I had a rather interesting dream last night. Was talking to a friend or a student, not sure which, but they were working on their doctorate and I was sort of thinking that I should be doing that too. Then I realized that I was almost 60 and it was too late to make a career and earn a living as a PhD.
Which brought up the whole sensei depression thing but that’s another story. What I reminded myself of was the choices I did make as a youngster pre-retirement. I took a buyout from my job at around 50 and have been supporting the family on the martial arts supply business ever since. By support I mean we have managed to sort of, mostly, pay the daily bills and buy groceries without going too far into debt and occasionally getting the credit cards down to less than maximum.
So here is some of the Economics wisdom I learned from my family and how to apply it to budo practice.
Get a job.
The best investment advice I can give you is to have a regular income from somebody else. We got two jobs working as lab technicians for a University and that managed to buy the house and the cottage before we both retired.
From a budo point of view, a job is where you build your lifetime capital, the principle you will live off for the rest of your life. You want to find a good, steady instructor who is teaching you something that is reliable, dependable. Something that, if you move to another place has skills that are transferrable. In other words, learn something common and widespread as your baseline. I learned Aikido which, while not as widespread as, say, Tae Kwon Do or Karate, is pretty well represented anywhere. I also learned TKD which is something you can find on nearly every streetcorner it seems. Those arts provided me with a core of skills that have been useful since then.
Live like a student.
We buy used cars and run them into the ground. We refinish our own floors and paint our own walls after practicing on rental units. Most landlords will buy you the paint and rent you the drum sanders, learn on other people’s stuff. In other words, don’t spend more than you have to. My grandmother taught me the value of straightening nails and re-using them to fix the greenhouse. Really. I still get the urge to re-use lumber and while I resist the urge to straighten nails I do reuse screws and our new deck is our old deck with the boards flipped over. The first deck cost us a thousand dollars (materials only of course, I’m not paying someone else to drive screws when I can do it) and the new one cost nothing for the frame and deck.
The budo equivalent to living like a student is to BE a student, keep learning, keep your shoshin, your beginner’s mind and budo will never become a chore. Live like you’ve got no money, teach like you’re only a couple weeks ahead of your students and you’ll keep accumulating that excess capital.
Figure out how the rich people get their money
If you want to be rich, do what the rich folks do. The 1% don’t make stuff, they are in the stock market. I have been in the market technically since I was 18 when I bought an annuity from my uncle who was selling insurance at the time. He backdated the policy so I could catch up to the maximum allowed, so I guess I have been doing what rich folks do forever (get so close to the rules they are in danger of bending). My kids will one day reap the benefit of my life-long investing mania. I have property (the house and cottage and a bit of land beside the cottage) and enough investment income to buy coffee every morning without worrying about how much I’m spending on it.
You know, since I was a student that’s been my definition of success, to be able to buy morning coffee without checking my wallet first, without feeling like I should be making it myself at home. I suspect being that easily satisfied has helped get me to the situation I’m at now, where I’m a rich man by my definition. (Rich is when you have more money than you need. Rich or poor depends on what you figure you need.)
What’s your budo market? How do you invest in your art so that it returns to you later? Your students of course, don’t spend students, invest in them. If you figure your students are to be exploited for fees or work or to kowtow to you and make your ego swell, they will be gone when you need them. On the other hand, if you teach them, support them, invest in them, you won’t be able to get rid of them when you’re older and need some help. Your students may find you an irritating old man but they will be there to install a new floor in your dojo when you’re too creaky to do it yourself. Your capital is your students, don’t waste it.
Never touch the principle.
While you kids may complain about us boomers and how we’re in your way, we complained about the generation before us. Those guys were the depression kids, the war kids who knew about making do with little. Those guys were champion scrimpers and savers and they taught us the same. They also left a bit to us as an inheritance. The boomers are a big population bulge but we come from a smaller family size (which now that I think about it, is strange) which means that we may have inherited a couple of times. I got from my grandmother and my parents and when I did, as a student, my firm commitment was that the money was not mine. I would not touch the principle, the money I got by the sweat of my ancestors would go to my kids. At that time I had no kids, but who knows what the future will hold and now there’s two of them kicking around somewhere. They’ll get what I got and trust me, when you guys get from us boomers you’ll not be cursing us. Unless of course you haven’t voted and you’ve allowed the governments to evicerate the pension plans so that we had to use up all our money before we get a chance to give it to you.
The interest from my inherited principle? Now that’s another story and I figure what I make on the money I inherited is mine to do with as I wish. It may or may not be there for the kids, it depends largely on how long I live I suppose, and that pesky pension income that some folks figure I don’t deserve because they don’t have one. Seriously folks, pensions are deferred income, they’re investments, money that was earned. If company pensions were not there the wages would have been much greater, the pensions you figure folks don’t deserve now are wages you’re trying to grab. Don’t complain about our pension plans, go establish your own!
My budo kids are going to get what I got from my teachers, unchanged, just as I was given it. I teach because I was taught, for no other reason than that. I won’t spend the principle, I’ll turn it over as I got it. Beyond that, my students may also be getting a bit of interest as they get what I’ve added, but I try to make sure they know what’s mine and what’s a legacy.
Another way of not spending the budo principle is not to squander the students. I actively discourage my students from getting involved in “the politics” too early because I don’t want them burned out on that stuff. Sure someone has to do administrivia and if that’s done well and in good faith, we’re fine. If I’m sending a student into a situation where they will work their asses off to be over-ruled and stomped on by someone who figures heirarchy trumps knowledge and effort, I’m going to be a bit angry because that way lies students who find something else to do, some place else where their talents are appreciated. Let the old folks do the work themselves if they want to re-do it and micromanage everything.
