Sushi Money

 Even with a challenging economy and dynamic swings in stock prices, the market has begun to advance over the last couple of months.  While the U.S. economy teeters on the edge of recession, is it really that bad out there? That certainly depends on your individual situation, but for the most part we’re managing to get by, even with gas and commodity prices that are out of control.  Interest rates have dropped quite a bit and that’s provided some relief to homeowners with ARM loans.

But is the Fed finished cutting rates?  Many experts believe so, and that from here will be a long pause to allow the economy to work its way back into growth mode.  Maybe the Fed Has Bought Enough Anti-Recession Insurance for now.  But we’ve got to put our money to work somewhere, and for most of us that means staying invested even in difficult times.

The amount of negativity about the economy and markets have been amazing this past year, and Jason Zweig’s near-contrarian view offers some good advice for Why Acting Bearish is a Dumb Move.

“This has been one ferocious stock market. Not only has Wall Street been flirting with a bear market – conventionally defined as a 20% decline in the major indexes – but we’re now in “the second-worst eight-year period for stocks since the 1930s,” says money manager Martha Ortiz of Aronson Johnson & Ortiz in Philadelphia.”

“…a growing chorus of bears thinks that the worst is yet to come and that investors should get out of the market. After all, everyone knows stocks will keep sagging since it’s obvious the economy is sinking into recession, right?”

“Even if the economy is headed for real trouble, don’t assume that your portfolio is too. Larry Swedroe, director of research at Buckingham Asset Management, notes that the U.S. economy has experienced 11 recessions since World War II. From the first day of those economic contractions to the last, stocks still managed to deliver average gains of 7.1% vs. 5.1% for cash.”

Bottom line?  Stay invested, stay long, and focus on living positively each day.  It’s not always easy to do, but I try to tune out the economic noise, and remember what’s important at home and with family.   If there’s something I’ve learned from this almost-recession and high gas and grocery prices, it’s that we really don’t need a lot of the things we spend money on.

Cutting back spending and becoming more frugal isn’t that difficult.  I don’t know about you, but when I save money or do something more efficiently, it really makes me feel good in other areas of my life.  It helps me to focus on the important aspects of life, and the goals I have for personal growth.  I’m not tied to worries or stress about the market, and how my retirement funds are doing.  

It’s about improving the quality of our lives and experience versus the quantity of something that is always changing.  

Laura Rowley describes it very well as feeling blessed. 

“Money can certainly buy us a measure of freedom or security, but money itself is none of those things. If we think money is security, we’ll never amass enough to feel secure. If we think it’s freedom, we’ll never earn enough to be free.”

“Once we remove the emotional baggage, we can acknowledge that money is just one component to achieve our goals instead of an all-encompassing solution. If freedom is a value, we have to ask which people, qualities, and experiences have made us feel most free in the past: Where do I need to live to be around those people? What should I do for my work, and how should I spend my leisure time? How much money do I need to help me create a life with those qualities and experiences? Being as specific as possible about how to manifest these qualities in our lives will keep us from running on the hedonic treadmill.” 

“… long-term flourishing requires discipline, persistence, hard work, faith, and, most important, pursuing goals that are close to your heart and based on your personal gifts.”

When we take time to appreciate what we do have in our lives, we begin to understand more about ourselves, our relationships and where we want to go.  It’s an essential part of the process of discovery, not only for whatever personal gifts we possess, but for the direction of the journey itself.  

Is money the reason for the journey?   Not by a long shot.  But it certainly helps.  A little balance and reflection helps even more.  Growing our money, like growing our lives, takes time and staying invested.  Money provides a lot of things in life, but it can’t buy long term happiness.  Money is simply a tool to take along the journey.  Sure it’s important, but if we forget our goals and what’s important in our lives, then we really haven’t gone anywhere have we?

Awoke to a cold spring morning today with blue skies and sunshine. It would be nice if it were all blue skies for the economy and markets, but there’s still a lot of uncertainty out there. Does it seem like we’re reading more and more about recession paranoia in the media these days? Maybe recession-speak is now fashionable, but perhaps also because of the election cycle. As some economists observe, one way to create a recession is to just keep talking about it. Hmmm, interesting observation about sex there…

Many American consumers are feeling pinched these days. The Fed has aggressively cut rates in the face of many economic challenges, yet some investors are worried about the Fed causing more inflation. The inflation argument may be valid down the road, but it doesn’t sit well when we’re trying to tackle the other economic problems first. Seems like you slay the dragon in front of you before worrying about the one coming next.

