Every penny we have ever received in our lives has taken exactly one of three paths.

Some pennies were exchanged in ways that did not increase our material possessions. Rent. Utilities. Food. Gifts and entertainment and trips. This money was distributed to the vast ocean of society.

Some pennies were exchanged in ways that did increase our material possessions. A house. Car. TV.  Furniture and clothes and books. These might be redeemable for cash if needed in the future, and can be a way to increase net worth. In any case, this money expanded our possessions, our lifestyle, our footprint in this world.

Some pennies were not exchanged for services or goods.  Bonds.  Retirement plans.  Stocks.  Pockets and junk drawers and bank accounts.  This money didn’t increase our material footprint,  but did increase our net worth.

The Independent Penguin has a stable iceberg to live on because of the distribution of money and the decisions made in the past.  Much more is submerged (in net worth) than is visible (in possessions).  If the resource distribution of the iceberg was off, money could be redistributed along the three paths to restore the balance.

Let me check the distribution of my iceberg.  What about yours?  Does it need adjustment?

One thing is certain:

Every penny we will ever receive for the rest of our lives will follow exactly one of three paths.

This is the introduction post in a new lifestyle blog.  Some of the posts will be financial, some not.  Many will have a philosophical theme.  It’s just the way I roll.

Meet the independent penguin.  Like all the penguins floating in the sea (of my imagination) he lives on a patch of solid stuff and is surrounded by cold water.  Some of the penguins live on rafts, some on air mattresses, some have big areas to play, some have small.  They will be the subjects of future posts.  This post is about the independent penguin.

The independent penguin lives on an iceberg (as you see).  That means when the sea is rough he isn’t tossed like the penguins living on light platforms.  If an unexpected event such as a collision takes out a good chunk of his living area, he won’t be inconvenienced much – the iceberg floats and the level above the water will adjust to nearly the previous level.  Similarly, if there is good fortune and the level of ice increases the new ice will be distributed above and below the water.   The iceberg is self-maintained (unlike a raft or inflatable) to let the penguin enjoy his life.

You see, when the penguins look out at the other penguins in the ocean, all they see is the patch that each penguin lives on above the water.   The key to the independent penguin life is that mass that is invisible to the others.

Most of you have probably caught the analogy to our financial life.  But for the sake of completeness it is spelled out below.

The ocean is the uncertainty of financial life.  Being dry is good (above water, breathing easy, unencumbered, etc) and being wet is bad (being underwater, drowning in debt, sinking feeling, needing a rescue, etc.).  The living area above the water is the stuff that people can see (house, car, watch, clothes, private school tuition, TV, etc., etc.). The area below the water is net assets (all assets minus all debts.)  The iceberg is a distribution of assets to aspire to maintain in order to have an independent life.   The iceberg is different for every penguin, since each one has individual needs and wants and desires.

The penguin is me.  And you.  And everyone who seeks an independent life.