Thursday, March 12, 2015
What About Tomorrow?
From time to time I talk with people who have really serious problems. It doesn’t matter if it was primarily their mistakes, tectonic shifts in the economy, or a misfortune totally beyond their control such as illness or an accident. They are in trouble and they don’t see a way out. There is always a path out of financial difficulties. There is no guarantee that you will reach your goal, but you can start out on that journey. You can do that today. Tell yourself, “If I am alive at 65 there is a good chance that I will still be alive in five or ten years. In may take me five or ten years to build enough of a nest egg to retire, but would I rather be 70 in my current condition or have a chance at a better life?” I graduated with a degree in U.S. History and English Literature. After nine years working in American factories in a variety of low and mid level positions, I lost my job in the recession of 1982. For those of you old enough to remember, that was a bad one. I didn’t like working in factories. They are noisy, smelly, and sometimes dangerous places. Some of the women carry blue steel in their purses. Employees get in fist fights. There was even an instance of a woman hiring a root doctor to place a curse on her rival for the attentions of the same man (really). Let’s not even mention some the really nasty stuff, like hexavalent chromic acid or cadmium cyanide. Like other men of my age (31), I came up with the idea of returning to school, earning a degree in mechanical engineering, so I could leave the factory floor and endless cycles of training new employees followed by the inevitable, layoffs. There was no guarantee that I could make it through Calculus. My track record on math wasn’t very good. There was no guarantee that I wouldn’t run out of money before I could graduate. We didn’t have much in savings. Three years later I graduated. Twelve years after my first graduation, I was starting over. At some point it was obvious that without a Master’s degree I wasn’t going beyond a certain level in a research and development laboratory. I knew it would take me about five years in night school to get the degree. At the time I was 40 years old. It was at this moment I first asked THE QUESTION, “OK, in five years I will be 45 years old. Would I rather be 45 with or without a Master’s degree?” At age 46, I received my Master’s degree. The school I attend only held commencement once a year, so I had to wait five months to get my diploma. It has been my observation that really serious financial problems take three to ten years of focused effort to solve, depending on their severity and your intensity, but in three to ten years, the actuarial tables tell me that it is likely that you will still be above ground. Would rather be alive in three to ten years living with or without a solution to your problems? Keith Cameron Smith discovered one of the significant differences between the rich and the poor is their sense of time. We all plan, but our timescales are different. Smith makes the following observations concerning different groups. “The very poor think day to day.” “Poor people think week to week.” “The middle class thinks month to month.” “The rich think year to year.” “The very rich think decade to decade.” I expect most readers of this blog fall somewhere in the middle class. Smith believes the middle class focus is on comfort. What can they buy today to make their life comfortable? If they think they can make the monthly payments, “It’s all good.” Take a page from the playbook of the wealthy, expand your time horizon. If you are thinking in terms of monthly credit card payments, imagine a future with zero balances on all your cards. Then plan to live on a budget that will allow you to achieve your goal. Ask yourself, “What kind of future do I want?” Then start out on your journey. Google Maps tells me that it is 52.7 miles from Pelion, SC to Winnsboro, SC. In current traffic that drive would take you about an hour. However, if you never leave Pelion, you will never reach Winnsboro.