All I know is I can bring more certainty to our own life through doing more things that improve financial stability, and doing less things that reduce it. Stuff like increased savings, reduced spending and debt, and becoming more knowledgeable about financial matters. Honestly I can control very little except the conduct of my own life, and even that is arguable at times.

Yet because most of us care about the nature of our life situation in the future, we do something about it. We modify behavior in the present in order to cause change for the future. Or at least we try to do that. Sometimes we fool ourselves for quite a few years, going through the motions, but not really being serious about it.

And then it hits. Some event, realization or dynamic in our lives that induces enough reflection to become aware of our mortality. For many of us it’s hitting the age of 40. Maybe like that keystone analogy and the poll results that shows how people take retirement planning the most seriously around the ages of 40-49.

It’s the realization that says,

“Half my life might be over, and I have very little to show for it!”

If you haven’t yet been hit with that realization, it will come. It’s kind of like presbyopia. “Presby what?!” Well, let’s just say “old people’s eyes.” Somewhere between 40-45 years old, most people are going to have a tough time reading things up close. And you’ll need reading glasses. Just a fact of life. And it’s a humbling experience that I’ve just gone through the past few years. I think reading glasses should come with a financial “how-to” book that helps people understand retirement planning. Because that’s about the same timeframe that most people start really planning for retirement.

I think it helps to remember what’s important, even in the face of a recession and that,

“If it takes change to make our lives better, then we better change!”

There are tons of resources out there of course. Learning from the experience of others can be a valuable source of new knowledge. In the blogosphere an excellent source of insight is the Carnival of Personal Finance hosted this week by Million Dollar Journey.

With an eclectic mix of personal financial advice and interesting stories, there’s something there for everyone. PennyMine talks about Teaching Kids the Importance of a Dollar. Dividends4Life finds Dividend Gold in a Down Market. The Honest Dollar shows us 11 Ways to Trigger an IRS Audit. And The Financial Engineer writes with the economy tanking it’s no time to increase foreign aid by $845 billion dollars. Not really time to increase taxes either…

There we have it. A place to find a beginning, and make a start or new commitment in our own lives. This week I’m committed to finishing our taxes. Now where did I put those reading glasses…

Where’s your financial focus lately? Are you concerned about the economy? The stock market? Gas or food prices? Housing? Okay, for most of us- yes, all of that and more. It’s been a tough year so far and not easy to stay focused or optimistic in terms of financial goals.

Certainly the challenges in our life, or our perceived challenges, can really influence our psychological approach to each day. For many of us that’s especially true when it comes to money. And that’s also why consumer sentiment is something that economists (and investors!) watch closely. One of the most important indexes used is the University of Michigan Consumer Sentiment Index based on the Survey of Consumers. This index samples a number of households each month and asks about current and expected economic conditions. The type of questions asked are fairly broad, ranging from the individual’s personal economic conditions to his/her impressions of the overall business climate in the nation. Wikipedia shows that the Index is published with the following objectives:

• Obtain near time assessment of consumer attitudes on business climate, personal finance, and spending.
• Create capability for understanding and forecasting changes in the national economy.
• Provide means to directly incorporate empirical measures of consumer expectations into models of spending and saving behavior.
• Forecast the economic expectations and the future spending behavior of the consumer.
• Judge the level of optimism/pessimism in the consumer™s mind.

Lots of research mumbo-jumbo, but very important data. Bottom line- the survey of consumers and index data presents a wealth of information that helps economists and investors ascertain public confidence in the economy. Which has a direct correlation on spending and the strength of business throughout the business cycle. It’s interesting to look back and see how consumer sentiment has compared with past recessions, as well as with another trend such as federal interest rates. Here’s a chart of the same going back 30 years:

It’s not hard to see why so many people believe we’re facing a recession. But how does this affect us personally and what does it have to do with optimism? Over the past year my psychological investing mentality has shifted from optimistic to very defensive/ conservative. Does that mean anything practically speaking? Not really. Simply that I’ve become a little more risk-averse, but have continued to invest over time while shifting a little more money to cash and balanced funds while considering strategic opportunities. Overall I’ve stayed in the market investing in a diversified, low cost portfolio for retirement.

