October 2011

Jerry Tyler

Blue Highways | by Jerry Tyler


Money— It's a Matter of Choice

So much attention has been given over the last few years concerning money.

First it was the boomtown "take-no-prisoners" approach of the latter administration and how that car just had to hit a wall sooner or later.

We all loved the fun, free fall of that ride, but now can't bear the thought of even driving by the crash scene. That bubble just had to burst sooner or later, right?

We hit that wall at 1,000 miles per hour. Our new economy means no economy for many of us. For the first time since 1945, we had zero percent economic growth.

Now hold on, before we all are put on a collective suicide watch, let's take some lessons learned from previous times to guide us toward a better, more sound economic future both individually and collectively as an industry.

One of my long time friends and industry colleagues has made, lost and remade several small fortunes. To be a sideline spectator to his life is like watching a high wire tightrope walker, both intriguing and scary to watch but fun all the same.

Recently we were going to an educational event and I was looking forward to that six-hour flight to Canada to reconnect and gain insights from my friend. Having seen him park at the airport in an American minivan instead of the Porsche that roared up the boulevard in the 1980s, I was intrigued in the natural change of his affairs.

After we landed, showered and with martini in hand, I asked my friend what it is all about. He gave me the Clint Eastwood thousand yard stare in the sunlight and said, "Money gives you one thing: choices."

"First off…. No money, no choices. It's somebody else's game to call if you thrive or merely survive. When you have a dollar, you can get a dollar deal at the "In and Out" [any fast food place]. A dollar doesn't give you much unless it's all the dollar can buy. Not many choices. Take a brown bag lunch to work and save that dollar," The wise man continued, "Now after the second day you have $2.00. Keep brown bagging and at the year's end you have $200. That's a 200 percent increase without any new revenue generated."

My wise muse went on with his illustration solemnly how money gives you choices. "Consider the possibility you spend $20 on your lunch. If you start brown bagging and save that $20 daily you get $4,000 at year's end. That would buy you two flights to London and a week on the town. Ask some of the busiest stylists and they say, 'vacation? I can't afford a vacation.' Why? Because you already spent the money on your $20 lunches."

"Now, save that same $4,000 for four years and make a five percent down payment on a $320,000 home. And, by the way, since you spend far less than you make, your credit rating will get you the best loans at the lowest interest."

Remember the tenth largest economic power in the world "the State of California" has a "Junk Bond credit rating" and has to borrow money at loan shark percentage margins. They love to spend far more than they can produce and their debt to income ratio is at stratospheric levels.

Try to refinance your house with your mortgage lender with California's debt to income ratio…… "declined" will be the answer. The higher the deficit, the higher the interest percent on the loan value. Abundance is profit and scarcity loss; the two cannot offer the same amount of space and coexist, they are polar opposites.

Poverty or prosperity is a choice; scarcity and abundance are conscious choices.

Spending beyond our means to produce the resources necessary creates deficit spending. Deficit spending is never completely income producing as the costs exceeds the value of what is produced. Debt is a choice with your full approval.

Spend one-fourth to one-third of what you produce, the rest can create "passive revenue" generation. Passive revenue is a choice as is the abundance it creates.

By spending equal to or more than you make, the less you will have as you need and the more you will have to repay in the form of debt later on.

While it may take spending some money to make more money, no one ever over spent their way to total prosperity, the bottom line dictates otherwise.

The truth is that the inside game creates the chaos we live with, in our desire to keep a party going way past our bedtime and they oblige our own desires every time to their benefit.

Again, we give them the keys to the car and as it approaches cliff side, they bail out and we, not seeing in the back seat, wind up on the bottom of the ravine every time. But, nice ride while it lasted.

My example is somewhat simplified but you get my point. What seems so overwhelming in these challenging times financially can be corrected by following tried and true simple codes of action.

Jerry Tyler's column Blue Highways is his "Road Less Traveled" perspective on the solutions and challenges facing the beauty industry. Jerry Tyler has been a stylist since 1975 serving as the former artistic director for Vidal Sassoon Academy and currently as Director of Industry Relations for Carlton Hair salons. He is also a licensed cosmetology instructor and has served as President of the California State Board of Barbering and Cosmetology.