"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.
Conclusion
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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