The 2009 First Week of January Test — Part 2

From: John Friedman
Sent: Wednesday, January 07, 2009 1:31 PM
Subject: Part 2 of The First Week of January Test — the test explained and illuminated

Greetings all —

Welcome to Part 2 of the 2009 group email re: The First Week of January Test.  The other day you hopefully received and had a chance to read, and then cogitate on, Part 1 of this group email, yes?  For most of you, it arrived mid- to late-morning, on the first Monday of the first week of the first month of the new year — the new year that we have all agreed to call 2009.

Remember when the year that we all decided to call 1984 sounded weird?  If you do recall how strange that year sounded as it approached, then you, like many people reading this email, are no spring chicken (the springtime being when chickens are young, right?).  And, guess what?  1984 was — gasp! — 25 years ago.  As in a quarter of a century ago.  We are so past that now.

And do you remember when the year 2000 sounded strange?  Remember that?  Remember Y2K and the Millennium and all that?  Well, we are now way beyond that as well, and, by gosh and by golly, through the inexorable march of the planet through space, and therefore (right, Einstein?) through time, we now find ourselves with but twelve months left of the Aughts, with the Pre-Teens and then the Teens soon to come.


*  *  *

And, yes, I did say you would receive Part 2 in a day or so, right?  Thank goodness for the or so because, though I planned on recycling and refreshing last year’s First Week of January Test email, I inexorably found myself drifting slowly away, and then swimming quickly away from, that email, and now, well more than twenty-four hours past my ETA, this email is, like the year, brand spankin’ new — and happy to have had its arrival qualifiedly or so’ed earlier this week.

So even for those who have seen First Week of January Test emails from years gone by, please rest assured that what awaits you down below will give you yet another perspective on the test.  It did for me …

*  *  *

The Test Restated

To begin, and to reiterate Part 1 of the email for those of you who did not or could not take yourself through it — quick! — answer this question for yourself, honestly, unhesitatingly, and top-of-minded’ly (or, if you in fact did this ask when you read Part 1, refer back to that):

How does it feel to be back after the holidays?

Are you all excited about having a brand-spanking,perfectly-empty-vessel-to-fill-as-you-wish, shiny,spiffy, new year at your beck and call — one that holds great promise for you?

Or are you feeling unexcited about it?

Or something in between?

And now it’s on to the good stuff, because here in Part 2, unlike Part 1., we get to tie all this in with your overall financial health.

Please read on …

A Quick Look at the Numeric Side of Financial Health

Financial health has many components.  For the sake of clarity and simplicity (two of my faves … ), I divvy those components into (1) the numeric side of financial health, and (2) the non-numeric side of financial health.  That just about covers it, yes?

The numeric side of financial health involves a simple equation: number of dollars in minus number of dollars out equals number of dollars stored-up (incidentally, keeping the dollars-out at or below 90% of dollars-in works great in most long-term-working-for-a-living contexts, while spending 4% or less of dollars-stored works in most not-working-for-a-living contexts, regardless of the absolute number of dollars involved … but that is a topic for another email somewhere out there in the glorious ol’ future).

Numeric financial health is simply that simple: Money-In minus Money-Out equals Money-Stored.  So not only is it not rocket science, but it’s also about third or fourth grade math (it would be first or second grade math, but there are can sometimes be percentages involved … ).  Now if only us older folks could do the math easily and consistently …

The Pain We All Have Been Experiencing on the Numeric Side of Financial Health Since September the 15th

Right now there is not much cheer on the numeric side of financial health, what with many of our Money-In sources threatened as a result of actual or feared job loss and business contraction (or, for retired folks, with much of their Money-Stored kicking off way less income than before), and what with most people’s Money-Stored having shrunken by well into the double digit percentages and, if all in stocks, having shrunken by at least a third, with a lost decade of growth thrown in to boot.

And as for dollars-out?  My, but weren’t there some great sales this holiday season — everything from clothes (half off before xmas) to cars (especially big ‘uns) to houses (when you get away from the city even more so) to mortgages (other than jumbo).  Last I looked, though, health care and education still cost fortunes and a half, and most people were feeling that their cash was more valuable to them than half-off clothes or half-off gas guzzlers — especially if the gas guzzler was manufactured by a company on the verge of dodo-birding its way outta here.  Still, many pundits see much lower prices ahead — though many pundits also see that, longer term, a ballooning federal deficit, running, as we learned today, at a rate of a trillion-dollars-plus per year, could easily drive prices up up and away.

Could all this be the result of 28 years of Reaganomics, 30 years of Prop 13, and umpty-ump years of an ideology that believes our efforts as a public collective should be unflinchingly, thoroughly, and without exception loathed (and therefore shrunken), and that our efforts as private profit-maximizers should be unflinchingly, thoroughly, and without exception worshipped (and therefore allowed to run free)?  That too is a topic for another email.

