Health and Wealth

While listening to an interview with Dr. Andrew Weil ( today I was reminded, yet again, of the similarities between physical and financial health.  To start with, staying both physically and financially healthy is based on very simple principles.  Eat natural foods, spend less than you earn, exercise daily, save money for the future, drink plenty of water, and so forth. 

The principles are simple, but our ability to make the processes complex is something to behold.  Fast, processed food and drink has taken us far off the path of eating natural foods and drinking water, while credit cards and casino-like stock market investments have divorced us from the realities of spending and saving.  It’s not tough to see the wreckage this has caused in both areas of our lives.  Roughly 40% of Americans are obese and the same percentage could not cover a $400 emergency expense. 

These are depressing numbers for the holiday season (sorry, not sorry).  Lord knows the next 12 days will see more binge eating and drinking, along with more credit card abuse (happy holidays!), but what will happen in 2019?  Possibly a pause for January, but then back to the pattern.  What if we want out of the cycle? 

Decide you’re worth it.

There are countless diet programs to be found online (more complex confusion), but start by eating one non-processed meal a day.  And trade the Mountain Dew for a water.  This is the first simple physical step you can take.  Take another the following week.  While you’re getting your physical life in order, try this for your financial life – save 10% of every paycheck.  Don’t put it in your company 401(k), save it.  To start with, just open a separate account at your local bank.  Get into the habit of saving the cash first, then figure out where it needs to go. 

Another piece of advice Dr. Weil dropped was that we all need to figure out what works best for us.  If you are used to hearing that this is the best and only way to get real results” or something similar, you’ll appreciate how refreshing this statement is.  First learn the principles, then adapt to your lifestyle.  Are you paid via direct deposit?  Maybe it will be easier to have your employer deposit the 10% directly into the new account.  Or maybe you need to put the cash in a separate envelope.  It’s up to you. 

Clients often say that they didn’t even miss the 10%.  Give it a shot and prove to yourself that you’re worth it. 

Unforced Errors

I was fortunate to grow up in an area with a mother who loved playing tennis.  She taught me to play and helped me understand the nuances of the game.  The goal is to get the ball over the net and land it within the playing area on the other side.  Pretty simple.  Of course simple does not always mean easy, and the mental game is where the battle is won. 

One aspect of the mental game relates to focus, and a negative consequence of when you lose it.  Specifically, unforced errors.  A tennis example would be hitting the ball in the net.  Unforced errors lose points, and potentially games, sets, and matches.  So it’s important to stay focused and keep them in check.

In my other life, I help run a 67 year-old distribution business focused on plumbing and HVAC products.  We have many long-term employees with deep industry knowledge and a love for what they do.  Even with this expertise and passion for our work, we make mistakes.  Today we discovered that we had made what can only be described as an unforced error and, just like in tennis, we suffered a loss.  This particular loss was big enough that it caught my attention and, like all unforced errors, it was driven by a lack of focus. 

I’ll spare you the details of the time and money needed to correct this error, but the short version is that it hurt.  Losing time and money stinks, which is why I’m posting this for you today.  It’s easy to see how we can all lose focus in our world of constant Internet distraction and it’s important to remember that unforced errors are the inevitable result. 

One unforced error that is extremely common in the personal finance world centers around saving.  Specifically, treating saving as the last “bill” you pay each time you are paid.  Simply moving this bill to the top of the list each month eliminates this unforced error in our money management.  Paying yourself first allows you to avoid this unforced error and lay a solid foundation for your future financial growth.

The next tennis Grand Slam is the Australian Open in mid-January.  No need to wait until then to ensure your saving plan is in place.  Financial unforced errors can be more costly than those on the courts in Australia. 

Passing of a Daredevil

Bonnie Nelson passed away on December 15, 2018, after a well-fought battle with cancer.  She was 87 years old.  Or, as Robert D. Smith likes to state it, she lived exactly 31,880 days. 

The piece below was written for our company newsletter prior to the cancer’s final push, and shows how Bonnie chose to live her life in retirement.  She celebrated her 20-year retirement anniversary this year and was happy with what she’d accomplished.

