Thursday, July 1

My Frugal Miser's Best Advice I've Received - Pragmatism

The best way to define pragmatism is to be practical. When you find something that works, keep doing it. If it ain't broke, don't fix it!

I have a theory that CEO's often try to justify their extravagant compensation by thinking up the next "new and improved" idea. At my J-O-B, one of the few complaints I had was that as soon as we got good at something, one of the team leaders, usually the CEO or VP of Marketing, would decide we needed to change things. Don't get me wrong - I am always looking for ways to improve. What I mean here is, you should find what you are passionate about and become an expert at that. Keep doing it, over and over again, until you are the absolute best at whatever it is you do. In other words, don't strive for being adequate and then move on to the next challenge. FOCUS. Be the absolute best you can be.

One of the goals I set for 2010 was to reduce the amount of stock trades I placed. Warren Buffett talks about having "20 punches" - look at every investment as though you can only make 20 investments over the course of your lifetime. By thinking this way, you spend more time making sure the investment you are about to make is the right one.

This is such an important trait, one that is lacking everywhere. Remember New Coke? Coca-Cola made the fatal decision to replace its classic formula with a new and improved one, only to drop the new formula after many consumers protested. Manufacturers of disposable razors invest hundreds of millions of dollars in rolling out new razors with more and more blades. Does a five blade razor with a special soothing moisturizer strip and hydro-power really make that much of a difference? Is it that much better than its four blade, or three blade, or TWO blade predecessor?

For me, I want to constantly improve on something I know works. For example, I know I can earn a living by mystery shopping. Instead of searching for other forms of income, I am working on ways to make more money by shopping. I am creating data entry templates for shops I do in quantity to cut down on paperwork time, and I am networking with my schedulers to make sure they think of me when deadline shops are being bonused. Similarly, instead of searching for my next brilliant stock investment, I study the stocks I already own and allocate my money to the companies I feel best about.

I think we as consumers are often trained to think "new and improved" is always better than "old and works". In fact, this emphasis on change is often brought about by companies looking to one-up their competition on a vicious cycle of mediocre improvement, or worse, is a quality encouraged by the companies that are compensated by change. E*Trade only makes money off me when I place a trade, so naturally they would love for me to be a day trader. Fortunately, I know this is a get-poor-quick scheme, something I can live without.

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