Category Archives: Change

Posted on

The Power of Opportunity Cost & Why You Should Use It

by

Writing this article has been on my task list for over three months. I chose to do many other things instead of writing it. I will come back to this at the end…

What on earth is opportunity cost?

Opportunity cost can be defined as:

The value of what you have to give up in order to get what you want.

Another way to say this is that opportunity cost represents the benefits you give up in choosing one option over another option.

It can be difficult to identify opportunity costs when the benefits of the alternative choices aren’t easily measurable. Fortunately, some alternative choices are easily measurable. Let me give you a couple of examples.

Smart Phone

I first encountered the concept of opportunity cost in economics. It is rather easy to see when you put it in terms of money. If I spend $1,000 today on a new smart phone, that is $1,000 that I cannot invest in a stock mutual fund (for example). Doing a quick financial calculation, if I take that $1,000 and invest it in a mutual fund earning a 6% annual return compounding monthly, in 20 years the value will be $3,326. So the opportunity cost of purchasing the new smart phone today is $3,326 in 20 years. Of course, there is value in me having that smart phone today, so I may still choose it. I will just be better informed about the actual opportunity cost of that choice.

It’s a New Car!

One more financial example.

As a young person, I felt it necessary to always drive a nice, new car. I never had the money set aside to be able to pay cash for a nice, new car, so I financed it (aka I went into debt). This means I had a fat monthly payment to make to the lender that funded the loan on the car. The financing was typically four years. I had to make 48 monthly payments before the car was really mine. This reminds me of the old saying “I owe, I owe, so off to work I go.”

As vehicles became more and more expensive, car dealers began working with their finance arms to offer increasingly long loan payoff terms. This was to keep the monthly payments “low.” That meant that to buy a new SUV, I might be making that monthly payment for six years or even seven years.

Let’s not get too crazy with this example. I am going to use the four year loan length. Let’s say I buy an SUV for $40,000. I finance all of the price at 6% interest for four years. My monthly payment is then a whopping $939 per month! On top of that, I still have to insure it, register it, maintain it with oil and tires, repair it when it breaks down, and keep it gassed up. That is quite a commitment.

The problem with a vehicle is that it is a depreciating asset. It goes down in value with each passing day. Eventually, it will be worth nothing. How do I know this? Most of the vehicles I have purchased are now rotting in a junkyard somewhere or have been crushed into large cubes. The same can be said of the smart phone. It will eventually be worth nothing.

Thinking in terms of opportunity cost, what would that $939 per month car payment be worth if invested in a mutual fund with a 6% return compounding monthly? In four years it would be worth $50,819.

When I was buying cars this way,  there was a related problem I faced. After about four years I was ready for a new car. After all, the new car smell had long since vanished. The paint had a scratch or two. So I repeated the process. I bought into the idea that “I will always have a car payment.“

So let’s go with that logic and assume that I will continue making that $939 car payment every month for 20 years. When we do that math, at the end of 20 years I will own a fourth “new” vehicle that is worth a lot less than when I bought it. That is what a depreciating asset is after all.

If instead of purchasing vehicles this way over the 20 years I instead invested that $939 per month into a stock mutual fund with a 6% annual return, my value in 20 years would be $434,000. Guess what? I could then remove $40,000 cash from my mutual fund and pay cash for a brand new vehicle.

“Wow!” you say. “Why doesn’t everyone do it  this way?”

For several powerful reasons:

  1. To actually do it this way you have to delay gratification and possibly drive (G A S P) an old car you pay cash for. Definitely no new car smell there.
  2. To do this you have to be able to withstand the constant marketing and advertising of some of the smartest people on earth whose job it is to get you to “need” that new car smell. Think white Lexus, huge red bow on top, and snow lightly falling on you and your golden retriever.
  3. Finally, you have to overcome the peer pressure that might come from those who could look down their noses at you for driving something they view as beneath your station in life. What would the neighbors say?

Once I really learned the lesson about opportunity cost with regard to cars, I became a little obnoxious about it. In an effort to  help my kids learn the lesson, I would sometimes look at a parking lot full of expensive cars and say something like: “Look at all those beautiful depreciating assets.” They were not that amused.

