Racine Journal Times, WorkLife Section, October 21, 2007

What does happy look like for you?

Have you ever wondered why there are so many different diet books? Amazon.com has 232,418 books associated with the word “diet.” When I Googled “lose weight,” I got over 8 million results. If the basic formula for weight loss is, by and large, “less calories + more exercise = weight loss,” can there really be that many different ideas?

I suppose the reason for so many different ideas is that we are all truly unique from one another, and what works for some may not work for everyone.

That’s why I cringe when I hear one-size-fits-all financial advice, formulas and methodology. Similar to the weight loss formula, the basic formula for success with your personal finances is “budget + save + invest + protect = financial well-being.”

But the variations of how you can implement that formula are enormous. Since we’re all so different, that’s a good thing. Too often, though, we forget to exercise our inherent right for creative control over our lives, which means we may listen to something like, “You should save 10 percent of your income.” What if I want to save 50 percent?

One size rarely fits all

Here’s another one-size-fits-all financial tidbit: A 15-yr mortgage is better than a 30-yr mortgage because the total interest you pay is far less.

While the portion of that statement addressing the total interest paid is factual, use of the word “better” is debatable. This statement doesn’t address how high (low) mortgage rates are, whether they’re trending up or down, if there are worthwhile investment opportunities to funnel the extra payments to, your age and tax bracket, if there are one or two income producers in the family, how many years before retirement, and at least five other issues.

Similarly, the best economic choice is not necessarily the best choice for you in this moment. For example, many more Americans took out an adjustable-rate mortgage (ARM) in the past few years than ever before. Some did so upon advice that they could always refinance when their rate resets. As such, those with an ARM enjoyed a lower mortgage payment for a time, which appeared to be the best economic thing to do, right? Wrong. These folks were never advised that interest rates can and do rise, which means refinancing may not offer relief. They were never counseled that real estate prices can and do fall at times. Also, lenders can tighten their lending standards, making that new loan harder (or impossible) to get, especially for someone with shaky credit.

This one-size-fits-all advice didn’t inform many that lower mortgage payments for a short time might be too little compensation for assuming the additional risk of ballooning mortgage payments, or worse, losing a home.

What do you really want?

Since following rules of thumb can be problematic, a better use of your time, no matter what your age, is to focus your attention on what’s best for you and your loved ones. As difficult as it may be, that means setting your own standards, exercising creative control and turning a blind eye to what others are doing. A course of action that’s right for your neighbor, colleague or sibling could be completely wrong for you.

Whether it’s for your personal finances or anything else, planning for the future should strike a balance in such a way that your journey to and the end result are as enjoyable and fruitful as possible.

The first place to start is by asking, “What do I want?” Strangely enough, some folks struggle with this question for a couple of reasons. First, they’re so used to making statements like, “I just want to be happy.” While happy is no doubt a good thing to reach for, it’s just too broad.

You have to be able to answer the simple question, “What does happy look like for me?” If you have trouble answering that question, try a few thought experiments to let your imagination run wild until you can begin to see, taste, touch and smell and wrap your arms around it. Then your journey and eventual destination will come into focus, and the specifics of how, what, why and when will fall easily into place.

As good as it gets?

The second reason some have trouble figuring out what they want is they are so accustomed to the way things are that they have trouble believing it could be any better. They get stuck in “what is.” Among his many great performances, Jack Nicholson played the role of a quirky, obsessive-compulsive guy in the film, "As Good as It Gets." Nicholson’s character struggled to break out of his comfort zone because he knew his chance for greater fulfillment, due to a new love interest, could easily slip away if he didn’t move beyond his old ways. He, like many, got stuck at times because his long-time mantra was, “What if this is as good as it gets?” We all fall victim to such thinking at times, and that’s why it’s good to remember what it was like to be a kid.

For the last four years, I’ve had the pleasure of volunteering for Junior Achievement, a non-profit dedicated to educating and inspiring young kids to value free enterprise, business and economics to improve the quality of their lives. It’s incredibly enjoyable for so many reasons. At the top of my list are the fantastic things the kids say and create when I tell them to let their imaginations go free. They get especially creative when I have the opportunity to tell them there is no right or wrong answer. Their young imaginations soar in those moments because there aren’t any rules of thumb, one-size-fits-all anything, and “what is” hasn’t had time to solidify in their minds.

What does happy look like for you? Only you can answer that. Let yourself have some fun with that question, and you’ll be surprised at how good it feels to break out of your comfort zone.

Michelle Ouzounian, CMFC, is the founder and President of Verity Investment Counsel, Inc. (www.verityinvcounsel.com), a fee-only, independent registered investment advisory firm in Racine. Michelle can be reached at 262-898-8400, or m.ouzounian@verityinvcounsel.com.

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This article contains the opinions of the author, but not necessarily those of Verity Investment Counsel, Inc.  Such opinions are subject to change without notice.  This article is provided for educational purposes only.  The information contained herein does not suggest or imply and should not be construed, in any manner, a guarantee of future performance and/or investment advice.  Information contained in this article was obtained from sources believed to be reliable, but not guaranteed.  No part of this article may be reproduced in any form, or referred to in any other publication, without express written permission of Verity Investment Counsel, Inc.