I have a bank account with the largest bank in the US. You’d expect everything to be standardized across their branches. However, there’s one state that’s different than all the others. For some unknown reason, Idaho (where I live) is on a different computer system than all of the other states in the country. I opened my account in Arizona, so I’m not in the Idaho system. This means that every time I want to make a withdrawal or a deposit inside a branch, I need to jump through a whole bunch of hoops to get it done. Out-of-state withdrawal slips and all kinds of other special issues.
Every time I make a transaction like this (which is surprisingly often for a guy with an ATM card), the teller always asks me if I’ve considered switching my account to an Idaho account. “It’d be so much easier for you,” she says. I wouldn’t have to jump through all these hoops, and could just get in and out of the branch with much less hassle. When I tell her that I’d rather not, the teller will more often than not respond with, “Why? Are you planning on moving soon?”. I just smile and nod, say “You never know”, and leave it at that. She shakes her head, and continues to process my transaction.
This little portion of my life would be easier if I’d just switch over. However, if I do ever decide to move, it would cause me just as many headaches in my new location as I now have in this one. It just doesn’t make sense to me to do something like that, since it removes options.
My point is, people plan for continuity. Most folks would make the switch to a local account, no problem. Most folks would consider that to be a smart move. Just like most people, even when faced with statistics like the average worker today switches careers 7 times, expect that those stats only apply to someone else. Whether this comes from fear of the unknown, or a desire to avoid change at all costs, I don’t know.
I’m just as susceptible as the next guy (or gal) to falling into this kind of continuity thinking, though. A little over a year ago, I bought a house. Prices had been falling in the area where I live, and I thought I was getting a good deal. I figured my family had no plans to go anywhere else, so why not? Buying a house is a good investment anyway, right?
Trouble with that is I didn’t foresee the housing market cratering. There’s no way I can sell my house today for what I owe on it, even though I got it at a pretty good price at the time. So, now I have a mortgage that, while within my means to pay, severely limits my ability to pack up and leave if the desire were to move me (and believe me, it does).
Most folks don’t have desires like that. I accept that I’m a bit of an odd bird when it comes to the wanderlust I have. However, I think everyone can use a little more flexibility, and planning for the unexpected seems to be the way to go. Here are 3 ways you can inject a little breathing room into your own life:
1. Don’t buy a house. Home ownership is the American Dream, right? And, it’s not really a bad deal, financially speaking. Real estate investments over the long haul show steady returns. However, there’s a big caveat: You can’t decide when to get in or out. If you’re in a bad market (like right now), and you need funds, you’re probably not going to get them from your real estate holdings. Property is about as illiquid an investment as you can find. So, if you own a house and you decide you want (or need) to move, you still have a responsibility to keep paying on that property. From the standpoint of flexibility, it’s a bad decision
2. Don’t buy depreciating assets on credit. That means no cars, no stereos, no vacations, not much of anything, really. Experts agree you can buy a home on credit (although the past year or so has shown that even those depreciate), and most folks say financing education is okay, too. It’s supposed to be an investment in your future.
I have both types of “good debt”, and I can tell you they still lock you in to the situation you’re in. If I didn’t have school loan payments and mortgage payments, I could get by quite nicely on half of what I currently make, and that’s assuming a pretty nice rent payment for the area of the country in which I live. I financed a good portion of an MBA degree, which so far has provided me nothing except for a few good friends. I think most degrees are like that.
So, if even those two types of purchases are poor uses of credit, really think about what you lay down the plastic for. That car that’s going to depreciate 25% or more the second the tires touch the street in front of the dealership? Bad choice. A new LCD television? Don’t do it. Kitchen remodel? Is the new butcher-block island really going to make your life better to the point where you’d sacrifice your freedom to choose?
3. Become a Jack (or Jill) of All Trades. Learn all you can about everything you can. If you’re an accountant, and that’s all you can do, what happens if you can’t find anyone willing to pay you to count beans? Bummer. However, if you’re an accountant who troubleshoots and fixes computers on nights and weekends, you can pretty easily begin generating a secondary stream of income. And, if you’re a computer-troubleshooting-accountant who also can do a little web design and back-end coding, you can open up a tertiary stream. The more streams you have, the less you’re affected by any one drying up. That’s the key to flexibility.
So take the time to get really good at something outside of your profession. Maybe it’s writing or coding or graphic design or teaching a subject you know really well. Can you speak two or more languages? If you know where to look, you can make a killing doing transcription and translation work. For instance, I’ve seen ads on Craigslist for Chinese to English translation and transcription jobs that offer between 15 to 20 cents per word (!). Do you realize how much that is? Assuming this article was in Mandarin, you could make around $180 translating it to English at 15 cents a word. I’m willing to bet that it would take you less than 45 minutes to transcribe it if you had near-native abilities in both languages. $240 an hour is a pretty good rate, wouldn’t you say?
What life really boils down to is choices. If you want one thing, you have to be willing to sacrifice another. If you want to put down deep roots in a place, and provide your family with a home that they own, then you’re necessarily sacrificing some flexibility to follow your whims. Not that this is a bad thing; it’s really up to you. You just need to understand that choices have consequences and you have to be willing to deal with the ones that come with your preferred lifestyle.
As for me, I don’t want to be locked in. I’m making efforts to reduce my commitments, so I can pursue some things that aren’t possible with a lot of unnecessary financial entanglements. Just take the time to figure out what you want to do, and then do it. Follow Thoreau’s advice; “Go forth boldly in the direction of your dreams; live the life you’ve imagined.”
So, do you plan for continuity, or do you expect the unexpected? If you do your best to keep things on an even keel, what benefits do you see in that way of thinking? Am I off-base? And, if you like a little (or a lot of) variety in your life, what have you done to make sure the unexpected finds you? Let us know in the comments...
Photo courtesy: Orin Zebest