The choices you made starting two years ago led to your life today. What you do today will lead you to your life 2 years from now. Think about your life years ago and compare it to the one today. Are you happy with it? Did you actively take steps to boost your financial security, happiness, and relationships with loved ones?
Jeff Bezos highlights that people congratulate him when Amazon has a blowout quarter. While he does say thank you, he recognizes that the results today started from two years ago. His employees live in the future and he lives in the future. Thats the kind of long-term thinking to implement, especially in personal finance and business.
Who I am in the present is because of choices made in the past. I can honestly look at someone straight in the eye and say that I’m happy with my progress. I recommend you to honestly evaluate your life today and think if it was truly better than the past.
Remember that you are who you are because of your choices. Yes, circumstances do matter. However, if all that mattered were your circumstances, then upward mobility wouldn’t exist. Stories of people climbing out of poverty or hardship wouldn’t exist.
Circumstances do play a large part in your life. Where you were born and to who you were born to matters. Think about this for a second. Would you really rather be an unsuccessful person because of your past? Or would you rather have a bad past and become a successful person anyway?
It might be an uphill battle and you might not achieve the full extent of your goals. A much better outcome than achieving the negative sides of your goals.
Two Years Ago
Two years ago in December 21, 2018, I only had $90,000 in the bank, ridiculously stressed out, and experiencing the horrendous market downturn.
I never sold my investments, switched jobs, and the S&P hit an all time high by 2021. I continuously and diligently saved and invested my money, mustering the strength to ignore the noise.
The stock market could have easily tanked 30% since that time. However, investing isn’t about trying to make consistent gains every year.
It’s about trying to earn more by the end of 40 years than what you started with, on an inflation adjusted basis. Some years, I’ll lose an astronomical amount of money. Some years, I’ll make an astronomical amount of money. It’s about the ending balance by the end of a 40-year period that matters.
The decisions I’m making today are to stay the course and to continue doing what I’ve been doing since two years ago. Never try to fix what isn’t broken. By December 21, 2022 I am aiming to have at least half a million dollars in the bank. Which I consider to be my retirement number.
Then I can decide whether I want to retire or keep working.
Knowing me, I’ll choose to keep working but the difference is, I’ll be working on passion projects. Work that excites me and things I choose to do because I want to. Not because I have to. It seems crazy to me that I’ll be in my late 20’s and retired.
What you can achieve in a couple of years is mind boggling. Continue to differentiate yourself and one day you’ll enjoy the fruits of your labor. It will pay off.
What Regret Looks Like
You don’t want to wake up one day like this man in the video. A wake-up call and sudden realization of what your life has become. Don’t one day look yourself in the mirror and decide you don’t like what you see. Don’t wake up one day and realize a former middle school classmate is deciding on your sentencing.
Hopefully, after realizing of what his life has become, hopefully the man in the video pulled it together. Hopefully he is taking steps to change his life to the right direction. It was certainly heartbreaking for me as well, as I could empathize with him.
It is ridiculously simple to better your financial life. However, the caveat is that it is difficult.
Below are common financial regrets that people have who haven’t taken the necessary steps to better their financial life.
Have Nothing to Show For
Imagine waking up 40 years from now, in your 50’s, 60’s, 70’s or 80’s, whichever it may be. Then realizing that you have zero financial nest egg, only stuff you bought over the years. That’s a horrible nightmare come to reality.
Truly look back and evaluate what you value. The saying is “show me your credit card statements and I’ll tell you what you value”. Whatever you spend or don’t spend your money on reflects your values.
It’s one of the reasons why data analytics companies are interested in your spending habits. To personalize your coupons, marketing, and products that you might like.
Instead of letting someone else know what you value, take a look yourself. Compare what you’re spending on today versus two years ago. Maybe you had to buy a crib because you had a baby.
Or maybe new furniture because you just moved into a new house. Whatever it may be, what you’re spending your hard earned dollars on, it’s what you value. Then think if it is really that important to have or not.
If not, it’s time to put the additional dollars into the bank.
Racking Up Debt
We all know that debt can hugely hamstring you in the race towards the finish line. Debt that makes you money is what’s called “good debt” and debt that does the opposite is “bad debt’.
Most consumers are stuck with bad debt. They depend on debt to finance things like a car or a shiny new toy. The general rule of thumb is, if you can’t buy it with your own cash, don’t buy it at all.
Never use a credit card to bridge the gap between owning and not owning. Always have the means to pay off your credit card in full every month.
Take a good hard look at your assets and liabilities and be brutally honest with yourself. Are you wishing your assets would be higher and your liabilities lower? A one-off month where your liabilities are high is understandable. However, it’s a problem if it’s consistently for more than 2 months at a time.
Your creditors analyze your debt to income ratio that indicates financial distress. Instead of leaving it to someone else to evaluate your financial situation, evaluate it yourself.
I keep a 1% debt to income ratio, day in and day out. The highest I’ve gone was a 4% debt to income, which quickly went back down to 1% in the next billing cycle.
“Two Years Ago” Is a Powerful Statement
The best time to plant a tree was years ago, the second best time to plant a tree is TODAY. Set your life up so that in 2023, you’ll say “I’m glad I started two years ago”. Instead of “I wish I started two years ago”.
Maybe you have that book that you’ve been meaning to read that interested you. Instead of letting it collect dust, pick it up for a couple of hours every weekend. One of my biggest regrets in the past year is that I stopped reading consistently.
I can’t imagine how far along I would be in my knowledge base if I continued to read. We are in the information era where knowledge is literally power. I’ve learned so many new things by reading people’s perspectives and research into a subject.
One good new idea from a book is more than worth the $10 you pay for a book. Less if you buy used and much less if you get it for free from the library. That’s the thing. There are so free resources out there that people don’t take advantage of. It’s funded using your tax dollars, take advantage of it, you paid for it!
I am hoping that my blog will be around to stay two years from now. I will never give up and will consistently post two posts a week for the next two years. If not more. Who knows what I can accomplish from it.
At the worst, I will learn a completely new skill, SEO and writing interesting content. While I don’t plan on adding that as a special skill to my resume, it is a learned skill. We shall see how useful it is in two years.