What? You don’t figure that stuff happens in a budo organization? You figure it only happens in your workplace? People is people folks. You can spend people as fast as you can spend the money you got from your grand-uncle.
Another way to think about preserving the principle is to consider inheriting the dojo. Your sensei may retire, or split a dojo so that you will take over some of his students. You ought to consider that your baseline, never pass along less than you were given to start.
You can’t spend what you don’t see
Best investment advice I can give you is to have your paycheque direct deposited in your account, and to have that money withdrawn automatically into some sort of investment vehicle. If you qualify for pension, max it out. If you can do a tax free investment, max it out. Trust me, if you live like a student and do your own work you won’t miss a massive amount of your income which never appears in your pocket. Don’t get used to spending it and you won’t miss it. Stay poor in cash, get rich in investment.
The budo equivalent is to do the same with your practice. As a university student I had a schedule that was all over the map, my week started early or late, labs took up random chunks of afternoon or morning. In that situation it is very easy to let stuff slide, to miss classes because you don’t know what day it is and there’s always time later to catch up… except you never do. For my undergrad and grad work I used my martial arts classes as an anchor, a not-to-be-varied set of times in the week that I was at a certain place for a certain amount of time. I arranged my school schedule to fit around those aikido and TKD classes and it worked. I knew where I was each day, I kept track of Tuesdays and the Wednesdays took care of themselves. Along the way those time-anchors were growing me some knowledge of the budo.
I didn’t miss the time spent on budo classes because I never had that time to begin with. It was outside my school time, and I never missed that time I “didn’t have”. Ever heard the expression “if you want something done give it to a busy man”? The problem usually isn’t lack of time, it’s inertia.
The Rule of 72.
Compound interest folks. If you can get 10% interest on an investment it will double in 7.2 years. 1% takes 72 years. Make sure you are maxing out what you make on your money but wow, make sure that you know what that 19% credit card interest is costing you!
Don’t ask too much from your students, that’s the credit card debt, keep it low. Give your students as much as they can take, as fast as you can, that’s the investment income. I’ve found you never get a big return for low interest. If you feed your students slowly in an effort to get them to learn better, they just learn slower. Low interest is low return. Your mileage may vary but fuel efficient cars tend to cost you less than gas guzzling monster SUVs that may have the power you need only once a year. Better to rent for that two day vacation with the monster trailer. Ah, I think I just pushed that metaphore over the cliff. More instruction means faster learning.
Use Other People’s Money.
Use it wisely. If you HAVE to use a credit card keep an eye on the balance. If you can’t pay it off before that 21% interest kicks in, see about a line of credit at 4% and use that to pay the card off. One will cost you much less than the other.
Similarly, pick and choose the students you ask to do things. Some will be more efficient than others. A student who knows how to install floors will be less resentful of helping with the floor than one who hates manual labour. On the other hand, finding a student who wants to learn how to install floors is like getting a 0.5% loan. Bonus!
Be Afraid Of Debt
If there’s one thing that will suck money out of your pocket too fast to stop it going, it’s debt. NO debt is good debt, and that includes your house which will return the money you put into it but historically, will not make you money. Only in an “overheated housing market” do you make money flipping houses. Most of the time you live in it, and 20 years from when you bought it you will usually get the same amount of purchasing power back from it.
Sure you paid $70,000 20 years ago and sure it’s worth $200,000 now, but work it out in inflation adjusted dollars and in the interest you paid on that mortgage loan. Better to have put that money in the market where you took advantage of all those investors who buy high and sell low.
What’s your debt in the martial arts world? It’s your actions as put against your reputation. The budo world runs more on reputation than on money, more on personal relationships than on rank. It’s who you know, it really is. You can’t invent a reputation, you can only earn one over the years, so don’t pull bonehead moves and burn bridges and be a jerk about throwing your rank around. All that is debt. If you have to step on toes, do it at the minimum debt interest, do it carefully and with sensitivity to other people’s feelings. Don’t do it with the fine print and hidden charges like a credit card or phone company. What’s your opinion of your cell provider? Yep, that’s what I’m talking about.
Best act of love my Grandmother ever gave me (OK we’re Canadian, not big on the emotional displays) was to put into her will that she’d like me to pay off my student loans with the money she left me. I did, and since loan rates back then were over 20%… That’s 3.5 years to double folks, if you were paying attention above there… I appreciated the advice and certainly followed it.
So I’m here in Calgary teaching a seminar and about to join another one where I will learn some more. I have the time to come for the 12 days because I followed the financial advice I just passed along. I really don’t like traveling but I came because the folks out here treat me well, they invest in me, and I appreciate them. I’m also paying forward from my own instructors who invested their time in me, and I’m investing my time in the folks out here so that the art continues along. The guys here used “other people’s money” and received some funding from the Canadian Kendo Federtion development fund, thanks CKF, and that fund from the CKF has and will help grow iaido in Alberta which means more membership for the CKF and thus more income to help spread the art and the organization to places like Antigonish NS where the founder of the Calgary club has moved, leaving his students here to carry on. Because the CKF helps here in Calgary, we also drive to Edmonton and back during these seminars where another CKF club has started practicing iaido. Three clubs on one grant, not a bad investment at all.
All this works through the currency of reputation and personal relationships. Very, very little of it works on rank. Even less of it works on money but there is an economics of budo if you look for it.