Roll Your Own . . .


photo credit: She Who Shall Not Be Named

When I wrote about the importance of investing in yourself I was having trouble trying to find the words to convey what I meant. I finally found a way to explain what I mean so that nobody should be confused (I hope).

Virtually every book on financial planning or wealth building I have ever encountered says something to the effect that there are two ways to have more money. The most obvious being to make more money and the too-often overlooked being to spend less money. When I wrote about investing in yourself my expectation was that readers would assume I was talking about the things that amount to making more money – increasing your education being frequently cited. That kind of self investment is focused on being better able to produce more goods, or more valuable goods for others to purchase in an economic marketplace.

What I was trying to advocate before was to not forget about self investments that amount to spending less. I would generalize those kinds of self investment as focusing on being able to produce for yourself those things which you have become accustomed to purchasing in the economic marketplace. That may be producing the same thing, or it may be producing a substitute.

The doctrine of the free market and the value of specialization to produce more total goods (Friday catching fish to trade with Robinson Crusoe for the coconuts he was harvesting) seems to have been repeated so much that we fail to recognize and properly value the dangers of over-dependence. No matter how much more Friday and Robinson Crusoe can produce together, either one of them needs to be able to survive alone should something happen to their partnership. That means that there is value beyond compensation for Friday to know how to get his own coconuts or something to replace them.

The first step in this kind of self investment would be taking the time to acknowledge what things you depend on that you do not produce yourself, and more importantly recognizing which of these things you are unable to produce for yourself.

9 comments for “Roll Your Own . . .

  1. Laura Miller
    January 11, 2010 at 1:29 pm

    What would the next step be?

    • January 11, 2010 at 1:34 pm

      Start figuring out how to fill the gaps – either by becoming independent of that good or service, finding a substitute, or learning to produce it yourself.

  2. Charles D
    January 12, 2010 at 4:48 pm

    I think the idea that one can truly be independent in today’s society is a fallacy. It simply cannot be done. The bigger question is whether personal independence is even a worthwhile goal. I don’t know about you, but I produce nothing. I provide services for which I get paid (when the economy is good enough to drive demand) and then I use that money to buy the products and services on which I depend. I can prepare through savings for times when there is no demand for my services, but to say that makes me independent is a bit of a stretch. Even if I succeed in accumulating savings, I have no guarantee that inflation will not destroy them or that my best attempts at finding wise investments collapse with the larger market.

    My personal financial security rests on the ability of the nation to foster a strong economy that produces a demand for more products and services, on the willingness of the government to provide the infrastructure that I require to both provide my service and obtain the goods I need and want, and on my continued good health, among other things.

    • January 12, 2010 at 10:47 pm

      I hope you do not misunderstand my position and think that I am advocating for individuals to withdraw from society economically or socially, but I have to disagree with your assertion that it is not possible to do – people do it. Like you I produce nothing that people can eat, wear, or live in. On the other hand, no matter how good your planning and saving, what happens in an emergency when goods cannot be purchased? Your savings does no good. Of course you can store a supply of goods, but what if it is not a short-term situation. Savings is obviously not the same as personal independence?

      Who is responsible to take care of you in the event that you do not have the option to sell your skills for money, or to purchase goods with money? Is it your employer’s job to give you work? Is it the retailer’s job to stock your shelves?

      Personal independence requires that you must have a plan for how to produce what you need in the event that you cannot trade for it.

      I would be very worried if I felt that my personal security was completely dependent on the national economy and the willingness of the government to provide infrastructure. I hope for a strong national economy and a government that is willing and able to maintain the basic infrastructure but I can’t be comfortable without some kind of backup plan that does not rely so much on factors outside my control.

  3. Charles D
    January 13, 2010 at 7:00 am

    David, I will be interested to read what steps you believe one can take to insure personal independence in the event of an economic collapse. Frankly, I’m not following your logic here at all.

  4. Ronald D. Hunt
    January 13, 2010 at 9:08 pm

    Perhaps a quote from my favourite socialist would fit…

    “All the property that is necessary to a Man, for the Conservation of the Individual and the Propagation of the Species, is his natural Right, which none can justly deprive him of: But all Property superfluous to such purposes is the Property of the Publick, who, by their Laws, have created it, and who may therefore by other laws dispose of it, whenever the Welfare of the Publick shall demand such Disposition. He that does not like civil Society on these Terms, let him retire and live among Savages. He can have no right to the benefits of Society, who will not pay his Club towards the Support of it.”
    –Benjamin Franklin

    • January 14, 2010 at 9:02 am

      I’m sorry to have to remove the halo from St. Franklin, but just because he participated in the founding of the nation does not make every word he said into some political scripture. Regardless of what he said, “the Publick” did not create the property that it has deemed as being in excess of that which is necessary for the conservation of the individual and the propagation of the species – nor do they have a right to whatever property they deem as being excess.

      The truth is that a person who lives in society should be willing to give what he is able to meet the needs of society, but his unwillingness to do so does not convey some right on society to simply take what they deem as “necessary for society” or “excess to the needs of the individual” by force of numbers.

  5. Ronald D. Hunt
    January 14, 2010 at 1:09 pm

    “Regardless of what he said, “the Publick” did not create the property that it has deemed as being in excess of that which is necessary for the conservation of the individual and the propagation of the species”

    I have to disagree, the “publick” created the corporation, paper money, etc. I consider both to be pretend (well technically money was real until the 1970’s when Nixon got to it), a necessary pretend as they are tools to organize wealth.

    “The truth is that a person who lives in society should be willing to give what he is able to meet the needs of society, but his unwillingness to do so does not convey some right on society to simply take what they deem as “necessary for society” or “excess to the needs of the individual” by force of numbers.”

    I again will have to disagree, if one is unwilling to pay his income tax’s or unwilling to pay his property tax’s, or is unwilling to pay sales tax’s, unwilling to follow law, then we can’t simply exempt him and let him off scott free. If society is an opt in when its convenient(access to rights liberty’s etc) and opt out when its inconvenient(tax time) then their is no society, all that is left is the basic pretext of those willingly able to put forth what amounts to charity among the anarchy. Society needs the inconvenient to fund the convenient they are a matched set.

    • January 14, 2010 at 1:40 pm

      Money is simply a symbol of wealth (at least insofar as there is anything real about the money). The government may have defined the monetary system and the rules for the creation of a corporation – they may even have printed an abundance of paper money, but they did not create any wealth for the individual. The only way to legally acquire real wealth is hard work (or inheritance from someone who worked hard to build the wealth they passed on).

      I am not advocating that people be free to opt out of society on tax day and freeload the rest of the time without penalty. The problem with Franklin’s statement is that it suggests that the public gets to define what is “excess” for the individual and take accordingly. The public has need of resources to maintain the freedom of society and it is perfectly acceptable to levy taxes to meet those needs. That being said, the public does not define what is excess and take whatever it defines as excess. It does not create wealth and it does not have the right to take as much as it can get away with – even in the name of doing good. Anything beyond the basic maintenance of safety and order within society is outside the authority of the public to confiscate and use private resources. Those who create those resources through their industry are responsible for how they choose to dispose of their wealth whether for purposes that are good for society or for self-gratification.

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