Ive been getting some positive feedback, and have made many new friends on facebook. Below is a repost, from a year ago. Sorry for those who have already read it. And also the length. Pls just ignore if youre not interested in money :) Student loan balances have just exceeded credit card loan balances in our nation. If an eighteen-year-old person approached you and asked for an $80,000 loan to set up a business, with a 50% chance of failing, most of you would tell the eighteen-year-old kid to go pound sand. Yet, I have known parents that have hocked their homes in the form of second mortgages and have used their precious retirement nest eggs just to bank roll their kids’ college tuition. The love parents have for their children is remarkable but often misplaced. Some parents have abundant resources that can justify such expenditures. The cost of college can be more than justified for the overall college experience and broadening horizons; however, parents with more modest means, which includes most people, must be strong enough, smart enough, and love their kids enough not to be so emotionally vested in their children that they throw-out all common sense. Alternatives such as community colleges and state colleges should be looked into. Please do not let your eighteen-year-old succumb to the yoke of such indebtedness—a debt that will likely be paid back by multiple parties for seemingly the rest of their lives. (As most know, student loans cannot be discharged in bankruptcies.) In fact, parents should encourage their children to try to cash flow a formal education and think long and hard about the economic outcome of schooling. Education is everything. It allows people in poverty to enter middle class. I am a product of this very humbling experience. It provides professional services that people would need in order to thrive; we cannot live well without doctors and other professionals. Education advances humanity. However, education could be obtained through other means. I am often reminded of Matt Damon’s character, Will, in the motion picture movie “Goodwill Hunting,” in which he says to the pretentious Harvard student he met at a bar, “you paid way too much for an education you could’ve received from $2.50 worth of late charges at the local library.” I have been on this earth for a while and one of the scariest things I have seen is people who make a market of something that is not necessary, ethical or even right. I’m not writing about the obvious like drug dealers and pimps. I’m writing about people whom are wolves in sheep’s clothing. Some people have exerted tremendous amounts of efforts in cultivating their crafts, but have never really given much thought of whether it is worthwhile or if they, in reality, would add value to the other party through their business. Some lawyers come to mind as the quintessential icon of this problem. Lawyers are comprised of the most educated, articulate, and talented among us, and yet their professional reputation is many times the least desired. In the game show, “Family Feud,” lawyers ranked as number 1 as liars when a survey of a hundred people was asked the question, who are the biggest liars in the world? One can picture the lawyer who entered into law school, with noble intentions, paid a ton of money and time to pass the Bar, and later realizing that the field he entered in is so ripe with competition that he finds himself unable to compete in his field. To further compound the problem, in this example, making this bad situation even worse, are that some professionals before they get heavy into their careers never take a simple economics class that would have highlighted the idea of the supply and demand curve affecting them personally in their own lives. For example, in Washington, D.C. and other areas of our country, there is such an abundance of talented lawyers (high supply) that many of them are forced to ‘create a market’ just so they can pay back their student loans, support their anticipated lifestyles, and ‘ambulance chase’ their way into financial independence. The other alternative is to work remedial jobs. Not knowing that the popularity of the profession and the talent shift that occurs along with that popularity, many lawyers have compromised their souls to make that almighty buck and to pay back their heavy student loans. I’m not really just writing about lawyers here but a sea of people feeling that the world owes them for poor decisions that they made earlier in their lives. I too am guilty of making some bad decisions. Generally, I feel that I haven’t made enough decisions at all. I know what you are thinking, all of this from a person who advocates the stock market—an environment which some say is the biggest casino of all. Of course, the most famous stock market started out as a noble idea--people meeting underneath a tree in New York. Believing and trusting in each other, farmers would invest their surplus capital with other farmers in an effort to bank roll each other’s businesses and earn interest payments and dividends from those businesses as those businesses competed and thrived in the marketplace. Most things are optional in life and people just blindly follow what so-called experts say and buy from these experts everything imaginable. In church, I learned that you have to have guideposts to tell you where you are spiritually. In finance, I feel you have to have guideposts as well. My guideposts in finance are as follows: to never have a mortgage that is twice my annual income, to have saved twice my annual salary in an account, and to have a meaningful retirement program. Many people allow strangers a.k.a bankers, especially ones dressed nicely, to dictate to them, what size of homes they need, how fancy their cars should be, and what items they should have in their homes. These pros that are counseling people to buy, buy, buy are subjected to the same economic principles as everyone else. They must sell you their ware. Imagine an unscrupulous doctor who performs an unneeded, highly complicated and dangerous procedure on a patient just to make his boat payments and keep his or her lavish lifestyle. (None of the doctors I know practice this way and are the most thoughtful and caring individuals I know. I feel many of them are underpaid) However, there is empirical evidence of these things occurring, sites the book, Freakonomics. Moreover, the place where we do contractual work, the ex-CEO of Oxy, Ray Irany, was forced out by Oxy’s board of directors, recently for poor performance. He had an average income of 100 million dollars per year. Humans are priceless in spiritual terms, but his salary has breached ridiculousness and no one man deserves that much monetary compensation nor does he deserve the 75 million he got as a severance package. I guess the point of writing all of this is to encourage all of my friends near and far that in order to stay true to yourself you cannot allow anyone to put golden handcuffs on you. Our consumption is one of only a few things we can control in this world. One of the greatest illusions in this world is thinking we are free, but in reality are slaves through debt and ‘golden handcuffs.’ For some golden handcuffs come in the form of a fancy car coupled with fancy payments or a membership to a prestigious Country Club, or a house too big that the American dream turns into an American nightmare or vacationing around the world or the almighty student loan and subsequent diploma, etc… My wife worked at a surf shop at our local mall and since I have always been interested in investing I would ask her: “what flew off the shelves?” She observed something interesting. When a shirt was being sold for $50, most of the shirts would sell quickly. When that same shirt made it to the sell rack, most people would pass on it and the shirt would not sell as easily. Brands work and the idea of exclusivity lets others know we have ‘arrived,’ but in reality the people that matter most in our lives don’t really care what we wear, where we live, and what we drive. Think about this the next time you’re asked to make a big decision that will have life-long ramifications. I wish all of you all the successes in life and to enjoy the ride and leave a legacy.
Posted on: Sat, 18 Oct 2014 13:53:41 +0000
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