Bonnie Nelson – Back in the summer of 1963, Bonnie was visiting a cousin in Iowa City after she left her 14-year insurance job in Des Moines.  She decided to visit the local employment office and they directed her to PSC.  Gladys Nesmith and Dave Gause were on hand to interview Bonnie and they must have been impressed.  According to Bonnie, she requested what she thought was way too much money, but they hired her anyway. 

            Shortly after being hired, Jim Nesmith came into the office asking “who’s the #51 car?!” and Bonnie thought it was already over.  Apparently license plates had county numbers (not names) back then, and #51 was Jasper County.  As a Jasper County native, JHN was just curious who may be visiting Johnson County (#50), so Bonnie could rest easy.  In fact, after six weeks, JHN stopped at her desk, said he figured things were going to work out and gave her a raise. 

            In addition to the license plates, the physical space of PSC was quite a bit different back then. There were no offices, so writing of purchase orders and answering the phones (Bonnie’s primary duties) took place in the counter area.  For the first six weeks, when Bonnie would venture into the warehouse, the guys would conspicuously clam up.  Things eventually loosened up in the warehouse, but she was only the third female in the building after Gladys and Nora Lee Balmer. 

            After nearly 35 years with PSC, Bonnie retired in April of 1998, but continued to fill in part time for the next seven years.  As we have heard from others in this cohort,she misses the people most of all and feels good about her time with the company. 

            The past 11 years have gone quickly and Bonnie has done a bit of traveling.  Her trip to Scotland and England several years ago is a highlight and, ironically, her tour guide was a Wisconsin native.  Small world!  Bonnie also proved she’s a bit of a daredevil while on a cruise through the Panama Canal.  You may not picture her zip-lining through a Costa Rican jungle, but Bonnie made it happen. She said it’s possible she was the oldest person doing it that day, but she’s not certain.  Finally, to show she really isn’t afraid of heights, Bonnie recently rode a hot-air balloon over Pella.  For those who have never gone,she says it’s peaceful to glide through the air, but it gets a little warm in the basket.  Next up is a flight to Pittsburgh for her nephew’s wedding in October. On a plane, this time. 

            Thanks again to Bonnie for her service to the company and for taking time to relive some old memories.

Bonnie worked for our family business for 35 years and grew into much more than an employee for the company.  After that long, it’s tough not to.  Bonnie was a friend to the family and to many of the employees she worked with over the years.  She will be missed.  Rest In Peace, Bonnie. 

Measuring Generosity?

If you’re looking for a podcast to explore, I highly recommend Freakonomics Radio hosted by Stephen Dubner.  If you’re familiar with the book by the same title, the podcast follows the same line of discovery.  Are all of our economic/life assumptions wrong?  What is happening beneath the surface that may be changing the outcome we expect?  And so forth. 

While I do encourage you to check out the podcast, this post is inspired by a rebroadcast of an episode (#288) from May, 2017.  The title is “Are the Rich Really Less Generous than the Poor?”, and the answer to the question was less interesting than the clear assumptions held by the researchers.  The general feeling, if you weren’t aware, is that rich people are selfish jerks who do their best impression of Scrooge McDuck on a daily basis.   The researchers seemed to agree with this premise.

We could take many posts to discuss who would be considered “rich”, how to segment them out, how they grew their wealth, and the various assumptions made about this group of people.  The short version is that the majority of this group of people are wealthy for one reason.  They figured out how to serve their fellow man by delivering the most value to the most people possible.  Of course there are exceptions to every generic statement and this is no different.  There are lottery winners, young adults living off successful parents, the latest Internet scammers, etc.  The major difference here is that the latter group has money, but they aren’t wealthy. 

The reason I make this distinction is to point out that, in general, people who have earned a decent living, have already been generous with their resources.  Their time and talent has been transferred into dollars by adding value to the lives of others.  In addition, our friends conducting the research discovered that “the rich” are just as generous with the money they earned. 

No matter where you are on the income scale, the Perpetual Wealth Code can provide you with a solid foundation for money management.  Building on this foundation can only help your ability to give to your favorite cause.