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Learning from the Tennessee Vols, the New York Jets, and a 7-year old
I remember it well. It was August 31st, 2019 and the Vols were taking on Georgia State to open its season. It was the first game at home and there was hope in the air that that the second year of new head coach Jeremy Pruitt would be better than the first year. This was a home opener against a team that had just got their program really going 9 years prior. The Vols were 24.5-point favorites in what was assumed to be a warm-up game. It turned into one of the worst losses in Vols history. Tennessee lost 38-30 and I found myself reaching a new low after a decade of misery as a Vols fan. Who would have predicted this to happen? Almost no one. Yet it did happen.
Fast-forward to 2021. New UT Athletic Director Danny White brought on a coach with whom he was very familiar, a former Oklahoma quarterback named Josh Heupel. By the summer, Heupel was faced with the most depleted roster in college football. Most of the talent opted to transfer out and the school was facing an NCAA investigation. Things looked very bleak in the summer of 2021 for the Vols. Was there anyone on planet Earth who would have predicted that one year later the Vols would beat the Alabama Crimson Tide for the first time in 15 years? Such a prediction would have seemed impossible for even the greatest of optimists. Yet it happened. My son saw the Vols beat Bama for the first time in his lifetime. And like a handful of sports moments, Vols fans will always remember where they were on October 15th, 2022 when Dixieland Delight rang out on the speakers in Neyland Stadium. Goodness, my blood pressure is worked up just talking about it.
Alright, for those of you who can’t stand the Vols, let me give a third example that happened just last night. After a disappointing season last year, the New York Jets paid up to secure one of the best Quarterbacks to play the game – Aaron Rogers from the Green Bay Packers. The 4-time MVP seemed like the missing link to an otherwise really strong roster on both sides of the ball. In their opener against the Buffalo Bills, Rogers went down three plays into the series with a lower leg injury. You could see the excitement dissipate like the popping of a bubble. New York went in at halftime down by 10 points. Commentators, including Payton Manning, just shook their heads and predicted a miserable second half for the NY Jets. Like many others, my family shut off the game after the first half assuming the worst. But when I woke up this morning, my 9-year-old told me the Jets won when an undrafted free agent for the Jets returned a punt for a touchdown in overtime. Unless you are a die-hard Jets fan, there was no human being watching that game that would have predicted the Jets would win at halftime. Yet they did.
Last example. In the Wilson household of 6, we all fill our March Madness Brackets each year and offer the winner a family meal at their restaurant of choice. If you are looking at a husband and wife and four kids between 16 and 7, who would you think has won the last two years? My 7-year-old little girl, who picks teams by how much she likes the mascots. Who would have predicted that? Certainly not me.
What in the world do these four examples have to do with money? They all underscore a truth that none of us like to admit – we can’t predict the future. The Cato Institute published an article on December 27, 2022 that highlighted a Wall Street Journal Analysis for the average forecast for the Fed Funds Rate. The year prior, the Fed Funds Rate was predicted to be .5% at the end of 2022. Where was the rate actually in Dec of 2022? 4.5%. That’s a pretty big miss. It’s fun to predict, but it’s hard to have more than a 50% success rate over a long period of time. In light of this, preparation for a multitude of scenarios is a better strategy – particularly when it comes to economic forecasting. In my humble opinion, preparing is better than predicting.
So, if you are a small business owner, you need to think through what you will do if a recession hits next year. But conversely, you need to have a plan for what you will do if there is no recession at all. Scenario planning can identify the outcomes that are unacceptable and can allow you to make plans now to affect those potential scenarios in the future. So, you can have one scenario that is your best guess at what will happen for your business. We can call that a base case scenario. You can then plan for another scenario that is better than your expectations, then a final scenario that is worse than your expectations. What will be the effect in your business in all three of those scenarios? Most businesses operate with a best-case scenario as the assumption, so most are prepared for that environment. But it’s the negative scenarios that don’t get the time in planning. Now planning for these negative scenarios doesn’t mean that you crawl in the proverbial bomb shelter and find yourself paralyzed to act out of fear. Rather, scenario planning allows you to operate with eyes wide open and to choose what risks are there and what risks you are willing to take rather than being blindsided by those risks. And it is easiest to do scenario planning when are not trying to put out fires. So now is a great time to do this. Many of you small business owners are still making good money, so take the time to estimate three different revenue scenarios and see how your business would be impacted in each of them. It’s a great way to invest in your business’ future.
Let’s apply this on the consumer side to those of you with student loan payments coming due. After a 3-year pause, loans have started accruing interest again as of Sept. 1st and payments will be due in October. Even though you might qualify for the new SAVE plan (which lowers monthly payments for lower income borrowers) go ahead and make plans on how you might pay for these loans if you don’t qualify. Check and see who you owe and what those payments might be. See how your budget is impacted by how much you owe and see how your budget might be impacted if you qualify for the SAVE plan. Scenario planning in this instance may encourage you to pay off some of your other loans sooner so you’ll have more room in your monthly cash flow to make student loan payments. Although the Supreme Court has ruled that student loans cannot by forgiven by the Executive Branch, there are certainly other avenues that might be pursued on behalf of student loan borrowers. But don’t bank on that. We’ve already established that we don’t know the future, so instead of guessing, make plans for the different ways things could shake out.
At MBC / Foundation Bank – we sell ideas, not merely financial products. Did you know that we have a High Interest Rewards Checking account that pays an interest rate comparable to CD’s and that has benefits like cell phone protection, credit monitoring, roadside assistance and local discounts? Terms and Conditions apply, so start a financial conversation with us today at to learn more. If you’ve found this podcast helpful, we hope you’ll subscribe to it in your favorite podcast app and share it on social media. To close this episode, I’m going to do exactly what I told you now to do and make a prediction: Vols over Florida this weekend by 50. Okay, maybe that’s more of a hope than a prediction. Until our next episode, God bless you.
-President Chad P. Wilson, CFP
Today’s episode of “Money Matters” was written and recorded by President Chad P. Wilson of McKenzie Banking Company / Foundation Bank on September 12, 2023. This episode does not constitute financial advice. Please consult a financial professional to discuss your specific needs. MBC/Foundation Bank is an Equal Housing Lender, Member FDIC.