No. 1205



The person who achieves real success in any area of life seldom travels in a straight unbroken line, because he or she has setbacks and reversals along the way. It is often said that success is taking two steps forward and one step back. But what happens to the person who continually takes one step forward and two steps back? Unfortunately, this person is going backwards and losing ground.
Today, this is happening to millions of people in America, especially in the area of personal finances. Perhaps the American railroad builder and financier James J. Hill (1838-1916) said it best in relation to financial success: “The test is simple and infallible: are you able to save money?”
If you or someone you love is losing ground financially, and you would like to do something about it, perhaps a good understanding of a little-known principle called the “ratchet” principle may help you. The ratchet principle refers to something or someone moving in a given direction for a period of time, then falling back to a solid position to regroup, then doing what is necessary before heading out again. To be able to see this principle very clearly in your mind, just visualize a socket wrench set that can be purchased at any store where tools are sold. A socket wrench set consists of a set of sockets and a ratchet with a little button on top of this device to turn if you want to go in the opposite direction. As you turn a tap or bolt and then back it up to get more leverage, you can hear the little “clicks” of the ratchet as it is being brought back into position for a fresh start. These little clicks of the ratchet are what keep it from losing ground.
When it comes to achieving personal financial success, I might say here in the beginning that the most important ingredient is self-discipline. Without having the self-discipline to stick with a plan, everything else is lost. When it comes to using the ratchet principle to help you or someone you love to achieve personal financial success, there are four simple steps to follow that will definitely help you to improve your present circumstances. The first step is to REGROUP, which is what happens when you pause using the ratchet principle; just sit down where it’s quiet and list all of your expenses item-by-item so you will know exactly where you are in relation to your income. You must know this before you can proceed.
The second step is NOT TO LOSE GROUND, which is what the little clicks of the ratchet are designed to do. Eliminate unnecessary expenses, and if you have credit cards and other loans with a high interest rate, pay them off before buying anything else that is not absolutely necessary.
The third step is to GET ON SOLID FOOTING, which means you must have the ratchet sitting firmly on the tap or bolt you are going to turn. This is the point where you develop a financial plan that includes goals, and it’s vital that you establish a savings and investment account that will begin to compound your earnings for the future.
The fourth and final step is to HEAD OUT AGAIN, which is when you begin to turn the ratchet to achieve real financial success. At this point, with peace in your mind and heart, you can go to work with real determination and enthusiasm that will make your plans and your goals come true.
Remember, when you follow this simple four-step plan, the chances of your losing ground have been greatly diminished and you have the plans to help you achieve. It’s the ratchet principle. Until our next visit, just remember, you cannot be defeated if you take the long range view. What many people do not realize is that “perseverance” is just another word for success.
(Editor’s Note: JIM DAVIDSON is an author, public speaker, syndicated columnist and founder of the Bookcase for Every Child project. Since its inception in 1995, Jim’s column has been self-syndicated to over 375 newspapers in 35 states, making it one of the most successful in the history of American journalism.)