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For my younger readers, you may not be familiar with the cartoon character Wimpy.
J. Wellington Wimpy was one of the smaller, but lovable, role players in the popular cartoon series, Popeye.
Wimpy had an incredible affinity for hamburgers.
Unfortunately Wimpy never seemed to have the cash on hand to buy a hamburger from his favorite restaurant.
Any scene featuring Wimpy would involve him propositioning the chef/owner of the restaurant with his famous catchphrase, “I will gladly pay you Tuesday for a hamburger today.”
In the cartoon, Wimpy was portrayed as someone who was always broke, but I contend that he had everyone fooled.
How Wimpy and the Financial Savvy are Similar.
Peruse any personal finance blog and you are bound to come across the term, “Stealth Wealth.”
The authors of The Millionaire Next Door were some of the first to reveal that what society perceives as wealthy and who are truly wealthy are often at completely different ends of the spectrum.
Turn on the TV and you can find countless shows where individuals are flashing signs of wealth such as exotic sports cars, high rise mansions, and private jets.
It is no wonder that we think of someone who drives a 6 figure car as successful and one who drives a beater as not.
Warren Buffet, one of the richest individuals on the planet, shatters this myth as he drives a relatively nondescript car.
Clearly Buffet could buy any car on the planet without blinking an eye.
However, much like how he invests, Buffet prioritizes value over flash.
Wimpy similarly does not go for flash.
His attire does not scream rich.
In fact his attire screams the opposite and, because of that, his friends often take pity on him and buy that coveted hamburger for him.
Using The Leverage Arbitrage.
Using other people’s money to accelerate your financial position is the premise behind leverage.
Real estate investors, for example, can multiply the gains on their investments several fold more when they use the bank’s money rather than their own finances.
Leverage works particularly well when inflation is taken into account.
The money borrowed today is typically far more valuable than the money paid down the road years or decades from now because of inflation.
There is always an ongoing debate about whether it is smarter to pay off a mortgage or invest that money instead.
By paying a mortgage off early you are essentially repaying a loan with more valuable “today’s dollars” instead of the cheaper “future dollars.”
Despite this reasoning, I still paid off my mortgage completely and had no regrets as there were far more psychological benefits that trumped the monetary differences.
Based on the classic behaviors of Wimpy, it is safe to assume that Wimpy would certainly prefer to be leveraged heavily, putting off payment as far into the future in order to get into something today.
Sure Popeye always got the girl (Olive Oyl) as he was the flashy one of the group.
But I would like to think years later it was Wimpy who was the one that became financially set as Popeye blew all his money on cans of spinach and sailor uniforms.
So channel your inner Wimpy and gladly pay someone Tuesday and maybe you will indeed get that hamburger and more today.
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