Defense the Key to $ Success


Fans are brought to their feet watching a monster slam dunk in basketball, a tape-measure home run in baseball, or a game-winning touchdown pass in football. They're all exciting feats, but not necessarily the path to a championship.

“The way to wealth depends on just two words, industry and frugality.”

—Benjamin Franklin

Fans are brought to their feet watching a monster slam dunk in basketball, a tape-measure home run in baseball, or a game-winning touchdown pass in football. They’re all exciting feats, but not necessarily the path to a championship.

“Defense will win you the championship, even though offense is more exciting,” explains Gregory Karp, author of a new book, Living Rich by Spending Smart. “And so it is with money. Earning is like your offense, and it’s kind of sexier, but it’s monitoring your spending, your defense, that will allow you to win with money.”

Karp, whose newspaper column Spending Smart reaches more than 6 million readers, recently shared his thoughts on physicians and the importance of smart spending.

Do physicians and other high earners tend to be notoriously poor spenders?

I think they do tend to be worse spenders, and that’s because they have more wiggle room than people on lower incomes. People with lower incomes have fewer choices. But when you have a higher income you’ve got so many more options available to you, and a lot more opportunities to waste money.

How does someone begin to spend wisely?

I think the first step is outlining your financial goals. That sounds boring and almost trite, but when you have goals it allows you to say no to yourself to the things you don’t care about because you have this thing off in the distance that you do care about. If you want to save for a second home at the beach and you want to pay cash for that, then you have that in your mind and it’s so easy just to say no to yourself on these other things because you have your eye on the prize. What I tell a lot of people is that if you’re going to examine your spending and look for the most wasteful leaks, try to become what I call financially FIT. That stands for food, insurance and telecommunications. Those are the three categories of tremendous spending and tremendous waste.

Does wasteful spending include purchasing a Starbucks coffee every morning?An occasional Starbucks coffee is not worth bothering about. What hurts you are these recurring expenses, the things that you do daily or weekly, and these monthly expenses you can see on your credit card if you go down the list, things you don’t even use anymore. If you have a gym membership and you rarely go … but it’s so easy when it’s on that recurrent payment system. So you’ve got to really be careful about automatic spending.

What about things like impulse or emotional purchases?

Impulse purchases are okay, if it turns out a day later you still want it. But so many times you don’t. You get these impulses and you come home and the tags are still on the garment and you say what did I buy that for? It’s kind of the thrill of the hunt during shopping rather than evaluating with our brains what we actually want and need.

Any examples of poor spending that stand out?That gets me into my pet peeves, and one of them is bottled water. For some reason we think that bottled water is somehow healthier for us, or is better than tap water, but that’s simply not the case. Blind taste test after blind taste test shows people can’t tell the difference. And in fact a lot of the bottled water sold, including Dasani and Aquafina, they’re tap water run through a filter. So, we think we’re getting this water from pristine mountain streams and it’s just tap water run through a filter, which is something you can do at home for a lot less money. Now, that’s not going to make a big change in anybody’s life financially, especially for higher income earners, but it’s the principle of the thing. And if you spell Evian backwards, it’s naïve.

Is there a key lesson you want readers to learn from the book?

Yes, it’s that paying attention to spending pays off. So many people, especially higher income earners like doctors, think well, it’s not worth my time to worry about. But in fact, it is. There was a study from Virginia Tech where shopping around for a television for 16 minutes got consumers a $100 better deal on a TV. Now, if you think about that, that’s $375 an hour they made. And if you compare it to earnings, of course on the earnings side we get all the taxes taken out, so figuring that in, they made $675 an hour. That’s $1.3 million a year, if you extrapolate it out. So, paying attention to spending pays off.

It sounds like everyone could benefit from some smart spending lessons?Yes, especially if they have the type of personality where they hate wasting money. They don’t mind spending money on things they want, but they don’t want to waste money on things they don’t want. And that’s really the focus of the book, is to plug the leaks of wasteful spending so you can redirect that money to things you truly care about.

Ed Rabinowitz is a veteran healthcare reporter and writer. He welcomes comments at

0.3Average annual personal savings rate for an American family.(US Commerce Dept., 2008)

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