The Numeric Side of Financial Health is the Sole Focus of Virtually All Financial Services Providers

So that’s the numeric side of financial health: Money-In, Money-Out, Money-Stored.  Numbers, numbers, numbers.  T’is the beginning, the middle and the end of what virtually all financial services folks focus upon.  Their business models know no other.

For some, though — yours truly and a few others — while very important and quite foundational, numeric financial health is by no means the full story.  Because, as it turns out, to get the full financial health story, one has to venture into the world of non-numeric financial health …

The Non-Numeric Side of Financial Health is All About How Comfy We are in Our Economic Selves

The non-numeric side of financial health has to do with the way in which we make our economic way in this world — the way in which our economic self exists within the world at large and, more importantly, the way in which our economic self co-exists with all of our other selves.  It turns on this question: is what you’re doing to bring money into your life and to then ship it on out of your life working for you?  Is that day-to-day dollars-in/dollars-out siphon giving you a grin, or is it giving you a grimace?

Or, more forcefully, is your economic self just-all-getting-along with your other selves, or is it, because it is anathema to your happy place, single-handedly wreaking havoc within you, and, in general, drilling a hole in the lining of your stomach that threatens to break on through to the other side?  After all, if what you’re doing day-in and day-out to make your economic Money-In/Money-Out economic way in this ol’ world of ours is conflicting with everything that makes you tick, can that be financial health?

So the idea here is that, somewhere out there, each of us has within us a happy integration between all of our selves, where our economic self is totally consistent with who we are, and in fact amplifies and reinforces the happiest parts of our selves, generating an ever-so-sweet virtuous circle.

Non-numeric financial health, then, is about pretty much everything other than the numbers involved in financial health.  So no numbers about it, is your financial life a good or great part of your life, or is it something that is besides the point, or worse, something that is dragging down the whole thing?

Some Holiday Examples of Non-Numeric Financial Ill-Health

One need look no further than 19th century holiday mythology to find a perfect example of the difference between numeric financial health and non-numeric financial health.  I refer, of course, to Mr. Ebenezer Scrooge, the prototypical miserable miser, he of terrific numeric financial health but of failing non-numeric financial health.  There he was, with all the money he could hope for, yet, in spite of (because of?) all that, he suffered away his days as a money-lusting workaholic inside of a life completely free of love and human warmth and companionship — but with oodles and oodles and oodles and oodles of money money money money (sung to the O’Jays tune For the Love of Money; see itat ).

One can also look to 21st century holiday mythology in the making.  I refer, of course, to one Mr. Bernard Madoff, another fellow whom we may surmise had tons of money — exceedingly ample financial health of the numeric sort — yet who apparently lived his life as a horrifically scarred economic being, the cause of which psychoanalysts, laypeople, anthropologists, philosophers, lawyers, sociologists, and, yes, most of your friends and neighbors as well, will be debating for years to come, but which we can all agree was non-numeric financial ill-health of the highest order, yes?  His economic self was, we may surmise, at war with his other selves, for how else could someone entrusted with so much be so utterly free of trustworthiness?  And how could someone who apparently so strongly desired to give people what they sought from him end up doing his job in a way that so absolutely assured that he would give them exactly the opposite of what they sought out from him?

Now those are all pretty extreme examples.  So let’s bring this on home, shall we, and let’s do that by connecting it all with The First Week of January Test, OK?

Nothing Helps You Cozy Up to Your Non-Numeric Financial Health Better than the Feeling You Feel the First Monday of the New Year

Hopefully you were able to read all about, and do, The First Week of January Test earlier this week via Part 1 of this two-parter group email — before reading this Part 2.  The idea of the test is that, after a long holiday season, and with the new year spreading out avast a’fore ye matey, Part 1 might have succeeded at catching you at a special moment in time: at a time when you were at your most back-in-the-saddle-but-not-yet-fully-back-in-it-yet self, having had some time off over the holidays and having been able, more so than usual, to leave your day-to-day Money-In/Money-Out world behind — having been outside your normal economic self, if only for a little while.

And then slam bam, thank you Sam and thank you Cam, you’re back in it, back in your economic life, doing what it is you do to keep your day-to-day Money-In/Money-Out siphon siphoning.

That return to your economic life is telling; the absence of it, as it happens, makes the presence of it all the easier to see and to understand.  It’s similar to how acute bouts of ill-health make us appreciate, all the more, our accustomed-to level of health, whatever that level might be.  And taking that thought it to its logical extreme, it’s also a lot like how experiencing someone else’s demise makes us appreciate, all the more, our living.  Breathe in, breathe out, from your very first breath to your very last, most of us don’t attend to that in-out very often, until, that is, the risk of it stopping snaps us to — if only for a moment.  You truly don’t miss your water ‘til your well runs dry.  How twue, how twue.

