A Penny for Your Thoughts, Compounded Daily

When my oldest son, Joseph, turned 18 in 2011, a good family friend gifted him a self-

help book by Darren Hardy called The Compound Effect. It’s all about achieving success one

baby step at a time. My six other children loathed that gift, because my wife, Leslie, then

proceeded to preach its principles seemingly ad nauseam over the next five years every

opportunity she could find.

We all know the core principle taught by The Compound Effect, because we, too, have

heard it taught our whole lives in popular metaphors, idioms, proverbs, and parables. How do

you eat an elephant? One bite at a time! “Rome wasn’t built in a day, but they were laying

bricks every hour.” Slow and steady wins the race, with the methodical tortoise always passing

the sprinting hare before the finish line. The mighty oak grows ring by ring from a sprouting

acorn, one year at a time.

Darren Hardy highlights this same principle with the parable of the magic penny. It goes

something like this: If you were given the choice between taking $3 million in cash today or a

single penny that doubles in value every day for 31 days, which would you choose? Most people

would take the $3 million, because at first blush, it’s hard to fathom how a mere penny doubled

every day could be more valuable than even a few hundred dollars in just one month. But the

compounding penny actually wins this race. It just takes a little time.

If you accept the $3 million and your friend takes the compounding penny, she only has

16 cents on Day 5 and a meager $5.12 on Day 10. You’re spending your millions and laughing

at her poor choice. Even after 20 days, two-thirds of the way through the contest, your friend

only has $5,243, a tiny fraction of your $3 million. But then her momentum begins to ramp up

dramatically. By Day 25, she has $167,776, still trailing you by a long shot but feeling a little

more hopeful. On Day 29, your friend is still slightly behind at $2.7 million. But on Day 30 she

finally overtakes you with $5.3 million, ending up with a cool $10,737,418.24 on Day 31, more

than three times your measly $3 million. That’s the crazy magic of compounding pennies.

No matter how you describe it, this fundamental principle remains a tried and true one.

Good habits and hard work, applied consistently over time, ultimately result in positive outcomes

beyond normal expectations, even if the incremental growth and successes are imperceptible

along the way. In other words, by small and simple means, great things are slowly but surely

brought to pass.

The negative side of that principle is also true. And that’s what I want to briefly focus on

today. Specifically, it’s the little things in life that eventually come back to bite us in big ways if

neglected or ignored for too long. Or, put another way, bad habits and neglect, if allowed to

continue unchanged, eventually result in precipitous downfalls and tremendous failures beyond

our worst nightmares–almost always unexpectedly after we’ve long since forgotten that potential

problems even existed.

Common examples of the negative side of this law are plentiful in our daily lives as well.

For instance, shortly after our current residence was constructed in the 1980s, somebody planted

a Eucalyptus tree about 6 feet in front of the house. I’m sure it was a small sapling at the time.

But by the time we purchased it in 2001, it was over 40 feet tall with a 4-foot diameter trunk.

Still, we let it continue to grow, and not until 10-15 years later did we realize that its roots had

begun to infiltrate our plumbing. We finally removed that beast and its 20,000-pound root ball,

but the damage had already been done. The tree should have been felled long before the

inevitable problems arose, but neither we nor our predecessors did so, partly because the job was

so big and the eventual problems were mostly invisible at the time.

I’ve currently got a pinhole leak in my swimming pool pipes that will eventually lead to

similarly disastrous results if I don’t take care of it soon. Roots growing under a sidewalk or

patio pad will initially just crack them but eventually make them unusable if ignored for too

long.

You get the picture. When it comes to potential problems, repeatedly kicking the can

down the road is almost never a good idea. And that’s nowhere more true than in government.

When I was on City Council, Boulder City’s electric utility infrastructure had been

neglected for decades. I’m not blaming anyone in particular, both because the blame game is

counterproductive and because it’s unlikely that any one person or particular City Council is to

blame anyway. The point is, we had to find tens of millions of dollars and spend thousands of

man hours campaigning to save our utility system. Mostly because nothing had been done about

it for so long.

Repaving our city’s streets is another example of a problem that’s hard to stay ahead of

and easy to neglect because, after all, it’s expensive to repave and the potholes and bumpy rides

aren’t exactly killing people.

Right now, I’m thinking of two big local government problems that continue to

compound almost imperceptibly. One is our ever-shrinking youth population in Boulder City,

which is most obviously manifest in our ever smaller public school student bodies. And the

other is the proposed new public pool complex that’s been on our radar for over a dozen years

but still not started.

Much has been written over the years about the growing cost of continuing to ignore

these dilemmas, including by yours truly. But we’re still waiting for more money to start the

pool, the result of which will likely be paying double for half the facility by the time it ever gets

underway. And we’d still rather pretend like our school numbers aren’t really shrinking than do

something about that scary reality, such as making minor tweaks to our sacred cow growth

control ordinance.

Unfortunately, just like the law of gravity that we can’t see operating hour by hour and

day after day, the compound effect is still very much in play and always will be. For better or for

worse, it will ultimately change Boulder City. We can either proactively use it to our advantage.

Or we can ignore it to our detriment. The choice is now, always has been, and forever will be,

OURS.