{"id":245986,"date":"2025-05-18T19:18:38","date_gmt":"2025-05-18T19:18:38","guid":{"rendered":"https:\/\/peraltafinancing.com\/business\/finance\/scar-tissue-the-best-interest\/"},"modified":"2025-05-18T19:18:38","modified_gmt":"2025-05-18T19:18:38","slug":"scar-tissue-the-best-interest","status":"publish","type":"post","link":"https:\/\/fivemor.com\/?p=245986","title":{"rendered":"Scar Tissue – The Best Interest"},"content":{"rendered":"


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Before the article, here\u2019s what\u2019s happening this week on our podcast, <\/em>Personal Finance for Long-Term Investors<\/em><\/strong>:<\/em><\/p>\n

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A deep wound. A terrible burn. The remnants of a life-changing surgery. <\/p>\n

Scar tissue is the body\u2019s natural way of healing after an injury. When the skin or other tissues are damaged, the body rapidly produces collagen fibers to close and strengthen the wound. This repair process often results in scar tissue. Its appearance and texture differ from the original tissue because it\u2019s laid down quickly and without the original structure.<\/p>\n

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But scar tissue carries memory with it, too. The same event that burned us or cut us can create emotional and psychological wounds. Or, quite often, an event that leaves no physical mark can create deep \u201cmemory scar tissue.\u201d I, for example, have some \u201cmemory scar tissue\u201d from driving in the Buffalo Blizzard of 2022<\/a>. No physical damage. But there\u2019s a mental wound in my brain that gets hyperactive when it snows, like your uncle\u2019s knee that aches when a storm\u2019s on the horizon. <\/p>\n

These mental scars, forged from intense or traumatic experiences, shape the way we think, react, and feel long after the proximate event itself has passed. These scars can protect us, making us more cautious. But they also limit us if we never learn to heal or reframe the story behind the scar.<\/p>\n

Financial Scar Tissue<\/h2>\n

If you\u2019ve educated yourself enough on personal finance and investing, you know money\u2019s mental and psychological aspects. It\u2019s much more than numbers. In fact, I\u2019d argue that most people struggle with the mental and psychological way more than they struggle with rational arithmetic.<\/p>\n

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Sometimes, you need to hear a first-hand account \u2013 a real<\/em> story<\/em> \u2013 for that fact to sink in. <\/p>\n

Last week, I was blessed to hear two<\/em> stunning anecdotes of this type. And I want to share them with you. <\/p>\n

Both Great and Depressing <\/h2>\n

The first powerful lesson comes from an elderly lady I met with. She\u2019s a delightful woman. Kind and funny. <\/p>\n

She was born in the late 1930s, just on the tail end of the Great Depression. By the time she was<\/span> 16, 18, 21, etc. \u2013\u00a0ages where we really start to shape our personal worldviews\u00a0\u2013 it was the 1950s. The Great Depression had been done and dusted for 20 years. <\/p>\n

But I\u2019m sure, even though she didn\u2019t realize it as a child, the echoes of the Great Depression surrounded her. She was swimming in it! Think of the adults and role models in her life and their experiences as adults in the Great Depression. All those echoes, those lessons, those fundamental changes in American life \u2013 they all informed the person she grew up to be. And yes, they inform the person she is today in 2025. <\/p>\n

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Regarding financial planning, she and her family saved and invested wisely for decades (!). She\u2019s living off less than 1% of her portfolio assets annually. As we\u2019ve discussed here regarding withdrawal rates<\/a>, 1% per year is low, low, low. Doubly so for someone her age. <\/p>\n

And yet, this woman looked around the room at her children (in the meeting with us), my colleagues, and I, and she said: <\/p>\n

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\u201cThank you for all you\u2019re doing. I just want to make sure you understand: I do not want to run out of money.\u201d <\/em><\/strong><\/p>\n<\/blockquote>\n

If all we do is look at the math, we\u2019d conclude: <\/p>\n

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\u201cWhat a silly thing to say! Someone withdrawing 1% per year \u2013 let alone someone at age 85+ withdrawing 1% per year \u2013 with never, ever, ever<\/strong> run out of money!\u201d <\/em><\/p>\n<\/blockquote>\n

But if we pause and zoom out, remembering where she came from and what she\u2019s been through, the lightbulb goes off. Ah ha! <\/p>\n

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This is Great Depression scar tissue. It\u2019s still there 85 years later. It\u2019s still there!<\/em> It\u2019s not an opinion. It\u2019s a fact! It\u2019s real.<\/em><\/p>\n

