Financial Planning and The Challenge of Sisyphus

I begin with a bit of Greek mythology. I believe it offers a keen lesson on personal finance. Sisyphus, King of Ephyra, was punished by the Gods for chronic deceitfulness. He was condemned to roll a large boulder up a hill, only to have it slip from his hands and roll back down the hill. This he did over and over … forever. This is an excellent representation of our efforts to grow and control wealth. You spend years in college and then years in your profession. You accumulate assets and pay down debt. In other words, you’ve carried that boulder higher and higher up the mountain. Then, in a relative instant, a decision or event causes the boulder to slip from your hands and roll down the hill. You might find this happening over and over again. Some examples of the boulder “slipping” might include:
  1. Mistiming the investment markets.
  2. Concentrating your assets into an investment vehicle, stock, or asset class that fails or severely under performs.
  3. Not planning for taxes properly.
  4. Purchasing the wrong type of life insurance.
  5. Stacking up debt on credit cards.
  6. Purchasing assets that decline in value rather than increase in value.
  7. Taking a loan against a 401K to purchase a depreciating asset.
  8. Experiencing a divorce or medical setback.
  9. Financing equipment in your business at year end to get a current year tax deduction (179 deduction), only to find yourself paying off the loan in future years with no corresponding deduction.
  10. Spending, spending, spending.
  11. Not helping your children learn or understand the value of money, thereby allowing your wealth to cause more harm than good in their lives.
  12. Failing to establish your estate documents, such as wills, living trusts, medical directives, powers of attorney, etc.
These are a few examples of how we at times display Sisyphus-like behavior with our finances. And our ability to accumulate wealth, retain it, and be made happier by it, depends upon our ability to avoid these mistakes. But like Sisyphus, we too can be chronically deceitful. When it comes to our finances, however, it’s generally chronic self-deception that is the root of the problem. We believe we don’t need an organized plan to accumulate and manage wealth. We believe we’ll earn tomorrow to pay for what we want today. We believe money itself will make us happier. We believe our children and grandchildren will inherently value a dollar. We believe we can successfully time the investment markets in every cycle. We believe we’ll never run into financial hardships. The solution to self-deception is honesty and a clear picture of reality. You need a plan. You need a set of values. You need a recurring reminder of why you do what you do. Why you wake up. Why you work hard. Why you value relationships. Why you need to be smart with your money. That’s one of our two fold missions here at PracticeCFO: To give the tools needed to accelerate financial independence for our doctors and help them give purpose to their money. Wesley Read, CPA, CFP, PracticeCFO
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