Does the word “optimism” signal unwarranted emotion that should be absent from any decision or action we make when speaking of investing? Some might say so, and if you’re trading I can understand a need for calculated neutrality. But I think optimism, and our psychological approach to investing is just as significant as it is to living our lives each day. I think it can be part of a fundamental approach to finding opportunity among chaos. It may be an inappropriate word for the short-term when talking about the economy or a particular stock. But optimism has to more with a mindset for how we approach life each day.

œA pessimist sees the difficulty in every opportunity; an optimist sees the opportunity in every difficulty.

Sir Winston Churchill

Admittedly it has been tough to stay optimistic at times over the past year. When most of us perceive challenge or pessimism we try to focus on more positive or constructive subjects. I think that’s a natural human trait, and very important in making constructive choices about the future. Equally however, when that happens it’s also important to make sure one is not simply ignoring the reality of a situation. There is a difference between a proactive choice to act positively for the future, versus wearing “blinders” without acknowledging risks or negative situations and doing something about it. In the face of so many negatives lately it has been a little tough find constructive choices.

But we can “stay the course” and maintain our goals. Sometimes that means doing nothing, and other times it means putting a little extra money aside for a rainy day and building up that emergency fund. It might even mean making a considerable investment in a key opportunity where others see nothing. For me it means “staying the course” with our goals. By “staying the course” I mean that I remain committed to saving and investing regularly via the 401(k), IRA, stocks and mutual funds. And no, I’m not a trader.

Many experts do predict continued economic weakness this year, but unless you think the financial world is coming to an end (and some do), stock valuations really have become very attractive throughout the market, with the long term price-to-earnings ratio as low as it’s been in decades.

With stocks of course, the short-term means very little. If we’re not in a bear market right now, we’re very close. But Walter Updegrave has written an excellent response to a question about the long term returns of stocks versus other asset classes. And he’s right- so much depends upon your measure of time for comparison of returns. Ten years isn’t enough in my book, especially considering that the long term historical average return from stocks is about 10% since the mid-1920’s. Personally I think 7% is a better number going forward. The comment trail on that post is excellent by the way, and “Jim” puts a rational face on our financial pursuits:

“There are several ways to make money. One adage is to buy low and sell high. There are lots of high quality stocks that are good deals right now. And if you add in the dividend, then you make money even when the stock is down. I™m taking those dividends and buying more stocks with good dividends. It just keeps compounding regardless if the stock is up or down. When the stock is down, I can buy more. The more things change, the more they stay the same. I remember the 90™s with the new economy. Everybody said that this time it was different. But it wasn™t . Same thing with the recession in the early 90™s. Everyone said it was different, but it wasn™t. Some recessions are more severe than others. But the economy goes in cycles. It always has, and it always will.” Posted By Jim

‘Ole Jim is right! As hard as it is to stay upbeat in the face of recession fears, housing challenges, a down stock market, etc it’s simply the cycle we’re in right now. We also see that some economic pundits are now worried about Stagflation? I haven’t heard that term in a long time. Some of these folks see a lot of parallels with the 1970’s. I remember as a kid waiting in the car in a long gas line for our turn at the pump. People didn’t drive nearly as much back then, but there were real fuel shortages across the nation. Can it get that bad today? Maybe so, but if we get to that point again we’re really in trouble.

We do face challenges, there’s no question about it. One area of the economy that has been crazy over the past year is food prices. When food prices strike the average consumer as excessive, then inflation has become a real factor in the economy. The other day I was in Costco and the price of eggs has almost doubled in the last month! What’s up with that? Something to do with grain and other commodity prices I’m sure. Nationally I’ve read the price of a dozen eggs has risen from an average of $1.19 to $1.92 per dozen over the past year. Costco sells a double pack of 36 total eggs that used to be $2.99. A good price, but not exceptional for Costco. Yet as of Tuesday this week those same 36 eggs cost $4.99! Holy omelet Batman! At this rate it may be time to buy a few chickens.

Of course as Laura Rowley discusses, everything is relative:

“Relativity makes us do weird things,” Dan Ariely of MIT says. “We might not think twice about paying $3,000 to upgrade to leather seats in a $25,000 car, but we won’t spend $3,000 on a new leather sofa — even though we might actually spend more time couch surfing than driving. We’ll add $200 to the cost of a $5,000 renovation project for upgrades, but also clip a 25¢ coupon for a $1 can of soup.”

Is it the same way with eggs? Sure. What about stocks? Absolutely… it’s just that I want my retirement to be relatively comfortable. To get there I need to stay on track, keep saving and make constructive choices. I think keeping an optimistic mindset helps us do that, especially among the uncertainty of the challenges we face.
I strongly believe in the long-term strength of our nation and economy. We set financial goals and do our best to minimize debt and keep saving money. We’re getting there, although sometimes it seems like one step forward and two steps back. But it’s all learning isn’t it?

