It is un-
certain, however, how long
the tax-time paper option
will continue.
Humans can be a competitive lot.
The way we posture and position
ourselves to stand out in a group
seems to happen instinctively. Af-
ter all, in the past we competed
for resources and survival. Today,
we compete for different reasons.
Instead of food, we compete for
attention and social currency. To
figure out if we’re “winning,” we
use visual shortcuts, and money
offers one of the easiest ones. We
look around and compare how
we’re doing with what we see.
But there are a few problems
with this approach. We don’t
have access to our neighbors’
balance sheets, so we’re relying
on the consumption we see, not
true net worth.
Imagine you come home one
night and a neighbor pulls up in
a new Porsche Panamera Turbo.
(The sticker price starts around
$140,000.) You chat for a few min-
utes, and he tells you how much
he loves driving the car. Pause
for just a second. I want you to
make a mental note. What did
you think about your neighbor
and his car as you walked away?
I’m betting your thoughts
jumped to something like, “He
must make a lot of money,” or
“How can he afford that car?”
You made a judgment. You told
yourself a story based on what
you’d seen and what you’d heard.
See the problem? This story
relies on one fact. You know your
neighbor loves driving the new
car, but the rest of your story
qualifies as a fairy tale. Let’s add
a few wrinkles to this story:
¶ What if he took out a home
equity line of credit to cover 100
percent of the car’s price?
¶ What if he recently sold his
business for $1 billion and, as a
percentage of his net worth, the
new car is a drop in the bucket?
¶ What if he got a new job at
the Porsche dealership, and he
gets to drive the car as a demo?
Your story changes if any of
these facts proves true. Your
neighbor may be rich. He could
be leveraged to the hilt. You just
don’t know.
I’ve been thinking a
lot about this subject
recently after a friend
recommended Byron
Katie’s work. I love the
clarity she provides
with the idea that there
are only three kinds
of business in the uni-
verse: my business,
your business and
God’s business.
I know we like to
compete. But we’ll al-
ways lose if we’re judg-
ing ourselves based on
stories that rely solely
on someone’s demon-
strated consumer be-
havior. Luckily, we
don’t need an outside
force to solve the prob-
lem. We just need to
stop competing and
realize that our neigh-
bor’s business isn’t our
business anyway.
Meddling in our
neighbor’s business rarely leads
to good outcomes. That leaves
our own business. Plus, staying
focused on our business comes
with a side benefit. We no longer
need to worry about our ranking
or anyone else’s … because we
realize it’s none of our business.
Mortgage lenders have good rea-
son to require borrowers to spec-
ify whether they intend to live in
a house they are financing.
“If it’s not your primary res-
idence, the chance of you de-
faulting is very high versus your
primary residence, where you’re
living with your family,” said Tim
Coyle, the senior director for fi-
nancial services at LexisNexis
Risk Solutions, which develops
risk mitigation tools for banks.
On a loan application, borrow-
ers must attest to whether the
residence is a primary, second
or investment property. At clos-
ing, they must sign an affidavit
saying they will occupy the home
within 60 days of closing. But
some borrowers who plan to rent
out a property rather than live in
it aren’t truthful about their in-
tent — a form of misrepresenta-
tion called occupancy fraud.
“People will try to get an own-
er-occupied loan as opposed to
an investment property loan be-
cause you can get a higher loan-
to-value, meaning a lower down
payment, on a primary,” said
John T. Walsh, the president of
Total Mortgage Services in Mil-
ford, Conn. “And you’re going to
get a better interest rate on an
owner-occupied.”
Occupancy fraud represented
19 percent of all mortgage mis-
representation on loans delivered
to Fannie Mae in 2013, making up
the largest category of fraud af-
ter misrepresentation of debt li-
abilities. False occupancy claims
have since declined, according
to the 2014 fourth-quarter fraud
report released last month by
Interthinx, another provider of
risk mitigation tools. By its own
measure, occupancy fraud was
down 6 percent from a year ago,
a decline that correlated with
fewer loans involving borrowers
with multiple loan applications
on file, or using straw buyers.
(Straw buyers obtain mortgages
for those who would not qualify
for a loan.)
Occupancy fraud is costly to
lenders because it can raise the
default rate and the risk that,
if a fraudulent loan is exposed,
the loan investor (like Fannie
Mae) could require the lender
to buy back the loan. Lenders
are getting better at rooting out
false occupancy claims. Among
the red flags are borrowers with
mortgage applications pending
elsewhere, or an unusually long
commuting distance between the
borrower’s place of employment
and the property to be financed.
LexisNexis has a new verifi-
cation of occupancy product that
applies a score to a borrower’s
potential for occupancy fraud,
Mr. Coyle said. The tool is for use
on applications for refinance or
home equity lines.
Many people think lying about
occupancy is “the white lie of
mortgage fraud,” he said. “But
it’s extremely costly to the banks
and financial institutions.”
BORROWING
LISA PREVOST
INVESTING
ANN CARRNS
MARK MAKELA FOR THE NEW YORK TIMES
LESSONS LEARNED
Bob Weidner and Angela Marchi are worth millions, but choose not to live that way. The couple
has been burned by owning extravagant homes. They bought this house in Lebanon, Pa., to be close to family.
RICHARD PERRY/THE NEW YORK TIMES
OCCUPANCY FRAUD
Some
borrowers who plan to rent out a
property rather than live in it lie
about their intent in order to get
better mortgage terms. This can
raise the loan default rate.
WESLEY BEDROSIAN
