002, Big Rocks


The Big Rocks of Finance

Get the Big Rocks right and you’ll be well on your way for financial success. The Big Rocks are assets, liabilities, and net worth. More on those later.

When I first joined the Air Force I really thought I was doing okay. Oh, ignorance is bliss. The reality was as a young Air Force airman basic (yes, that’s a real military rank) I was only making about $700 – $900 per month with two kids. I was really poor and had little to no savings. My family was getting food stamps, eating deer meat and government cheese. The kids were on a government program called Women, Infants and Children (WIC). That program provided formula, milk etc. for the kids. The driving car, a Bronco II, was financed, so I didn’t own it even though when you finance a car everyone says things like “Hey, I like YOUR car”. It was the bank’s car that I was driving. If I stopped paying for that Bronco, they would come get it. I did have another car, but it rarely ran. It was a hot rod that was a money pit and not practical at all. While financially it was tough, we were able to get by with help from the government and an occasional family gift. The household net worth was negative.

By the time I was in my mid 30s, or 60% of my life to date, I thought I knew a few things about finance. Nice cars were in the driveway, silk curtains hung on the walls, big HD TV complete with an upgraded audio video system, antiques from my tour in Italy. I had some mutual funds, a couple of shares of Pepsi Co, a little bit of savings, savings bonds, a car and a truck. But I also had way more debt than that young airman basic above. I had more and better stuff in my possession, but again, just like my first car, most of it was financed. My family had tens of thousands of credit card debt. Financially speaking, I was not much better off than I was when I first joined the Air Force! It was not readily apparent, but the debt was killing me financially. There was more nice stuff, but it would only take a month or two without income and we would be on the streets and the nice stuff would have to be sold. The household net worth was still negative.

I’m sure we’ve all heard financial terms before like assets, liabilities, net worth, investment, insurance, trusts, and the list goes on. There’s no shortage of advice from numerous sources and especially advertisers. Commercials on the television are frequent. Brokers, advisors, banks, credit cards, insurance, annuities and more. Why are there so many commercials coming your way? Because they are all trying to get a piece of your finances! There’s lots of money being made by handling your money. I sure paid my fair share to those companies.

There are literally thousands of financial products out there. Which ones do you choose? How do you even begin? It’s easy to get overwhelmed by trying to learn about these products. It can be difficult to figure out which one you need to meet your financial needs. If you are not well versed in these topics, there’s lots of information to learn about them even before you can make a decision as to which one is right for you. Right? Don’t get overwhelmed. Navigating them doesn’t have to be overly complicated.

You can make finances as complicated as you like. Universities offer associates, bachelors, masters and even doctorate degrees just in finance. But even then, you can further specialize within specific areas of finance. However, folks managed to live happy, healthy, and whole lives before these fancy degrees came along and will continue to do well without them. Education is definitely important in finances, but a fancy degree is not always necessary. There are plenty of resources that can help you along the way. Hopefully this blog can help navigate through the maze.

Some of the wealthiest family members that I know who left an inheritance for their children and their children’s children only had high school diplomas! So, it it possible to gain financial independence without a fancy degree or certification. Cynthia’s parents only had a nice house, a bit of land, a rental house, some land down the street and about a year’s worth of expenses in the bank. My Aunt Terry passed away fairly early in my Air Force career with a few hundred thousand dollars worth of AT&T and South Western Bell stocks in her retirement portfolio. She had always been a saver and started teaching me about savings when I was young. She was the first person who actually got me thinking about money. All three of these people had a few things in common when it came to finances. They had very modest incomes, lived below their means, had no debt, and used what was left to ensure they always had money to live well into retirement. When they left this broken world, they passed some wealth on to their heirs. Oh yea, one more thing…they all only had a high school diploma and no fancy financial degree. They also tithed 10% and gave more hard earned income to church and were generous to family members or others in need.

It’s all about putting the big rocks first. If you learn the big rocks of finance, you can surely make smart decisions that will align with your financial goals. So, what are those big rocks? The big rocks are what make up the foundation for you to build your financial life upon. With the correct perspective as to what type of rocks you are dealing with, you can look at all of the small decisions you make daily with a different perspective. You’ll look at it and understand how it fits into either moving forward to gain a little ground, moving backwards or away from your direction, or maybe it’s a neutral and insignificant decision that doesn’t really matter much.. But by consistently making small decisions that push you forward, you’ll go far. Rest assured, however, there are no shortcuts.

I’m happy to report that my net worth today is positive. Very comfortably positive that will take me to an early retirement and still leave something for the children’s children. I have funds available for emergencies. If there was a break in income for six months the emergency funds would be available to replace income. I’m also looking towards retirement no later than 59 and a half or sooner (I just turned the big 5-0h). So, if you don’t waste as much time as I did doing what everyone else does, you can be better off and retire even earlier than I do!! Hopefully reading this blog will help you avoid some of the mistakes I made.

Get the Big Rocks right and you’ll be well on your way for financial success. The Big Rocks are assets, liabilities, and net worth. I’ll cover assets next post.

Here’s an old, yet relevant, video on finance. (It’s short for the ADD generation). It lays out one of the most important concepts of financial independence. It shows you how to avoid the biggest mistakes the average american makes and teaches you efficiency in spending money. It’s complicated, but I’m sure this crowd will be able to boil down the complex issues into something useful. Enjoy and let me know your thoughts. Here’s the link: Complex Financial Video.

Paw Paw


3 thoughts on “002, Big Rocks”

  1. That is what we are attempting to do. We did get some added debt from the hospital and the irs but still manageable at this time.

    Keep it up pawpaw

    Liked by 1 person

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