“What is important is to keep learning, to enjoy challenge, and to tolerate ambiguity. In the end there are no certain answers.” Martina Horner

Maybe there are no certain answers to the questions we ask. But in uncertain times, we can choose to do something about our future! Best regards-

Okay, I’ll admit it- my wallet is usually a mess. It’s filled with coupons, receipts, notes and sometimes even money. In no particular order of course. I wasn’t always this way however. I think when I was younger my wallet was much more organized. Probably because I didn’t have very much money in it.

But according to Bankrate.com I am most like the Unruly Receipts money personality:

Unruly receipts — Your wallet is stuffed with receipts, but there’s no sense of order to them and you never really do anything with them. This is the person who is trying, says Thakor.

“You want to know how to keep tabs on your money — otherwise you would have thrown the receipts away. But you just can’t take it to the next step to get them all organized and do something with them. You are like the person that buys all the latest exercise equipment but doesn’t get around to using it,” she says.

Hmmm. Well, I’ll take Unruly Receipts over the Chaotic Cash or Running on Empty personalities. And truth-be-told, I’m never going to be the File Folder Funds type where every single receipt or financial item is meticulously organized, with money in the wallet organized by bill type. More power to those of you who are so organized, but I find it hard to find the time to do that every day. I probably go through everything a couple times a month, and I do organize receipts in a shoe box to save for taxes each year. I like the part above that says “This is the person who is trying…” That’s me alright, always trying!

But I think I also have a split personality when it comes to my wallet! How? Well, my regular wallet doesn’t hold credit cards in it, just the normal bills and receipts, etc.. For the fancy stuff I have a second wallet. “What?!” I can hear you say. Well, it’s true. I use one wallet for the paper stuff, and things I can “afford” to lose. But I keep a separate little credit card wallet that I hold in my front pants pocket. Why do I do this? Glad you asked… primarily because I like to have all the ID, credit cards and other important plastic cards in one safe place. But also because as I’ve traveled around the world for many years, I found it best when visiting foreign cities to safeguard important belongings from pickpockets, etc. Now besides keeping a little extra money in my shoe (or other strategic place), I would keep the important cards and money in my front pants pocket. It’s harder for someone to try and “pick” your pocket when it’s up front. So that’s it… a messy wallet, and an extra credit card wallet. Just a habit I’ve become used to.

So what’s your money personality? Are you well organized? By the way, I’m really glad I don’t have a purse, and I don’t envy you ladies. That’s just more room to accumulate stuff. Who knows how many of those I’d have! Oh- and sometimes I actually do use my exercise equipment.

Sometimes we make some strange decisions involving money.  At the time we often think we are buying something we really need.  Usually it is something we really want for a host of reasons we may never understand.  And so often we haven’t really thought it through.   Last night I was watching the news and they were interviewing a woman who drove across three states with two young children to attend a Hannah Montana concert!  That wasn’t the amazing part- she made that trip without any tickets, prepared to pay whatever was necessary to get in.  And pay she did, giving a scalper over $450 per ticket to watch the concert.  She was quoted saying, “My husband thinks I’m crazy.”   Hmmm… really?   To each their own of course, and I hope that concert was a memorable outing for all of them. 

     I’ve made my own share of extravagant spending only to wonder later why I felt so strongly about something.  For example, I have a really nice shotgun in my closet that I purchased over 15 years ago for hunting.  It’s very nice, but guess what?  I’ve never used it.  I rationalize that now it’s probably a collector’s item, but looking back- I would have been far better off investing the money I spent on it.  And I can find a lot of similar themes just by looking around the house.  Why do we own some of these things!?   So often I think it’s about satifying some need within ourselves for very different reasons altogether.

Laura Rowly on Yahoo Finance has written a great article called This is Your Brain on Money. In the article she cites the work of author Jason Zweig who has written a new book called Your Money and Your Brain: How the New Science of Neuroeconomics Can Help Make You Rich.   I haven’t read it yet, but it sounds pretty good.  Author Zweig takes a close look at why we make foolish financial decisions, and strategies we can use to avoid them and improve our financial lives.  It sounds like some of his key advice has to do with the basics, but also the essentials:  Put a good financial plan in place, and stick to it!  Easier said than done over the long-term, but it’s something we must work at to achieve our financial goals. 

