Real Financial Planning Part 2
In the world of nature, plants are either growing or dying. "Neutral" is a man-made phenomenon.
So why is it, when it comes to life (and especially money), so many people are stuck in neutral and waiting for someone else to put them into gear?
What's up with that?
Neutral Fever
People on the TV news are looking to others to fix their problems. According to cardweb.com (as reported by CNN Money) the average American family with at least one credit card has $10,700 in credit card debt (which happened because they spent money they didn't have - usually for stuff that while important to them, probably wasn't necessary to live). I wrote an article about how to save money which posted to the Yahoo!Shine page this summer. Over 600 comments were posted - most gave every excuse you could think of (and a few I never could have imagined) for why a person couldn't save that kind of money.
Very few of those comments owned up to the fact that each of us created our current reality and if we want a different reality, we'll have to create that as well. It's not hard. It does require a shift, but that shift doesn't have to be a mind-blowing experience. The journey of a thousand miles begins with a single step, yet very few people make any effort to even put their shoes on much less walk outside their door.
Life Is Going to Hit You
This is what I mean by "Letting Life Hit You In the Face."
And life is going to hit us all in the face a heck of a lot harder over the next several years than we have witnessed so far - at least that is what I suspect the future has in store for us. It has to. We have too many major issues that have been swept under the rug the past 15 years: everything from bad debt (from stupid home loans that should have never been made) to trillions of dollars in paper money floating through a system like a giant house of cards.
Greece will default. It's only a question of when. The Euro will not be functioning in it's present form five years from now. Interest rates will eventually rise (substantially) and credit will continue to contract creating first deflationary pressures and then later hyper-inflationary ones (as a result of all the dumb things we do to try to stop the deflation first). If you thought 2008 was bad, you haven't seen anything yet.
Big Questions
Are You Ready For This? What is your strategy?
Are you saving? How are you protecting the money you have already saved? Is it exposed to the Stock Market Roller Coaster? Can you afford to take a 30% hit from here? What happens if you lose your job? What happens if your business customer base drops? What are you doing to provide value to your neighbors, customers, friends and family? Are you giving more than you are taking in life? Have you left yourself with as many options as possible should something not-so-great happen in the future?
These are the questions that rattle through my head every day - and these are the questions we ask of financial planning clients. That is what the profession of real financial planning is all about. It isn't about investment portfolios (although that is a small part of the work I do). Financial Planning is about helping people take control over their personal finances, to be as strong as possible and prepared as possible as they navigate the stormy waters of their financial future.
Real Financial Planning
If I'm wrong about the next five years (and I hope that I am, although I seriously doubt it) but you have a financial strategy in place ... you'll do even better than you would with just the rising tide floating all boats. If I'm correct about even a few of the possible financial challenges coming our way, that financial strategy could be the life-vest that saves you from drowning.
You don't have to work with me (although I do suggest that you work with a REAL financial planner professional, however) but you do at the very minimum have to start putting together your own strategy.
Ask yourself (or preferably someone else whom you trust), "If (something bad) happens, how am I exposed to it? What's the worst that could happen to me? How can I protect myself and my family or at least have a way to recover from it?"
Now Is Good
This is not a time for procrastination. Events are unfolding at a rapid rate. The waters are already turbulent and getting more violent every day. I know there are all kinds of other things that might seem to be just as important. Believe me, when it comes to putting off projects, I'm a master.
But this time, the important deadline is here - It's time to get out of neutral!
John