Advanced Personal Finance

I don’t write resolutions at the beginning of the new year. In fact, I’m kind of anti-goal in general, but that’s a topic for another post. Even so, it does help me to periodically remind myself to not focus on things related to personal finance that I can’t control.

Things fall into two categories for me - things I can affect and things I cannot. Things I can affect largely end at my skin and I find putting energy into things I cannot affect is just a waste of effort. I didn’t come to this conclusion easily or early in my life and it’s something I can forget. But it helps to remind myself from time to time.

Here are just a couple of things I cannot affect I’ve kicked around in my own head recently.

1. Interest rates. Regardless of what I think about the Fed, foreign investors, or the U.S. government, I know without any doubt I don’t have any bearing on interest rates. Those other groups of people do, but I don’t. Thinking about how this or that event might affect rates or making investments based on what direction I think rates are going to move isn’t smart for me. None of this means I don’t care what interest rates are. Far from it. As a soon-to-be mortgagee, I care deeply. I just don’t get to decide what rate I get, so why worry about it.
2. Economic indicators. There are as many economic indicators as there are economists - and that’s a lot. Whether it’s inflation, job growth, GDP or whatever, I know what I think about them means nothing. Low unemployment rates mean nothing if you’re unemployed. You have no say on unemployment. You most certainly do have a say in whether or not you are unemployed. Focus on what you can do and ignore the rest.
3. Housing prices. If there is one thing on this list I should care about, it’s this one. We recently sold our house very quickly, but for arguably less money than we could have a year ago. Does that matter? Not a bit. We weren’t selling our house a year ago; we sold it last month. Focusing on or worry about the value of your home doesn’t do any good. In a market like this, it only makes you miserable. What’s the point of that?
4. Gas prices. I don’t drive much and that’s about to change to ‘almost none.’ Nevertheless, even if I did drive more, I wouldn’t complain about gas prices. What good does it do? What are you going to do - drive less to work? not pick up the kids after school? visit your in-laws less? Well, maybe that last one, but the fact is most people don’t do a lot of discretionary driving. You can drive a more fuel efficient car, properly inflate your tires, and combine trips. You most definitely can’t change gas prices by boycotting or complaining.
5. The direction of the stock market. If you think you know what direction the stock market is going in tomorrow, this week, or this year, you’re deluding yourself. I don’t care who you are - you can’t predict it and you can’t affect it. What you can do is invest in it, month after month, year after year. Over the long haul, you’ll make a great deal of money. In the short run, who cares?
6. Taxes. I don’t know whether my personal taxes will go up or down this year. I do know I’ll be paying taxes. Do I get a say in how much? For all practical purposes, no. Worrying about taxes is pointless. (Planning for taxes, however, is decidedly not.)

I don’t know about anyone else, but I try to spend my time and effort on things I can do something about. And these things don’t fall into that category. Shouting at the tide never works. You just end up wet and hoarse.

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