     Foolish decision making isn’t always about money of course.  There is a host of research into Decision Science, or why we make decisions that are not always in our best interest, or that of the organizations we work with.   Most of this has to do with psychology and how our emotions can govern our lives.  This knowledge helps me to understand financial decision-making, especially where poor financial decisions result in too much debt, and too little financial security over the long term.  I read an article recently by Ron Blue on The Road to Debt that makes a lot of sense.  In the article  he cites four main factors as causes for problem debt:

1.  A lack of Discipline
2.  A lack of Contentment
3.  A search for Security
4.  A search for Significance

     These themes also have a lot to do with our habits, our emotions and the psychology involved in money decisions.  Does it help me to understand the personal psychology of using money, even in a spiritual sense?  Yes, I think it does.  Mostly because it helps me to reflect more about why I am going to make a certain decision, or why I want to buy a stock or some other item for the home.  I then ask myself, what meaning or need will it fulfill in my life?  Why do I need to purchase it now?  

    I know I must work at staying disciplined in meeting my financial goals.  That is more than a daily thing- to achieve success over the long term I need discipline that lasts.   And that’s where Contentment, Security and Significance come in…  We can try to explore what is important to us individually and within our family and community.  We can try to do things that bring joy and growth personally, and to others over the long term.  We can focus on achieving positive outcomes, and what Curt Rosengren calls Skewing the Bell Curve of Potential Results.   For me, it all serves as a sort of self-improvement project for one’s entire life.  And heck, if it helps us improve our financial futures, then that’s good enough for me.  I often wonder what foolish money decisions other people have made.  But do you know what my most foolish money decision was?  Not starting to save and invest sooner.  The simple measure of time does amazing things for a portfolio. 

It’s often been said that experience is the best teacher, and that’s a very appropriate axiom when it comes to managing money. Jonathan Hoenig from SmartMoney.com might agree in his article Trading, Not TV, Offers Best Investing Lessons. He makes an excellent point in terms of investing in the market and how learning to trade stocks can provide an understanding that we won’t get anywhere else. It’s a good read with some valuable insight, but it’s not for everybody. There are plenty of investors out there who have never set foot in the world of brokerage accounts, and don’t intend to. Many investors have a 401(k), Roth IRA, and a host of taxable mutual funds. Do they need a brokerage account? Not unless they want to trade stocks on their own.

Sometimes I think many of the Wall Street gurus think that trading in the stock market is a necessary practice for achieving wealth. Perhaps surprisingly it’s not- many people enjoy building a business and working at a career that provides long-term growth and opportunity. Many other people invest patiently without trading. Some folks think the market is just too complicated, and don’t want to risk any money trading. I can empathize with that, but at one point in my life I felt a strong desire to learn what trading is all about. My story is pretty much like Mr. Hoenig’s, except perhaps that I didn’t make as much money and don’t trade for a living now.

The conclusions I came to were born on the winding road of countless gains and losses, and the realization that, for me, trading stocks is no way to make a living! Naturally, if you are a professional or have a passion for trading, then more power to you. But to be quite honest, I realized that unless I was going to focus on trading full-time, or become a professional in the investment and trading world, I really had no business being there. It takes a lot of time and focus to get it right, and you can’t be very successful on a part-time schedule. Maybe there are exceptions- I’d love to hear about them. Trading just doesn’t get me there… but saving and investing does!

I would offer that most of us need to be a little more patient and disciplined over time, and instead of trading- focus on investing. Once I accepted that I wasn’t going to spend a lot of time trading stocks, I became a long-term investor, and focused on companies, stocks and mutual funds that would help grow my portfolio. Much of that means dividend paying stocks that return something for the risk I take when holding them over time. I also became someone who looked for opportunities to save money in every facet of life. Little costs add up to big dollars over the years. Something that David Bach calls “The Latte Factor” or how People Magazine says “A Latte spurned is a fortune earned!” Don’t see it? Let’s say you give up three latte’s per week at $3.50 each. That’s $10.50 per week, or $42 per month. Or if you cut back somewhere else and save $20 per week, or $80 per month? Take a look at a comparison:

That’s just from some extra savings each week, with monthly compounded interest. Maybe it looks like a paltry sum of money to some people, but it’s just a minor example. Imagine what we can achieve by saving more! It also shows how a little more interest can go a long way. And it presents an opportunity for us to look for saving money in everything we do over time. At home, at the grocery store, at the bank, when using credit cards, etc, etc. There are countless ways to become more frugal, efficient, thrifty… whatever you want to call it. Just doing it is the hard part, but once you get started- it becomes kind of fun.

