Tuesday, July 31, 2007

Best Posts from the 111th Carnival of Personal Finance

Thanks to Plonkee for hosting this week's Carnival of Personal Finance. He adds a nice British flair to it with his Glastonbury Festival theme.

My contribution was When Less is More, a reminder about keeping in mind the purpose of money and why more isn't necessarily better.

My picks for best posts from the carnival are:

  • Money and Happiness at My Money and My Life. She writes about Jean Chatzky's book You Don't Have to Be Rich which talks about how, after a certain point, money doesn't really make us that much happier.

  • Lifestyle Inflation by Amy Fontinelle at savingadvice.com. It's about how lifestyle inflation can easily sneak up on us. She has a few pointers on how to avoid it.

  • Personal Rate of Return at The Financial Buff. He talks about the difference between Time Weighted Rate of Return and Dollar Weighted Rate of Return and how they should be used for different purposes.

Wednesday, July 25, 2007

When Less Is More

The other day, I received a newsletter with a story that some of you may have read before:

An American tourist was at the pier of a small coastal Mexican village when a small boat with just one fisherman docked.

Inside the small boat were several large yellowfin tuna. The tourist complimented the Mexican on the quality of his fish and asked how long it took to catch them.

The Mexican replied, "Only a little while."

The tourist then asked, "Why didn't you stay out longer and catch more fish?"

The Mexican said, "With this I have more than enough to support my family's needs."

The tourist then asked, "But what do you do with the rest of your time?"

The Mexican fisherman said, "I sleep late, fish a little, play with my children, take siesta with my wife, Maria, stroll into the village each evening where I sip wine and play guitar with my amigos, I have a full and busy life."

The tourist scoffed, " I can help you. You should spend more time fishing; and with the proceeds, buy a bigger boat: With the proceeds from the bigger boat you could buy several boats. Eventually you would have a fleet of fishing boats. Instead of selling your catch to a middleman you would sell directly to the processor; eventually opening your own cannery. You would control the product, processing and distribution. You could leave this small coastal fishing village and move to Mexico City, then Los Angeles and eventually New York where you could run your ever-expanding enterprise."

The Mexican fisherman asked, "But, how long will this all take?"

The tourist replied, "15 to 20 years."

"But what then?" asked the Mexican.

The tourist laughed and said, "That's the best part. When the time is right you would sell your company stock to the public and become very rich, you would make millions."

"Millions?...Then what?"

The American said, "Then you would retire. Move to a small coastal fishing village where you would sleep late, fish a little, play with your kids, take siesta with your wife, stroll to the village in the evenings where you could sip wine and play your guitar with your amigos."

I found it to be a reminder that sometimes we have our priorities mixed up. If our goal (whether conscious or not) is to make more money to be able to afford a better lifestyle, we shouldn't forget what we're giving up in order to get there.