Welcome back to the Rambling Mind Newsletter. This is the final post of 2022. I hope to see you all in 2023.
This post is 869 words and 4 min read. Enjoy!
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I was in New York visiting my sister a few months ago when I saw a sign that read: "DELAY = DENIAL"
That simple yet profound statement immediately struck a chord with me.
The sign was referring to our current Climate Crisis. But I could see how this plays out in other areas of my life. I began asking myself, what causes us to delay or deny the obvious?
I reached one clear conclusion: COMPLEXITY.
We tend to delay the things we believe to be too complicated. The earth is the most complex system in our lives, so it makes sense that we pause when we think of something as overwhelming as climate change. It’s much easier to deny it’s happening and to delay doing anything about it.
I see this occurring in other areas of our life. Think of the last time you ordered furniture from Ikea. If you’re like me, you probably set that big cardboard box in a corner of the house for a couple of weeks, denying its very existence until you’re about to have guests.
We all want the finished product but sometimes getting there just feels too complicated, so we deny and delay.
When I first wanted to get my finances in order, everything felt complicated. It seemed impossible to deal with all the issues involved. Just think of the questions we have to deal with:
How do I budget?
What are my savings goals?
Do I have enough to buy a house?
Is my debt bad or good?
How long will it take to pay for my house?
How do I save for retirement?
Can I save for retirement?
Can I save for children?
What accounts do I need to open to invest?
How do I pay my student loans?
Am I using the right kind of account?
Do I have the right insurance in place?
Once we have some experience with money, none of these questions seem that complicated or hard to answer. But for anyone just getting started, each question feels like we are trying to climb Mount Everest.
Along with the steep climb, we have all these fancy financial terms like mortgage, amortization, HSA, 401(k), IRA, Roth, APY, APR, premiums, liability, fiduciary, credit, expenses, net worth, etc.
This compounds the problem.
Not only do I not know what to do, but also I can't even have an intelligent conversation with someone who might help because I don't understand the language. It all feels impossible.
So most people do what I do with IKEA furniture
I checked out.
I would tell myself, "I don't have time to handle all these things, and it’s not that bad anyway. I am young and I have plenty of time. Next weekend for sure, I will work on my budget. I will finally set up that savings emergency thing."
But the thought of doing any of it was too overwhelming, so I denied there was a problem. Which led to me never actually doing anything to make progress in my finances.
This was until we had personal finance classes at church. We used Dave Ramsey's Financial Peace University course. It provided a framework to process the various financial questions I had. It brought everything down to the basics. It removed the noise and allowed me to narrow my scope to keep the main thing, THE MAIN THING.
Morgan Housel, my favorite writer, explains why this approach works so well:
If you’re going to act on a problem that is monstrously complex and uncertain, the stripped-down, rules-of-thumb response is not only good enough. It can be superior to tripping over yourself in pursuit of something that appears marginally more accurate.
Rules of thumb give you time to learn, and learning gives you rules of thumb.
Most important is accepting that when you’re dealing with uncertainty and complexity, simple ideas are not dumbed-down ideas. They are often complex solutions gift wrapped for you in a way that makes their application practical and sustainable.
There is a confidence we get when we know exactly where to begin. It allows us to take control and make plans. This is also why the Humble Dollar Two-Minute Check-Up is such a great tool. It gives CONFIDENCE.
As 2022 comes to an end, we all have financial goals we want to accomplish in 2023. The solution is to find and use simple rules of thumb to get started.
For example, if you need a budget. Use 50-30-20 Guideline:
50% of Income to Necessities
20-30% of Income on Guilt-Free Spending
20-30% of Income on Savings, Investing, and Debt Repayment
The goal is to get started and then improve as you learn more.
I hope 2023 is the best Financial Year yet for you!
Remember GENEROSITY > greed
✌🏾
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