Gamification guru talks fiscal fitness

Published: Tuesday, April 16 2013 7:00 a.m. MDT

DN: Throughout your career, you taught companies how to be more productive by applying the fundamentals of gamification, as it’s called. How do those same fundamentals apply to individual financial management?

CC: The five key principles we developed for The Game of Work included, one, clearly defined goals; two, contemporaneous scorekeeping; three, frequent feedback; four, personal choice; and five, never changing the rules in the middle of the game. What we found is that those principles could be implemented in just about everything, including fiscal responsibility.

DN: And that resulted in “The Four Laws of Debt Free Prosperity”?

CC: Yes. The book was a collaboration between myself and Blaine Harris, who had been a client of The Game of Work and was starting a company called Checquemate to help people manage their expenses. The idea was to take the principles in The Game of Work, plus some of Blaine’s key thoughts, and expand them into the area of personal finance.

DN: And the four laws are?

CC: Tracking, trimming, targeting and training. The first law, tracking, is really scorekeeping. We ask people to make sure on a daily basis to track their expenditures so they raise awareness of where their money is going. Then secondly we teach people how to trim — see where the dumb money things are going and eliminate them, so by tracking and then looking to trim we get people to find money inside their current spending. The third part becomes, what are your targets? That’s the goal-setting aspect. Do you want to set aside so much per year per child for college? Do you want to retire when you’re young? Do you have philanthropic goals? Whatever your goals are, target them and develop a plan to achieve them. And then the fourth area is training. Read books about investing, go to seminars, watch Jim Kramer on “Mad Money,” but whatever it is, identify how money and how the investment community works so you can become better and better as money managers. Follow these four laws and you will recognize the three things you have to do if you’re ever going to accumulate anything financially.

DN: And those three things are?

CC: One, live on less than you make. Two, a portion of all you make is yours to keep. Three, never consume principal.

DN: Sounds simple enough.

CC: There’s a great quote from N. Eldon Tanner about financial independence: Those who structure their standard of living to allow a little surplus control their circumstances. Those who spend a little more than they earn are controlled by their circumstances. They are in bondage.” The point is not being a slave to money. Make sure you’re managing your money and your money’s not managing you. I believe (LDS) prophets have been telling us this for generations: to learn to live on less than you make, that a portion of all you make is yours to keep. And it ought to go into a one-way safe, like they have at the 7-Eleven, and you really need to have three months worth of income or six months worth of expenses available in a liquid account, and until you get there don’t worry about sexy investment schemes and knocking the cover off the ball.

DN: But what if you’ve already put yourself in a pretty big hole?

CC: The principles are still absolutely the same. I read a reference recently that said the housing crisis of 2008 was the ninth real estate crisis we’ve had in the history of the United States, and that society after society after society has gone through the same boom-and-bust mentalities. The idea is to stop the cycle. One of the things, for example, that the Japanese did after World War II was embark on an ambitious savings rate. Even though their country was devastated, at one point the average Japanese family was saving more than 20 percent of its income. As a result of that, capital became relatively cheap in Japan and, combined with U.S. aid, the erection of the Japanese manufacturing society was incredibly rapid. The point being, learn to live on less than you make, no matter what you’re making.

DN: You’re saying these fundamentals apply to everyone?

CC: Anybody can do this if they want to, no matter what their circumstances. I think it’s interesting when you read the obituaries that every so often you’ll find an obit of someone who donated a sizable sum at the end of their life to some cause that they admired, and as you read down you’ll see the work the individual did wasn’t high-paying. They couldn’t have made a lot of money in their lifetime. But they practiced the principles and they made it work. When it was all over they didn’t come out behind, they came out ahead.

DN: In spite of the current economic circumstances, then, we still have as good a chance as ever to be fiscally OK?

CC: I believe the same rules will always apply. Here’s the point: You and I are divinely designed and created, just as everyone on this Earth is a divinely designed being. And with that design there comes a whole point of order, a whole series of do the right things, and whether it’s morality or fiscal responsibility or whatever it is, there is an operating manual for life. And if you follow those guidelines and those codes, then it works.

EMAIL: benson@deseretnews.com