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Feb 2014 Newsletter: Financial Adages and Economic Preparednes
February 27, 2014
Hello to all my frugal friends:

We've had a real winter here in Wyoming, the likes of which I don't think I've seen in my 15 years as a resident. Our average snowfall for February is 7 inches, and we've had more than 20 so far and expecting more over the next day or so. We've also had quite a bit of below zero weather and high winds. Like the rest of the country, there are a number of my fellow Wyomingites who are looking forward to warm and sunny weather as we head into spring. (Understanding of course that our spring is still a couple months away.)

As promised, I'm getting the newsletter out each month. I just made it by the skin of my teeth this shorter than usual month. I'm thankful that my buddy Mr. Lickerson helped remind me to get it out on time.

This month I want to provide you with two articles that you won't find on the site. The first article discusses an old adage, "Easy come, easy go." We have much to learn from old sayings like that, if only we'd listen and study on it a moment or two. In this first article, I hope to provide a bit more insight as to why this adage speaks the truth.

The second article makes good on my promise to start providing you a set of articles about economic and financial preparedness. In my book, it's my #1 concern. I don't see anything generally that is more important for those of us who value being prepared. The news on the economic horizon isn't good, and that means we'll all suffer financially. Those who are prepared will suffer the least.

The second article kicks off a series of over 40 articles that I want to provide to you that lay out how to be a better player in the economy, and a better steward of your financial resources. There's lots of information in this series so you'll have lots to consider. What I'm hoping to do with this edition of the newsletter is just lay the groundwork for the rest of the series. It's a bit long, so get a cup or coffee or glass of wine before you start.

Let's dive in.

Working Hard for Money Helps Assign it a Value

Easy Come, Easy Go – Financial Adages Help Us Learn from Others

by Clair A. Schwan

I like to focus on the psychological aspects of personal finance, especially when it comes to staying out of debt and getting out of debt. In light of that, I thought it would be helpful to look at an adage related to personal finance. We hear these sayings quite often, but many of us don’t stop to think about what they really mean.

This is where I’d like to help make a difference. If we can absorb the meaning behind some of the adages, we’ll be better prepared to utilize the wealth of knowledge and experience wrapped up in each one. Let’s give it a try.

Let's focus on “easy come, easy go.” It’s become a well worn adage, but the meaning behind the phrase isn’t well understood. So, let’s take a good look at it to see what we might learn. Perhaps we’ll walk away with a better appreciation of the powerful message it offers, if only we’ll take a moment to see the lessons in action. Quite often, it’s a story that helps accentuate the lessons, and a true story, like that which follows, is best for cementing the lessons in place.

Our story starts with Brent, a friend of mine who married Evelyn after he had worked hard for many years to accumulate considerable wealth. He owned several pieces of real estate and had hundreds of thousands of dollars in the bank. Brent accumulated this wealth through hard work, good decision-making, and a desire to lift himself above others who were often focused on day-to-day pleasures instead of long-term success.

Brent’s wife Evelyn is the individual in this story who will help us learn what “easy come, easy go” means. She was the type of person who never had much, but was always trying to buy happiness with whatever financial means she had; a new car, a nice meal, fancy clothes, and other superficial “happiness salves” that never seemed to last. Clearly, she didn’t understand need versus want. Now, with her husband’s considerable wealth, there was no limit to the amount of happiness she could purchase for herself in the form of “wants.”

Perhaps she could sustain happiness through more frequent and more expensive purchases. Maybe then, it would take root and stay.

It started out slowly at first, and then became more reckless in nature. After all, for a woman who never really had much, her husband’s life-long accumulation of wealth seemed nearly endless. It didn’t take long before caution was cast to the wind. Brent continued to work hard in his career, so family income was much higher than most. It was a perfect situation for Evelyn. It was easy to spend money because there was plenty of it, and Brent was always making more.

Sparing much of the details, suffice to say that the story of Brent and Evelyn ended on a sour note. They divorced because of her spending addiction – her need to feed the addiction was much more important to her than any desire for a good relationship and financial security. Clearly she was an incurable spendaholic. Brent realized that he was worthy of a much more responsible life partner, so he took the necessary steps to rid himself of this human tar baby that was sucking the financial life out of him.

