Space and Time

Be super careful what you count. Not everything can be reduced to numbers. It is essential to be able to jump to an alternative reality free from the constraints of space and time. A reality that is still. Where you can breathe. Financial Mathematics is built around reducing decisions to Risk and Return. Around concepts like Time Value of Money and Opportunity Cost. “Net Present Value” is meant to be a framework for decision making. You set up the inflows and outflows into the future and discount them back at a required rate of return. Then you choose. The fundamental flaw in all of this is that neither Risk nor Return can be reduced to numbers. We see what we want to see, and models will show us whatever we most want to see. The world is complex, ambiguous, and random. By the time the numbers are out, it will be too late. Even then, there is so much noise our choices still boil down to judgment calls. Numbers give the illusion of control. Confidence gives the illusion of understanding. No one can, or does, know. What we can do, is build the ability to cope. We can value every moment without discounting it, and connect what comes before to what comes next. Not making anything so important that we lose everything. Making space and time.

Purging

One of a clan of great family friends of mine is getting married in a couple of weeks in New Zealand. It is a long way to go for a short trip, so I am heading off to New Zealand and Australia for two months next Sunday. I figured it would be silly to pay rent for that period and so I am moving out. The last few weeks have seen a brutal purge. I am very conscious of what happens when you put things in storage. There is a strong risk that on the other end you take the stuff out, and then get rid of it. So I have attempted to do up front ridding. We keep a lot of stuff just in case.

 

Not much survived the Purge

Opportunity costs are very difficult to quantify. I mentioned how I have been using ZipCar for the last few years. I am a fan of the idea of renting things as and when we need them. Renting is a much clearer idea of real cost. When we look at the costs of things, we tend to only  look at the explicit price tag. This misses a lot. Imagine a elderly couple who have been running a corner store for years and years. Assume they bought the store when they opened it. Once they have paid it off, they may not consider the rent that they could be getting if they rented the property out. They may also be very content with other non-store earnings and highly value the network of friends they have in the area. The friends may only shop there because of them. Now consider their kids inheriting the store, but not their friendly nature. In considering whether to keep the store going, it would be silly for them to ignore the value of the property and what else it could be used. And whether they had the skills.The real cost is what it would cost them to do it from scratch.

I was kuiering last night with a friend I haven't seen in years. Amongst other things, we were talking about work choices, career paths and goals. One of the choices we have to make is about the amount we need to make in order to 'maintain the standard of living' we are accustomed to. This is a great example of opportunity costs and explicit price tags. Often our thinking doesn't go beyond a salary, how much we spend and how big a positive or negative gap there is between the two. It is certainly the easiest way to think about things and without the space or expertise to look at it differently, we can easily just get on with what we are good at.

I don't claim any expertise on this. I am keen to learn more though. Given flexibility and a ZipApproach, I would like to see how much more control I can have over my standard of living at a much reduced price tag. Part of this has been giving up a flat I have loved renting for the last 6 years. Someone else will get to love it. I also purged much of my DVD and book collection. That was hard. It was like giving up friends. The truth is the movies don't disappear anywhere if I don't have the objects. When I first got my Kindle in 2011, I suspected that books might become more like art. As the world becomes more digital storing up the physical objects that aren't art becomes a large hidden cost. I didn't really give up my friends and charity store guys will have a few more titles to tempt bargain hunters.

 A handful of holdouts - unread books and the best box set ever

Now that I have cut loose, watch out Kiwi and Aussie buddies, ek kom kuier.