13 | Do You Trust Me?

In a recent conversation, my wife and I were reflecting on the realities of dividing roles within our household.

In this particular season, my work generates the majority of our household income and my wife's work is caring for our three young children.

Both roles are integral to how our family functions every single day. Both roles also require a high level of trust that the other person is playing their role to the best of their abilities.

One tension that always exists is how the breadwinner spends time at work, particularly on days that are challenging on the home front.

Some days I get home later than expected. Some days I go out to lunch with co-workers who fortunately are also close friends - the balance of work and fun can get pretty blurry. Some days I am still processing the day while we're sitting at the dinner table as a family.

The temptation is to believe that the breadwinner wastes time or prioritizes the wrong things or actively chooses to be at work instead of at home.

As we reflected, I was grateful for the trust and benefit of the doubt that is extended to me and realized that the exact same tension exists with our household spending.

In our particular case, my wife spends the majority of our household dollars. Not because she is a big spender, but because in this season she keeps our home life functioning.

Some days $500 gets spent at Costco. Some days a flurry of Amazon packages land on our doorstep. Some days there is a new lamp or picture frame or storage bin in a corner of the house.

The temptation is to believe that the spender wastes dollars or prioritizes the wrong things or actively chooses to spend instead of save.

The temptations are eerily similar. The accountability demanded and trust required are the exact same regardless of your role.

Do you trust me?

10 | The Beautiful Gray

My wife described a vision of a piece of art that she wanted to add to our home.

On one side of the painting, it would be solid black. On the other side of the painting, it would be solid white.

Both would converge in the middle to a messy mixture of black and white that appeared gray without being a solid, uniform gray. The "Beautiful Gray" is what she called it.

Not that we are old, but as we add years to our life experience it is becoming more apparent that the squishiness, ambiguity, and uncertainty of "gray" defines nearly every life experience that involves people.

There are no "perfect" answers or "clear" understandings, only trade-offs, emotions, differing perspectives and values, incomplete communication, and ever-changing facts and circumstances.

Yet, this reality is all too easy to forget each day.

The innate desire for black and white leads to...

Relationships that become rigid and transactional instead of nimble and forgiving.

Past decisions that are declared a wild success or are crippled by feelings of shame and regret.

Labels of rich or poor, Conservative or Liberal, friend or enemy, supporter or detractor.

Outcomes (outside of sports!) that are either a win or a loss. Nothing in between.

I've received the advice that if a decision seems too big then it is probably more than one decision.

I would add that if a decision or conversation seems too emotional or complex then there is probably more "gray" to be acknowledged.

It seems like the ability to see and talk about the "gray" is unique and infinitely more important than seeing and talking about the black and white.

9 | When Did Paying Cash Become "Creative"?

“Home Buyers Get Creative With Cash Deals to Fend Off High Mortgage Rates” is a headline from the Wall Street Journal from the last 60 days.

The first case study is a man paying $965,000 in cash for a townhouse in Colorado.

Raise your hand if you have $965,000 sitting in cash right now.

If you raised your hand, keep it raised if you’re up for parting with all $965,000 for the purchase of a townhome.

Wow.

Honestly, it is just disappointing to see this as a headline.

In a current housing market where refreshing a mortgage calculator feels like you’re in a cold shower that you can’t turn off, we get a headline that tells us the “trick” is to save a ton and pay cash for a home purchase.

The fact that the article is applicable to 0.000001% of society is unfortunate given that it was likely read by much more than 0.000001% of society.

The fact that saving a ton and paying cash for a home is considered “creative” is just misleading and publishing an article about it in one of the largest publications in the United States is just plain reckless.

The article was full of financing and tax planning tactics (and beautiful pictures of course!). Not once was there mention of purpose or “why” the home purchases were important to any of the highlighted folks. Per usual, tactics before purpose.

I don’t mean to beat up on the highlighted people or even the writer. I am bummed because articles like this only continue to compound the confusing, complex, and taboo nature of personal finances. Tiny glimpses into glamorous spending decisions without any context aren't improving our collective relationships with money.

4 | I Didn't Sign Up for That!

A friend of a friend who is an avid cyclist and extreme mountain biker recently broke both elbows in an accident.

Two slings. Restricted movement. Weeks of disrupted eating, dressing, sleeping, bathing, and everything else.

In reflecting on the accident, the friend of a friend said something along the lines of, "Yeah, it's sort of what I signed up for."

I am certain he hadn't listed all the potential downsides of extreme biking, but he clearly knew they existed.

I am also certain he will be back on the trails soon rather than later.

It's easy to see all the upsides on the front end of the decision, and bemoan the downsides when things inevitably fall apart.

Getting paid a salary feels secure and comforting. You're also signing up for uncertainty during lay-off season, needing approval for vacation time, and micro-management that is a little tighter than you might like.

Buying the cheapest option feels frugal and responsible. You're also signing up for functionality that might disappoint you, perpetual jealousy towards "better" alternatives, or sooner than expected maintenance.

Running a household with no cash in the bank feels efficient and return-maximizing. You're also signing up for a sleepless night or two wondering where you'll find your next dollar or having to say "no" to something when you'd like it to be an automatic "yes".

Owning stock in companies feels thrilling and glamorous. You're also signing up for moments of paralyzing fear about the future viability of the company or someone picking a better company than you.

The "falling apart" is inevitable.

Being able to acknowledge that you signed up for it is a superpower.

2 | The Kick Six and Your Money

In the 2013 Iron Bowl between Alabama and Auburn, the final play was a missed field goal that was returned 108 yards for a touchdown to win the game. Watch it here.

One of the most nuanced, random rules of football determined the outcome of the game.

