Tuesday, February 5, 2013

My 2nd (of 4) Daily Motivational Mantras

"Laugh Often"

There couldn’t be better advice when it comes to personal finance than this gem, especially for those of us who take themselves way too seriously (guilty as charged). Even when I found the right path to financial freedom I still made and make mistakes. You will too. Especially when it comes to drafting and then living off your first few zero based monthly budgets. I overthought, overcomplicated and overstressed the entire ordeal a lot more than I should have.

As I’ve progressed though in my financial development I’ve actually found laughing at myself a much more easier process to go through than when I first started. When I first started I was crunched for time, 20k in debt and felt like I needed to get a move on everything, and get it functioning perfectly and fluidly ASAP. There was a ton of stress in my life brought about by the debt I owed and coupled with not having a plan and wanting to move along the financial prosperity spectrum in a hurry, it was a lot harder to laugh at myself when I made mistakes. Back then I felt that there was no margin for error.

Now when I mess up I still get stressed out about it, probably because I’m the control freak nerd spouse, but it takes me a lot faster than it did 5 years ago to pull back, look at the situation, see where I’m at, laugh about it and move on. So I find it fitting to share with you some of the best opportunities I’ve had to laugh often during my road to financial peace.

The first envelope pull

After having read, “The Total Money Makeover,” for the like the 5th time that week, we were set to follow Dave’s envelope system for certain spending categories. Our zero based budget was drafted and agreed upon, and as soon as the vote was set to agree on our plan I whisked off to the nearest ATM to make our monthly cash pull for grocery expenses. I was so confident, a bit arrogant, but set in stone that this plan was going to work and work right now in my plan for financial prosperity. I stopped at the ATM and pulled out our agreed month allotment and then proceeded to the grocery store (a block or so away from the ATM) to make our first cash grocery purchase “on the plan.” When I came home we put the groceries away and I pulled the receipt to accurately track how much we had spent and how much should be remaining in the grocery envelope. When all dollars were counted, the envelope was short $20! I went into orbit and felt like such a failure. Here I was trying to get my financial act together and blew it on day one.  Did I drop it in the street? Did I overpay the cashier? Is it in another pocket? None of these questions would be answered because I had lost $20 the first time I tried to use the cash envelope system for grocery spending.

I can assure you that looking back on it now, I genuinely am laughing at myself. That young man at that time needed to learn a lesson in humility. He needed to know right off the bat that perfectly planned months don’t happen and that life is always happening to your budget, whether you like it or not, or plan on it or not. That night we made needed adjustments to cover the $20 shortfall from another category, breathed deeply and moved on. I am happy to report that since that night I have never lost a single dollar transporting cash from the ATM to our envelopes. As a matter of fact a month or so ago, when my wife and I were returning from the very same grocery store that I had lost $20 at, walking down the very same path back to our apartment, we found a clean, crisp, $20 on the ground. Yes we picked it up and yes we used it to refill the grocery envelope from that $20 lost long ago. It’s interesting how things circle back around!

The Cash Holding
This past year I was ready and set. When the market crash of 2008 occurred we used a limited amount of disposable income from our month to month budget to invest as the market free fell. With the 2012 fiscal cliff deadline looming in the distance I was going to be ready for that imminent market drop. So months before December 31st, 2012, we had stockpiled $5,000 to be ready for when we all went over the fiscal cliff. I was expecting a big market drop and wanted to swoop in with even more cash than we had in 2008. We still did our systematic and consistent investing through our retirement vehicles, but I wanted to give our brokerage account a nice cortisone shot in the arm by buying awesome mutual funds at great prices with even bigger dollars. December 31st, 2012 came and went, we went over the fiscal cliff, our brilliant government passed an awful solution, and the market didn’t drop. In fact it pretty much has done the exact opposite. This has left me wishing I had taken my own advice: consistently invest steadily and regularly over long periods of time and do not try to time the market.

I should really listen to that guy, he seems to know what he’s talking about J! But be rest assured that even though a lot of that $5,000 in cash has missed out on the ride that has been Q1 2013, between our entire investment portfolio we currently have over $100k that is invested and has been a part of this ride.

The middle of nowhere suggestion

This one is not financial, but it’s still a funny story in my book. A few years ago my wife and I took a road trip up to Northern Michigan to Mackinac Island. Along the way we stopped by main drags in small towns along the way. My wife had randomly chosen 3 or 4 great places in a row that were picturesque and really fun to have stopped at. So when she took the wheel I figured it was my turn to strike gold. So with our GPS in our rental car I randomly picked a destination in a small town in route with an address of Main Street. About an hour later through windy hills and countless farmland we ended up at the destination I had selected:  vacant farmland in the middle of nowhere that was not exactly off a major highway. When we arrived at the destination point my wife pulled the car over and we immediately burst into laughter for a good 20 minutes. It still makes me chuckle how confident I was that I could find our next great adventure on our little roadie.

The mutual fund that got away

Now I believe with everything in me that if you filter and search, that there is a plethora of excellent mutual fund choices out there. But every once in a while one crosses your path that just makes your jaw drop in awe. Many moons ago one of the best mutual funds I’ve seen in a while crossed paths with me. Through my employer’s 401k one of our choices was a superstar Dodge & Cox Large Cap Growth and Income fund, known lovingly as DODGX. This beauty has been around since 1965 and has an average annualized return of 10.74% since inception. Oh, and its fund manager Mr. John Gunn has lead the fund since 1977, so he kind of knows what he’s doing J!

For about 7 glorious months this mutual fund was a part of my portfolio, and I am understating this when I say that it was bliss. But the rug was pulled out from under me, as our 401k options changed and this proven stud was traded out for a couple of mutual funds that weren’t old enough to be out of diapers AND had average annualized returns that were a fraction of what DODGX brought in. I was scarred, I was upset, I was hurt, but I moved on. Looking back on it now I definitely chuckle at the fund that got away.


I have found that I have absolutely no control whatsoever at the curve balls that life will throw my way. Whether I end up in a field, losing a great mutual fund, am left holding a pile of cash or losing Mr. Jackson, I’ve definitely seen firsthand that life’s ups and downs are going to happen. I have and will make stupid mistakes (hint: you will too). But with a solid long term financial game plan that works through bulls and bears, and not taking myself too seriously, I am genuinely happy right where I am in life and the direction that I’m heading. Through the successes, failures, laughable moments and everything in between, I must say that life has been really enjoyable in my post-Ramsey days!

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