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Counting and Comparison

June 20, 2014 , , ,

The Freaks Shall Inherit the Earth

The Freaks Shall Inherit the Earth

There are different ways to approach finances, but there is only one way to count. You can count by 5’s or by 10’s but when you come up with a sum, that is reality. People today are often confused about what constitutes wealth, security, or satisfaction. One of the problems I notice is the addition of interest rates and complicated denial schemes to hide from financial reality.  When people became accustomed to using credit cards many also abandoned balancing the budget.  Some might believe ignorance is bliss, but when the interest rates catch up with your finances there will be no bliss for you.  The popularity of Suze Orman shows how very well educated and powerful people can be financially illiterate to the point of causing agony in their lives.  When I was a child there were no credit cards.  The parents had metal plates that belonged to specific stores, but I don’t think there was credit advanced.  The bill at the store was paid each month in full.  We did not consider borrowing money to buy everything.  Time was more bountiful too, so people were not strapped to decide which meeting/sporting event/social episode to choose.  We had time for everything, including hopping in the car to drive across the country.  I do not think we need to return to the days of yesteryear to conquer or mathematical shortcomings.  I think we need a simple way to teach those who have always lived in a world with credit cards how to understand compounded interest.

Chris Brogan, one of my favorite authors, has written a book, The Freaks Shall Inherit the Earth, that offers a wonderful solution to our dilemma of rampant financial delusion.  He calls it “Mortgage Math”.  It is a brilliant way to compare and bring into focus money that one is contemplating spending.  Instead of trudging onward randomly spending, paying, and wondering how to get out of debt he suggests that each expenditure be compared to something you buy all the time.  A mortgage payment is a very common overhead expense to which people can relate.  If you have to decide if what you will pay (both now and in interest) for something is worth it, just ask how it compares to your mortgage payment.  This adds perspective to an otherwise never-ending spending problem that has buried many Americans in hopeless debt.  I have no mortgage, but I use this system to compare anything to a trip.  I want a first class ticket to Europe, plus time and money to spend months tracking down my dead ancestors in style.  This adventure will be pretty pricey, and I want it more than most day to day things I might purchase.  I am not really saving up for it, but rather am using it as a guideline for comparison.  I am not an interest payer.  I like to be an interest collector, but I still find this idea very useful for attuning with financial reality.  He uses a similar formula to determine how valuable time is.  By limiting meetings to 20 minutes, saying no often, and staying aware that tempus fugit, memento mori, he gives good advice to create frameworks for more abundant free time.  By valuing what you already have, time and freedom of choice, you can make your own financial future more comfortable and successful.  There are many good ideas in this book, but this way of looking at finances and time has great potential to help many get on track and fulfill dreams.

 

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comments

This is a great post. I think I should buy the book and give it to the kid!

Like

Stevie Wilson (@LAStory)

June 22, 2014

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