Pluto Isn’t a Planet and Financial Rules That Change

Brent Pittman —  06/21/2012 — 13 Comments

Not a Planet :-( News flash: Pluto isn’t a planet. In case you weren’t around for the announcement in 2006, Pluto is now a dwarf planet. I was busy too and didn’t have a clue.

The International Astronomical Union voted that pluto didn’t meet the criteria to be a planet.

  • A planet must orbit the sun- Pluto does this
  • A planet has to be roundish–Pluto kinda fits this.
  • It must be the dominant gravitational object in its orbit. –This is what got Pluto demoted by the  IAU. Watch the video if you’re like me and didn’t understand.

Why Pluto isn’t a Planet Video

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What? Yes, everything your teachers told you in school was a lie– a fabrication….OR they told you the best truth based on the facts and knowledge at hand.

Facts change and orbits change and we have to change our way of thinking as the telescopes get bigger– behaviors and rules have to change based on the new paradigm.

Financial Rules That Change

Financial rules also change. Things that were once a given have been turned on their heads with the recent recession.

Let’s look at a few financial rules that have changed. 

1)  3-6 months of emergency savings is enough- As a trained Dave Ramsey coach, I believe and have taught this too.

However many others and myself have found that 3-6 months isn’t enough, especially those who have been out of work. The new paradigm for many is 6-12 months of savings for an emergency fund is needed.

2) Finding a job is easy and quick- While this might be true for some fields it takes longer to find a job.  Gettting hired in the “new normal takes more work and the competition is more fierce.

3) A college degree equals success- This has never been true, but the recession has proven this.Millions with college degrees are unemployed or underemployed. It isn’t about the degree, but about what value you can bring to your employer.

4) A student loan is ok, everyone gets a loan- Indeed, almost everyone who has attended college in recent years has graduated with debt. The nation has over 1 trillion dollars of student loan debt! 

We are witnessing the student loan bubble bursting and people saying crazy things like “I’m not going to send my son to college.” Times are changing.

5) Everyone can afford to go to college- The past few decades of subsidized loans have made college more attainable to the masses. But with soaring college inflation costs not everyone can afford the debt that comes with a college degree.

6) It takes a lot of money and loans to start a business- This also hasn’t been true in the past, but people like Chris Guillebeau are highlighting the fact that you can start a business without debt and low start up costs.

Read what I learned from his book The $100 Startup.

We have a “new normal.” The new normal isn’t always as black and white as personal financial experts once thought it was. New shades of grey exist that cause us to examine each personal situation differently.

The only thing that remains the same is change and we all have to keep learning to keep up to date with new financial changes.

If you subscribe to OnTargetCoach.com, I’ll do my best to inform you of any financial rules that change.

What other financial rules has the recession changed or shown to be false? 

Photo by Crilix (Creative Commons)

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Brent Pittman

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Brent is a financial coach and writer looking for the perfect donut. He believes personal finance should be both fun and accessible to anyone willing to learn.
  • Lance@MoneyLife&More

    Things definitely change and you have to stay on top of it or else you’ll fall behind quick.

    • http://www.ontargetcoach.com/ Brent Pittman

      Word!

  • krantcents

    The recession has changed the rules! What used to be safe and secure like working as a teacher or for the government is no longer secure. A good reason to have multiple streams of income.

    • http://www.ontargetcoach.com/ Brent Pittman

      true, no job is secure. That’s why I encourage everyone to start a business, even if they are happily employed. They’ll quit or get fired at some point.

  • http://mymoneycounselor.com/ Kurt Fischer

    Like nearly all ‘one-size-fits-all’ rules of thumb, the 3-6 months (or 6-12 months) emergency savings is pretty well useless I think. Each family needs to look at its own circumstances. Can a two-income family survive on one income for a while? How secure are wage earners’ jobs? How well insured is the family, especially disability insurance? Does any wage earner suffer from a chronic disease? How much equity in the home? Is a lot owed to high-interest lenders? Are the most valuable items the family owns (car, appliances, house) in good shape or apt to need major repair or replacement? In short, a family-specific risk assessment is the best way to gauge how much emergency fund is needed, I think.

    • http://www.ontargetcoach.com/ Brent Pittman

      Kurt, thanks for reading and chiming in. I don’t believe there is a one size fits all rule for this either. The “I can sleep well at night” is a good test, though many might be naive about the possibilities.

      Risk assessment is good, but who really knows what emergencies our family will face? Heart attack? Lay off? (no job is safe anymore), car wreck, etc. That is the beauty of insurance (which you mentioned) and an emergency fund. It protects us from unpredictable and unassessable circumstances.

      I’ve talked to a lot of people these past few years who would have been served well to have a larger emergency fund.–I tend to lean towards over insuring and larger emergency funds because of all the stories I hear.

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  • http://twitter.com/barbfriedberg Barbara Friedberg

    Hi Brent; During each financial transition, when the markets go up or down, there is the cry “this time it’s different.” My comment suggests that the only way to know a trend has changed is in hindsight. I’ll let you know later whether history is repeating itself or if financial cyles remain the same.

    • http://www.ontargetcoach.com/ Brent Pittman

      Barbara, I agree that we go through financial cycles– many people forget the lessons learned of previous generations.

  • maria@moneyprinciple

    Good, provocative post; I may disagree with some of the points you make but it is a good thing you make them. As to this disagreement: I am not sure whether increasing the size of the emergency fund is really hedging (it is still limited and the longer one doesn’t get a job, the harder it is to get one). On other points there hasn’t been a change, really; we only got duped into thinking things have changed before. College education in countries where education is a privilage and not a right has never been accesible to all (the US and the UK are two such countries; in Sweden though education is a right).

    • http://www.ontargetcoach.com/ Brent Pittman

      Maria, I agree with you that college is a privilege and has always been that way in the U.S.

  • Greg@ClubThrifty

    My wife and I are really into astronomy at the moment,and – funny enough – we were just talking about the Pluto thing yesterday. So, you roped me in with that. However, we are also obsessed with personal finance, so you kept me reading with a nice article about how the financial world changes.
    While I would agree that college degrees do not guarantee success, obviously some jobs require specific degrees. However, I’d argue that you likelihood of success is higher depending on the degree you receive. For instance, I chose to pursue a degree in Theatre Arts – which is basically worthless. If one chooses to be an actor, then go be an actor. You don’t need the degree, although it did help me to find day job work. After realizing that my degree was not going to help me reach my financial goals, I got another degree in field that would. Unfortunately, neither of my degrees give me the flexibility of a business degree.
    Regardless, I would agree with you that employers are searching for what value you can bring to their company. However, this is a bit more true for those who have been in the workforce for a while. Often times, the degree is what can get your foot in the door. The student loan debt is what keeps it stuck there after you are hired.

    • http://www.ontargetcoach.com/ Brent Pittman

      Astronomy eh? Have you seen Pluto then? Yes, some specific fields require a degree, but less and less.