Lifeboats on the Titanic of Your Personal Economy…
An interesting comment on the radio this morning sent me searching the internet for information about how the White Star Line dealt with the life boats on the Titanic. While the White Star Line spared no expense on almost every aspect of the Titanic - from dinner plates for the steegage class to the redundant power system to the uniforms of the staff and crew - it decided to use the minimum number of lifeboats required by maritime law at the time. The decision was made knowing that the lifeboats could accomodate only about 50% of the passengers.
“Why?” you ask.
Two main reasons: arrogance and arrogance.
First, the folks at the White Star Line - and almost everyone else for that matter - believed that the Titanic, with its advanced design of separately sealed compartments below the water line, was unsinkable and, therfore, that the lifeboats were redundant. Second, they thought that, if the proper number of lifeboats were added, the greatest marine vessel in the world might not look as good.
Many people handle their finances that way too.
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They accept 20th century conventional wisdom about risk managment. They focus on accululating investments and fail to prepare for the uncertainties of life - accidents, disease, divorce, job loss, children in trouble, caring for aging parents, con artists, dishonest business partners, and on and on and on. They believe they are unsinkable.
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They put aside enough money to last six months (or less) and call it a lifeboat.
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They buy some term life insurance - because some spokesperson or television pundit or captive sales rep who has nothing else to sell tells them that’s what they need - and feel they have met a lifelong obligation.
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They max out their 401(k), fund an IRA, take out an equity line of credit and run up credit card debt…all at the same time.
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In other words - they build a Titanic for themslves and their families and refuse to add the lifeboats because
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they feel invincible and because
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adding the lifeboats might make them look foolish, or at least unconventional.
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There is a better way - a much better way…lifeboats included. www.TheMoneyForLifeBook.com
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