Friday, July 16, 1999

A Fairy Tale Fribble


Once upon a time, a young girl grew up with no financial education from her parents or her teachers, other than the knowledge that her mother never had much (if any) money left after paying The Bills. As she walked along the path into young womanhood one day, she met a Big Bad Wolf named E. Z. Credit, and her nightmare journey into the bowels of the Debt Monster began.

A number of years passed before she began to realize that the Debt Monster had a stranglehold on her life. It took a few more years before she saw through the delusion of pleasure by instant gratification. Eventually, however, she began to have vaguely Foolish notions. She began to "Just Say No" to impulse purchases, and -- now that the student was ready -- teachers appeared, one after another.

She still remembers the fateful moment as she idly browsed through an employee handbook and serendipitously ran across a reference to a financial self-help book called The Four Laws of Debt Free Prosperity (see note below). She ordered; she read; she implemented. As she busied herself with her Tracking, Trimming, and Targeting. Her training moved forward with Your Money or Your Life, a book well known to many Fools. It added quite a wallop to her Trimming energies once she had calculated exactly how much of her life energy would be required to pay for another widget. The Richest Man in Babylon inspired her to be as diligent about paying herself first as she was about paying her creditors on time (Mantra: "Ten percent of all I earn is mine to keep.")

Then, during the summer of 1997, she was deep in the struggles of Operation Debt Storm and in dire need of moral support. She was checking the Yahoo! financial page, and noticed an odd little link called The Motley Fool. The name strongly suggested that the folks at that link must really enjoy whatever it was that they did -- and they must have great senses of humor. She had always been predisposed in favor of people who enjoy what they do (or do what they enjoy) for a living, so she clicked, and has kept on clicking, nearly every business day since that first magical one.

The Fool was with her (just like the Force!) when she paid off her credit card debt on February 13, 1998 -- a day that will continue to be celebrated in her household as long as the stars shine and the rivers flow. The Fool was with her when she transferred all her 401(k) funds into the Vanguard Index 500 fund (which her firm's retirement plan began to offer "due to popular demand"). The Fool was with her as she introduced her prince to Fooldom -- to the point where he invested in the RP4 variation of the Foolish Four about a year ago. The Fool was there when she and her prince used a windfall to pay off their mortgage 15 years ahead of schedule. The Fool was with her when she put her year-end bonus into a discount brokerage account and thence into some Rule Breaker stocks. And now the Fool is with her as she relaxes and watches her Rule Breakers taking a breather. Exciting as it was when her portfolio was up over 50% in the few months since she bought, the recent stumble has not worried her. She still feels good about what the future holds for her stocks and for herself. She expects that she and her Fool will live happily and prosperously ever after.

May the Fool be with you, too!

Note: The Four Laws: 1.) Track your expenses; you have to know where the money is going. 2.) Trim unnecessary expenditures; once your tracking shows you where the leaks and dribbles are, plug them up! 3.) Target your goals (first eliminate debts, then grow savings, then invest); be realistic, be specific, set deadlines, keep score. 4.) Train yourself in sound investment strategies before you put your money into any kind of investment.

The book is in novel format and is a very easy read -- a great gift for a high school or college graduate or -- heck! for anyone! It is a short book and so can't go into the same depth as the Fool's School does, but it is an excellent place to start for the financially challenged.

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