Archive for November 15th, 2008

Walk Wednesday! (The Financial Athlete #71)

November 15, 2008

Not long ago I was briskly walking through a local beach town. On my way to the beach, I passed by the town’s only elementary school. A large banner hung on the front building. Big, bold letters on the banner implored: “WALK WEDNESDAY!” Apparently, the school was on a campaign to get the kids to walk to school in the morning and back home in the afternoon every Wednesday. I thought, “WALK WEDNESDAY” would make a great national campaign to get people to exercise. Communities would organize these walks by simply establishing a predetermined hour and place for the start time, the walking route, and then allowing people walk at their own pace. This would not be a novel idea. In Germany the 10 kilometer Volksmarch (people march) is a popular outing for families.

Let’s face it: the majority of adults don’t participate in sports or any form of rigorous exercise because they don’t want to. An organized weekly walking event, on the other hand, would be a fine way to socialize while exercising mildly and safely. To walk alone may too boring, but to walk with others you hardly notice you’re exercising.

Now let’s face another fact: most people don’t want to commit the time and effort to become astute investors any more than to become athletes. These people should “walk” with their money, instead of
“run” with it. Rather than invest discretionary income into individual stocks or properties, it’s a wise choice for them to pay down debt including the principle of their home mortgage. It takes less financial education to decrease liabilities than to increase assets. All you do is pay off the debt with the highest interest rates first and shun new debt. To focus on reducing the liability side of the ledger also helps you to control unnecessary spending on consumer items. When you are done paying off debt, then your attention turns to compound interest…earning interest on the principle and interest income.

In the end, you probably won’t be as wealthy as your neighbor who made investing his hobby, but you should live a financially comfortable life into retirement without worry of market gyrations. This is similar to the person who walks daily for exercise. She does not have the physique of an athlete who regularly bikes, runs, swims, or plays sports, but she is healthy and content.