“As Is”…Your working assumptions are failing you

We presume certain aspects of life will keep working as is. Simply and logically entropy will not allow ‘as is’ to exist truly as it does in our imaginations and in our mental models. We often forget nothing is static. ‘Keeping things simple’ won’t save you. Living on a plot of land in BFE won’t save you. Your valiant attempt to be a stoic won’t save you.

I have caught myself saying ‘If everything stays as is we will be fine…..this applying to family finances, health, business etc…you get the point…but we don’t get the point. Nothing stays as is, its a farce. Yet we continue to make decisions with the ‘as is’ assumption. Perhaps you do not fall victim to this as I do…but for those who do here are a few working examples I am processing as of late that help me shape the rut of ‘as is’.

I do well personally assessing many angles and to make sure I understand all the ways something can go right or wrong. While I can’t possibly consider all angles it helps being more firm in my position to do something especially if you have people counting on you such as family or employees. Also, this is a thought gauntlet you should go through annually at the least, quarterly at the most….not often in other words but likely more often than you are doing currently.

  • Finances – Lets say you are wanting to buy a new house:
    • Does this plot of land increase/decrease my ability to find a job that fits my skill sets in the years ahead? IE I am a sales person/tech person….does this put me in proximity of more or less opportunity? I am a farmer…does this put me in more/less opportunity?
    • Is my ability to afford this house dependent on 1) my finances improving 2) staying flat 3) can it sustain some degree of financial loss?
    • Does my spouse/partner also need to work to afford this house?…if so, this inserts more risk/questions.
    • Should my health suffer…what protections do I have in place to continue to stay in this house? Insurance to hedge against that risk.
    • If I knew this house were to decrease in value by X% over the next 10 years would I still be ok with this decision?
    • Is this area becoming more or less susceptible to sector setbacks? IE land has a variety of uses allowing it to better weather varied economic times….IE employers in difference sectors, mixed use retail in the area, etc
    • What % of my take home pay is going towards the house?
      • 28% of your income before taxes is the lenders rules…but that to me is too risky….bc thats likely 35% of net if not more.
      • 25% of after tax income is about where you should be
      • 25% of after tax income with taxes and insurance is ideal.
      • So math given the above for an 80k/yr (assuming AGI of 55K)….
        • Risky: $1,900 for house/rent
        • Fine: $1,400 for house/rent
        • Ideal:  $1,400 all in for house/rent + property taxes + insurance
        • Given the scenarios above you basically live in 2 different houses based on what you choose
  • Company or Job – You are an employee (IE don’t own the company, not on the cap table) and want to make sure you are thinking through your options well.
    • At any point a public or private company is for sale….meaning everything could change overnight
    • New boss or CEO? Is this an opportunity or a threat to you?
    • A new law that increases/decreases the market and/or the opportunity….i have heard of medical reps losing their job/comp levels after health care stuff went into place over the last decade.
    • Is your resume up to date? Always have a version that is no more than a year behind…this is not being un-loyal, this is making sure you are ready to go should something bad/not ideal happen
    • In the above vein, how is your local network of people who can connect you to the next opportunity? Having no opportunities is a bad proposition for you and your family. (How to keep a local network/pipeline going? That’s a different blog)
    • Your product/service is thriving/dated….what next? Double down or exit stage right?

This exercise can be stressful and i encourage you to go through it and report findings to your spouse (if you have one) and at least 1 friend.

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