Overall I think we can achieve a balance between needs and wants… taking care of ourselves and our families, treating ourself to good things now and then, and being proud of our savings and investing habits over the years. We can end up with a lot more than we ever dreamed of, if we just do our part each week. And by the way, that axiom about getting experience? Well, experience is pretty darn important, no question about it. But it’s not the only place we can learn. Learning from the mistakes and wisdom of others is often more important. There’s a quote I like from Benjamin Franklin, someone who long recognized the value of money throughout his life:

“Experience keeps a dear school, but fools will learn in no other.”

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     Lots of news about housing and mortgage problems facing countless homeowners across the country.  And a lot of other news about how terrible the economy is doing or the “major economic crisis” we face.   To think the writings of Karl Marx offers solace to some today?   OMG.  Why has this become a mantra where people seem to accept that any financial challenge we face is due to “the economy” or ”the system?”  It amazes me because, frankly, it doesn’t get much better than this.   I’m not trying to minimize the challenges that some face, but I have to admit it bothers me when people think these are really bad economic times.   Obviously where some see difficulty others find opportunity.  But are housing challenges, foreclosure and mortgage difficulties something new in American society?  We know it’s not.  Yet to read much of the media’s focus today you might think so.  You would also believe that the “financial squeeze” on the middle class is a terrible new problem we face.   As the 2008 election approaches these issues will only become more emotional.  Economic themes are prized for political polarization and rhetoric, and unfortunately it stirs the passions of so many people in a negative way.   Certainly there is difficulty and challenge for many in today’s economy, but that has always been the reality for people in any society!  Tell me who in the world lives in a utopia where everyone is happy and financial secure?  Compared to much of human history, and many places to live around the world, the economic fortunes we have today are pretty darn close to utopia.  Where else can you find such opportunity, freedom and potential for success?  Where?  

     I remember stories about my grandparents.  I only briefly knew one of my grandfathers.  But this is a story of two approaches to life and the economic burdens that two families faced.  One family, shattered by the Great Depression never quite recovered.  They struggled from day-to-day, with barely enough food to survive.  They didn’t own their home, and lived by the gracious assistance of family members.  The father didn’t work or find a job, but they kept the family intact until he passed away at midlife, never recovering from earlier challenges.   The family survived, the mother worked when necessary and the kids even worked to put themselves through college, making their own way successfully as they grew up. 

     The other family also lived through the Great Depression.  But it wasn’t something that destroyed their hope or approach to life.  The father always managed to find work, or something to do.  He went door-to-door asking to work when times were really tough.  Instead of barely eating, they grew a garden, hunted and fished.  They rented their home their entire lives, and never owned one.  Eventually the father did find work as a tool and die maker.  He worked for the same company for over 32 years, and was eventually let go.  He never received a pension or any retirement benefits whatsoever, and there were no laws that gave him rights as a worker.  The company believed it owed nothing to him, and gave him just that.  He may not have been shattered by the Great Depression, but he never quite recovered from the abence of loyalty after so many years of dedicated labor.  They lived on government assistance until he died.  But his children grew up, finished college and achieved great things in their own lives.

     Both families managed to get by and helped instill family values and a work ethic to their children.  One was more hopeful and optimistic, perhaps more proactive about life.  And both families were challenged greatly by economic forces they had little control over.   The children of both of those families grew up and worked hard during their own lives to succeed.   They raised their own families, appreciated what they had, and didn’t take success for granted.  And they knew that life had been a lot harder before- they had something to measure their achievements by.  Maybe that is something many of us forget at times because we haven’t faced the same challenges.  For those who have only known success or plenty, the absence of either must be staggering.  I appreciate this view of achievement versus success:

“My mother drew a distinction between achievement and success. She said that achievement is the knowledge that you have studied and worked hard and done the best that is in you. Success is being praised by others. That is nice but not as important or satisfying. Always aim for achievement and forget about success.”  Helen Hayes

     I would offer to those who think our economy is terrible that there are far worse places to live and struggle than here in the United States.  I have seen those places… I have seen children living in the squalor of cardboard huts selling their bodies and souls for food.  And I know that doesn’t change the reality of the situation for those who do face mortgage problems, foreclosure on their home, job losses, etc.  But I think there is a more insidious problem, and that has to do with the psychology and perceptions we share about our nation and the economy as a whole.  With enough focus and acceptance, our perception becomes our reality.  We tighten our belts.  Then we face greater challenges as consumer spending slows and the wheels of this great economic machine slow down.  Perhaps it’s part of the business cycle, but it bothers me that some see this as inveitable and necessary.  Others, while worrying of uncertain economic times, at least look for proactive ways to manage finances.  And some see opportunity and potential in how technology will shape the future.  We can always do more, and we can always try to improve ourselves and the lives of others.  But I think we need to look around at times and appreciate what we do have.   Mostly there is change… and that’s something we’re never going to be without.

