Tuesday, June 9, 2009
We frequently re-visit earlier posts to determine their continuing applicability. In February of this year, we generated a piece entitled "Making Use of the Current Financial Mess."
Since we continue to be in an economic "______ession" of some type, we thought that we would re-visit our earlier thoughts, and see if any of your thoughts have changed in the interim.
© 2009, the Institute for Applied Common Sense
Mark Twain observed that if a cat sits on a hot stove, she will never do it again. Unfortunately, she'll probably never sit on a cold stove either.
Everyone has their favorite villain for the current economic collapse. The Logistician sent me a list of 10 ways in which he felt consumers were responsible.
I told him that I did not buy into his premise, but in thinking about it further, I realized that if we only point the finger at the fat cats, we will have learned little. We all bear some responsibility.
We are behaving much like Mr. Twain’s cat. Despite our efforts to revive our financial system, we have little to show for it… yet. We definitely can’t sit at the starting line waiting for the next guy to say, “Go.”
We simply need to use some Common Sense, on which the left and right should be able to agree.
According to the Scientific Method, bad ideas and experiments that don’t work are as valuable as those that do, provided we learn from the experience, and use that knowledge productively.
So, with 2/3rds of our economic well-being based on our own behavior, we would like to suggest a few topics for discussion, the results of which may assist us in finding our way out of this financial wilderness.
1. If a deal sounds too good to be true, it probably is.
You don’t need a Ph.D. in economics to realize that markets don’t always go up. The observation that a few people are making great sacks of money, and violating the rules of Common Sense, does not relieve us of the obligation of doing our own home work.
If you can’t make the numbers work within your current income, don’t bet on massive increases in the value of your investment to bail you out.
You have a better chance in Vegas than in a financial commodity you do not understand. (And the truth be told, few of us really understand them.)
2. Don’t bet your home on things you don’t need.
Contrary to the Logistician’s mantra, there is nothing wrong with wanting a better, more luxurious life, but not at twenty percent interest. Here there are demons…like bankruptcy…and acid rain falling on your childrens' heads.
Save the money 1st; then buy the Lexus. It’s only Common Sense.
3. Ignore herd instinct.
When everybody agrees on the direction of a market, guess what…?
4. Be careful when building and buying things which are more than you need.
Advertising not withstanding, buying an Escalade won’t make you an NBA star. There is a reason why the Toyota Camry and the Honda Accord are the 2 best selling cars in the country.
5. Particularly avoid using credit or going into debt to build or buy things which are more than you need.
We went into debt, both individually and collectively, based on the assumption that the party would never stop.
Pick up any book on history…it always does. And, you don’t want to be the guy playing musical chairs when….
6. Remember that gluttony and greed are 2 of the 7 deadly sins.
Really want to make a 20% return on your income? Pay off your credit cards.
7. Carefully weigh the impact of retirement on an individual and societal level.
The Logistician and I differ on this point. The Logistician feels we got lazy and retired too early. My take is that we took the money and ignored our inherent desire for a more worthwhile job… and after 30 years we couldn’t wait to get out.
With our most experienced workers, although still productive, leaving the workforce early, all of this experience went to waste… and it is experience we can ill afford to waste.
8. Avoid being seduced by the short-term Sirens.
There was a time when we bought things to last. Next time you are in the park, look at the number of people taking pictures with manual focus SLR cameras.
This desire to last drove a subsequent demand for quality… producing a pride of workmanship that represents the essence of “Quality of Life.”
9. Don’t leave the education of your kids to the entertainment industry.
Not wanting to engage them, we abdicated our responsibility to the likes of Nintendo, Disney, and MTV, as long as they didn’t interfere with our pursuit of the “good life.”
If you don’t want children, don’t have them. You can not experience the sense of wonder children project, as they learn about the world via remote control.
You have to be there… and evolution suggests that this is one of the few primal pleasures we have inherited undiminished.
10. Lend a helping hand.
If you know someone in need of a job, through no fault of his own, ask around. Do what you can to help him get re-employed.
Want to raise the “quality of your life,” watch the face of a man or woman you have helped put back to work. Government can’t do that.
You see, we do most of the spending. No income, no spending. No jobs, no income.
Is there anything on this list which defies Common Sense?
After all, we should be smarter than Mr. Twain’s cat.
© 2009, by the Laughingman for the Institute for Applied Common Sense
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