Financial security, first principles, and you

Our universe is an inherently chaotic place.  Whether this is a natural consequence of quantum randomness or of the unpredictability of human choice is irrelevant.  Every day you will be affected by some kind of chaos outside of your control, and your handling of it can either be an asset or a liability.

Asimov had an inspired idea that he based a series of novels on: that although individual human behavior appears to be random, the behavior of a group can be predicted more accurately as the size of that group grows.  He made this analogous to the ideal gas law, where the movement of individual atoms is impossible to predict but get enough of them together and their properties (temperature, pressure, volume) are related in an extremely reliable way.  It is idealistic to apply this concept to human beings (and I suppose even to gases, hence the name), but it makes a great story, and the simplification has a degree of truth in it.

Let’s move on to a more relevant example.  The daily activity of the stock market is unpredictable, but the trend over time is clearly one of growth.  The stock market always goes up.  Yesterday it went down, as a result of the Boston bombings.  Similar events have had similar effects.  But over any 10-year period, including those containing a depression or disastrous event, the stock market is a winner.  Chaos is all around us, and the way to deal with it is to not panic.


I personally don’t recommend taking the president’s post-9/11 advice to “keep shopping” but as a stockholder I certainly take comfort in knowing that many people out there are.  Many of you are probably familiar with the “Business Continuity” plans most companies keep for all manner of contingencies.  The system is the same as it always was, and keeps on rolling.  Life goes on.  So it goes.


EOM March 2013

I don’t have any fancy graphs and data for March because I want to keep certain things to myself, namely the exact prices of certain significant expenses.  This past month my lady friend and I got engaged, and we booked a one-week trip to Jamaica later this year for when we will surely require a break from wedding planning.  These were easily my biggest expenses for the month, but by following my own advice from a previous post I was still able to keep my March savings rate closer to my 2013 goal than it is to the national average.  Not too shabby!  We are continuing to use these rather obvious methods to save money as we plan our wedding.

After spending more than I should have on alcoholic beverages in February, my interesting experiment for March was to not spend a cent on these.  I still drank, but only when it was given freely.  This led to an extreme decline in the number of weekday beers I consumed.  Coincidentally, I seem to have lost five pounds without changing my diet or exercise habits.  How about that.

I hope to do something similar this month: no spending money on eating out!  I promised the lady friend I’d treat her to frozen yogurt when her March Madness team lost, and she didn’t seem to mind that I bought a tub instead of taking her out.  So I’m already saving money from this initiative!  What’s funny is that I will still probably eat out at restaurants about five times this month.  Once as a treat from my lady friend, once using a gift card I was given, and thrice on a business trip.  None of these will cost me a cent.

People really do spend a lot of money on these things.  By cutting back on enjoying them just a little, I was able to cut my spending on them entirely.  Considering I still get to enjoy these things, it doesn’t feel at all like I’m sacrificing anything.  And my wallet is certainly happy about it.