One of the primary laws I wrote about in my 2003 book The Laws of Money is coming home to roost big time:

Invest in the Known, not the Unknown.

I just finished watching the CEOS of the big three automakers testify before Congress on December 4th; testify is being kind, as what they really seemed to be doing was begging for money. All because their companies refused to invest in what they had to know was true, for more than 20 years.

Those supposedly smart CEOS that you are programmed to believe are smarter than you, didn’t follow the simple law of making choices that are based on fact, on what is known. We have known for years that oil is a limited commodity, yet Detroit did not aggressively pursue higher fuel efficiency. (And don’t get me started on the fact that Congress didn’t exactly push them in that direction.) They saw their competitive edge erode to foreign car manufacturers, yet they didn’t manage their business to adapt to that competition. And in the process they turned off their main client: Americans, who refused to support products that they now judge to be of inferior quality. They saw the marketing surveys; they knew they were losing ground to the competition, yet it sure doesn’t seem like they made the massive changes necessary to reinvent themselves for an evolving auto industry.

Yet, I firmly believe that as incompetent and clueless as they were, now is not the time to let the Big Three fail. We as a nation can’t afford the impact of all the lost jobs-both those employed directly by Chrysler, Ford and General Motors, but the millions more whose livelihood is linked to the industry.

Yes, we should all be mad and annoyed that we have to bail out these companies that have been run with an indifference to tackling what is known. My hope is that at the very least, any federal aid will come with serious requirements, oversight and regulations.  What is needed is that these CEO’s finally get their heads out of the sand and make the known changes that have always been needed and start running these companies like this is 2008 not 1958.  

In the meantime, as I was watching the Congressional hearing I was thinking about you. And how my wish is that you act far more intelligently than the auto CEOS this holiday season. I hope that you have the fortitude and foresight to make choices based on what you know is true today.

• You know you need to build an emergency savings fund that can cover six to eight months of living expenses; so you and your family will be okay if you are laid off.
  
• You know you need to get serious-finally-about tackling your credit card debt, because you understand how a high unpaid balance can mean big trouble in 2009.
  
• You know you need to invest more for retirement to have any shot at living comfortably later in life.
  
• You know you need to sit down with your child and discuss how much you can honestly afford to cover for college
  

If you honestly know all that, you will not spend money on holiday shopping that should instead be used to build financial security. If you know all that, you will take actions based on what you know so you never have to turn to anyone for a bailout (as if you could get one.) Stop looking up to the CEOs of the world as if the are smarter than you. If they are so smart, why have they run their companies into the ground? I want better for you and your family. Focus on what you know you have to do to build security and you will give your family the most wonderful gift of all.

Happy Holidays.
-- Suze