Then we talked about the Stages of Relationship Development. The criteria Marty and Jean established for determining the health of their relationship were the number of times they met and the number of unresolved conflicts that needed to go to the general manager. Clearly they had increased the number of times they met. They were meeting at least once a day in the morning to talk about the schedules, and sometimes they met more than once a day. They also agreed that all their conflicts had been resolved in a win-win manner. They gave me an example:
At one point, a housekeeper and a maintenance person quarreled over who was to be in the room. The housekeeper was upset because it was the last room on her shift and she wanted to pick up her child at daycare. The maintenance man needed to change the air conditioner compressor, a messy job that would take more than an hour. Jean managed to reassign the room to a housekeeper who worked a later schedule. The housekeeper was happy because she could leave; the maintenance man was happy because he could get the job done and then have the room serviced.
Investing involves small segments of society: businesses, individual farms, buildings, and entrepreneurs. Only recently, with the advent of index funds, has investing concerned the whole of a large market: the stock market. Index funds are mutual funds that buy shares in every stock in a given segment of the market. Buying index funds, you can buy a piece of the whole stock market. Still, the stock market is only one segment of society, though currently a large segment.
The investor trusts the investee. When this trust is broken, strong emotions are unleashed. Utility stockholders are furious when a utility cuts or
eliminates its dividend. When a tenant defaults on a lease and forces a property into foreclosure, the property owner has a wide range of emotions triggered by the breach of trust. Some vow never to own real estate again.
Sometimes the investment exceeds expectations. Wal-Mart investors saw their small regional chain become the largest retailer in the world. Berkshire Hathaway went from a shell company to one of the world’s largest corporations. Success triggers grandiosity in some, frivolity in others.
Many successful investors are disoriented and unhappy. However, faith is also a part of investing. The borrower, tenant, or business owner believes the application of science and technology to business practices will produce more than the sum of capital and labor, thus enabling him to pay the rent, interest, dividends, or capital appreciation plus enough for his own savings. Productivity, technology, and efficiency are the creed of investors.
Let’s look at another example. Sally is carrying a $10,000 balance on her credit card. Sally’s monthly minimum payment is 2% of the balance, or $200, and the interest rate on the card is 18% annually.
If Sally makes just the minimum payment each month, it will take her 57.5 years to pay off her balance! Not only that, the $10,000 she put on the credit card will have cost her $33,930 by the time she gets it paid off.
But let’s say Sally always makes her minimum payment, plus an extra $100, or $300 a month. In this case, it will take Sally just under 7 years, instead of 57.5 years, to eliminate this credit card debt. In addition, her $10,000 that she spent on the credit card will only end up costing her $16,000. That’s a savings of over $17,000, which could have been used to eliminate other debts sooner.
Keep in mind as well that this example used a credit card that is charging 18%. With credit cards that charge higher rates (30%+) and things like payday loans, you can spend the rest of your life trying to get caught up. In either case, you’ve got to take drastic action to cut your debt now.