Thursday, March 26, 2015
Michael Jordan has a net worth of $1 Billion. That is one with a B billion or think of it as a 1,000 million dollars or just $1,000,000,000. Michael likes to gamble. I have read huffy reports filled with self righteous indignation that Michael has been known to lose $50,000 a weekend in Atlantic City. Let’s compare that to a hypothetical retiree with a net worth of $500,000 who loses, $25 playing the slot machines. It’s the same thing. Does anyone care about the second scenario? There is also a report from a questionable source that Michael Jordan once lost $5,000,000 in a single night at the crap tables in Las Vegas. If this is true that would be equal to our retiree loosing $2,500 in one night. In both case I expect their wives would have extremely angry unpleasant things to tell them about their behavior. In both cases, I would suggest they had a problem. I would advice them to seek counseling and perhaps the support of a twelve step group. It’s our old friend the money equation. Money In = Money Stored + Money Out Pretty simple isn’t it? This equation integrated over a lifetime is all the mathematics there are to the story of your money. How you use it is your business. After all, it is your money and your life. One of the foundational purposes of this blog is mindfulness, the ability to understand and control the movement of your money through your life. Over most of our lifetime, Money In will come primarily from our paycheck. I personally wanted to start enjoying a comfortable retirement as soon as possible. In order to achieve that goal, I had to make some compromises and sacrifices in other areas. My parents thought they must have failed me on some level. They could not understand why I could possibly want to retire during my peak earning years. They did their best to talk me out of my plan. My father loved his job. He really didn’t hit full stride until he was in his early sixties. Then he wasn’t about to let anybody or anything slow him down. He kept on running until a few days shy of his 76th birthday. Finally, he decided it was time to retire. He spent the last ten years of his career traveling the world, giving speeches, and along the way, winning several prestigious awards. That was not my experience. If you are a 29 year old man with a wife and two babies in diapers who has trouble making the monthly bills what you want out of a career is less important than providing for your family. If you need to take a second job to make ends meet, take a second job until you can find something better. Money Out is where our fun starts. It is your money. If you love to eat at the finest restaurants in town, that is your business. If you consciously budget $400 a month for sampling the best food and wine your city has to offer, that is OK by me. If you can afford it and it gives you pleasure, it is your money and it is your life. On the other hand if mindlessly wasting $400 a month on lunch out at restaurants rather than brown bagging it prevents you from doing what you really want, going on a really cool vacation, then I would say, “You have a problem.” Money Stored is not an end in itself. It is only a tool to help you live a full and rewarding life. That would include giving to others and building a better world for the next generation. We need to approach these questions with a little common sense. Here is where a monthly budget might help if you don’t understand the flow of money through your life. One of the problems with money is that you can only spend it once. If you pay $600 for a pair of handmade Italian shoes, you can’t use that money to buy a new camera. Shoes or camera is none of my business. How you choose to spend your money or not spend your money is your business. I want you to use your money wisely and well, in a conscious appropriate manner that brings you pleasure and makes your world a better place.