One reason few of us do the opportuntiy cost calculations above is that there is indeed value in doing or enjoying something today. Driving in that new car smell, getting the latest smart phone, or having that daily cup of joe brings a certain amount of pleasure.

The concept of opportunity cost is not limited to financial matters. The reason I am a guitar plunker with a very limited skillset is because 10 years ago I prioritized other things above playing guitar. Those things may have been more important, but I still chose them over guitar. I wonder how many things we could all learn and accomplish if we didn’t binge-watch streaming entertainment? It takes a certain amount of vision to see beyond the present moment and to see what this moment could lead to if I chose a different opportunity.

In chapter 11 of my book Forward Story I write about vision: “Your mind has an amazing ability to visualize a future that has not yet occurred.Some of the greatest inventors and entrepreneurs that have ever lived had the ability to visualize their invention and how others would use it. They could see how it would make peoples’ lives better before it ever became a product. That is vision.”

You and I likewise have the ability to develop the vision to see the opportunity cost in anything we buy or in any way we spend our time and talents. We must nurture that kind of vision.

Conclusion

Back to the point I began with. Writing this post has been on my list for over three months. The reason it was not written before now is that I took the opportunity to do other things with my time. The reason it is being written now is because I chose it over all of the other things I could have done with this time. Such are the decisions we make.

My encouragement to myself and to you is to be more intentional about the opportunities we take. Pay attention to opportunity cost. Ask “Is this the best and highest use of my time, money, and talents? Ask “What am I giving up or postponing by choosing this option?”

Posted on

Rescuing Rhett

by

On Monday, April 4, 2022 an era ended for our family. Our beloved corgi Rhett passed away peacefully at home in his sleep in his favorite sleeping spot. That he had such a peaceful passing was a great mercy to us. He removed the trauma that we dreaded.

It is the end of an era because he was the final packmate of the trio that included our other beloved corgis Fiona and Toby. Those two were our originals that we adopted when our children were still young and at home. Rhett joined their already well-established pecking order and found a way to fit right in. For the next many years our house was a flurry of furry activity. It was equally noisy and enchanting.

Rhett’s life began at a breeder operation about an hour from us that was dubious, to be kind. To not be kind, it was a puppy mill. Our daughter was at college and wanted a dog to keep her company. She loved our other corgis, so I began looking for corgis in our area. I found this breeder online. We drove there to meet Rhett for the first time. He had been born in October, so he was only a few weeks old when we met him in November 2009.

We waited in the office while Rhett was brought in to us. He was so tiny and so precious. It was love at first sight. Honestly, how can you not fall in love at first sight with all puppies? I requested to see the mother and father (or dam and sire, if you prefer breeder talk). The woman was very reluctant to let me see them. I insisted. She took me back through a maze of dilapidated buildings to a ramshackle shed where this poor mother dog was living in what appeared to me to be squalid conditions. It made me sad. It also made me angry.

I have titled this article “Rescuing Rhett” because once I saw the conditions in which he was born, I intended to rescue him as soon as possible to give him the life he deserved. I was able to do just that on December 10, 2009. I drove down there with a new crate and brought him back to our house. After Rhett was safely in our lives, I also filed a complaint with the authorities about the abysmal conditions at that facility. I never got closure on that, but in my mind I hope that is reason there is no longer any online presence for that breeder.

Off Rhett went to college with Kellen in January 2010 as a very young pup. It was in Lubbock, Texas that he provided love to a college student far from home. There he learned to chase frisbees, go on walks, and keep watch over the apartment as his Mom was at school. Later our son also joined our daughter at college in Lubbock, and he spent a lot of time with Rhett as well.

Every pet has unique characteristics. Rhett had many. One of his most endearing was that when he was picked up and held, he would put his chin on your shoulder facing backward. To us it seemed like a hug, so we would ask him, “Hugs?” Then he would dutifully allow us to pick him and up and hold him in that embrace. He was especially willing to give hugs to Kellen and Matt.

