According to an ancient Chinese Proverb, “The best time to plant a tree is 20 years ago. The second best time is now.”
I find that to be a compelling message. And one that lends itself to the world of personal finance. One only need imagine the line “the best time to pay-off debt, or start saving for retirement…” to identify the fit.
Several months ago, I was watching an episode of the Dave Ramsey television show. He was doing a special on the second half of his “live like no one else so later you can live like no one else” mantra. He was dedicating the show to callers who were debt free and prospering financially. I wanted to find it motivating as I tried to imagine myself as one of these callers one day, but I struggled in so literally comparing their circumstances with mine – the ages, debt loads, and wealth levels didn’t align. I could never be one of those callers.
But then a funny thing happened, either by masterful production or divine intervention a clear trend emerged among 3 consecutive callers.
Each individual’s specific details varied to some degree but suffice it to say each shared 3 unique (and highly desirable) markers.
- 100% debt free – including mortgages
- $1 million net worth – at least
- Cash saved for ‘life events” – college, retirement, emergencies, vacations, etc
The first caller was roughly 35 years old and I have to admit a tinge of jealously in hearing of this type of success at such an early age. Having already surpassed that age, I’ll never be “that guy”. But in hearing his story – little debt out of college and 12 years of hard work and saving I realized how proud I’d be if he were my child… and I realized that may, one day, be possible.
The second caller was roughly 45 years old and I paused a moment longer trying to squeeze my foot into his shoe. Hmm, a mental survey of my debt and age and income… it was at least plausible if not entirely practical – the window was simply too small.
The third caller was roughly 55 years old and either by the want of my ear or the sound of his voice, he seemed the happiest and most satisfied with his lot. Ooooh, now we’re talking. A quick thumb-in-the-air estimating exercise…. My age, income, debt, mortgage… hmm, I think I can be that guy one day.
Or course the next morning – in true budget nerd fashion – I started building a spreadsheet model. My assumptions were loose but in no way reckless and the final calculations were brilliant. With some luck and lots of discipline the freshly crunched numbers revealed a compelling story. While we all vaguely dream of a $1 million net worth, I now had a path complete with milestones and action plans. I can do it and now I know exactly how.
Sure, it’s easy to simply wish the tree had been planted many years ago so I could bask in its shade now but that’s simple-minded too. Now I see the seed and shovel and can envision the shade. So let’s get to digging.
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