So, let’s see what we can learn from the sad story of Brent and Evelyn when it comes to the phrase “easy come, easy go.” If I can take a break from story telling and shift into a more analytical mode, perhaps we can sort this out for better understanding. There are two parts to the phrase:

1. easy come

2. easy go

The “come” part of the expression refers to what comes our way, whether we earn it, find it, win it, or it’s something that we’re given. The “go” part refers to how it leaves us through spending, loss, irresponsible behavior, or perhaps even simply giving it away.

The key for me in all of this is the common word “easy” as this is the heart of the matter. When we think of “easy” we understand that it refers to something that isn’t difficult nor challenging – it’s not hard work at all – it’s easy! That’s where the wisdom of this adage shines through so clearly.

We equate difficulty with value, and since Evelyn didn’t work hard for the wealth she was spending, she didn’t appreciate the value represented by the money. It came to her easily, and she blew it simply because she didn’t appreciate how much effort went into earning it in the first place.

Imagine how much value Evelyn would have assigned to the money had she been the one who had earned it, saved it, invested it, and protected it for all those years. I am reminded of a Joni Mitchell song, “…you don’t know what you’ve got ’til it’s gone.” Well, with an easy come, easy go mindset, that’s exactly how it works, you don’t know what you have until you no longer have it – all because you didn’t earn it and therefore, you don’t have an appreciation for its value.

If I can jump back into the Brent and Evelyn story for just a moment, I think you’ll appreciate when the “light finally comes on” for Evelyn. As the sun sets on our unhappy couple, Evelyn stands in tears realizing that with all the money she wasted, she could have had a good provider, a nice home that was completely paid for, everything else a reasonable person could possibly desire, and plenty of money in the bank – building more wealth all by itself. It would have been a life filled with financial freedom as well as financial security. Instead, because she never appreciated the value of the money that was so freely available, she ended up with nothing, and a bleak future ahead, all by herself.

She had a glimpse of the true meaning of “easy come, easy go” all too late. And, I say “a glimpse” because it’s likely that she’ll never change her self-destructive behavior. She has a demon to feed, and it must be fed. Brent knew that, and that’s why he’s long gone.

So, when it comes to personal wealth, no matter what form it takes, be sure that those who have authority over it also have “skin in the game.” It’s the “skin” that translates to value, and it’s value that causes us to appreciate what we have. That appreciation helps us stay focused on maintaining our financial position, preserving the advantages we’ve created for ourselves, and enhancing our financial well-being when we have the opportunity. If there is no skin in the game, then we might just fall into the mindset of easy come, easy go.

Economic and Financial Preparedness - My First Priority

Economic and Financial Preparedness – An Arena Too Often Overlooked

by Clair A. Schwan

I don’t hear much talk about financial preparedness or getting along in a poor economy, although I hear plenty of talk about eroding economic conditions and emergency preparedness in general. It seems that people are getting themselves prepared, but it isn’t clear in my mind exactly what they’re preparing for. It seems most preparedness efforts have a broad base instead of a limited focus on specific scenarios that are likely to occur.

From where I stand, it’s clear to me that economic and financial preparedness is probably the most neglected area of emergency preparedness, yet it’s likely one of the most important areas since money and the marketplace touch nearly every aspect of our lives, multiple times each day. Recent trends in foreclosures, homelessness and demand for public assistance should make the seriousness of the matter so very clear. And, from what I’m seeing on the horizon, it’s much less of an emergency — something that emerges unexpectedly — and much more of an eventuality. Therefore, it’s something we need to be prepared for specifically, and assign a sense of urgency to it as well.

If the truth be known, perhaps there are many people out there who are getting themselves prepared for financial challenges and a poor economy, but what I don’t see is a clear link between their preparedness efforts and how those efforts are focused on addressing personal finances and a failing economy. Therefore, what I plan to do here is create a series of articles that not only provide examples of being better prepared, but directly link suggestions for preparedness to personal finances and the economy.

In this first article, let’s set the stage by clarifying the difference between financial preparedness and economic preparedness.

From a financial standpoint, we can’t eat money, but money will buy us something to eat in the marketplace. I like to think of finances at the level of the individual, something we do largely independent of others. We save, spend, use credit, invest and manage our finances largely on our own, deciding what’s best for us as individuals. Think of financial preparedness as centering on personal finance issues...nearly all of which are within our immediate control.

Oh good, it’s within my control, so it’s something I can effectively manage...if that’s what I choose.

