Thursday, December 10, 2009

News Flash: Your Hero Might Let You Down

I find a lot of times when I write I am not only speaking to you the reader but also to myself – usually it is mostly to myself. A few months ago I wrote an article about finding satisfaction in your current situation. Boy, that message really resonates during the holiday season on so many levels.

I have been thinking a lot about finding satisfaction within your means both through the lens of personal finance but also as an individual. Being waist deep in the hMerry_Christmas_1024oliday hustle, I think it is important to think about your current satisfaction within your family’s situation. Are you happy with your resources? Are you happy with your giving over the last year? What would you change next year?

Like most finance professionals, one of my professional hero's is Warren Buffet. He lives here in Omaha, not far from the University of Nebraska. He is one of those guys that, when you grow up here, does not seem like he is that big of a deal. For the record, he is a big deal.

So just like I do with any hero, I watch his interviews on TV, I follow his company and their holdings and of course I read his biographies. In particular I read “The Snowball: Warren Buffet and the Business of Life”. The book was a volume in itself, outlining each of his major business deals as well as his personal family information. Like any human, Buffet has some particular quirks that make him unique as an individual. You know, weird food preferences like cheese sandwiches and interesting past times like model trains. But one quirk jumped out that really made me think. The book discusses Warren Buffet and his attitude toward giving away money. According to this biography, giving away cash makes Buffet physically ill – yes, to give even $1 makes Buffet’s stomach turn.

Now, I don’t generally like it when people speak poorly about my hero’s, it kind of makes me feel like someone is kicking my dog.

But I have to say it… he seems like a Scrooge.


Don’t get me wrong, I understand that Buffet has become the second richest person on earth by being cast iron, but becoming physically ill when you give money away? Come On!

So here is where the satisfaction piece comes into play. Don’t you say to yourself “If I had that much money I would give it to such ’n such” – I know I do. Well, Warren has that much money and he still doesn’t want to give it to “such ‘n such”.

There comes a point in life and in money where you have to say, “ok, it is time to starting living like I am satisfied”. I would argue that for every single one of you, including me, that day is today.

True Story:

I recently had an interaction with one of the most gracious people I have ever met. I started the conversation by complimenting him on some new construction he had recently finished. Rather than simply accepting the compliment and moving on, this man turned the conversation around and complimented me for mentioning it! I could not believe it, he was actually complimenting me for complimenting him – and now I felt really good about my compliment!

I walked away from that conversation saying, DANG! I want to be just like that guy! At some point in his life he made a choice to be so satisfied with his situation that the satisfaction oozes from his body.

I’m going to make the prediction right now: You will never have enough __________________ (enter whatever it is you would like more of) until you find satisfaction with your current situation. This holiday season I am going to choose to be satisfied, I challenge you to try it too.

There Is Something To Be Said For Peace Of Mind

When people start to take the journey of paying off debt they try to get all scientific about it. They say “Well I have a college degree, so I should synthesize these numbers and put together a debt payoff strategy that most completely displays my intelligence.” Then they go and spend all afternoon putting together an Excel spread sheet that best accomplishes the display. More often than not, that is where the excitement ends.

Keep it simple, there is something extremely psychological about debt.

Don’t let your mind keep you from winning! Pay off the smallest balances first – this way you can have a win right out of the gate. That win gives you an instant blast of peace of mind. You are going to beat debt! Next, pay off the second smallest balance with the payments you were making on the recently paid off loan, and so on until all the debt is gone.

The “Debt Snowball” approach works, plain and simple. There is no high finance involved – don’t even worry about the interest rates! Once you get the ball rolling you will find success like you would not believe. I always envision a Looney Toon's espisode where Wile E. Coyote is rolling down a hill to catch the Road Runner but is rolling so fast that he starts to pick up all kinds of dirt and debris. Do the same thing to your debt - START ROLLING!

Listen, if you still want a spread sheet, you can do that too. But make your first snowball payment before you open Excel.