“Finish each day and be done with it. You have done what you could. Some blunders and absurdities no doubt crept in; forget them as soon as you can. Tomorrow is a new day; begin it well and serenely and with too high a spirit to be encumbered with your old nonsense.”
                                                                                        Ralph Waldo Emerson

Lately I have been struck with thoughts about Capitalism. And thanks today to BusinessPundit.com for including Sushi Money in the eclectic Carnival of the Capitalists 4th Anniversary Edition.

But I came to the carnival thinking about business and expansion… so many facets of capitalism that drive the world of commerce. Maybe more importantly for the dichotomy I keep seeing as the world continues to change through creative expansion, technological (r)evolution, and wrenching pre-industrial strife among the poorest nations.

I found myself intrigued by the first chapter of Democratic Capitalism and Its Discontents by Brian C. Anderson; the alternatives to capitalism have left nothing except misery through generations. I’m also amazed how the opponents continue professing beliefs that “Capitalism is the Worst Enemy of Humanity.” It bogles the mind that some can place such blame without understanding the potential for change and prosperity, and the lifting of so many from the depths of poverty and war.

An excellent article from the Wall Street Journal focuses on these issues and how similar beliefs leave No Room for Entrepreneurs. Capitalism may never solve all the miseries attendant to the human condition, and may well force challenges and change along the way, but tell me what economic and human productive system has ever reached so far to foster the advancement of knowledge and human progress?

So many people disagree… a quick Google search brings up extreme debate with hosts of people who see businesses and capitalists as evil, greedy moneymongers. Very strange indeed. I find it interesting to observe what is happening in Asia and India today, because the evidence speaks volumes, and the debate there is alive and well.  Capitalism will continue… have a great day.

     What are your real motivations for making money?  Do you want to become rich?  Or is that something that seems too greedy?  I think we should be honest with ourselves, and the sooner the better!

     Lately I’ve been wondering how many of us are truly driven to increase our wealth.  When I say “driven” I mean that one of our primary goals in life is to save, invest or accumulate as much money as possible in order to become “rich”.  Is that a goal for you?   I must say honestly it never has been a goal for me before.  And what about business and entrepreneurship?  Is your goal to succeed and become wealthy through business and working hard developing a company?  What about using personal energy and creativity to achieve great things?   For me, that was never a priority either.  But I’m finding as I grow older that what we strongly desire, what we hold in our thoughts and dreams, and what vision we have for our future can indeed become our reality.   If money is not part of that vision or dream, then guess what?  It’s probably not going to be part of our future, or a reality in our life either. 

     When I look to my future, I see a desire for a comfortable, enjoyable life, free of worry and stress about financial matters.  I also see things I would like to do, and places I would like to go.  I also see that a lot of money may be involved at times.   In some ways that bothers me… I don’t want money to be the focus of my life.  At least not in terms of trying to get “more” money all the time.  But when I am really honest with myself, I do want the things and opportunities that money can buy.  I do want to be able to give to charity, to start new companies, to travel to far-off places around the world, to help educate children and increase opportunity for others.   All of that takes money that most of us must work and save many years to gather.  But do I only want to have that money after I’m 65 years old?  No!  I would like to have it sooner…  to enjoy along the way.

   But I’ve always been about balance, and I think that has held me back.  Not too many excesses here or there, not too much risk, yet not too much boredom.  Well, except perhaps flying off of aircraft carriers in fighter jets for many years… but it didn’t seem like risk at the time.  It was just something I strongly desired and enjoyed doing.   Otherwise, I’ve led a fairly moderate life and approach to things.  Even my investments are balanced overall.  But guess what?  I don’t think a balanced approach is necessarily going to achieve great things unless given a great deal of time.   Sure, with 30-40 years of consistent saving and investing, I think almost anyone can become very wealthy.  But most of us do not consistently save or invest for that length of time!  As it stands right now, I’ll give myself 25 years as an estimate for how long I will be consistently saving and investing until retirement.  Barring unforeseen circumstances, that should allow us to accumulate a very nice nestegg.  But unless we take on a little more risk, or succeed in a business venture, we are probably not going to ever become rich.   That’s a hard notion to swallow or accept, especially if you are someone who is accustomed to success.  