From an economic standpoint, it’s the marketplace we rely on to get something to eat, and it’s there that we earn money to pay for what we buy. I like to think of the economy as our interdependence in the marketplace. Think of the economy as a competitive place where resources like materials, goods, services and labor are traded...very little of which is within our immediate control.

Alright, not so good, it’s not within my control, but I can influence it. On the other hand, it doesn’t necessarily have control of me either...unless that’s what I choose.

It’s prudent to start thinking about where we’re collectively headed in terms of the economy, and how well we need to be prepared when it comes to our personal finances as well as our position in the shared marketplace (the economy). Some might say that it’s only a matter of time before the U.S. dollar loses much of its value. The truth is it’s been losing value for generations now, and only recently are we clearly seeing both internal and external influences placing pressure on what remaining confidence there is in it. When you couple that with an economy that is struggling at best, and getting little help from the powers that be, it’s clear that we need to be on our toes with respect to our economic and financial preparedness.

In my mind, the basics of economic and financial preparedness center on wealth, specifically three areas: 1) ways to create it; 2) the manner in which we might preserve it; and, 3) how we make good use of it. Think of it as a milking stool with three legs, any one or two of the legs won’t be of much use, it’s necessary to have all three, and maintain all three in good working order. As an introduction, I’d like to get us thinking about where we sit in all of this. Let’s look at some potential problems we might face when it comes to the economy and our personal finances, and let’s organize them under the three legs of the financial and economic milking stool.

Creating Wealth

When considering the need for preparedness measures in the general area of wealth creation, ask yourself the following questions:

  • How secure is my job?
  • Am I prepared for reduced pay, loss of overtime work, a cutback in regular hours, a change from full-time to part-time employment, curtailment of benefits, or an outright loss of employment?
  • How much upward and lateral mobility do I have with my current skill set and experience?
  • How employable am I right now, should I lose my job?
  • What if I became disabled?
  • With respect to my investments, are they risky or otherwise give me a sense of insecurity?

Preserving Wealth

It should be important for each of us to be prepared to preserve the wealth we’ve created and accumulated. Ask yourself these questions to see how well prepared you might be:

  • What am I doing to counter the effects of inflation?
  • If the dollar lost value quickly, for whatever reason, how would I maintain my buying power?
  • What would happen if my home or other property were destroyed?

Making Good Use of Financial Resources

Having a lot of money is just stacks of paper and numbers in an account. Unless you turn it into something else, it really has no value to speak of. Ask yourself these questions to see if you’re making good use of your financial resources:

  • Am I completely dependent upon others for my comfort, safety, security and well being?
  • How am I protected against foreclosure or eviction?
  • If the price of goods, services, materials, fuel, rent or utilities were to double or triple over the short term, what affordable alternatives do I have?
  • Are my expenditures focused on desires or needs, and what kind of a future am I building for myself?

Let’s call this a sufficient introduction to the topic of economic and financial preparedness. The focus here is getting along when financial or economic disaster settles in and upsets our personal finances or our economy. If you think it can’t happen, just talk with: individuals living as homeless in America; people who have walked away from their mortgages because they’re so upside down or underwater with respect to payments; and, millions in the country who are chronically unemployed, underemployed, or otherwise viewed unfavorably by potential employers.

Our personal financial situation and how we fit into the economy is vital to nearly every aspect of our lives. We simply can’t afford not spending time deliberately thinking about our position and how we might respond to changes. The changes we’ve seen over the past 20 or 30 years might have crept up on us, but if we view them from a “then and now” perspective, it’s much easier to see how much ground we’ve covered, or perhaps more correctly, how much ground we’ve lost. And, that perspective should alert us as to how much more ground we’ll continue to lose as it appears that we’re continuing on the same path, full speed ahead.

Up Next

I'll continue to provide more articles that I think are of interest to those with a frugal mindset, and at least one of the articles will be a continuation in the economic and financial preparedness series.

Next month, I'm planning to provide an article about charity, how we might view our assistance to those in need. And, I'll provide the second article in the economic and financial preparedness series that focuses on the first leg of the milking stool: creating wealth.

Thanks for being along for the ride here at Frugal Living Freedom. It is my hope that you enjoy the articles in the newsletter and get an idea or two from them. It's not realistic to think that someone else's writing can change you, but if you can appreciate a different perspective or gain a valuable insight, then you have something to think about and possibly act on.

I wish you all the best,


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