I have lost some of the exact chronology, but once Kellen finished college she and Rhett moved home and lived in an apartment. Then, through an apartment change that allowed no pets, it made sense for Rhett to come live with us and join the existing pack of two with Toby and Fiona. After a short adjustment time, the three of them had the pecking order worked out. Fiona was the Alpha and in charge, but she allowed Rhett to wrestle with her and chew on her a little. There was a limit to that, however, and she would let him know when he had crossed the line.

At various points both Kellen and Matt lived with us and our pack for short times while they were getting started in their careers, so all of us got to enjoy the corgi pack. We have special memories of all three dogs interacting together. Corgis are such entertaining little beings.

In August 2015 Fiona was the first of our pack to cross the Rainbow Bridge. Toby and Rhett became closer and inseparable.

One story from that timeframe. In July 2016 some friends visited us from out of state and stayed at our house. One of the children in that family left her bedroom door open with a suitcase on the floor. Toby, who was always food-crazy, found a package of sugar-free gum. He recruited Rhett to help him devour the package. When we discovered this situation, we realized that the gum was sweetened with Xylitol – very toxic to dogs. Given that it was a weekend, we had to take them both to the emergency veterinarian. When all was said and done, the final tally was $3,646. That was a very expensive pack of gum! From that point forward our vet clinic referred to Toby and Rhett as “The Xylitol Twins.”

We lost Toby in April 2018. He had been our first corgi. As with Fiona, it was very painful to let him go. Our house was much quieter with only little Rhett left. He was never a loud dog, except for four triggers which would set him off. We are certain that he learned his hatred of all three from Fiona. If you wanted Rhett to bark and make a racket, just put a new trash bag in the garbage bin, run a vacuum cleaner across the floor, set up the ironing board, or fire up the hair dryer. I am sure Fiona was proud of her understudy as he faithfully maintained her legacy.

In April 2019 Rhett was diagnosed with Progressive Retinal Atrophy (PRA), a genetic condition allowed to occur because of the unethical breeder, who did not do needed testing before breeding the sire and dam. Our veterinary ophthalmologist explained that every puppy born to that mother and father will have developed PRA. It leads to blindness, and there is no cure.

So, the last few years of his life Rhett was in near-total blindness. It was amazing to see him use his senses of smell, hearing, and touch to compensate for his loss of vision. We had a dog door onto the back patio and into the back yard. Even with his deteriorating sight, he would easily go out and spend hours on the patio enjoying the great outdoors. He had every square inch of that house mapped.

Then in July 2021, we moved into a new house. The back yard is steep enough to require stairs. Stairs are one obstacle Rhett could not master. It was too dangerous. So there was no dog door for him at the new place. Even so, after a couple of challenging weeks, he adjusted beautifully to the new house. The covered back patio was a place he really enjoyed hanging out. We installed a gate so he could not wander onto the stairs. He really enjoyed spending time on that patio and feeling the breeze. He loved being with us and was our constant companion. He was an important part of our human pack.

A couple of additional observations about Rhett. He hated riding in the car. By the time we got him to the vet, he was incredibly stressed and shaking. Like I said, dogs all have their own little idiosyncrasies. Also, when our young grandson would visit us and eat in his high chair, much of what was intended for his mouth ended up on the floor. This was fine with Rhett, who hung out underneath and kept the area clean.

As I already mentioned, even though Rhett was a quiet dog, he was not silent. Our house is now much quieter. There is no more clicking of nails on the floor. There is no more shaking of his collar tag. There is no more sprinting for doors that are opened. Of course, we think of him anytime we vacuum, dry hair, or put in a new trash bag. It is quiet. There is also no longer a faithful companion waiting by the front door or the garage entry door for our return. 

I must thank my Dad for helping take care of Rhett each time we were out of town. My Dad is a definite “dog person.” He had a special place in his heart for Rhett. I know he misses him, too. I also want to thank him for being there for me as we laid Rhett to rest under his and Mom’s Memorial Oak. It is a perfect place where Rhett joins their beloved dog Prissy and Charley the cat, as well as my sister’s cats Buddy and Sasha. Margot and I are grateful.

