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Prudence, Fear and Irony

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4186728 Prudence, Fear and Irony
Cover of Alanis Morissette

In the 1990’s, an upstart pop singer Alanis Morisette released a song entitled Ironic.  The song ran through a litany of unfortunate occurrences that really were more indicative of bad luck than irony.  Irony is the phenomenon of taking actions intended to bring about one outcome which end up producing the opposite outcome.  Some people speculate that this is the greater meaning of the song Ironic, in that it is a song about irony in which nothing in the song is ironic.  I have my doubts.  I had the benefit of hearing a great talk, by a leadership expert, Jeremie Kubicek, about the concept of self-preservation in the current economy and how when it comes to personal finance our own fear and the actions we take in response to it can bring about our own financial self-destruction.

There is a strange thing about how our lives evolve from youth into adulthood.  In some ways we are different and in other ways we never change.  So much of our youth is driven by self-image in relation to others.  In our attempts to fit in, we adopt the cultural rules and the norms of others.  We submit ourselves to excessive pressures due to supporting self-imposed cultural expectations, putting energy in maintaining a delusion that we are the embodiment of those expectations.  As we grow up, we usually care less and less what other people think, but we often mistakenly assume equally burdensome expectations of oneself or obligations often in the form of debt, duty and lifestyle.  So although the reason for the pressures has changed, the pressures have not.  Unfortunately, although only a change of perspective can relieve us of the burdens of our own expectations.  Some burdens of our obligations have much sharper teeth.  If you burden yourself with debt, for instance, there are legal ramifications for abandoning them. 

The problem with all flavors of burden is that they exert huge burdens on the psyche, which are transmitted to everyone around us, particularly in times of great stress.  It takes energy to maintain a delusion.  Either I am trying to convince myself that I am what others think I should be, what I think I should be, or I may face the consequences of not being able to meet my obligations.  Fear and worry put us in a fight or flight mode, where it becomes easier to withdraw.  This damages our relationships with others, shuts down our higher thinking processes, makes the quality of our work less and usually endangers the very things we are trying to build walls around to protect.  Irony indeed.

2880286209 6c063c8b55 m Prudence, Fear and Irony
Image by nikoretro via Flickr

The economic downturn of the past few years has made many of us uncertain and scared.  I, myself, lost much and endangered much more.  Humans are not built to keep their spirits in bottles.  Fear entices us to do just that.  It is only through self-examination that you can find the things that you are afraid of losing.  Know that if your fear pushes you to build walls of protection around you, you are destined to lose those things.  You must fight back with all your power against that reaction.  I actually had to endure my biggest fear to lose my fear of it.  It’s a strangely liberating experience and drove me to write about money topics.

As parents, it makes sense to teach our children the concept of prudence, which is the art of delaying action until we’ve completed our due diligence.  But prudence is very different from fear.  The first is the analytical higher level thinking process of decision making.  The latter is the emotional reactions of our reptilian brain.  By discussing the difference between the two and by discussing the pressures of youth and adulthood and the consequences of taking on obligations, we can raise our kids to deal with our fears in constructive ways. 

Fear is there to make us aware of danger, not to make us afraid of it. Now that’s irony.

 Prudence, Fear and Irony
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Book Review: The Total Money Makeover

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This book offers the simplest and most down to earth approach to financial success I have ever read. 

Having been reading financial books for nearly a decade, I had continually struggled to find one who’s philosophy would be accepted by my wife.  I exposed her to various experts, even took her to a couple of conferences.  Nothing every stuck, until we started watching the Dave Ramsey show.  She was impressed by his common sense, tough love, and simple ideas delivered with a Christian perspective. 

Seeing that we’ve finally stumbled on something that she was able to embrace, we picked up the Total Money Makeover.  

Having lived life where he had to deal with apparent success, a long and painful collapse, immense financial stress, and eventually bankruptcy, I feel a kinship with Dave Ramsey.  So do many who have had to endure or are enduring financial hardship and now sing his praises.  Through the simple 7 step formula outlined in his book The Total Money Makeover, he has created a path that has led hundreds of thousands of people onto the road to financial success.

As married devotees of Dave Ramsey come to understand, as I have, when life partners do not have a common set of financial goals or objectives, financial success is elusive for both of them.  Each partner follows his or her own heart and most often they work against each other—usually not by malice or deliberate contrarianism, but just because two people joined at the hip, moving in different directions, makes sure that neither party goes anywhere.

There are 2 distinct differences to the Ramsey approach that differentiate it from all the others I have examined.  First, Dave’s approach does not bank on speculation what-so-ever.  He works with financials that exist today.  He does not advocate gambling on getting involved with speculative ventures or starting businesses except those that are small enough that encompass low overhead and making money quickly.  He doesn’t believe in starting businesses that you must subsidize for a lengthy period of time for them to get off the ground. 

The second distinctive aspect of his philosophy pertains to his opinion of debt.  Having gone bankrupt, he believes that no debt is worth taking on.  On his radio show, he is fond of saying that of the homes that have gone through foreclosure, 100% of them had a mortgage on it.  He believes in a life without debt.  While other experts advocate borrowing money to put it toward money making ventures or investments, Ramsey rejects this.  Although, leveraged returns on investments appear to be more profitable, he contends that once you account for risk of the investments falling and the potential to be on the hook for the borrowed funds, those returns are much less lucrative then they appear. 

After my own experiences with leveraged investments failing I am inclined to agree with him.

Dave Ramsey’s unapologetically Christian approach to personal finance and investing is also quite refreshing.  In a field that for too long has been dominated by secularists and by those whose ethical choices have worsened by the decade, Ramsey provides learning and education about money in a way that is without moral ambiguity.  He fearlessly makes value judgments all the time.  His readers and listeners love him because he is right. 

Dave Ramsey’s program is a blessing to those who chose to follow his wise advice.  The Total Money Makeover is the step-by-step instruction booklet to financial freedom.  The steps he lays out are simple.  Notice I did not say they were easy.  But it is true, that a family that follows his recipe for success will achieve it.  And the sooner you start it, the sooner you will become a success. 

Total Money Makeover

 

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