We might think, \u201cWell, the numbers simply don\u2019t justify feeling that way.\u201d <\/em>And I agree. The numbers alone<\/em> don\u2019t justify her concerns. But that memory scar tissue didn\u2019t manifest on its own. Just as with a real scar \u2013 it got there through burns or cuts or other traumatic injuries. Traumatic<\/em>. This woman\u2019s concern \u2013 her memory scar tissue \u2013 is borne out of real financial trauma.<\/p>\n

It doesn\u2019t just disappear with a few off-the-cuff lines of retirement math. <\/p>\n

No Chicken<\/h2>\n

The second story comes from a ~45-year-old man. As nice and humble as you can imagine. The definition of \u201csalt of the earth.\u201d <\/p>\n

25 years ago, he started his career in a blue-collar, technical, manual labor field. Work, work, work. He progressed one step at a time. And now, for the past couple years, he\u2019s managing the entire company\u2019s manual labor workforce of 1700 employees. That\u2019s serious progress. <\/em><\/p>\n

But to explain where he came from, he told me this story: <\/p>\n

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\u201cI\u2019ll never forget it. Our daughter was young at the time, and we were in Wegmans [grocery store]. I walked over to the meat department and got one of those packages of chicken breast and put it in the cart. My wife stopped and looked at me and said, \u2018I\u2019m sorry honey\u2026but we can\u2019t afford chicken.\u2019<\/strong><\/em>\u201c<\/p>\n<\/blockquote>\n

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Just imagine that. What could that chicken have cost? <\/p>\n

But the budget was tight. Kids are expensive. Income was hard to come by. <\/p>\n

Fast forward to today, where he\u2019s leading a team of 1700 (!)<\/em> employees, and his compensation matches his responsibility (we\u2019re talking easily<\/em> within the top 1% of all earners in the country). Hard work really<\/em> pays off sometimes, and he\u2019s the kind of human who deserves it. But he admitted to me,<\/p>\n

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\u201cl\u2019ll never forget hearing that we couldn\u2019t afford chicken. And sometimes I still feel like that\u2019s still my relationship with money.\u201d <\/em><\/p>\n<\/blockquote>\n

And once again, we might think, \u201cWell, the numbers simply don\u2019t justify feeling that way.\u201d <\/em>And I agree. The numbers alone<\/em> shout out, \u201cEat nothing but chicken for the rest of your life!!!\u201d<\/em> But his memory scar tissue didn\u2019t manifest on its own. It got there through burns or cuts or other traumatic injury. Traumatic<\/em>. <\/p>\n

I\u2019m not sure if it was disappointment, sadness, shame, a combination, or perhaps a different emotion altogether. But the feeling that you cannot afford a \u201csimple\u201d grocery item for your family\u2026that sticks with you. It leaves a mark. <\/p>\n

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And even as life goes on and the financial floodgates open, that scar tissue sticks around.<\/p>\n

But what about you? And me? We<\/em><\/strong> don\u2019t have any finanical scar tissue. Right?<\/p>\n

Blind Spots<\/h2>\n

First scars, now opthamology? <\/p>\n

Not that I\u2019m becoming a medical expert, but I do know this: we all have two blind spots in the middle of our visual field.<\/strong> According to some eye doctors I know, the \u201coptic nerve blind spot\u201d is a small area on each of our two retinas where the optic nerve exits the eye, containing no photoreceptors<\/strong>, and therefore incapable of detecting visual information. <\/p>\n

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And the great irony is that most of us are ignorant (or blind<\/em>, you could say) to those blind spots. If you don\u2019t believe me, or if you\u2019ve never tried it, here\u2019s how you test your blind spots for yourself<\/a>.<\/em> <\/p>\n

Most humans in history have gone their entire lives without realizing their blind spots are there. Trippy! <\/p>\n

But you know what? I\u2019d argue that most of us \u2013 you at home, me typing this, my two examples above, etc \u2013 we go our entire lives blind to our memory scar tissue. Blind to our trauma. Blind to the long-lasting effects that define our very lives. <\/p>\n

We make daily financial decisions as a function of long-held beliefs. Some logical and well-thoughts beliefs. Others as a function of pure trauma. <\/p>\n

Yet again, this is a time to call upon David Foster Wallace\u2019s \u201cThis is Water\u201d<\/em> speech. Long-time readers know it\u2019s one of my favorites. Specifically, the opening story: the parable of the fish.<\/p>\n

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