We all do money differently. How do you do money, Matt Levine, Dealbreaker editor?
How did you end up where you are now, writing for Dealbreaker
Well, I was an investment banker and I read Dealbreaker, like everyone does. And after a while I didn’t want to be a banker any more. So I sort of tried to quit, and they were like, No no no, don’t quit—take some time off and see if you feel better. And then I saw Dealbreaker was hiring a second editor, and I thought, this is too perfect, so I applied, and I got it. So I went back to my bosses and said, Okay, this time I actually quit, I accepted a job at Dealbreaker. And—strangely—they said, okay, sorry to hear that, but you should stay for a few weeks, and finish up what you’re working on. And then someone in media relations or compliance or something heard where I was going, and they were like, Yeah, you have to leave today. So that was pretty much the end of that.
Was that traumatic?
I was expecting it. It was still a little traumatic because I had been working there for four years, and I liked the people. I was pretty over it as a thing to do with my life, but day to day it wasn’t that bad. The people I worked with were really nice and I respect them a lot and it felt weird for them to be like, You have to be escorted out of the building. They were nice about it though, and I think relations are good now.
But it was also great, because they made me take gardening leave. My contract said I couldn’t work anywhere else for two months, so they paid me for two months, and paid out my vacation days. I think that was more then I made in my first year at Dealbreaker, those two months of not working. It’s the best job you could ever have, getting paid a banking salary to do nothing. Some people make a career out of it, quitting their banking jobs every year or two for the gardening leave.
Was it a point of contention in your relationship, you quitting this very high-paying job to write for Dealbreaker?
Not at all. We both have left higher-paying jobs to do things that we like more and are passionate about, so we’re pretty much on the same page. And we both do okay and can afford our lives. For now. More or less. With some caveats.
What has your career path involved?
Lots of things. After college, I was a high school teacher for a year. Then I went to law school, then I clerked for a judge, then I was a lawyer for a little while, then I was an investment banker for four years, and now I write for Dealbreaker.
Do you still have your law school loans?
I’m almost done with them. I have one loan left, and I’ll pay it off in the next year or two. My loans haven’t been a major burden for a long time because I paid them down pretty aggressively with my first few law firm and banking bonuses. One of our professors gave a speech early in law school. He said, A lot of you are going to go to big firms, and you’ll say you don’t want to work at those firms, but you’ll go for a couple of years to pay off your loans. My advice to you is: If that’s your plan, just drop out now. There’s no point in taking out loans to get a degree that lets you get a job that lets you pay off the loans–just don’t get the loans! And I thought that was smart. But then I went to a big firm anyway. But I didn’t feel that bad about it because I liked the work; I had no real problem with corporate law. And it helped pay the loans.
How did you transition from law to banking?
A guy I knew had left my firm to go to my bank, and he called me up and said, you want a job? And I said, Is it better than this job? And he said, Yeah, it’s a little better than that job. So I went.
Afterwards I would get calls all the time from disgruntled lawyers asking me for advice about transitioning to finance. And I was like, I don’t know, it helps to have someone call you up and offer you a job, I guess? So my advice wasn’t that helpful, but I did get one of those disgruntled lawyers a job at my bank, so I guess it was accurate anyway.
Can you explain what a banker does, briefly, in layman language?
The best description I heard of it was when I was traveling with a senior banker and we were waiting for a plane in the Minneapolis airport. He asked me about my background, and I told him, and he said, What made you leave the learned profession of the law to become a traveling money salesman? And that about covers it. Bankers are traveling salesmen; they fly around the country selling things to companies. And the thing they’re selling is basically money, ways to get money, and a few related services, like buying other companies.
So my role was mostly that I went to companies and helped them raise money. When companies need money to build a factory or buy another company or develop a cure for cancer or whatever, there are different ways they can get that money. They can borrow it from a bank, or they can borrow it from investors by selling bonds, which are IOUs that you can trade in the market. Or they can sell equity—stock— to investors, so that instead of having to pay back the money they give investors some ownership in the company. (That’s what Facebook did when it IPO’ed recently: an IPO, initial public offering, is when a company sells ownership in itself for the first time.) I specialized in a thing called convertible bonds, which are kind of like bonds (where companies borrow money) but also kind of like stocks (where they sell ownership interests).
So I’d go to a company and say: Hi, we hear you want to build a factory and you need money. Have you considered getting that money by selling convertible bonds? And they’d say, No, tell me more. So I’d tell them more. And I’d have a big pitchbook with slides full of numbers and graphs and clip art that some junior banker had put together, telling them all the advantages of selling convertible bonds in general, and of selling them using my firm’s services in particular. And sometimes they’d say yes and then we would help them sell convertible bonds to investors and charge them a few million dollars in fees. And mostly they’d say no and I’d get back on the plane and go see another company.