Imagine if someone's introduction to college football was that play.

Very literally, imagine if someone watched that play with no prior context for the game of football and attempted to start learning how to play the game from there.

It couldn't be more misleading and disorienting.

There were no quarterbacks involved in the play.

The kicker would have appeared to bring greater risk to the situation than potential reward.

The "field goal return man" certainly would seem like the most important player on the team.

No part of the experience would contribute to the person knowing how to win a typical football game.

The novice spectator would be reviewing a case study in the PhD level course before they even knew they should enroll in the 101-level course.

Whether we realize it or not, it's too easy to engage with personal finance in the same way.

The different ways to invest and talk about investing are so nuanced, unique, and overwhelming that we get distracted or never even know what matters.

The different ways to save are so nuanced, unique, and overwhelming that we are led to believe that the way you save is more important than just saving.

Few parts of the experience emphasize the things that actually lead to a healthy relationship with money.

The kick six is a cool story. Most things in mainstream personal finance are more like a cool story than the secret to winning the game.

The Three P's of Inflation

It feels like inflation is everywhere.

Whether you read about it in the headlines or experience it at the gas pump or grocery store, it is hard to be unaware even if you try.

While paying higher prices can make you sick to your stomach and tips about I-Bonds can trigger FOMO, there are a few reasons to take headlines with a grain of salt and stick to your plan when it comes to your own finances.

Inflation is personal.

Inflation is not a flat fee that is applied to everyone and to every dollar you spend. It is personal and is based on how and when you choose to spend your money.

Commuters will experience inflation in gas prices differently than those who work from home.

Young families with many mouths to feed will experience inflation in food prices differently than empty nesters.

Travelers will experience inflation in airplane tickets and hotels differently than home bodies.

Taxes, mortgage payments, charitable gifts, and even other large line items in many personal budgets have likely not been impacted by inflation at all.

Inflation in the headlines is different from the inflation experienced in the individual household.

Your personal experience with inflation is the one that you can feel day-to-day and the only one that matters for your own finances.

Inflation can be participatory.

Businesses charge for value delivered to customers or clients.

This value can come in the form of a chicken sandwich, a subscription service, a couch, or a million other things.

There are times when businesses must increase their prices to cover their costs and there are times when businesses can increase their prices because they deliver value to their customer or client above and beyond the existing price.

Both scenarios lead to inflation AND both scenarios typically lead to a company remaining profitable or even increasing their profitability.

These profits do not go into a black hole never to be seen again. Instead, these profits are captured by the owners of the businesses to be distributed as income or reinvested in the business to further increase its ability to provide value.

Instead of only paying inflated prices, investing in a diverse portfolio of companies over time allows you to participate in the profitability and growth that often accompany inflated prices.

Inflation is not permanent.

Of course, everyone would like to participate in the profitability and growth part of inflation, but herein lies the beauty of competition.

Competition creates incentive for others to jump into the fray to claim their “share” of the profitability and growth.

Oftentimes, the easiest way for these latecomers to capture their “share” of the profits is by offering a similar product or service for a reduced price which in turn keeps prices from racing to infinity.

While the precise magnitude and duration of inflated prices can be difficult to predict, the inherent nature of competition naturally keeps inflation in check and helps prevent temporary price surges from becoming permanent.

Building Resilience Instead of Grasping for Certainty

The only thing that we know about the future is that it will be filled with more uncertainty than we can imagine.

It is easy for financial planning to fall into the trap of attempting to “predict” the future to reduce or eliminate uncertainty.

Certainty (or probability of success!) will increase if…

You can make a certain level of income for the next 30 years.

You spend a fixed amount inflated by 3% for the next 30 years.

You max out your 401k and/or Roth IRA every year for the next 30 years.

You achieve investment returns of 7.5% for the next 30 years.

In theory, this is supposed to help you do “financial planning” and oftentimes this process is called a “financial plan”.

In reality, this process encourages grasping for certainty, focusing on things that are out of your control, and transforms a "financial plan" into a financial services “product” that exacerbates society’s tendency to over-spend (i.e. consume) or over-save (i.e. hoard).

Real financial planning is knowing that we can only build resilience to navigate through an uncertain future adjusting course when new information is learned and improving our relationship with money each step of the way.

Resilience looks like…

Generating income from something that leverages your natural gifts and skillsets, allows you to manage risk of burnout, has a long (or indefinite!) time horizon, and allows you to spend time doing things that matter to you.

Spending in a manner that brings lasting contentment and is aware of spending that is relatively fixed and hard to change as well as the spending that is discretionary and can change relatively easily in the face of uncertainty. Generosity often increases contentment, debt often decreases contentment.

Saving, on average, in proportion to your level of income and into buckets that will be accessible in the near and distant future when you need the dollars the most knowing that cash on hand provides flexibility in the short run and durability in the long run.

Investing in a manner that you believe in and in which you have a baseline understanding knowing that, regardless of strategy or plan, the only guarantees are that someone will always outperform you and that how you behave during the inevitable unsettling times will be the biggest determining factor in your lifetime returns. Owning businesses tends to increase potential returns, diversification tends to make the ride smoother, long horizons tend to increase the probability of positive returns, and above-average patience is a superpower.

Grasping for certainty is inflexible, rigid, exact, unrealistic, disappointed by course correction, and ironically abstract because it tells a story with numbers that does not match up with the lived experience.

Building resilience is flexible, fluid, imprecise, realistic, expects course correction, and ironically concrete because it tells a story with numbers that matches the lived experience.

Additional Reading

The Magic Certainty Button by Carl Richards

Endless Uncertainty by Morgan Housel

God at Work in an Uncertain World by Rev. Daniel Mason