As with Fiona and Toby, I once again want to thank Dr. Todd Rabon at VCA Premiere Animal Hospital for his compassionate care for Rhett.

At the end of this era, what did Rhett mean to us? He brightened our lives with companionship and happiness. He was important not only to Margot and me, but also to Kellen and Matt. As with Fiona, Toby, and all of the special cats we have had, we stand in admiration – no, we stand in awe – of God’s creative work.

I miss you, Rhett. I love you, buddy. Thank you for sharing our lives with us.

Posted on

It’s Time for a New Story

by

Photo by Max Saeling on Unsplash

The most powerful thing about a story is that it can make you believe. When you write a story about your future, you are committing to paper a vision for what you want to accomplish. A goal is an example of a story. The way I write my Forward Story is to create a comprehensive view in different timeframes of what I plan to accomplish. This includes many goals, objectives, etc.

I revise my story annually. At least that is my desired approach. I do not do this perfectly. For the last few years my wife and I have been working toward the completion of one of the major chapters in our life. This chapter has been primarily financial – overcoming many years of bad financial habits and decisions and getting back on course. Since this has been a dominant theme in our lives, the story has not changed that much.

Within the last year we have achieved what for a long time appeared to be unlikely. It was not easy, but we have now reached a new stage. Even though we are smack in the middle of the year, I realize that I need to revise my Forward Story now. I do not need to wait until the end of the year.

I will go back to the process I lay out in my book and begin doing a revision that will help me get my new bearings in this new reality.

Next post about the re-write

Where are you in your story? If you are ready for a re-write, there is no time like the present.

Posted on

Life Happened for Sean Adams

by

Photo courtesy of AM 1300 THE ZONE‏ @am1300thezone

Austin media personality Sean Adams passed away yesterday at the age of 46. That could be one of those impersonal headlines that you see and think nothing of. For many people in the Austin area it is very personal. It is for me.

I recently wrote about change. Yesterday things changed for a lot of us.

Sean and I were not close friends, but we knew each other and liked each other. I went to church with him for many years and always admired him. There were many exceptional things about him. He was a great son, husband, father, and friend. He took all of those roles and responsibilities seriously. He was a man of faith, and he had a remarkable breadth and depth about him. He had talent coupled with a terrific work ethic. He and Chip Brown in the mornings were a special team discussing sports. There was true chemistry there, and it was great to listen to. It was a morning staple for many of us. It was about more than just sports – it was sports generously seasoned with wit and wisdom.

I had lunch with Sean a couple of times at his favorite restaurant, Cover 3. We talked about our families, business, and he encouraged me when I was writing my book. He was also an encouragement to our children. When I got the stunning news yesterday about his passing, I looked at my text message history with him. There is nothing profound there, but I will always treasure it.

My heart goes out to Karen, Damon, Alex, and Sean’s mother and siblings. I also grieve for Chip Brown, Mike Hardge, Mike Weigand, Anthony Williams, Thomas Graham, Geoff Ketchum, and all of the other many people who shared a close bond with Sean. He had a lot of true and genuine friends all across the country. You cannot say that about many people.

My lasting memories of Sean will be his faith and his heart for elevating others to higher planes. He was famous for the wisdom in his many sayings. They will stick with me.

Here are a few of my favorites:

  • “The dream is free, the hustle is sold separately. Go to work.”
  • “Do something good for the world today, because the people who are making it worse aren’t taking the day off.”
  • “Everybody dies, but not everybody lives.”

Photo courtesy of Enrique Garza‏ @goodstuffcvms

He and I also shared a perspective on the value of sports. He spoke often of the huddle. The huddle is sacred, he would say. It is the one place where northerner and southerner, rich and poor, black and white, conservative and liberal, come together, put their arms around each other, and bond for a common goal. They sweat and bleed together, and special things happen.

Sean often said: “Life happens for those who show up.”

Sean showed up.

Life happened for him.

Thanks for showing up for all of us, brother. Rest in Peace.

