February 04, 2014 / Don’t Miss The Big Picture: Career
In the first article of our big picture series, I discuss risk taking and your career.
A huge mistake I see people making all the time is losing sight of the big picture. I see this all the time, the so called "missing the forest for the trees" problem. I see it in dating, I see it in education, I see it in the work place, I see it at the gym. Wherever it is, I see it. In this brief series, I am going to go into greater detail on this point as it pertains to various aspects of life. The first one will start with career.
I have seen so many people out there constantly fail to take miniscule risks with such high potential that it blows my mind. I’m talking guys afraid to give up $3,000 a year in pay for the option of making 20, 50, or even 100x that in the near future at a different role. I have seen people forget about an entire career they have always wanted because they don’t want to pay $400 for a license of some kind or don’t want to spend a month studying for an exam.
When it comes to your career, always be thinking about the big picture, especially if you are young with little to no responsibilities other than taking care of yourself. As someone who has been moderately successful in his career so far, let me tell you something you may think is crazy but is not: $1,000, $5,000, even $10,000 is chump change in the big picture. (In many circumstances and for some people, I could argue even 10x those numbers is chump change).
Big numbers today will look small tomorrow
Think about it, what is +/-$10,000 going to do for you over the long term? Even assuming it is invested at 10%/yr return compounded (good luck) it will be worth $175,000 in 30 years. Assuming no inflation (a big if), $175,000 is a nice amount of money, but how many years of good extra retired life is that really going to get you? 4? 5? And that is being retired on $40k or so a year which is ok in some parts of the US I guess but nothing to brag about, and I mean, guys, it’s 30+ years from now!! The upside if you would have risked that $10,000 today to get a better career is likely to pay many multiples of that and not just 30 years from now, but much sooner than that.
Furthermore, if you are young (college, teenager, etc.) let me tell you this: you have a completely warped sense of what is a lot or a little money. I know I did. You should be much less worried about short term money (as long as you can eat) and much more worried about how you are going to be successful (financially and otherwise) in the long life you have ahead of you.
Look, I am aware that for some of you, your circumstances may simply not allow any risk taking with money for a longer term payout down the road, but I encourage you to reevaluate your situation (assuming there is a monetary risk worth taking) and see if you really fall into that category. If you think you fall into that category because you think you have to ‘put aside $300 in savings every month or you will be living on the streets when you are 50’ or because you think debt is the devil and you should never have any debt, ever, then you are really missing the forest for the trees. That brings me to the last point of this article, a note about debt.
Most people have a massive aversion to debt, and the financial crisis of 2008 has reinforced this view. Unfortunately, it is a very bad view to have. There is good debt to take on and there is bad debt to take on. Stop being afraid of taking on debt, and start recognizing that there is good debt and bad debt. Good debt is something like a home mortgage at 4.5% locked in for 30 years and the option to pay it off if you feel like it. A mortgage is, generally speaking, a good thing. Buying a house in all cash when the government is subsidizing mortgages and giving you a tax benefit on your mortgage is completely nuts! The classic example of bad debt is credit card debt. Borrowing money at a 20% interest rate is absolutely insane and should only be done in a last resort situation.
Bottom line, instead of assuming all debt is created equally and trying to avoid it, take advantage of good debt (gov’t subsidized student loans if they still exist, fannie/freddie mortgages) and avoid bad debt (credit cards, payday loans, etc.)
Everyone’s circumstance is different, but I would bet that the majority of you are young enough that you should be taking more career and financial risks than you currently are for what could be a huge payout for the rest of your life.