Friday, August 10, 2012

Don't Let Your Life Become a Money Pit!


Penny-Wise and Pound-Foolish

Avoid the Money-Pit.
My grandfather used to say to me, "Don't be penny wise and pound foolish." (I'm guessing this expression dates back to mother-England and their monetary standard, "the pound) I think he was telling me not to waste all my money on baseball cards. Common wisdom in those days was that if I started saving that money at the age of 8, the compound interest would make me a millionaire by the age of 23…

I have a lot of baseball cards.

I've seen the penny wise/pound foolish phenomenon played out on a larger scale as well. People find their "dream house" for an incredible price, only to discover it's actually a nightmare money pit. High school grads choose to jump into the workforce rather than go to college because they can be making $12 an hour instead of paying to sit in class… 20 years later they wonder why they are only making $12.25 and hour.

Undoubtedly, we can all look back at decisions we've made which have seemed "penny-wise" at the time, only to learn later that they were certainly "pound-foolish."

4x6 Decision Making

One of the most important things you can do whenever you make an important decision is to consider the consequences not just in the near future, but also the distant future. I like to call this the 4x6 method of decision making. Before you make any significant decision, consider the potential consequences in:
  • 6 minutes
  • 6 weeks
  • 6 months
  • 6 years
Then… decide which of those potential consequences is most important, and press foward.

Don't Be Stupid. Be Wise.

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