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    Financial Decisions that Hurt Like the Dickens: Where do you fall on the Micawber-Scrooge Continuum?

    Wouldn’t it be great if every financial decision you made were as sound as Warren Buffett’s and as profitable as one of the top ten Fortune 500 companies?

    Instead, you may feel as though your foray into your own financial world is more like living inside a debtor’s prison not too dissimilar than one from the mid-1800s. These prisons trapped their inmates in a vicious cycle of never being able to get ahead. Your incarceration allowed you to pay off your debt little by little, but you also paid for your upkeep, making it difficult to meet your financial obligations.

    English author Charles Dickens knew all too well about debtors’ prisons. He not only wrote about the evils of managing money poorly and the consequences of it, he also lived and worked in debtors’ prisons to pay off his burgeoning debts — several times.

    The topic of money was a favorite of Charles Dickens, and with good reason. If writers are told to “write what you know,” he certainly knew a lot about the unfair economic policies and social conditions of his time. His readership did, too. Staying afloat financially during the Victorian age was no easy task for many residents of London.

    Had you lived during Victorian England as one of its poor and working class citizens, a good day was one where you at least broke even — nothing gained and nothing lost. Better days meant that you might have made some gains, even if by a few shillings. Most days pushed you further behind.

    You either had to increase your earning or stop your spending. Dickens had some lessons about that.

    Mr. Micawber’s Wisdom

    For the first lesson, we have Mr. Micawber, the landlord in Dickens’ David Copperfield. Mr. Micawber is described as a “stoutish, middle-aged person, in a brown surtout and black tights and shoes, with no more hair upon his head (which was a large one, and very shining) than there is upon an egg” (Dickens).

    Mr. Micawber makes this observation about spending less than you earn:

    “Annual income twenty pounds, annual expenditure nineteen pounds nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.”

    This sage advice comes, ironically, from a man who fails to follow his own advice. The young protagonist David learns this wisdom from the ever-indebted Mr. Micawber at King’s Bench, the debtors’ prison in London, where Micawber has been held for his inability to pay his creditors.

    A well-known bookkeeping wisdom, the “Micawber Principle” is a simple formula that always adds up perfectly. Spend less than you make: good; spend more than you earn: bad. Why does this simple advice prove so difficult to live by?

    The question of “should I spend more than I make” is elementary. We all know the answer. Life is more complex, however, than the arithmetic of 2-1=1.

    According to a FINRA Investor Education Foundation study, 55{1cd8e41884a47db8d1ba9858ee640ae032d38e6ad43af2ac78fd7095779c3cb5} of American families spend more than they earn or are living paycheck to paycheck. In other words, with the exception of the ultra wealthy and those living near the poverty line, the trend is that people spend as much as they make, regardless of how much income they earn. As earnings rise, spending rises in proportion.

    Let’s look at an example:

    A professional gets a raise and a holiday bonus. She spends the bonus on a down payment for a condo and takes out a mortgage to finance the rest. As her salary grows, she leases a new car, joins a more expensive gym, hires a weekly maid service, upgrades her iPhone, and runs up $25,000 in credit card debt to buy furniture for her new home, promising herself she will be rid of it before the next zero percent transfer balance. Poof! The cost of her lifestyle has risen to meet her income, and despite the raise and the bonus, she’s just barely making ends meet. And, how ironic, she always thought that earning more would make her feel safe and secure. Yet – for her – and for many Americans like her, her newfound wealth has the opposite effect: the more she earns, the less secure she feels.

    Like so many others, she’s having difficulty living by the Micawber principle.


    The Ghosts of the Past

    Not everyone finds himself or herself caught up in a relentless cycle of earning, spending and earning more to compensate for overspending.

    Some people spend so little, if anything, that they have difficulty finding enjoyment in life. Their preoccupation lies in amassing huge sums of wealth, hoarded and stockpiled to ward off the perception of imminent financial disaster.

    You remember Ebenezer Scrooge, the famous miser. Scrooge was:

    “A squeezing, wrenching, grasping, scraping, clutching, covetous old sinner! Hard and sharp as flint, from which no steel had ever struck out generous fire; secret, and self-contained, and solitary as an oyster. The cold within him froze his old features, nipped his pointed nose, shriveled his cheek, stiffened his gait; made his eyes red, his thin lips blue; and spoke out shrewdly in his grating voice” (Dickens, p. 2).

    In A Christmas Carol, we first find him on a cold and bleak Christmas Eve working away in his business of money lending.

    Ebenezer has one critical eye on his shivering clerk, Mr. Bob Cratchet, monitoring that his employee dare not attempt to replenish the single coal by which he is warming himself. Just then, the miser’s nephew, his only family, enters to wish him Merry Christmas and invite him to dinner.

