In 2001 the Oakland A’s were coming off an incredible season. They won 102 games and were set up to become a dynasty with a core of young players. Unfortunately finances doomed the A’s and several of their best players were pilfered by wealthier teams. They entered the 2002 season expected to be one of the worst teams in baseball, until they decided to do things differently. Their story of the 2002 season is chronicled by Michael Lewis in the book and movie Moneyball.
Forget The Rules
If you are fed up with the way things seem to work, with being overworked, broke, underpaid and frustrated with the financial status quo in our culture this book is worth your time. Led by their mad scientist/number crunching general manager Billy Beane, the 2002 A’s won 103 games (out of 162 games), won their division, made it to the playoffs, won a record 20 games in a row, all with a total player salary of around $40,000,000 and after losing three of their best players to free agency. $40 million sounds like a crap ton of money to win baseball games, but it isn’t when you consider that the Texas Rangers in the same season had a salary of $105 million and won a whopping 72 games.
What Oakland accomplished in this one baseball season is remarkable, because they completely changed the way baseball was played forever. They changed what people assumed it took to win, they changed the rules. By rejecting the status quo they found value in players who were thought to be worthless. At the center of their discovery was that the way baseball players were traditionally valued was hokum, and had very little to do with what it really took to win baseball games.
Change Must be Embraced
“No matter how successful you are, change is always good. There can never be a status quo. When you have no money you can’t afford long-term solutions, only short-term ones. You have to always be upgrading. Otherwise you’re f*%$*#.”-Billy Beane.
We often assume that change in regard to our personal finance is a bad thing, we value consistency, that which is known and we assume can be trusted. Whether we would care to admit it or not, we love the status quo, because it makes us feel safe. It also gets us off the hook for looking at our own financial picture and admitting that there is room for us to do it better. Let’s take a quick look at the financial status quo in our country:
- In 2008, US credit card debt reached $972. 73 billion. The average credit debt per household was $8,329.
- Fifty percent of Americans have less than one month’s income saved for a rainy day.
- The average student loan is US$23,186. Americans collectively owe more than US$875 billion on student loans.
- Fifty-seven percent of households don’t have a budget.
We continue to have financial expectations that are hurting us. No you don’t have to go to a 4 year institution and take on debt. No you do not have to have an iPad, iPod, iPhone and mac book pro to go along with your giant house that you can’t really afford but feel you deserve. It is time for us to dramatically change what the status quo looks like. If you’re tired of your situation, change it, it is more in control than you would probably care to admit because if you did it would mean you probably aren’t the savvy person you thought you were.
If you challenge conventional wisdom, you will find ways to do things much better than they are currently done.-Bill James.
Conventional wisdom would say that we get a job after college, work until we are 65 and then enjoy some semblance of a retirement. Most of us have even less ambitious aspirations than that. Some of us have actually resigned ourselves to working into our 70′s or 80′s, where does that come from? Who says that you can’t retire as a millionaire if you only make $30,000 a year? Where is that written? Think you can’t retire by 30, or 40? Well there are a few financial bloggers who would care to disagree because they chose to reject everything that has been written about conventional personal finance.
The same can be true for you, and if you make it you will have done something remarkable, freed yourself from a system that is broken. Who says you can’t save 50% of the money you make? Who says you have to pay thousands of dollars a year for your cell phone, or for cable TV, or for new cars? When you change the rules of the game you give yourself a better chance to succeed and you find a better way to do things.
What are the rules we have just come to accept? What are you doing to change the personal finance game?