What We Can Learn From Baseball

When it comes to your finances, are you smart like Dom "The Little Professor" DiMaggio or are you more like Fred "Bonehead" Merkle?  As baseball's postseason begins and I have baseball on my brain, here is a list of tips that could apply equally to baseball and to those of you trying to Budget, Save and Eliminate Debt:

Make a good game plan and stick with it.
Work with a good financial planner on a long-range financial strategy and stay focused on the long term.  Don't panic-sell your investments just because they suffer temporary drops in price.  You never see Phillies manager Charlie Manuel use his top power-hitting pinch hitter, Matt Stairs, in the fifth inning.  Rather, he saves Stairs for the critical ninth inning situations.  The fans might be screaming for him to use Stairs earlier, but Manuel knows his game plan in advance and sticks to it.  He's not going to panic-sell his chance to use Stairs.  More often than not he's rewarded for it.

With greater risk comes greater reward.
Dodgers manager Joe Torre knows that it's worth the risk to allow Juan Pierre to steal second base. Sometimes Pierre will get thrown out, but most of the time he'll make it.  Statistical gurus will tell you that over the long term, the runs created by stolen bases exceed the runs lost by getting caught stealing.  So it is with investing.  The riskier investments yield the bigger returns.  Playing it safe by having all of your money in a savings account won't yield great returns.  Having investments in several stocks is like having Juan Pierre stealing bases; you'll win some, you'll lose some, but most of the time you'll win.

Don't be afraid to sacrifice.
Baseball managers aren't afraid to order sacrifice bunts to advance baserunners.  (Let's forget for a moment that the sacrifice bunt with a runner on first base is the stupidest, most overrated play in sports, a play with no percentages in the offense's favor, yet one employed by managers who purport to "play the percentages."  It's been statistically proven time and again that a man on first with no outs scores more frequently than a man on second with one out.  When you have to move a runner three bases and you have three outs to work with, trading a base for an out accomplishes nothing more than bringing the inning that much closer to ending.  To score the runner, the team still needs a hit.  It has a better chance of getting that hit if three batters try for it instead of two.  But I digress.  The fact remains that managers aren't afraid to sacrifice.)  You shouldn't be afraid to sacrifice, either.  Do you really need to have 140 cable channels, or will the basic package do?  Do you really need that designer shirt, or will you look just as good in a lesser-priced shirt?  You have to ask these questions daily as you manage your budget.

Work hard.
Not all of us can be like Manny Ramirez, whose numerous transgressions, on and off the field, are excused with the worn-out saying, "That's just Manny being Manny."  It would be nice to have similar license, to be able to walk into the office, for instance, and say, "I just lost the McDougal account because I didn't feel like showing up for our lunch meeting" and have the boss laugh it off by saying, "That's just Joe being Joe."  Unfortunately, real life doesn't work that way, at least outside of the world of Manny Ramirez.  Remember that your best asset is yourself, particularly your ability to bring home a paycheck.  Don't do stupid things that cause you to miss out on raises or bonuses or even to lose your job.

That about covers it.  Now get out there and play ball!