    “Bah!” grunts Scrooge, “Humbug!” He goes on to lecture,

    “What’s Christmas time to you but a time for paying bills without money; a time for finding yourself a year older, but not an hour richer…. If I could work my will,” Scrooge’s voice rises, “every idiot who goes about with `Merry Christmas’ on his lips, should be boiled with his own pudding, and buried with a stake of holly through his heart.” (Dickens, p. 5)

    After sharply dismissing his nephew, Scrooge snaps at gentlemen collecting for the poor, threatens carolers with his ruler, and accuses Cratchet of stealing by taking Christmas as a paid day off of work.

    The uncharitable miser then retreats to his home, the only residential apartment in a commercial office building, and spends his evenings reviewing his banking ledger, soothing himself with accountings of deposits and interest paid. According to psychoanalyst Stephen Grosz, as Scrooge studies his statements he self-placates with the words, ‘You see? ‘No losses, only gains’ (Grosz). The words fall as coldly as coins clanking on a heap of gelid money.

    So, Scrooge is cranky, stingy, and a social recluse. We get it. This man seems destined to live and die a lonely miserable existence.

    It is only through the spirited intervention of his former business partner Jacob Marley and three ghosts that he is finally able to change the course of his life. By revisiting his painful past, taking a hard look at his present, and glimpsing his terrible fate ahead, he is finally able to undergo a radical transformation and create a new future.

    Why did he change? Perhaps it was because Scrooge was not only a miser, he was miser-able.

    As we revisit the three ghosts, we learn that beneath his icy exterior, Scrooge was hiding a broken heart. The ghost of Christmas past replays these painful memories for Scrooge: the death of his sister; the end of his engagement with his fiancé, Belle; and lonely nights spent alone as a child.

    The ghost of Christmas Present shows Scrooge the fragile state of the dying Tiny Tim Cratchet; this suffering is brought on, in part, because he’s not paying the boy’s father a decent wage. The vision of the physically disabled Tiny Tim moves the elderly Scrooge who himself had been emotionally disabled as a child.

    Abject terror takes over when The Ghost of Christmas Yet to Come shows Scrooge his own grave next to Tiny Tim’s. Looking at Tiny Tim’s grave reminds Scrooge of his own early innocence and human condition. This spectacle, coupled with a glimpse of his own mortality, is enough to transform him.

    The next morning, his sadness, loneliness, and denial fly out the window as he calls down to the boy to go and buy the prize turkey for the Cratchets.

    It’s easy to discount the extent to which we see the world and how we justify our behaviors, having been influenced by memories of our early life. These influences show up in our management of money.  For Scrooge, the loneliness and losses of his youth lead him to seek security in monetary gain, such that anyone or anything that threatened that security was dismissed or attacked. Thus, he hoarded money and worshipped it for its own sake.

    Dickens shows us two opposite ends of this spectrum. On one end, “frivolous spending” lands Mr. Micawber in debtor’s prison and on the other; Scrooge’s “aimless saving or withholding” reaches the point in which the “means,” the accumulation of money, became the “ends.”

    Living Abundantly

    Where do you score on the Micawber-Scrooge Continuum?

    Most of us living in a non-fiction world fall somewhere in between the extremes. Dickens knew that our environment and our experiences place us on that continuum, but we don’t have to stay there. No one has to be a Micawber or a Scrooge.

    Take the first steps in managing your financial future with honest answers to questions like, “What did your parents and your teachers teach you about money?” and “What were their words, and more importantly, their actions?”

    As we’ve seen with Mr. Micawber, it’s one thing to remind others about the importance of responsible spending, but it’s quite another to do so while sitting in debtor’s prison! As you think back on these memories, take time to reflect on your own ghosts. What tendencies to spend or save can be traced back to childhood? How are your beliefs limiting your current financial success?

    Consider the origin of Scrooge’s ghosts. Were they supernatural creatures or hallucinations? Not likely. As the dreamer, Scrooge alone created his dreams. His three ghosts did not come from central casting; they came from his own memories. As each ghost reminded him of a different part of his life, the painful past, his miserable present, and the bleak future, Scrooge healed himself.

    Each of us has the power to make positive changes in our financial lives through awareness and reflection. As you recognize your own ghosts — your past, your memories, and your losses — give them standing. This is your Captain’s log – a record of where you’ve been. It will be invaluable as you draw up plans for the journey ahead, for we cannot count on supernatural ghosts coming in the night to get us to change!

    To build such blueprints, we must use an approach that draws out the examined life, and not just the bottom line.

    You face your own ghosts by studying your histories, coming to terms with the way you live now, and having the courage to glimpse what may lie ahead along the current path. With this awareness you may realize how your ghosts of the past can lead to a more joyful and abundant financial future.

    Your financial decisions don’t have to hurt like the Dickens.


    Dickens, C. (1850). David Copperfield (1950).  Retrieved from  06/03/16. (1858). A Christmas carol                  (2012). London: Bradbury & Evans.

    Grosz, S. Retrieved from 06/03/16.

    FINRA Investor Education Foundation. Retrieved from 06/03/16.