Important Things are Simple, Simple Things are Hard

I am always looking for good ideas for this blog, surfing the internet, reading financial articles, watching video exposes of the credit industry, and reading bloggers who write rants not unlike your humble servant. I watched a video that must have been some kind of cable TV special. It wasn’t very good. Two couples and two individuals were going to receive financial makeovers from a panel of experts. This show introduced the victims, gave the experts an opportunity to yell at them a bit, and gave the audience a brief introduction (as in four lines on a Power Point slide) letting them know where this was headed over the course of the next three months. The people needing the makeovers had very different stories, one couple were very successful entrepreneurial high rollers, who lived large, $400 bottles of wine, and limousine rides to Las Vegas casinos "Laissez Les Bon Temps Roulez," then the economy and their businesses crashed. One small businessman ruined his credit by protecting his employees while he recovered from cancer. This story just broke my heart. If I had been in that audience I believe I would have started a collection for the poor guy.

It dawned on me that all four of these very different stories had one thing in common, denial. All of these people got themselves into very serious trouble one step at a time. When the experts pointed out what was obvious to the audience, the victims continued to deny the reality of their situation. It wasn’t really a guilty defensive of their behavior, it was denial.

If we are unable to confront the simple facts of our condition, it is a certainty things will not get any better by themselves. Can you, can I, be comfortable with the reality of a situation? Start right now. Look at the following equation.

Money In = Money Stored + Money Out

Pretty simple isn’t it? Most of our money in will be in the form of our take home salary, but there are other sources, interest, dividends, capital gains, gifts, and pensions. Money stored includes both “real money” in bank accounts, credit unions, and money market funds and “imaginary money” that needs to be converted into “real money” before it can be spent on a late model, low mileage BMW 4Z. Imaginary money would include the equity in your home, stocks, bonds, gold doubloons, and footballs signed by John Riggins. Money out is the sum of the real money you spend every month and the imaginary money that disappeared in the stock market crash. Watch this equation with unblinking eyes. As long as money in exceeds money out, there is nothing to worry about, money stored will increase. If money out, for whatever reason, exceeds money in, it is important to examine that fact with unblinking eyes.

It is at this point that each of us must take responsibility for our situation whether it was caused by our own sinful behavior, bad judgment, or events that are wholly beyond our control. If I close my eyes, encourage my wife to sprinkle pixie dust around the room, and wish very, very hard that the stock market will rebound; I will not be able to retire any sooner. If I continue to draw a salary, save, invest, and learn more about money, the day may come when I will be free.

Living in delusion, pretending that something did not happen, pretending we have no responsibility to improve the situation, telling ourselves, “The devil made me do it,” or any attempt to live in some kind of cognitive dissonance is a recipe for disaster.

I hope to continue this line of thought in future posts.

I was looking for a good scripture about staying awake and alert. This one comes to mind.

Matthew 25

[1] Then shall the kingdom of heaven be likened unto ten virgins, which took their lamps, and went forth to meet the bridegroom.
[2] And five of them were wise, and five were foolish.
[3] They that were foolish took their lamps, and took no oil with them:
[4] But the wise took oil in their vessels with their lamps.
[5] While the bridegroom tarried, they all slumbered and slept.
[6] And at midnight there was a cry made, Behold, the bridegroom cometh; go ye out to meet him.
[7] Then all those virgins arose, and trimmed their lamps.
[8] And the foolish said unto the wise, Give us of your oil; for our lamps are gone out.
[9] But the wise answered, saying, Not so; lest there be not enough for us and you: but go ye rather to them that sell, and buy for yourselves.
[10] And while they went to buy, the bridegroom came; and they that were ready went in with him to the marriage: and the door was shut.
[11] Afterward came also the other virgins, saying, Lord, Lord, open to us.
[12] But he answered and said, Verily I say unto you, I know you not.
[13] Watch therefore, for ye know neither the day nor the hour wherein the Son of man cometh.