Recapping 2012 Part 7 of 7

2012 TimelineWell here it is, the end, the last day of 2012, and this is my last post looking back at the year. My next post will be looking forward. It’s important to know and understand the past but that’s only so you can plan your future. Going into 2013 I thought this post would be a good reminder that every decision you make has consequences so the sooner you make good decisions the better off you’ll be. Looking ahead means projecting several outcomes from each decision and deciding which is the most likely and which will serve you best. Here’s to taking the right combination of paths in 2013!

Action and Reaction

Early in our school lives we all learn about Issac Newton and his apple mishap that led to his theory of gravity. Well Newton also had some laws of motion and his third law of motion loosely states that for every action there is an equal and opposite reaction. Welcome to world of consequences. For every choice you make there is a choice (or several) that you did not make and every decision leads to a result, good or bad.

Consequences start at a young age. Things you have control over but often don’t have the maturity to appreciate, like the importance of good grades, for example. Once we move on to the next level in life we choose our major in college or career in life, and we would do well to choose wisely. How many people are willing to go into debt for an education that may not provide the means to easily pay back that debt? That one decision will have ripple effects throughout life.

How many people delay investing in their retirement accounts early in their working lives because they think they can’t afford it, because it will negatively affect their lifestyle? The fact is that their lifestyle will be much more adversely affected in old age if they wait too long. It’s not that they can’t afford it now, it’s that they won’t be able to afford it later.

Taking a What Next approach to decision making is to weigh as many options as feasible, and to choose carefully. Asking What Next means you have a long term outlook and understand the ramifications decisions have. In financial planning terms that means understanding the future value of a decision. Put simply, the future value of a dollar invested today at 10% interest is $1.10 one year later. The future value of not going into debt to fund your education is the ability to start saving earlier and building your retirement nest egg sooner.

I don’t have children but I think I might have spent more time talking about the consequences of that decision with Julie, than most people who do have children. I’m not sure I can think of a weightier decision than the choice to have children and yet I wonder how many people treat it with the reverence it deserves.

The everyday choices we face today will affect the life we have later. Buying a house, a car, toys, taking lavish vacations, all diminish your ability to save for the future. Whether you stay in your home for a long time or move frequently, whether you buy a new car every couple of years or hang onto it for a decade, will determine your level of success. It is a balance between now and then.

The question for you is, are you well balanced? (I know what some people say about me – so let the jokes begin) Do you have a long term outlook on life? Are you confident that your choices today will still look correct a year or five years from now?

Share some examples of long term decisions that have paid off for you and some that didn’t.

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Ready, Willing, and Waiting

WaitingWhen you are confident that a decision is right and a sense of calm washes over you, the next thing you want to do is get to work.  What often happens however is that you find yourself at the mercy of others, waiting for someone else to make the next move.

This is where my impatience comes in, where I find myself with lots of energy but nowhere to direct it. I start planning, over planning, and obsessing on details I can’t do a thing about.

It is still too early to give any details on this latest exercise in What Next but I’m ready, willing, and waiting no so patiently.

What do you do with all your energy when you find yourself dependent on others?

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Sometimes the things we say in jest end up being all too true. One of the tasks at my day job is teaching people how to edit video using software called Avid. A lot of people are worried about making a mistake, about doing something so wrong that they’ll never recover. Well that’s almost impossible thanks to a feature that is available on many programs, the undo button or Control-Z (Command-Z for all the Mac users).

When I first tell my students about CTRL-Z, they are relieved that whatever they did, it isn’t the end of the world. I then say “I’m still waiting for someone to invent a CTRL-Z for life.” I’m kidding but, after the laughs, I usually hear some murmurs of agreement, “tell me about it” or “Yeah that would be nice” or “me too.”Undo

We all have regrets, hopefully small ones, but no CTRL-Z. We live with our mistakes, learn from them, and move on because that’s all we can do. Like any mistake in editing video, there aren’t many mistakes or misfortunes in life that rise to the level of “the end of the world.” As long as you remain alive and in relatively good health, any mistake or misfortune can be overcome. This is not an excuse to make mistakes! Yeah I’d like to learn from my mistakes but I’d prefer not to make them in the first place.

Whether the bad thing that happened was your fault, simply bad luck, or an accident, don’t look for the undo button, there isn’t one, but rather turn it around and make it positive. Think differently about the problem. You can never undo the bad thing like Julie and I couldn’t undo the fire that destroyed her house six months after we began dating, but we were able to assess the situation, think strategically, and make the best out of what we had.

In What Next I recount a story that Jeff Bezos, the founder of tells about making the decision to leave a good job, with a very good salary, in order to start Amazon. He said he thought about the decision and came up with a “regret minimization framework,” a way of thinking that would hopefully reduce any regret he felt, reduce his desire for an undo button. He does a much better job of explaining it than I can.

What Next and the concept of regret minimization work well together. What do you want to do and how are you going to do it?

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