Compounding Decisions
One of my clients was running late to a Zoom coaching meeting yesterday. Since I had a few minutes to burn, I decided to scroll social media. Within 30 seconds, I stumbled upon a brutal rant from an early 30-something. This man, self-identifying as a younger millennial, went scorched earth about the older generations and how they set up the younger generations for utter failure. In his words, he and everyone his age (and younger) are essentially screwed.
Can't make enough money to survive.
Will never buy a house.
Can't afford to get married.
Not enough resources to raise children.
Zero chance of retiring.
Limited incomes, heavy debt burdens, and spiraling monthly expenses were highlighted as contributing factors to the misery. Each of these problems were somehow pinned on the older generations. I could almost hear a little baby violin playing in the background.
Here's the irony. My client, who was running a few minutes late, is the exact same age as the jaded victim from the social media post. One difference, though. This couple is absolutely crushing it! Through intentionality, consistency, humility, sacrifice, and a strong work ethic, this couple has carved out a beautiful life for their family. Make no mistake, it was no accident. This couple has had a vision for the past decade, and they've executed well. It wasn't always easy, and it was rarely sexy, but here we are.
When I spend time with this awesome couple, I'm reminded of a principle that's a universal truth in money and elsewhere: decisions compound. When we make good decisions, the implications of those decisions compound into the future. When we make poor decisions, the implications of those decisions also compound into the future.
Back to the man from the social media post. I was so fascinated by his rant that I checked out some of his other content. Sure enough, I found example after example of how his poor decisions have compounded on him. Here's a summary:
He chose to go to a small private school to play a sport. Tuition was sky high.
The sky-high tuition caused him to sign up for more than $100,000 in student loans.
Immediately after college, he purchased a new car. He's since traded in for 2-3 different new cars. The negative equity rolled from each, resulting in today's car payment of nearly $1,000/month.
In order to pay his quickly rising monthly obligations, he signed up for the first reasonably paying job he could find. He hates it, but it pays the bills....barely.
In part because of how much he hates his work, he goes on lots of vacations. He can't always afford them, but the credit cards help him connect those dots. That's okay, though, as he'll pay them off in a few months.
Things are increasingly tight, so it's difficult to save anything for retirement.
His decisions have compounded. Each one leads to the next. The pressure builds. If he were to ask me for advice, here's what I'd tell him: "Start making some key positive decisions. Move the needle. Let it compound. Make another. Watch it compound more. Keep fighting the good fight. Eventually, the compounding will be your best friend instead of your worst enemy."
Today's decisions will eventually compound for future you. Make sure it compounds in the direction you desire.
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