When I was fifteen, I played a computer game that simulates building and operating an amusement park. The object of the game is to make money by thrilling patrons on the rides, taking care of their basic needs (extra sugar in the sodas), and making them happy enough to empty their pockets on souvenirs.
The game begins with enough cash to build a park, but it is all debt financed.
The first time I played the game, I paid little attention to the financial side of it. I just wanted a really cool looking amusement park. I blew almost all of the cash building a Ferris wheel, an inner tube water ride, and a roller coaster, all of them customized to be as tall, long, and fast as the game permitted.
Then, expenses popped up that I wasn’t planning for. I quickly figured out that my patrons couldn’t find any restrooms. When I saw smoke coming out from some rides and kids were falling out of them, I had to hire mechanics. Oh, and I had to hire janitors to clean up after a few kids that must have ridden my extreme roller coaster one too many times.
Just when I thought I was making some money, my bank balance was mysteriously drained at the end of every month (a month in the game is about 20 minutes in real life). After this happened for a few months, I decided to investigate my cash flow problem by looking at my financial statements (imagine that, financial statements in a video game – sounds like real fun) and found that the disappearing cash had gone to pay interest on the debt.
Disappointed that my amusement park was headed to bankruptcy, I gave up on it and started a new one. This time, I immediately paid the debt down to a minimal amount that I needed to frugally build my park with cheap rides like bumper cars and a merry-go-round. I paid off the debt as soon as I was able to, and bought bigger rides when I had the cash to pay for them. Without the burden of interest, I was able to slowly build a bigger and more profitable park than I had the first time.
I’m grateful that I learned the importance of avoiding excessive debt and spending through a video game, rather than a real-life scenario.
Now, I could talk about when I played SimCity and hiked the tax rates, but I’ll save that for another blog post.