So say what you will about the holidays — whether you had a great time or an awful time, a family-filled time or a family-free time (and, if the former , whether you had a isn’t-it-fun-to-be-with-the-family time or a how-do-I-always-forget-how-rotten-it-is-to-be-with-the-family time) — but, please, also acknowledge that the holidays are totally fab at helping us get, upon our return, a good look at the day-to-day life we have built for ourselves, and to see it all anew.

So how did it feel?

Hmmm …

The Limits of Generalism

One of the challenges of writing group emails — and, indeed, of doing the work I do — is finding generalities and common themes that apply to all.  As someone with a hyper-liberal-arts’y background (at Grinnell College, you cannot major in a subject that has more than one word in its title … ) and as someone with a generalist bent, that suits me just fine.

But, in general, sometimes you can take generalism only so far, so here we are going to divide the conversation into two groups and have a little chunk of this email pertain to each.  The two chunks are (1) those who work for a living and (2) those who, for one reason or another, do not.  That pretty much covers it, yes?

And, please, if you have the energy, don’t skip over the chunk not directly applicable to you, because that that’s- not-me perspective can be helpful to you in improving your overall financial health.

The First Week of January Test for Those Who Work for a Living

If the day-to-day Money-In/Money-Out routine to which you returned involved working for a living (great phrase, isn’t it?  Yet another topic for a group email … ), then the odds are high that this past Monday morning saw you back in the saddle at work — the ultimate Money-In aspect of life.  How did it feel?

First things first, though, we must ask the threshold question: when you looked out into the year, did you even see a job?  Right now a lot of people are looking into the year and seeing no job, or seeing the threat of no job.  If that’s you, then your financial health requires that you be proactive; you must be in, and stay in, action of the finding-a-replacement-for-my-money-in variety.  Because there are two options for you when the job goes away: either you fall down or you fall up.  The world will mostly (entirely?) let you fall down, so your task is to increase the odds that you will fall up.  And that takes vigilant effort on your part.

One good that can come from bad economic times that shrivel jobs away is that some (many?) of those whose jobs get yanked away will ultimately find improved financial health of the non-numeric sort because, as Richard and Linda Thompson might paraphrase it, sometimes getting pushed is exactly what it takes because many of us simply don’t have it in us to jump.  In fact, there are many people out there for whom losing a job was the best thing that ever happened to their non-numeric financial health.  I know some of ‘em quite well …

Second things second, we ask the other questions, beginning with this one: if when looking out into the new year you saw a nice secure job throughout, then did you see a lot of great work spreading out in front of you, that made you smile and feel happy, or did you see a lot of work you’d really rather not be doing, thank you very much — work that you do simply because it pays the bills — and did that thought make you frown and grump or, worse, did it make you experience hatred and gut-wrenching anger?

If the former, kudos to you because your financial health of the non-numeric variety is strong; you are fortunate, perhaps more than a bit dumb-lucky, and probably nicely skilled at designing your life.  If the latter, fear not; excellent non-numeric financial health is quite rare, so you’re normal for not having bundles of it yet, but fear not also because the odds are that, if you set out to do so, you can improve your non-numeric financial health, maybe even passing The First Week of January with flying colors come Monday, January 4th, 2010.

Whatever the case might be, if you need to work for a living, you owe it to you and to your financial health to make that living in a way that provides you with the sort of sustenance that you need — whatever that might be — and not merely dollars with which to put shelter over your head, food on your table, clothes on your back and medical insurance in your Come-What-May.

It’s often hard, but, man oh man and woman oh woman, is it ever worthwhile.

The First Week of January Test for Those Not Working for a Living

If the day-to-day Money-In/Money-Out routine to which you returned did not involve work, and if your numeric health is OK (i.e. you are not working and have enough money to last as you long as you need), then the questions are mostly different, getting to a broader version of your economic self, which I refer to as your fish-gotta-swim self.  By this I mean that most human beings are fairly well hard-wired for accomplishing — so much so that, even when they don’t have to be in accomplishment mode for purely economic (shelter, food, clothing, health care … ) reasons, they still find themselves feeling best off when they are seeking to make something in the world — their world — different from how it would be absent their efforts.

Now for some folks that might be a difference that is as self-contained and as seemingly inconsequential to the world as the stereotypical improved golf game, but for many others it might be the proverbial making a difference. Either way is great (no value judgments here): the fish is swimming, so to speak, i.e., the human is accomplishing in a way that satisfies the accomplishing urge in the human.

The questions that come up for these folks via The First Week of January Test, then, are quite different from the questions that come up for those who are working for a living, with the broad question being this one: when you did the test, did you see a lot of worthwhile activity in front of you?  Did it make you smile and feel happy?  Or did you see a lot of nothingness out in front of you, and did that make you feel uninspired and deflated?

