Its status as a bystander in the cultural shift
to instant gratification has changed only modestly.
As a financial principle that served earlier generations
saving was considered essential before making a purchase
of something special you wanted. Then came the seventies
and the explosion of credit cards became a tsunami through 2007.
We are all familiar with what happened next.
“I want it all and I want it now, thank you very much”
become the call that echoed throughout the malls.
Today, when a household’s debt is 150% of its disposable income
saving as a financial principle has surely eroded to the point
where it is non existent among no less than a third of the population
who have nothing put away for retirement.
I bet 50% of people fifty and over couldn’t make it
through the first year of any forced retirement (unemployment)
given their current consumption pattern and the value of their assets.
Now what?
I travel on both sides of the US/Canada border and I haven’t seen
an empty shopping mall parking lot yet. But we’re told saving is making a comeback.
The speed of this reversal to thrift relative to the pace of debt accumulation, its total dollar amount, and what it will take in income saved to whittle it down is a huge concern.
Spending less is the surest path to that victory.
Earning more would be nice, too but that doesn’t look very promising
in the immediate future. Cutting back on consumption and redefining
your wants versus your needs now remains the best strategy
for instant gratification if saving is what you want.
This could be the fight of your life.
Copyright 2010 William M. MacKay
[ add comment ] ( 2 views ) | permalink |
( 3 / 77 )Everything keeps getting bigger …
except what really matters most.
Bill Gates is the world’s richest man.
He has even more cash than before.
Cell phone penetration hits 89% in the US.
Some people have two they love them so much.
Americans keep getting super-sized with 34% obese.
Toyota tops GM’s sales. (Runaway cars. No problem.)
There is no end to the all-time highs.
National debt is no exception.
So what should really matter?
Let’s start with the basics like life expectancy.
For many countries this is a national disgrace.
True, many are third world countries
where kleptocracy reigns supreme.
And when the US ranks 26th in maternal deaths
isn’t something wrong here on gold mountain?
Perhaps our priorities are off target.
Personally, the measures of our well-being
also appear to miss the bullseye.
Look at the size of your household debt
relative to your retirement fund.
This is a yardstick worth examining.
There is no perfect fit in an imperfect world
but someday you have to save something for
when the cash stops flowing in your direction.
Speaking of employment, where have all the jobs gone?
By the yardstick used by the Clinton administration
unemployment is north of 20%. Add to that
the underemployed and you have a horde of people
fighting to keep it all together.
Outside of major urban centers rural poverty
is a very real problem that is less obvious
but no less an issue of shrinking incomes.
And then there is my favorite. Happiness.
That subjective measure of well-being we all
crave but find harder to grow and maintain.
Here’s one important idea to help change that.
We are notoriously lousy at predicting how much
pleasure we’ll get when we spend our money on
anything we want (when all wants are needs).
So as you consider making that next big purchase
that is sure to make you happier and more satisfied,
know that you are probably wrong by a country mile.
Look how much you could save right there.
A giant step to grow your retirement fund.
Copyright 2010 William M. MacKay
[ add comment ] ( 2 views ) | permalink |
( 3 / 74 )Is their a best retirement strategy that solves the problems we face?
And who can forget…
Your debt service interest sucks up too much of your income.
Inflation is rising faster than what you get paid.
Other middle-aged folks in the same boat plug the promotion ladder.
Job security is a joke. Much like pension benefits.
And far too often, your grasp still exceeds your reach as your belief in the golden years
still lingers in the face of some brutal truths that appear to the contrary.
So if you haven’t saved enough (read any) what’s the only other option?
You will work longer. Maybe 3 years…maybe 5 years past 65.
I predict it will be longer as conditions demand and your health permits.
The motivation is a combo of both fear of loss and hope of gain.
Whatever is the most powerful driver based on your situation
will determine how and where those years are spent.
I don’t fancy being a Wal-Mart greeter but then I have some fall back job skills.
My current distaste for travel (how is it that every flight anywhere takes 12 hours?) suggests I don’t want to be a limo driver to hear others whining about this reality.
