Wednesday, July 28, 2010

Michael Kay - Good Stuff My Father Told Me; I Just Didn't Know it at the Time!

Nice little post from Michael Kay at his Financial Focus blog at Psychology Today. Our fathers often offer us their wisdom in ways that may not make sense until later in our lives.

Good Stuff My Father Told Me; I Just Didn't Know it at the Time!

Old words take on new meanings!

Michael Kay

There are times, when the ghost of my father visits. OK, so if not his ghost exactly, more his words that somehow wind up in my head. It's interesting to observe so many years later; thoughts reemerge from hidden crevices to bring a layer of truth and understanding.

As an example, for whatever reason, my dad used to quote Newton's Laws of Motion; but only the First and Third. Newton's Second Law ("A body of mass m subject to a force F undergoes an acceleration....") was way too complicated for a musician and sixth grade teacher to whip out and explain to his children. His barrage of quotes mostly passed beyond my comprehension.

I remember with absolute clarity, lying on the couch, and his imposing frame standing in the doorway, some random tool in hand, saying, "things in motion, tend to stay in motion; things at rest, stay at rest. You've rested long enough!" This clearly was a sign that I had to sweep something, carry something or do some other innocuous task that made me have to leave my reverie on the sofa. OK, perhaps this wisdom doesn't exactly stir the cockles of one's heart (another dad-ism), but there's something to be said for building momentum. You can recognize the impact of momentum when you find yourself "in the zone" and performing at a higher level of effectiveness. It might be that incredible round of golf (not in my case) or something as simple as accomplishing a task with focus and purpose.

The heart of his physics lesson came in the guise of Sir Isaac's Third Law, which, if I may paraphrase talks about every action having an equal and opposite reaction. I can hear his voice, even as I write this. Of course, as a youngster, I had no idea what he was babbling about. But today I do.

In the world of Financial Planning, Newton's Third Law is a biggie. It might even rival Ben Franklin's whole compound interest thing that people get so excited about. The whole equal and opposite reaction can cover a lot of territory. For example, consider your spending patterns; if you incur significant amounts of credit card debt, the equal and opposite reaction is a significant impact on cash flow. You now have "stuff", but you also have bills that come due every month that need to be paid, with interest. Is your enjoyment of those purchases equal to the pain of opening those bills each month? The converse is true of one's ability to save. Every dollar accumulated comes back and provides security and opportunity. Therefore, BEFORE making a financial decision, it is best to consider the equal and opposite reaction. How will your investment benefit your life? What, if any, are the negative implications of making that purchase? Applying Newton's Third Law can add to your financial success by simply looking at both sides.

While I might not have appreciated these off-handed and often quoted laws of physics, they did take root in my thinking. While I'm at it, I clearly remember him quoting another of his favorites, this by Mark Twain; "When I was a boy of fourteen, my father was so ignorant I could hardly stand to have the old man around. But when I got to be twenty-one, I was astonished at how much the old man had learned in seven years."

It was good stuff; I just didn't know it at the time!

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