President Obama announced new initiatives today to help citizens save more money for retirement, making it easier to contribute to IRAs and 401(k) programs. I applaud his administration's efforts. An administration official (not named in the Reuters article I read) was speaking about the personal savings rate which has risen to 5% today from as low as 0.8% in April of 2008, and has even been negative in recent history. He said, "Right now the situation in national savings is unsustainable." He also called the negative savings rate, spending more than we make, of past years a "major macroeconomic challenge."
It's so amazingly refreshing for someone in government to say that it's not okay to continually spend more than you bring in, and that it's unsustainable to do so. Overspending increases your debt load, and increases interest payments to loans rather than paying for goods and services. When expenses exceed income it is called deficit spending.
Having a positive savings rate as individuals is absolutely critical as we make our personal budgets, and a positive savings rate is the result of having, of all things, a balanced budget. But wait. To go from zero to a positive savings rate, you also need to have something left over and unspent. That leftover is what you use to either pay down the debt you've built up in the past, or to build up savings. That unspent amount is the 5% mentioned above.
The really slick part is that once you've paid off your debt, your cash available to spend on goods and services goes up by whatever you used to be paying in interest. Then if you build up a nest egg of investments, the interest from those investments can either accelerate your savings or become additional spending money. So eventually, you can get to the point where you have everything you did while spending yourself into ever-increasing debt, but without actually going into debt to do it. Neat trick, isn't it?
It's the difference between sacrificing for the future, and sacrificing the future. To make this work, those who are overly fond of deficit spending (on a personal level or otherwise) need to trade in their audacious chutzpah for a backbone, sort of like a Cash for Clunkers program.
Showing posts with label motivation. Show all posts
Showing posts with label motivation. Show all posts
Saturday, September 5, 2009
Thursday, February 12, 2009
Our Best and Brightest Hope
We have the obvious problem that the economy has hit a bump in the road. For some, it's a really big bump. We have foreclosures, layoffs, businesses and people going bankrupt. So we have weeping and wailing all around, right?
No, not even close. We have a shining beacon out there, able to turn the economy around, give finance a kick in the pants, and get society out of this "woe is me" attitude. Who is this paragon of goodness? The nearly trillion dollar government-built taxpayer money shotgun? Once again, no, not even close. The refunds, bailouts and handouts are likely to have an emotional impact which could possibly shorten the downturn, and some borderline-viable businesses will be saved, but that's not what recoveries are made of.
Let's make the reasonable assumption that some of those who have been in a layoff recently have been fiscally responsible and have spent the time and effort to build a nest egg. Yes, there are those who didn't get into loans beyond their means and who are able to hold a $20 bill for more than 10 minutes without spending it. The exact percentage doesn't make any difference. Now let's trim it down some more and assume that some percentage of those responsible types also have some entrepreneurial spirit. This results in new small businesses popping up all over the place.
If you assumed 5% savers and 5% of those as entrepreneurs, you have 2500 businesses formed per million layoffs. Of course my numbers are guaranteed to be incorrect, but the principle remains despite the numbers you would prefer to choose.
Those new small businesses will hire people, so the old-school companies don't need to hire everyone back to reduce unemployment. Some of the fledgling companies will fail as they always do, but some will thrive and move on to become the movers and shakers of the economic recovery, and will become household words in their states, countries, and even in the world.
To widen the scope, many of those small businesses will thrive because they meet the needs of you and me, the common citizen. Our part in the recovery if we're not forming these engines of industry, is to patronize them because they help us with what we need and want.
So whose vest is big enough to hold the shiny pin given for saving the world from economic disaster? Yours and mine, if we're up to the challenge.
No, not even close. We have a shining beacon out there, able to turn the economy around, give finance a kick in the pants, and get society out of this "woe is me" attitude. Who is this paragon of goodness? The nearly trillion dollar government-built taxpayer money shotgun? Once again, no, not even close. The refunds, bailouts and handouts are likely to have an emotional impact which could possibly shorten the downturn, and some borderline-viable businesses will be saved, but that's not what recoveries are made of.
