Safety Rules

We’ve been doing some boat work around here for the past several days. It’s hot, dirty, hard work that is sometimes dangerous. When working with heavy stuff under load it’s very important to follow several safety rules:

Never exceed the safe working load of a line

Never work in the bight of a line under load

Never try to control a loaded line with your hands, take a couple of turns on a winch or cleat

Always have an exit strategy

It occurs to me that this same thinking should apply to your money.

The real heart of these safety rules is Anticipate and Plan for the Worst.

We don’t seem to have a problem doing this when it comes to our physical safety, we wear seat belts and bike helmets and tread carefully on wet floors; but when it comes to our money and our life, most people I meet are unrealistic optimists.

If you are spending money on Baby Einstein DVD’s but do not have adequate term life coverage in place, you are an unrealistic optimist. I don’t care how bright your 4-year old is, she won’t be able to support herself should something happen to you.

If you are mindlessly accepting student loans for your private school degree in Underwater Basket Weaving, you too are an unrealistic optimist. I have no argument with the degree – only the fact that you are going into debt without any realistic plan of how you will repay it.

If you buy a house with no savings, less than 20% down, or mortgage to the hilt the home you already own; what is you exit strategy should you need to move?

If you are loading up the future you with consumer debt so you can have the latest gadget or car today, how do you know that in the future you will have the money to pay those bills?

Buying life insurance will not cause you to die. Planning for a layoff will not get you fired. It is not morbid or pessimistic to anticipate the worst; it is adult.

Is it time for you to grow up?