What If All of Your Money Was Stolen?

What emotions come to mind with this headline? As a kid, Aesop’s story about the miser really registered with me.  If you are unfamiliar, it is a fable about an old man who had an oblong gold bar and he was so afraid that it would get stolen that he buried it deep in a hole in his back yard.  Every day he would go out there and dig it up to admire it and then bury it again in the hole.  A thief eventually saw this weird ritual and stole the oblong gold bar in the night.  The old man was totally shattered and a traveller passing by listened to his tale and tried to console him advising that the old man take a large rock place it in the hole and carry on the same as he always had and nothing would be lost.  “You will be no better or worse off”, said the traveler. 

The Miser

This story has it all. The idea that financial independence must be claimed in order to be a real benefit rather than a burden. The risk of working pointlessly for your money rather than it working for you. The waste of an unused resource and the real feeling of happiness that simply possessing money gives to people.  Both the savers and those paycheck to paycheck spenders out there could use this story to support their cause and both would have some valid points.  I would offer that where the miser went wrong was in choosing fear instead of rational optimism.  He had done the right thing in saving and was able to get the gold bar.  However, his fear did not allow him to enjoy it or to employ his security in a productive way.  It is easy to laugh at the absurdity of the miser but fear can seem to make a lot of sense. 

The Case For Fear

Money today is not gold but just paper or bits in the software ether only backed by peoples’ faith in it as a store of value.  The federal reserve conjures up or destroys billions and sometimes trillions of dollars per year.  The Hungarian Pengo was a currency once valued at around 108 Pengo per ounce of gold but when faith faltered at the end of WWII people started to need wheelbarrows of bills to buy a single loaf of bread.  You would get paid and have to spend it that day because it may be worth less than half by tomorrow.  In the end, the Pengo fell to, brace yourself for this, around 400 octillion Pengo for 0.0026 ounces of gold, which is to say that the burning of the paper was far far far more valuable than the exchange value.

Today, similar things are happening in Venezuela and South Sudan among other places. The US has huge debt obligations and the US dollar could lose status as the worlds reserve currency and plummet. The US economy is historically overdue for a recession and stocks could fall by 50%. A loved one’s health or life tragedy could bankrupt you, or you could simply just get randomly shot by some maniac’s AR15 that he bought strictly for hunting pheasants. Your heart which must beat 115,200 times per day to keep you alive could just stop because you ate that krispy kreme. Fear Fear Fear!!! Ok, now pause and literally take a deep breath in and exhale a few times. Rationally, the odds of death by homicide in the USA (approx. 0.01% per year) are lower than the odds of suicide. The odds favorite if you are betting is that you will live to an average age of 78.6 years old. The odds are also that if you follow the 4% rule you will be ok as it has held through rigorous historical analysis. Reasons to worry are often overblown by our emotional brain because fear was a great survival instinct back in the day. With our huge intelligence and awareness of the world there will forever and always be a reason to worry. However, at some point we simply have to make a choice between practicing a mentality of fear and scarcity, or one of rational optimism and abundance.

The Case For Rational Optimism

Before I reached financial independence, I had this foolish implicit thought that if I had plenty of money life would be better. I think that most of us believe this to some degree. Once I reached my initial financial goal, I realized that we acclimate quickly and like the miser, if one doesn’t claim the independence part, the benefits are not really there. I also realized that hitting a number is not an end and its not even a new beginning, but merely a continuation. Actually being happy takes practice and commitment. Rational optimism helps. I posed a question to reddit awhile back asking those who had reached financial independence if they thought it was possible to get the benefits of financial independence without actually having gotten there yet. In other words if you are following a plan that you are confident will get you there can you claim some of the benefits before you actually hit the number? The consensus was yes and that it is not about hitting a number. It seems to be about peace of mind based on knowledge, discipline, and confidence in a plan.

We live in one of the most bountiful countries in the world.  We live in the most intelligent, safest, and healthiest time in world history.  All you need to be happy and content is to claim it and to practice it.  The future is entirely yours to change and the past need not be thought about except to realize that it has made you the great person that you are today standing ready for the bright future that is waiting for you to take it.  My point here is that reasons to feel safe and successful are also real and often statistically more likely. So which will you choose? Instead of acting like the miser, I know that even if I were to lose all material possessions I could get them back.  I know this because I did it once and I now know how. It is a known and hence less scary.  After some threshold, this comfort of knowing may be worth just as much as the actual savings.  I will not try to hide away gold like a miser but I will invest and believe in people and we will end up greater together.  I could worry about the edge cases of the 4% rule or the various far fetched scenarios in which I end up regretting not having saved more but at some point it just becomes a choice. I will not fear that my realistic and well thought out financial plan may hit some edge case catastrophe but rather I will embrace life on my terms. We will encounter challenges in our lives but these will help us to feel gratitude for what we do have and what we have had the opportunity to do.

The Miser Part 2:

Before it was stolen, the miser’s wife had told him to invest that gold in his brother’s printing press business but he had been fearful and concerned with scarcity. What if he lost it all? What if everyone grew tired of this whole printing thing? Fear is the first stage in creating personal change and the miser had been stuck there in denial that there was any problem and defending his current ways.  But I like to think that there was a sequel after the miser lost his gold.  He realized that money is a fickle thing and decided not to let it consume him.  He entered the 2nd stage of personal change which is contemplating change and seeing it’s barriers.  He got back out of the house and returned to work with his brother.  He earned back what he had lost but something had changed.  He now knew that whatever, happened he could make it in this world. He had done it not once but twice and he could do it again. Everything was going to be ok.  He wanted to share his secret with others and they listened and followed him.  His wealth grew beyond his many bars of gold but into a community that the old man loved.  One day, a wealthy merchant came to see the old man and thank him for the inspiration. He claimed that the old man’s teachings had changed his life and the younger merchant had brought a dirt soiled oblong gold bar as a gift.  “What did you do before my teachings inspired you to become a merchant,” asked the old man. “I was a thief” replied the merchant. The old man smiled contentedly and placed the familiar gold bar in his stack and continued about his day.

I’d love to hear your thoughts in the comments. Anyone have a story of embracing rational optimism?