Dealing with your own money and dealing with this other money, I’m guessing is very different. Did the job affect your personal finances?
Not really. A lot of people in banking think of themselves as very financially savvy . They think, I sit around all day and watch the markets, I know what’s going on, I must be a better than average investor! Part of your job in selling financial services to companies is going to companies and giving them an update on the market: The market is down today because Greece is doing this and oil prices are doing that and unemployment came in at the other, etc. So you do enough of those and you feel like you know whats going on. Banks typically don’t like you to do a lot of trading for your own account, but you can trade stocks you don’t work on, and a lot of people think they’re pretty smart and do a lot of investing.
And then there are people like me, where every time I gave a market update I felt like I knew less about what was going to happen. There’s too much to know, and anything you know the market knows too, and it’s too much of a crap shoot to predict what will happen next. And so much of your life is correlated to the stock market anyway—if markets are good, you’ll usually get paid a lot; if they’re bad, you won’t—so it doesn’t make that much sense to buy a lot of stocks since you’re just doubling down on that risk.
Since I worked on Wall Street people would ask me what they should do with their money and I was literally the worst person to ask. Every time I made a decision—to sell stocks and move to cash, or use cash to buy stocks—the market went in the other direction. So I tried not to make decisions, and kept most of my money in cash and the rest in stocks and bonds but in the form of very boring, broad-based index mutual funds.
And when you say cash, you don’t mean under your mattress.
Right. When I say “cash” I don’t mean paper money, I mean things that don’t change their dollar value. Savings accounts, things like that: if you have $1,000 in a bank account and you go away for a year and come back you’ll have $1,000, plus a tiny tiny amount of interest. That’s “cash.” If you have $1,000 in stocks or bonds or whatever and go away for a year you have no particular idea what you’ll have when you get back. That’s not cash—”risk assets,” if you like, loosely speaking.
So half my money is in cash and the other half is in risk things, stocks and bonds. I don’t, like, own Microsoft or whatever; I own very broad index mutual funds that are the entirety of the U.S. stock market or the U.S. bond market or the world stock market or whatever, so I never have to make any decisions about what companies or industries or countries are likely to do better than other companies or industries or countries. The only individual company stock that I own is that of my old employer, and that’s only because it’s locked up and I can’t sell it. As soon as I can sell it, no offense to them, I will.
Did you learn about how to deal with your own money from your folks?
Probably. I feel like my family had a healthy attitude to money, where we lived within our means and saved and weren’t extravagant, but at the same time when I’d feel guilty about spending money on something my mom would say, That’s what it’s for, to buy things. And it is, right? And so then I got a job that paid a lot of money and I saved a lot of it and was careful to live well, well within my means but also I would spend money on things that made me happy because why else have the money?
At banks you get a dinner allowance—if you stay past 8 p.m. you can order dinner on the firm—and there are some people who make a lot of money and use the dinner allowance to get dinner and a salad for lunch the next day, and they’d eat that free salad at their desk for lunch, and like: You’re making too much money for that to be necessary. And on the flip side there are some people who make a lot of money and spend it all on summer houses and vacations, and that’s not a great idea either. I had a happy medium where I spent money in ways that made the job more pleasant, but also was saving up to not have to do the job anymore.
Did you start saving because you knew you wanted to quit?
Well I felt like you can’t really avoid saving—you get paid a lot more than you need to live on, unless you’re living pretty lavishly (or, to be fair, have kids and live in New York.). So you save because you don’t know what else to do. But also I probably am more diligent about it than most people; I use Mint and built a fairly complex spreadsheet to track my savings and budgeting and stuff. And I saved for the things I knew I wanted to do, which were mainly, one, quit, and two, buy an apartment.
And since I had that in mind, I was careful about money. I’ve never really lived lavishly. It’s all relative—I live in a nice part of Brooklyn, so it’s not cheap, but it’s not the West Village either. Since I came to New York my housing costs have actually gone down each time I moved – except when I bought my apartment, but even there I was pretty careful about how much I could afford to put down and how much maintenance I could pay and things like that. Actually after taxes I’m probably paying less now than I did in my last rental.
How did you save?
I set up automatic sweeps from my checking account to a savings account and to my investment account, and so every month some money went to savings and some money went into mutual funds. When I left for Dealbreaker, I stopped investing and reversed the flows from the savings account, so now that money is supporting my lifestyle every month. And I’m pretty obsessive about budgeting, not that I control my spending strictly, but I track it strictly at least—I update my fancy spreadsheet every week. I have a pretty good idea of what I spend and what my lifestyle costs, so when I quit my job I had an idea about how far my savings could go.