If the former, kudos to you; you are a swimming fish, propelled by something internal that works for you; if the latter, why then, that’s exactly what brand new, vessels-waiting-to-be-filled years are all about.  Please enjoy the filling and appreciate how your numeric financial health provides you with opportunities not available to most people.  And please use those opportunities well!

The First Week of January Test for Those Who Spend

Having looked at the Money-In aspects of The First Week of January Test, we now turn to the Money-Out and Money-Stored aspects — but only briefly because The First Week of January Test is mostly about the Money-In/making-a-living choices we make.

Our Money-Out choices are the most salient part of our economic selves because we do the actual thing — the actual act of departing dollars from our lives — every day, often many times a day, whereas the Money-In and Money-Stored parts of our economic selves are inherently relegated further into the background.  After all, did you get paid today?  If so, how about yesterday?  And how about tomorrow?  And did you tally up your net worth today?  No, right?  But did you spend some dollars today?  Yes?

Clearly, not many days go by during which we don’t actively depart some dollars from our lives.  Yet, even though it’s such a salient part of our economic lives, for most people doing The First Week of January test the Money-Out side of things doesn’t come up.  For them it’s just not that top-of-mind.

But for people who have Money-Out issues, or who have the ultimate Money-Stored issue that results from consistent long-term Money-Out issues — having a negative net worth — it can easily overshadow everything else, so it can in fact be the first, most top-of-mind thing that comes to mind when they take the test, as in, This year I will pay down my debt by 20%, or, This year I will save 10% of all my money-in and if I get behind on that goal then I will stop spending money on [you fill in the blank].

So, even if Money-Out didn’t come up for you, ask yourself this: do you feel like your spending is smart?  Or is it out of control?  And is it consistent with the other parts of your self?

And more specifically, are you dreading the January credit card statements?  Or are you feeling like you nicely controlled your holiday spending given the context in which we all found ourselves?  And then there is a very specific, very salient spending issue that dominates the financial health of folks who have the “T” word in their lives: when you took the test did you see big tuition bills out in front of you this year?  If so, did they make you squirm or did they make you say to yourself something along the lines of painful-but-can-do?  Or did you instead find yourelf contemplating whether this year marks the right time to consider pulling the plug, biting the bullet, and having the tough conversation because, after all, a good education can come from the educatee as well as from the educator?

And drilling even further into the non-numeric, do you feel like every dollar you spend is a vote well-cast for the type of world you want to live in?  Because it’s true, isn’t it, that every dollar we spend is a vote for the type of world we want to live in?

So that’s Money-Out.

We’ll conclude with Money-Stored, which provides the much needed crescendo and sweet unifying that endings require.

The First Week of January Test for Those with Money-Stored

Now, for a lot of folks the first thing that came to their mind when taking the test, especially given that they think of me as a financial guy, was, How the hell am I ever going to make up this 40% down hit I took in the stock market.  I mean, correct me if I’m, wrong, but it takes a 66.666667% up thrust just to get even, right?

There are no easy answers to that question, other than this: time — and lots of it — and a dash or two of changed expectations/changed lifestyle.

It’s also helpful to think about the good news scattered here and there, inside-out though it might be.  For instance, one piece of good news is that we have all learned more about risk lately — and learning is good, right? — and about how much risk each of us can actually stomach having in our life.

Other good news is that we just had meted out, pretty much against all of us and fairly evenly, one of the worst Money-Stored blows that has ever been meted out, and we are all for the most part still standing — dazed and stunned, perhaps, but definitely still standing and still breathing.  Check it out: breathe in, breathe out, breathe in, breathe out.  Still happening, right?  Working right as rain, yes?

And drilling further into the non-numeric, maybe some of us have found that Money-Stored, and its cousin, Money-Out, just ain’t what they’re cracked up to be?

Indeed for some people, having been pushed to a 40% lower Money-Stored figure rather than having chosen to jump (no unfortunate second-meanings intended), the view from our currently less-money-infested environment has served, much like the shock of returning from holiday, to illuminate what is important, and what is real.

And that might be the most wonderful silver lining of all, as people come to realize, as Scrooge eventually did, that an unfettered and unquenchable lusting after money money money money, without something of a higher meaning involved, can do great harm to all it touches, and that what really matters, though different for everyone, is at least one step — and often many, many steps — removed from money money money money.

So as a final leg of The First Week of January Test, please ask yourself this, and add your response to whatever you did with the test previously:

What matters?  What really matters?

Sitting here during this first week of January 2009,what truly matters to me?

And how am I going to make sure that I fill up my 2009 with what truly matters to me, so that in January 2010

I can say to myself:

Well done.  Jolly good.

And, yes, let’s do take it up another notch or two or three this coming year.

Because more of *this* really *is* better.

*  *  *

Cheers, all, and may your results for The First Week of January Test start out great and get greater year after year after year after year …



Leave a Comment