When your life is out of control, nothing seems to go right. You have the worst luck, and you can’t seem to get ahead with anything, whether a project, a goal, or even simple things like taking care of daily tasks.
Regaining control of your life is imperative. For your finances, you can do that by paying attention, changing your mindset, taking an inventory, tracking changes in your finances, budgeting, and seeking support from family, friends, and even strangers. This was one of the major premises behind Consumerism Commentary.
The same is true in all aspects of your life, especially those in which you’d like to see change or improvement.
Control comes through the practice of making better decisions, those decisions that take your future into consideration. Sure, if you’re struggling to survive, “the future” is a luxury. I understand that. But even small steps towards control can help you move forward towards having the freedom to consider more than just how your family will survive paycheck to paycheck. When the situation is controlling you, you feel helpless. But starting to control the small things in life will offer the confidence to, stamina for, and even luxury of making life better for your future.
Being in control can be a significant achievement. But the work isn’t over once you have control. I realized this while watching a baseball game. It was a subway series, with the New York Mets visiting the Bronx to play crosstown rivals the New York Yankees.
The commentator used the phrase “command and control” in discussing the talents of a pitcher. Every pitcher who makes it to the major league should be in control consistently. That means they should be able to throw fastballs for strikes and get other types of pitches in the strike zone on demand, whenever desired.
Brandon Katz describes in Bleacher Report, a baseball blog, what happens when pitchers do not have control: “Without control, basically all hell breaks loose for the guy on the mound. If you don’t have a good feel for your pitches, then it’s going to be a night of free base runners and a lot of runs due to unintentional walks and undoubtedly a multitude of pitches up in the zone.”
Command is another matter. Having command of the pitch is what separates the great players from the everyday. Katz describes pitching command thusly: “Pitchers with good command have the talent to place their pitches any where they want within the strike zone; they are able to throw not just strikes, but good strikes.”
This is also what happens when pitchers are in sync with their catchers. The two players determine for every pitch the speed, direction, pattern, and target, and a pitcher with perfect command hits that target every time. When the catcher wants a cutter to approach the strike zone from the the top outside corner but land in the catcher’s mitt low and inside, the pitcher with good command makes that happen. When the catcher wants a series of three fastballs starting low and ending high and outside, tricking the batter into swinging at a fastball out of the strike zone, good command is necessary for the plan to result in a strikeout.
Control is just the beginning. I’m in control of my finances. I know I’m spending only what I can afford to spend, less than I earn with enough to save for the future. I am like a major league pitcher. Just my presence in the major league means I’ve outshone hundreds or thousands of others on teams in Little League, high school, college, and the minor league.
But I’m not Matt Harvey (or whoever your favorite superstar pitcher might be). I do not have complete command of my financial performance. Not only do I rely on the stock market to take my net worth higher, but I haven’t determined how to invest in such a way that I can position myself the best for my future.
While many would be satisfied with a diversified portfolio of index stock and bond funds, when your needs involve a regular income, protection of your assets, tax efficiency, and growth for taking advantage of a variety of opportunities, things get more complicated. I can throw my strikes, but I’m still learning about the finer points of money management — the skills that will get me to the point where I can just show up on the mound and batters get nervous.
For example, I’m in the process of moving out of New Jersey. My portfolio until recently included as part of my bond portfolio the Vanguard index fund that’s exempt from New Jersey state income tax. The purpose of that was to keep my overall tax burden lower while being able to (relatively) count on some steady income. But if I’m not a resident of New Jersey and not paying New Jersey income taxes, the tax benefit of the investment is irrelevant to me. And quite possibly a waste of an investment opportunity.
And one might argue that the state of New Jersey is in such a bad condition that it was a bad investment in the first place.
But now I have the full investment previously in the New Jersey bond fund sitting in a sweep account earning a paltry (taxable) 0.01% interest. I need to come up with a plan to invest this amount soon, as opportunity cost — the cost of doing nothing compared to potential results — is a real thing and quite expensive. My initial thought is to stop worrying about tax efficiency, particularly considering I am not sure what my plans for residence will be beyond the fall of this year. A strong suggestion in continuing the income portion of my portfolio is to look at the Vanguard Intermediate Term Corporate Bond Index.
Clearly, the trickier pieces of my investment game — being able to paint the corners with my strikes — is not where it needs to be yet. My control is on point; my command requires some work before I’ll get my All-Star Game invitation.
Here’s what I need to do.
Dive deeper into investment research. Until now, it’s been enough to know that the stock market index generally returns 8% over long periods of time for those who buy and hold and don’t react to market news. It’s been enough to know that bond indexes can balance stock indexes and prevent some damage in market downturns without a major detrimental effect to overall returns.
I’m still not interested in investing a major portion of my portfolio in individual stocks, but if a unique investment opportunity comes my way, I will need to be able to evaluate the offer and make a decision that is as informed as possible. I have some business opportunities coming my way, and I’d hate to miss something important because I wasn’t able to analyze the situation effectively.
Talk to more people in similar situations. I’ve done a great job of helping people and teaching others what I know. I’m always available for friends who want business advice or would like to take their blogging to the next level.
Because I found myself paving the way and perhaps doing things that haven’t been done on a large scale before, and have been that way for about three decades, I haven’t done the best job of seeking out mentors when what I’ve wanted to learn has all ready been perfected by others. Whether it’s success in business management or investing, I need to spend some time talking to established experts in addition to mentoring others who see my successes as something similar to what they’d like to achieve.
Practice over and over. It’s great to avoid mistakes, but there’s often to better learning substitute than making mistakes and having to deal with the consequences. The mistakes I’ve made throughout my life — and I’ve made many both pertaining to and beyond my finances — have forced me to learn on my feet, adjust, and improve. I’ve made poor decisions regarding working with others, I’ve had to learn to live with hurt in personal relationships, and I’ve misjudged people. Mistakes like these have given me more insight.
As I make more investing decisions, I’m sure I’ll make more mistakes. More opportunities coming my way means more opportunities to fail. But the experience I gain when that does happen will be valuable — and as long as I don’t rely too much on the success of any particular decision, I should be able to whether failures and use the knowledge gained to my advantage later, increasing my command, not just control, of my finances.
Photo: Flickr Creative Commons
Published or updated April 27, 2015.