I recently heard an absolutely riveting sermon in church that was interestingly related to personal finance. The topic hovered around faith and doubt and the relationship between the two. The preacher’s point that I walked away with was that strong faith is based on two things: logical information and real world experience. Doubt enters the mind (and soul for that matter) when either logic or experience is missing.
The preacher used a brilliant illustration of zip-lining. Through information we know that the harness will hold our body weight. But to embrace and enjoy the outdoor adventure that is zip-lining, you have to put that knowledge into action by climbing up a few stories and taking the leap. A child may fear taking that leap because they may genuinely fear that the harness will not hold them. Mom and dad can relay the evidence, the strength of the gear and even go ahead of junior to show that the harness will hold their adult bodies. But if junior doesn’t trust the harness, he will not step into action. Junior may have the head knowledge that the zip-lining gear is safe, but until he puts that knowledge into action it he won’t experience faith come full circle.
So what in the world does this have to do with personal finance? In my little world here on the North Side of Chicago I gathered as much head knowledge as I could about personal finance. I learned everything I could get my hands on from ways to make a budget to insurance to investment vehicles to the right kinds of insurance to the importance of an emergency fund. But none of it would mean a single thing if I didn’t put this head knowledge into action.
Through that action I have been able to build and gain traction in my life. That traction has given me hope and the ability to plan for things I seriously didn’t think were possible for the first 20 some odd years of my life. Unfortunately though I have been coming across many writers, bloggers and editorialists that don’t share my hope. Instead I’ve noticed over the last month a sad uptick in volume from naysayers suggesting that wealth building for the common person is not possible. And to me it seems that these voices have lost, or perhaps have never had, real faith.
There are tons of voices out there. Mine is a pebble in the middle of a vast ocean, but the likes of Ramsey, Orman and even that idiot who made “Rich Dad, Poor Dad,” have become household names that surely the naysayers have heard of once or twice. But the naysayers don’t believe, and that in itself is thoroughly heartbreaking to me. Without a glimmer of hope, without wheels in motion and without a proven and workable game plan for financial success, I can understand why a lot of these voices are angry, bitter and quick to put down those that are frugal and beating debt into submission.
I will admit that it is indeed tediously difficult to prosper financially. I had to develop some head knowledge through self-directed research and began, four years ago, to step into the zip-lining harness. For me that included saying no to impulse purchases, writing out a zero based budget, opening my ROTH IRA and 401k and getting the right insurances in place. But the toughest, yet at the same time the most vital part of the entire ordeal was stepping to the edge of the plank with my harness secured, and taking that leap.
Taking that leap meant actually living on my zero based budget through the month. It meant engaging my wife and getting on the same page financially and agreeing how to save, spend and give every dollar that passed through our household. It meant working my debt snowball and going after my $24k student loan with gazelle intensity. For me, it also meant cutting my standard of living down to near $20,000 a year to build my emergency fund and defeat debt forever. And it all started with a little head knowledge and a lot of action to build my faith in the fact that the little man can get ahead in our world.
When it comes to personal finance that’s really all it takes. Just a little head knowledge and lot of action. And if that action is based on well-founded head knowledge and a solid financial game plan, then you will lead yourself to exactly where you are trying to go. J