Sunday, April 15, 2012

Debt Free!

I haven't posted in way too long. I wonder if anyone still subscribes or reads this blog. Regardless, I think it's time that I post again. The occasion requires it - we are officially debt free.

That's right, we don't owe anyone any money. We have been slaves to the bank that loaned us money, and we are now free from their grasp. The feeling of liberation is surreal and exquisite. After so much time of dedicating over 25% of our gross salary to our loans, we are finally free.

I have read hundreds of blog posts and more books than you can imagine on personal finance. Most explain that credit card debt should be paid off first and as quickly as possible (obviously). However, when it comes to student loans the advice is typically different. Outside of Dave Ramsey the general feeling is to take the full 10 years or whatever it may be to pay them off. The argument is that you'll be better off putting the money in a retirement account and taking advantage of the student loan tax benefits. The advice appears sound from a math perspective.

However, I've learned that personal finance isn't just about the math, it's so much more about behavior. You can understand the math, but if you still blow your money on useless things, or if you never attempt to increase your earning power by working harder and smarter, you'll always be behind. You will never be free.

We had created a goal to pay off our student loans as quickly as possible. By focusing on this one specific goal we changed our behavior. We lived cheaply and I did my best to increase my earning potential. By honing in on one specific goal we were able to accomplish that goal faster than what may have seemed possible. This experience taught our family how to focus on behavior in the right way financially. Now that we are fully paid off we can focus intensely on our other goals (saving for a house, saving more for retirement, building an enormous emergency fund, raising a family, etc.). This intense focus pays off. I would recommend that everyone gives it a shot.

Saturday, September 24, 2011

Authority and Leadership

From the very beginning of his career Albert Einstein challenged authority. At the beginning of his career he said that "blind respect for authority is the greatest enemy of truth." Well said, Albert Einstein!

When Winston Churchill was 22 years old he was a Lieutenant in the British military. To make additional money and to introduce his "personality to the electorate" he would write newspaper articles. In these articles he would criticize the leadership of the British military. He would condemn the failure to cover retreating soldiers with continuous fire, the system of recruitment, the lack of rations on long marches, and so forth. Obviously this didn't go well with the generals, and even his fellow soldiers. Churchill always struggled with authority. As a student he was always insubordinate, as a backbencher in Parliament he defied authority, throughout the 1930's he continuously challenged those in power. The list goes on.

Obedience to authority is ingrained in our culture. Obviously obedience is a very good thing in most cases. If God tells you to do something, you should do it. If you are a private in the military and you are given orders, you should probably carry out those orders. However, it seems that the greatest and most influential leaders rarely submit to authority. What's the difference?

My observations have been that those who lead in their field or in society have difficulty with authority. I think they have so much difficulty because they want to lead. I've heard it quoted that great leaders are also great followers. I'm beginning to wonder if people say that to get us to blindly follow them. Following great leaders is a must. Great Britian would have done well to follow Churchill in the 1930's, but instead they blindly followed the current government, eventually causing millions of lives to be lost.

Perhaps we could do better at two things: first figuring out if someone is worth following before we actually follow them (don't be blind). The second is to become leaders ourselves. Learn to lead yourself. If we are willing to do that, we may become the next Einstein in our field, or perhaps the next Winston Churchill to the world. Without great leaders we would eventually be forced to follow poor leaders like Adolf Hitler.