Tuesday, January 3, 2012

Interest (The rule of 72, 114, and 144)


Hey y'all!  2012 hugs, kisses, yada yada yada...

About 20 years ago we were living in a VERY small community in SW Colorado.  It was a time in our lives that we enjoyed very much...made some great friends that we still communicate with, enjoyed the gorgeous scenery, and learned a heckuvalot about the US Western lifestyle.

It's WAY different than urban SE United States life.


Anyway,  a man I knew there was the Maintenance/Custodial Supervisor for the little school system.  One day we were talking, and he mentioned that he REALLY REALLY REALLY needed to find someone that could fill in for his Custodians/Maintenance guys on vacations, sick days, personal days, etc.  So I said, "Juan (because that was his name), I could probably do that for you."  

I grew up in the mechanical business (kinda), had a good working knowledge of mechanical equipment, and knew how to swing a mop.

Also, I figured it would be a good way to meet more local folks, get more involved in the community...and make a few coins.

So, I became a "Substitute Janitor!"

Honestly, I really enjoyed it!  I spent a couple of months filling in for the other Janitors, had a great time of it, and made some great friends along the way.

As an employee, I was enrolled in the State of Colorado Public Employee Retirement Association.  And, every year I get a statement from them showing just how much I've got coming when I cash in.

Now, as a "Substitute Janitor," I really never contributed but just a small amount of money (which was withdrawn from my Substitute Janitor checks), but it's been interesting to watch my little nest-egg blossom.  I got my annual statement today, and lookit!

As you can see, the $44 I contributed (tax deferred, too) has blossomed over 19 years to a whopping $128!  Jeepers, that's 84 bucks in FREE money!!!

I got to thinking about that, and it reminded me of my 9th grade Civics class.  The Civics teacher, Mrs. Carma Cook was married to a Certified Public Accountant.  And, even though personal economics/money management stuff was probably not part of the proscribed curriculum, she taught us a lot about money junk.  She taught us about how to write a check, keep a checking account balance, and about interest.

I remember her teaching us about the "Rule of 72, 114, and 144." 

That rule tells you how long it will take to double, triple, or quadruple your money at a particular rate of interest.  You just divide the "RULE number" by the expected rate of interest, and it tells you how many years it's gonna take to either double, triple, or quadruple your money.

As an easy example, if you are making 10% interest on your money, it will double in 7.2 years, triple in 11.4 years, and quadruple in 14.4 years.


So, my annual statement from the Colorado PERA tells me that I have not made a contribution since 1993.  So, let's say that's (WHAT???)  19 years.  My contribution of 44 smackeroos (which were extracted from my check by force) have dang near tripled in those roughly 19 years.  So, that means that the Colorado PERA has invested my hard-earned toilet cleaning coins, and gained me exactly roughly a 6% return on my contribution (which was extracted from my check by force).

And you know what?  That ain't all that bad.  

Interest rates on savings/money market accounts/etc. have fluctuated over those 19 years, but they have been EXTREMELY low the last 10 years or so.  And, 401Ks have sucked like armadillos in a graveyard.

So, whatever the folks at the Colorado PERA are investing in must be pretty safe, and profitable.  I do not know exactly what they are investing in (because, believe it or not, I am not on the Board of Directors), but I'll give 'em a tip of the ball cap!

Maybe I didn't explain that 72/114/144 RULE very good.  

Let me go Goobling...y'all hang on...

Okay, here's one if you're interested.

That's all.  Let's just call this Education Day at Andy's Place.

(And, just because I'm gonna be filthy rich in 420 years, don't be thinking I'll give y'all a loan or nothing...)


  1. Depressing post Andy, Now that I know I'm going to be rich in about 400-500 years..Sorta takes the fun out of it.

    But still can you loan me some money then too? :)

  2. 6% is pretty darn good. Hard to do that in todays economy.

  3. You explained it just right Andy. When you cash it in you gonna take Mrs. Andy on a vacation to the Riviera?

  4. Dang. My days o' moppin' floors and sweepin' up didn't pay NEARLY as well. That was a pretty good gig ya had there, Andy.

  5. What community in southwest Colorado had the good fortune of having you live in it? I lived in Durango from 1973 to 1990. Did you ever go there in that time?


    Indeed, I did. We did not live in Durango...but I was there quite a bit from 1992 to 1996.

    We lived for four years in Ignacio/Bayfield (lived in both small communities, but most of the time in Ignacio).

    A great time in our lives, for sure! Still communicate regularly with old friends there.

    Thanks for asking.


Don't cuss nobody out, okay?