Let's make the reasonable assumption that some of those who have been in a layoff recently have been fiscally responsible and have spent the time and effort to build a nest egg. Yes, there are those who didn't get into loans beyond their means and who are able to hold a $20 bill for more than 10 minutes without spending it. The exact percentage doesn't make any difference. Now let's trim it down some more and assume that some percentage of those responsible types also have some entrepreneurial spirit. This results in new small businesses popping up all over the place.
If you assumed 5% savers and 5% of those as entrepreneurs, you have 2500 businesses formed per million layoffs. Of course my numbers are guaranteed to be incorrect, but the principle remains despite the numbers you would prefer to choose.
Those new small businesses will hire people, so the old-school companies don't need to hire everyone back to reduce unemployment. Some of the fledgling companies will fail as they always do, but some will thrive and move on to become the movers and shakers of the economic recovery, and will become household words in their states, countries, and even in the world.
To widen the scope, many of those small businesses will thrive because they meet the needs of you and me, the common citizen. Our part in the recovery if we're not forming these engines of industry, is to patronize them because they help us with what we need and want.
So whose vest is big enough to hold the shiny pin given for saving the world from economic disaster? Yours and mine, if we're up to the challenge.
Monday, December 15, 2008
Inciting Change
Change is not just something you get at the grocery store. It's how society and individuals grow, progress and learn. Unfortunately change also includes moving the other way into decay, corruption and ruin.
Let's assume for a moment that you want to be an agent of change. What's involved?
Scope
You can decide on your own that you want to change something about yourself. You may want to lose weight, earn a degree, buy a home, earn a million dollars, read a book, whatever.
Changes of a local scope are those that influence those around you. Of course that comes down to a question posed in the New Testament: "Who is my neighbor?" It really depends on what you're changing. Some changes will effect your family, like deciding to go on a vacation together, or to all learn to speak Pig Latin fast enough that the neighbors can't tell what you're saying. If you decide your home owner's association needs to be reformed, it takes a bit more effort since a few hundred people could be involved. The local scope can grow to encompass just about everything.
When the scope of a change covers everything, you get to global change. Everything we do has some global impact, but the strength of that impact is almost always negligible in the big picture. Based on chaos theory, there could be an extra butterfly in South America this winter because I left for work fifteen seconds late one day in 1995. The vast majority of change is small and untrackable. A relatively small number of changes or actions have a clear global impact.
The interesting thing about the spectrum of local to global change is that the large changes depend upon the individual scope as a driving force. Cities, states and countries don't make laws. The people do, through whatever government they have.
Method
The usual method to produce change is to follow the established rules. The legislative branch of government is responsible for writing the laws that we will follow. If you want to change something, there's a well defined process that works fairly well most of the time, whether at the level of city, state, or federal government. An idea is turned into a bill which is discussed. Some are deemed important enough to proceed to a vote, and some of those bills become law. Citizen initiatives are a similar process.
Another method of inducing change is to be a conciencious objector. Some time you may feel a law (or entire government) is oppressive or archaic, and the usual method of following the rules of the current system doesn't work. To change the way things work may require breaking a law in a particular way. Being an objector means you break a law publicly, announce your personal intention to the appropriate authorities, and subject yourself to the full consequences. Personally, I don't have any call to be a conciencious objector, but I maintain respect for those who honestly have no alternative.
The third method to incite change is to break laws without accepting full responsibility. This group actively tries to avoid the consequences of their actions. This group includes the scum of the earth. Deadbeats. Thugs. Thieves. Murderers. Terrorists. People who roll through stop signs. This method, rather than creating something new, seeks only to tear down and destroy the existing value system. Those who use this method of change think might makes right, and that they can do whatever they are strong enough to get away with. Theoretically, this method could be used to do something good, but those who try to get away with breaking the law aren't usually out to help others, now are they?
Value
Now that you've decided this "change" thing is what you want, what sort of change do you want to make? Change ain't so hot if you just put a different pair of dirty socks back on. Change for the worse is just as likely as change for the better if you don't look before you leap.