Posted on

Changing Seasons

by

As we approach the end of summer with the autumnal equinox, I find myself appreciating the changing of the seasons. Here in Texas we usually have a hot spring followed by a scorching summer followed by a hot fall. Even here, though, the changing of the seasons is noticeable if you pay attention.

Moving into autumn the daylight is getting shorter. The morning temperatures are a lot cooler. The trees are starting to think about changing colors. The Friday Night Lights start to glow (in this region that is actually part of nature). Until I started gardening I did not pay much attention to the seasons. I now find myself feeling more tied to light, darkness, rain, temperature, planting, and harvesting. Just about the time I am getting tired of the long hot days, they start getting shorter and cooler.

The changing seasons are a metaphor for life as well. I have never met anyone who truly loves change, at least not all change. I tend to get set in my comfortable routines and find that any change or disruption to them is annoying, even if the change is ultimately better (which it often is). Even though most of us don’t love change, we have to make peace with it because things change. It is one of the few constants.

Since change is inevitable, I try to get philosophical about it. Perhaps just as I welcome the changing of the seasons I can also welcome other types of change. There are many seasons of life that people experience. We greatly enjoyed the season of life when our children were small. When they started school that brought many changes to our lives and routines. When they left for college we again faced great change. Now that we are empty nesters and see the gray hair in the mirror, yet more change. When we face changes to the seasons of our lives we try to look for the new and exciting possibilities. It is not always easy.

My practice of writing an annual Forward Story (detailed in my book by the same name) helps with this process of change. It actually empowers me to not only think about what changes are coming, but to take some level of responsibility about how I will handle it and respond to it. It allows me to embrace change as exciting and positive. It is a choice I make.

Sometimes change is thrust on us and is most unwelcome. This is true with the death of a loved one. We did not ask for it, but it happened anyway. Many of my friends have suffered change because of a hurricane and flooding that they did not want. Change is inevitable and comes in many flavors. We are in charge of the way we respond to it.

How do you cope with the changing seasons in your life?(leave a comment)

Posted on

Are You Stuck in the Doldrums?

4 Steps to Get Unstuck

by

The word “doldrums” is an interesting one. I have heard the expression “stuck in the doldrums” from the time I was a child, but until now I never bothered to look up what it means.

What are doldrums?

It turns out that this is a nautical term. The doldrums is a region of ocean near the equator that receives very little wind, and thus is difficult to navigate. Both north and south of the doldrums the trade winds blow. These winds allow skilled sailors to coordinate sail and rudder to travel where they wish.

Put yourself back a few hundred years on a wooden sailing ship with no engine. All you have are sails. You are stuck in the doldrums. There is not enough wind to work with, and your ship is too large to row. All you can do is sit and wait.

Sit and wait.

Sit and wait.

You make no progress. You have no trajectory.

It is not hard to see why we have turned the name for this region of the ocean into a metaphor. Our modern usage of the term means that if you are stuck in the doldrums you are making no progress. For this reason you are sad or depressed.

How do you get out of the doldrums?

  1. Recognize where you are. Step back from the details of your life at the moment and acknowledge: “I am stuck in the doldrums! This environment is not conducive to my going anywhere positive. I am getting nowhere fast.”
  2. Get clear about where you want to go. You are going to get unstuck, so you ought to know where you want to go when the winds blow and you can set your jib. Prepare for what happens when you start moving. Create a vision. Write a Forward Story.
  3. Change your environment. Remember, the trade winds are just above and just below where you are stuck. The fact that you are not moving anywhere does not mean that there are not places you can be where the wind does blow. You likely need to change your current environment to get to those trade winds. Then you can travel toward your desired destination. Unlike the physical doldrums, most of us can greatly control the environment in which we live, learn, and work.
  4. Apply energy (or generate some wind). Once engines were invented and built into ships, the doldrums could be navigated. You may need the equivalent of an engine in your life to get unstuck. What could the engine be? It could be education, meeting people, becoming an apprentice, taking a second job, or any number of other practices that may help you move in a positive direction.

How do you get out of the doldrums when you are stuck there?