I had to—I needed to know how long the money would last before I’d need to go back to finance or whatever. So far my projections have been pretty accurate. And I’ve still got some time to figure things out—I’m not constrained by dire financial necessity yet.
Was changing your lifestyle in a drastic way an option for you at all, or were you only going to go to Dealbreaker if you could stay in your apartment and keep your standard of living?
Of course everyone in banking has thoughts of, I’m going to quit and move to a beach in Thailand and spend no money and just surf all day. When you sit on a giant trading floor with no natural light, staring at a computer all day, that sounds really appealing. Actually that’s true for both banking and Dealbreaker. But as you get older you develop responsibilities that make it pretty difficult for you to change your life in that drastic a way.
I mean I still think about moving to rural wherever and starting a farm or a bed and breakfast, but I like the life I lead now. I haven’t maintained the exact lifestyle I had before—I’ve cut way, way down on fancy restaurants and other expensive things—but I’ve cut out the things that used money without making me happy while focusing on the things that do make me happy. So we eat out less and cook more but we still eat pretty delicious food because, you know, we like delicious food. And we spend a lot of time in Prospect Park with our dog because it’s beautiful and peaceful and the dog likes it.
But still it’s expensive; Prospect Park is free but really it’s expensive. I had a friend who once said about Paris that there’s a lot of free beauty there—you can just walk the streets and it’s good for your soul because there’s beauty everywhere you look. I kind of feel that about where I live, except it’s only free because I’m spending a lot on mortgage so I can walk around there every day. Also the dog is really really expensive.
What advice would you give to a young person about what to do with their career? Their life? Should they go to law school? Or try to be a banker?
I don’t know. A while back you guys had a post about a guy who left banking to be a pianist, and I really liked the comment that someone left saying that you read a lot of these narratives where a person does unfulfilling lucrative career for awhile, then quits that career to do something low-paid and risky, and then says, Everyone else should just go directly into the risky low-paying thing! And it’s like, But you could only do the risky low-paying thing because of all the money you saved in the unfulfilling lucrative career!
I can’t say that I’ve made the exact right choices in my life, since I’ve taken a pretty roundabout path to get to where I am now, wherever that is. But at the same time, I did a bunch of different things, and those things were interesting and sometimes fun and I learned a lot and the variety is nice. And also I got paid a shitload of money for some of those things, and that’s enormously liberating and makes it a lot easier to experiment now.
New York is weird because in certain neighborhoods, it seems like everyone is a blogger or an investment banker—either you work in an industry where 22-year-olds make $20 or $30,000 a year, or zero, or you work at a job where 22-year-olds make $150,000 a year. I guess that if you want to be a blogger you might as well be a blogger, but it’s hard to say that it’s a bad idea to do banking for a couple of years if you have that opportunity because you do learn a lot and, you know, you make so much money. For me, too, it was good preparation for what I do now, in that now I write about stuff I used to do, and it’s really nice for me as a writer to sometimes know what I’m talking about.
The danger is that when you make six figures as a starting point, you are in an industry where everyone makes more and you go to the Hamptons and Per Se and whatever a lot and you end up spending all your money and taking on an expensive lifestyle. And then all of a sudden you’re a vice president and you don’t like the job any more than you did five years ago but you haven’t saved enough money to leave. That’s bad—it’s fine if you like it, and lots of people do; it’s also fine if you don’t like it and save enough money to leave. But it’s bad if you hate your life but are too addicted to Per Se to leave it.
What I do feel like I’ve done right is that I’ve been careful to treat money as a way to buy freedom. The Roots say “fuck getting money for real, get freedom,” and it’s a good line but unfair to money. Money is a really, really good way to buy freedom. It’s just that the goal is freedom, not money.
And don’t go to law school, that’s a terrible idea. Unless you want to be a lawyer. If you really want to be a lawyer and can go to a good law school and have a reasonable plan for paying back your loans—or someone else pays for it—then go for it. But this is not a good time to go to law school because you can’t figure out what else to do with your life.
Thanks so much for talking to me. I know it’s hard to talk about money (even when you talk about money for your job, ha).
It’s particularly hard once you make more than a certain amount of it. When I made $20,000 a year teaching right after college I had no problem talking about money, but now if I were to say what I made as a banker—which was pretty typical for someone in my role and my seniority—it would probably enrage everyone. Like, 90% of the comments on The Billfold, would be, like Ahh, you got paid so much, it’s so unfair that bankers are so rich. And then 90% of the comments on Dealbreaker would be, Ahh, you got paid so little, you must have sucked at banking, no wonder you left.