If you're used to sitting back in your comfort zone, you can take things two ways. First would be to take some area where you already have some expertise, and to make some change using that skill or knowledge. Second, you could decide you need to change yourself, and gain a new area of expertise. If you decide to change something beyond the personal scale before you know what you're doing, you'll be like famous actors who use their well developed skills to weep or rant at congressional hearings on subjects they only peripherally understand. All show, no substance.
So, remember that order. Learn skill then use skill. That way, you'll know what you're doing, and it will show. I may not agree with you, but you'll have the respect of those who value knowlege used well.
So What Now?
I already mentioned that whining isn't the answer, but there are infinite ways of changing for the better. Whether you learn something, create something, or serve someone based on what you already know, the world may just be a better place because of you. Don't like your mayor, school board member, or Congressman? Run against him. Don't want to run for office? Support someone who will. Use what you've got however you can to become an agent of change, rather than a victim of it.
Let's assume for a moment that you want to be an agent of change. What's involved?
Scope
You can decide on your own that you want to change something about yourself. You may want to lose weight, earn a degree, buy a home, earn a million dollars, read a book, whatever.
Changes of a local scope are those that influence those around you. Of course that comes down to a question posed in the New Testament: "Who is my neighbor?" It really depends on what you're changing. Some changes will effect your family, like deciding to go on a vacation together, or to all learn to speak Pig Latin fast enough that the neighbors can't tell what you're saying. If you decide your home owner's association needs to be reformed, it takes a bit more effort since a few hundred people could be involved. The local scope can grow to encompass just about everything.
When the scope of a change covers everything, you get to global change. Everything we do has some global impact, but the strength of that impact is almost always negligible in the big picture. Based on chaos theory, there could be an extra butterfly in South America this winter because I left for work fifteen seconds late one day in 1995. The vast majority of change is small and untrackable. A relatively small number of changes or actions have a clear global impact.
The interesting thing about the spectrum of local to global change is that the large changes depend upon the individual scope as a driving force. Cities, states and countries don't make laws. The people do, through whatever government they have.
Method
The usual method to produce change is to follow the established rules. The legislative branch of government is responsible for writing the laws that we will follow. If you want to change something, there's a well defined process that works fairly well most of the time, whether at the level of city, state, or federal government. An idea is turned into a bill which is discussed. Some are deemed important enough to proceed to a vote, and some of those bills become law. Citizen initiatives are a similar process.
Another method of inducing change is to be a conciencious objector. Some time you may feel a law (or entire government) is oppressive or archaic, and the usual method of following the rules of the current system doesn't work. To change the way things work may require breaking a law in a particular way. Being an objector means you break a law publicly, announce your personal intention to the appropriate authorities, and subject yourself to the full consequences. Personally, I don't have any call to be a conciencious objector, but I maintain respect for those who honestly have no alternative.
The third method to incite change is to break laws without accepting full responsibility. This group actively tries to avoid the consequences of their actions. This group includes the scum of the earth. Deadbeats. Thugs. Thieves. Murderers. Terrorists. People who roll through stop signs. This method, rather than creating something new, seeks only to tear down and destroy the existing value system. Those who use this method of change think might makes right, and that they can do whatever they are strong enough to get away with. Theoretically, this method could be used to do something good, but those who try to get away with breaking the law aren't usually out to help others, now are they?
Value
Now that you've decided this "change" thing is what you want, what sort of change do you want to make? Change ain't so hot if you just put a different pair of dirty socks back on. Change for the worse is just as likely as change for the better if you don't look before you leap.
If you're used to sitting back in your comfort zone, you can take things two ways. First would be to take some area where you already have some expertise, and to make some change using that skill or knowledge. Second, you could decide you need to change yourself, and gain a new area of expertise. If you decide to change something beyond the personal scale before you know what you're doing, you'll be like famous actors who use their well developed skills to weep or rant at congressional hearings on subjects they only peripherally understand. All show, no substance.
