This post is 896 words, a 5-min read.
In my day job, I'm a transmission line engineer. I design these things
There's a phenomenon in Transmission Line Design called Aeolian Vibrations. Aeolian Vibrations are motions caused by low winds on transmission lines. Winds as low as 1mph (a breeze) can cause Aeolian Vibrations.
On the surface, low vibrations might seem to be inconsequential. These motions are imperceptible to the human eye because of the minimal motion. However, these vibrations have been known to cause catastrophic failures in transmission lines.
These Aeolian Vibrations are a perfect example of compounding at work.
Initially, these motions do not pose any problems. It is over a sustained period of time that problems begin to arise. The main issue with the vibrations is not what it does to the wires but rather how it affects everything around the wires.
The problem is with the wire’s connection to the insulators. Over time, the vibrations can wear out the connection points much faster than designed. Leading to mass-scale failures such as seen below
And it all started with a tiny almost imperceptible vibration.
I love this quote from Albert Einstein (at least according to legend).
Compounding is a very powerful force. The more I understand it, the more I see it in every area of my life. Think about your life, none of us came out of the womb walking. We learned to:
Lay on our stomachs and pick our heads up
Then we learned to push our bodies up
Then we learned to crawl
Then we learned to stand using objects
Then we learned to stand on our own
Then we learned to take a few steps with our own power
Then we learned to walk
Then we learned to run
Each action is compounded on the past action. Some happened much faster than others. It is such a cliché whenever I talk to my friends that are parents. They always say the same thing, "I cannot believe it but he/she is already walking. He/She was just crawling a few weeks ago."
This is the beauty of compounding. Things seem to happen slowly and then suddenly.
Unfortunately, compounding also has a dark side. Bad things also compound. The small little things that we ignore and allow slide. Quickly become much larger things that are difficult to evade. Especially when it comes to our finances. As Ernest Hemingway wrote
There are two types of Aeolian Vibrations in our financial lives:
The vibrations we see but ignore
The vibrations we have gotten accustomed to
Vibration 1: We tend to believe for some reason if I ignore a money problem long enough it will just disappear but that never happens. We avoid our student loans, credit cards, car loans, bills, etc. In hopes that we can ignore it. Keep living life how we want. And we will be okay.
Vibration 2: The scariest part of Aeolian Vibrations is the fact that you can look at a line and it appears to be fine. It takes a close inspection of the transmission line to see the problem. In our finances, this typically happens when we have added numerous things to our fixed expenses. Where we have justified overpaying for a house, car, food, pets, children's school, etc.
Most of us deal more with Vibration 2. We slowly stack up things over time that we find impossible to live without.
Regardless both lead to the same place, Catastrophic Financial Failure.
However, there is a solution to the problem. There are things called dampers.
They add weight to the line to ensure that the wind does not cause the wires to move. With one seemingly small decision, transmission line failures were cut down drastically. It also led to transmission structures and parts lasting much longer reducing the amount spent on maintaining the line.
One small item that most people never notice. Completely changed the face of the industry.
The question for you is: WHAT ARE YOUR DAMPERS?
What are the ways that you can make one decision to protect your financial life from disaster? Here are a few examples of Financial Dampers:
Tracking your expenses
Creating a plan for your money
Creating an automatic savings plan
Creating an automatic debt pay-off plan
Creating an automatic investing plan
Run the numbers before making large purchases like a car, house, etc.
Turn on auto-pay on your credit cards
Choose what you value and what you don’t
Stop following social media trends
These are just some dampers that I have used in my life.
Transmission Lines are designed to withstand hurricane-level winds up to 120mph. However, it is not the obvious thing that destroys the lines. It is a 1mph wind that is sustained over time.
It is the same in our finances. Most of the time, we think we are winning because we do not have crazy expenses like buying a $1000 purse or going on an expensive vacation. However, we regularly ignore the way we are killing ourselves by 1000 cuts. With the small but consequential decisions, we make every day. As Warren Buffet said
Thanks for reading
Generosity>greed
God Bless You
✌🏾