     As we grow older, it seems like we go through a process of cherishing the things we can do, and accepting the things we cannot, or may not, do anymore.  But I refuse to believe that I can’t become more wealthy!  The energy and creativity that exists within the human spirit is unlimited in my opinion, and we can achieve great things at any age.  So to wrap up this self-absorbed examination of “money motivations” I think what I’m saying is that I’m now going to acknowledge my desire to become wealthy.  I’m going to accept and encourage that desire as a goal for my life over time, as well as my other goals.  I will still try to achieve balance in all aspects of living… but where saving, investing and developing creative ways to make money are concerned?  I’m excited about a future that is only ours to create!  We’ve got to start somewhere, and there’s no time like the present.

    Yesterday after work I went inside to shower and change.  Feeling refreshed, I put on my “comfy clothes”… shorts and a favorite t-shirt to relax a little in the evening.  Do you have a favorite shirt of some kind, or other clothes that you enjoy wearing to relax?  Most of us have several particular shirts or something… I wear mine when I want to be more creative with writing, thinking, etc.  Here’s the interesting part:  After putting on that comfy shirt and spending the evening doing homework with our son, paying bills, catching up on email, and doing some writing, I finally went to bed.  As I stood in front of the mirror… to my surprise I realized I was not wearing my favorite t-shirt!  It hit me with a jolt of awareness… it was all an illusion, false perspective and a simple mistake.  I thought I grabbed a particular shirt and went blindly about my business with that knowledge, all the while being wrong. 

     New thoughts came to mind as a parallel to that experience.  It seems that much in our lives is an illusion.  “What if,” I thought, “it’s like that with everything?”  We make choices and decisions based on a set of circumstances, sometimes believing it is the most reliable set of circumstances.  And yet we may be totally wrong about the circumstances or elements with which we are basing our choices and decisions on.  We even extrapolate our emotions and feelings from those circumstances.  

Could our financial lives be the same way?  I think that the answer is clear.   We make choices, decisions and take action based on what we know, or what we think we know.  Many times we don’t know enough, and what we think is absolutely incorrect.  Much of our life is indeed perception and belief.  I surely won’t argue for the exercise in trying to make sure we are correct all the time.  I don’t know anyone who has the time or capacity for outright perfectionism in living a functional, productive life.  We make the effort to learn and grow, set our intentions and goals in action and then do the best we can with the choices and decisions we make, hopefully learning during the journey.  And we try to remain observant and prepared for the opportunities that will help us improve our life.  

My real point however, is that perhaps we should simply recognize that we don’t have all the information about things.  We have some information, and we should not assume, nor take for granted the evidence we have as absolute proof.  We must be willing to learn, to change and to adapt with new information to modify our context and perception. 

     With the knowledge that we are doing the best we can with a limited set of knowledge and information, we then have good reason to re-evaluate our choices and actions over time.  Maybe it’s time to look at that mutual fund we’ve been investing in the past couple of years.  Do we have more knowledge now?  How is the expense ratio or the fund’s investment goals related to our overall asset allocation, or desired portfolio structure?  What rates are we getting on the cash stashed in the bank?  Do we have CD’s or money market funds holding cash that may be put to better use?  Or vice versa, maybe our portfolio is way more aggressive than we need, and it’s time to rebalance?   And what about our home and mortgage loan?  If we’re paying PMI, when can we drop the PMI payments?  And credit cards… if we’ve accumulated more debt than we would like, what is our monthly APR, and how much money are we spending on financing charges?   Etc, etc.

     Regardless of the casual benefits, ignorance is most certainly not bliss.  Much better to be well informed and aware, at least for our financial well-being.  Like a favorite t-shirt that really wasn’t, it’s good to remember that much of what we see and experience in life is based on the context of the moment and our perception.  And we don’t always see what’s really there, sometimes being surprised down the road a bit. In the financial arena, surprises are generally not a good thing!

“How hard it is, sometimes, to trust the evidence of one’s senses! How reluctantly the mind consents to reality.”

                                                                                            Norman Douglas