So, remember that order. Learn skill then use skill. That way, you'll know what you're doing, and it will show. I may not agree with you, but you'll have the respect of those who value knowlege used well.
So What Now?
I already mentioned that whining isn't the answer, but there are infinite ways of changing for the better. Whether you learn something, create something, or serve someone based on what you already know, the world may just be a better place because of you. Don't like your mayor, school board member, or Congressman? Run against him. Don't want to run for office? Support someone who will. Use what you've got however you can to become an agent of change, rather than a victim of it.
Saturday, December 6, 2008
No Whiners Allowed
Actually, and equally valid topic, but one that might have made some folks wonder at my grammar would be "No Whiners Aloud."
I don't care for whining in our house. If a kid comes up and says "I'm hungry," my first thought is to say something like "well, that's too bad, isn't it?" Or maybe "That sounds like complaining." If I'm in a good mood, I'll just say "Hi there, Hungry. Nice to meet you."
Now if a kid asks what they can do to help with dinner, I'm all ears and willing to share information and jobs which can get us fed sooner. Those willing to actually do something will always win when pitted against whiners.
Political whiners are the same. I have no use for them. I don't appreciate it when things and people I vote for don't win, but I try really hard not to whine. I didn't get everything I wanted this last election. Very few people get everything they want. But how do you handle the losses you face? Rather than whining, learn how the system works, and what it will take to succeed in the future. Promote the good you see within the causes and people you support. Bypassing or subverting the system is cheating, by the way. You don't want to be a cheater any more than you want to be a whiner.
Are you currently a whiner? Do you wish for things to change that are unchangeable or in the past? Do you complain, rather than ask questions or correct things? Then stop it.
Once you've stopped whining, you're only half done because now you need to actually do something productive to make up for wasted time and to move forward on whatever you stand for. Don't know what you should stand for? You're in luck! You get to choose what you will devote the rest of your life to. I'd recommend faith in God, strong family life, upright principles and transparent ethics in case you are still undecided.
I can already hear the new whining bubbling to the surface. If that little voice in your head says that it would be hard, or that you don't have time, or that it sounds good for other people, or you wish things would just go your way instead, then stop it. Tell the little voice that you don't want to be roommates any more and move from whiner to mover and shaker. The world has enough baggage without you becoming part of it.
Don't just sit there. Do something. Be an example. Make something. Help someone. Take a stand. Leave a mark. Start now.
I don't care for whining in our house. If a kid comes up and says "I'm hungry," my first thought is to say something like "well, that's too bad, isn't it?" Or maybe "That sounds like complaining." If I'm in a good mood, I'll just say "Hi there, Hungry. Nice to meet you."
Now if a kid asks what they can do to help with dinner, I'm all ears and willing to share information and jobs which can get us fed sooner. Those willing to actually do something will always win when pitted against whiners.
Political whiners are the same. I have no use for them. I don't appreciate it when things and people I vote for don't win, but I try really hard not to whine. I didn't get everything I wanted this last election. Very few people get everything they want. But how do you handle the losses you face? Rather than whining, learn how the system works, and what it will take to succeed in the future. Promote the good you see within the causes and people you support. Bypassing or subverting the system is cheating, by the way. You don't want to be a cheater any more than you want to be a whiner.
Are you currently a whiner? Do you wish for things to change that are unchangeable or in the past? Do you complain, rather than ask questions or correct things? Then stop it.
Once you've stopped whining, you're only half done because now you need to actually do something productive to make up for wasted time and to move forward on whatever you stand for. Don't know what you should stand for? You're in luck! You get to choose what you will devote the rest of your life to. I'd recommend faith in God, strong family life, upright principles and transparent ethics in case you are still undecided.
I can already hear the new whining bubbling to the surface. If that little voice in your head says that it would be hard, or that you don't have time, or that it sounds good for other people, or you wish things would just go your way instead, then stop it. Tell the little voice that you don't want to be roommates any more and move from whiner to mover and shaker. The world has enough baggage without you becoming part of it.
Don't just sit there. Do something. Be an example. Make something. Help someone. Take a stand. Leave a mark. Start now.
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