What to do? Is there any relevance anymore to looking for work that has the motivating factors that drew us to certain jobs and filled pages of Harvard Business Review? Some may remember hearing about these back in your youth?
Today, we can dispense with many of the extrinsic motivators (maintenance factors behind a good job) like fair and adequate pay, job security, and pension benefits.
What’s left are the intrinsic motivators. Look for variety and challenge, opportunity for decision making, adequate feedback and a chance to learn, mutual support and respect, and don’t forget the big one…room to grow and be self-actualized.
Jobs with these conditions for most 65 year old seniors without educational credentials are in short supply.
The answer may be to continue learning, and never stop learning, new practical skills. This assumes you keep sharpening the old skills, too.
Being overqualified is a retirement strategy you definitely want to have on your side. When you’re through learning, you’re through.
Copyright 2010 William M. MacKay
[ add comment ] ( 4 views ) | permalink |
( 2.9 / 97 )You would suspect that the rich and the poor are very close in what matters most to them. And why not?
We are all part of the great human family. It’s why we work so hard to raise our standard of living.
And what matters is our satisfaction with life. Here’s the survey to help you identify yours. I encourage you to take it.
Pick the number that best represents your Life Satisfaction.
*** Low 1 2 3 4 5 6 7 8 9 10 High ***
While you’re at it, make a prediction of what you think the world average might be. Write it down. I’ll share the answer below.
The above survey comes from The International Society of Quality of Life Studies. It has compiled a world average rating of our life satisfaction based on over 1 million responses from people in 45 countries.
Now, I’d be concerned that the folks in Botswana and China will surely put downward pressure on the average compared to folks in Belgium and Canada.
What you don’t suspect, however, is how close they come when rating their life satisfaction.
It’s a curious thing. Regardless of economic or social conditions people in many of the underdeveloped countries are just as happy (some happier!) than we are in the west where our standard of living is dramatically higher.
Perhaps we’re all working too hard here as the ‘standard of longing’ demands more and more money and more and more of our time.
When the world average is seven among “the haves and have nots”, I think “the haves” need more face time and more fun time with those they love.
Remember. You’re not here for a long time. You’re here for a good time.
Copyright 2010 William M. MacKay
[ add comment ] ( 3 views ) | permalink |
( 3 / 86 )I’ve had a change of heart today. It’s a relationship thing.
Nothing that would make the National Enquirer but it should.
Because it’s loss could be brutal. Your job.
Reading Don Peck’s article in the March issue of The Atlantic, “HOW A NEW JOBLESS ERA WILL TRANSFORM AMERICA”, left me feeling deflated, ‘empty as a pocket’ in Paul Simon’s words.
In the first instance, it triggered my fight response. What to do (and do it now) to protect my friends and my children from the potential downward financial, emotional, and social spiral that joblessness could create if Peck’s and others’ predictions are even close to accurate.
Signs of Trouble That Peck Reports
* average duration of unemployment now extends beyond 6 months (first since 1948);
* in the past year a job loss, a reduction in hours, or a pay cut hit 44% of families;
* number of delinquent mortgages in November at 1 in 7, up from 1 in 10 a year earlier;
* no other circumstance produces a larger decline in mental health and well-being than being involuntarily out of work for 6 months or more;
* we are 11 years into a period of decline, much deeper than the latest recession.
Sobering thoughts for Americans to be sure, all of which led me to change my stance on the amount of emergency funds you should have available. This relationship between consumption and saving is a precarious balance and should reflect changing circumstances, both yours and that of the economy.
Given that so many of us use multiple credit cards with ridiculously generous limits, I had relaxed the traditional rule of thumb about keeping 6 months of income available in highly liquid assets. In the past I felt comfortable that 3 months would be adequate. Not any more thanks to The Atlantic article.
The challenge, however, when budgets are tight is to squeeze that much out of monthly expenses. This represents a significant amount of cash that few can manage to hold back from consumption when every dime is allocated for something.
Reading this article will help you find the motivation to try if not the immediate cash.
Copyright 2010 William M. MacKay
[ add comment ] ( 4 views ) | permalink |
( 3 / 113 )
Calendar
