Retirement Ripoff

This is the headlines in a TIME Magazine story from the October 31, 2005 issue:

The Great Retirement Ripoff

Millions of Americans think they will retire with benefits are in for a NASTY SURPRISE.

How corporations are picking people's pockets with the help of Congress.

The generations have developed the mentality of just kicking the funding of retirement issues over to the next generation. Trouble is that this just makes the problems even worse. Eventually one generation will get stuck with the tab.

People have go to develop their own retirement personal fund that they alone control.

Source of Ford's Wealth

At his height, Henry Ford’s assets consisted of 25% tangible (cash, plant, equipment, etc.) and 75% intangible (his experience, his associates, his organization, etc.). Hill makes this interesting point:

Destroy every plant the Ford Motor Company owns: every piece of machinery; every atom of raw or finished material, every finished automobile; and every dollar of every deposit in any bank, and Ford would still be the most powerful man, economically, on earth. The brains that build the Ford business would duplicate it again in short order.

To me, it follows that time is our friend, not our enemy. The longer we have lived, the more experience, knowledge, and relationships we have had the opportunity to accumulate. The more intangible assets we have accumulated.

Bots on Social Marketing

Facebook and Twitter are all the rage and yes, I joined in, too. The time to keep up with all the tweets and wall messages overwhelms. So, I see that people have resorted to automated services. They automatically generate replies and follow people who follow you. I notice the same canned messages coming in over and over.

So, how many of the communication is from real people and how much of it is just bots talking to other bots?

Last month, with my mother dying, I traveled to Seattle to see her. I tweeted this. No one responded. Just the same messages came in as before. Now personally, I don't care but the implication for actual communication that is occuring is large.

One has to measure the amount of authentic communication that is occuring in this media.

Carry Cash

Dave advises to carry cash instead of credit cards even though you may get robbed. He believes that you loose more money through credit card fees than through the risk of robbery.

My parents used an envelope system for their expenses. They had envelopes for groceries, mortgage payments, gas and so on. Then they cashed their paychecks and allocated the money amongst the envelopes. They lived out of these envelopes. That’s how they budgeted.

Statute of Frauds

This law requires agreements to be in writing concerning:

1) Land
2) Performance greater than 1 year
3) Sale of goods of $500 or more
4) Promise to pay the debt of another
5) Promise made in consideration of marriage
6) Promise of an executor or administrator of an estate to pay estate’s debts out of his own funds.

From watching Judge Judy and other such shows, they seem to live on the disregarding of agreements in writing.

As a practical matter, one should always get it in writing. I recall from 20 years ago, a mechanic who declared to me that he would put nothing in writing; if people would not trust one another’s word, he would have nothing to do with them. Since he was so adamant, I let him get away with it. Needless to say, the relationship ended badly. – Lesson learned.

Pliny on Success

It is a maxim universally agreed upon in agriculture, that nothing must be done too late; and again, that everything must be done at its proper season; while there is a third perception which reminds us that opportunities lost can never be regained.

- Pliny the Elder

More on Pliny

From Mark Twain

They cap their section on self reliance with a quote from Mark Twain.

"Don't go around saying the world owes you a living. The world owes you nothing. It was here first."

The Master Mind

Every mind is a TV station that has both a transmitter and a receiver. Napoleon Hill’s corollary to this concept is that the mind needs at least one other station to network with it. One will go father with a partner/mentor/advisor to bounce ideas off of and to receive encouragement from.

Thomas Paine noted that he experienced two distinct kinds of thoughts. One class were those that came from study and reflection; the other just entered through their own accord. Most success authors address the first class; Napoleon Hill’s writings on “The Master Mind” addresses the second.

Has Print Media Hit Bottom?

Finally advertising revenue is going up for the industry. But not subscriptions. Over at the Washington Post, they’re selling Newsweek Magazine. There does not appear to be a path for recovery for that publication.

Part of the industry’s problem is loss of credibility. Too many times ideology has trumped facts. Even readers who agree with a publication’s point of view can feel that they’re being manipulated over being informed. Management of these declining media may not be able to control many factors in this internet era but this is one that they can.

There’s a lesson there for the internet publishing industry.

On another front, internet media needs a viable business plan. This plan should have 3 legs to earn revenue: 1) Reader support; 2) Advertising; and 3) Sponsorships. We can understand the last two legs but how to garner reader support? Getting readers to pay $ remains this industry’s biggest challenge.

Debt in Divorce

Divorce decrees may obligate one spouse to pay the debt but both are still responsible for it. The creditor can still go after the “innocent” spouse. That spouse still has to pay. The divorce decree just gives the “innocent” spouse lift to sue the other spouse. Moreover, the credit report of both spouses still gets hammered.

Dave counsels people to refinance debts in the individual’s name before the divorce gets finalized. Divorce attorneys ought to make that part of the divorce process.

Internal Rate of Return

Is a big investment worth the money? Well, what rate of return do you expect to realize from it?

Imagine that someone offers you an annuity of $5,000 for 5 years. How much should you pay for it?

The rate of return is similar in concept to the interest rate. You are putting out money for something and you want to know what you are going to get back out of it.

Here’s a test case: what is your rate of return for your social security? Hint: It’s lower than you think.

Drucker on Success

For it is the willingness of people to give of themselves over and above the demands of the job that distinguishes the great from the merely adequate.

- Peter F. Drucker

More on Peter F. Drucker

Today's Major Economic Problems

What are today’s major problems? (Remember, the book was published in 2006.)

• Dollar is falling
• Debt is rising
• Retirement funds (social security, Medicare, pensions) going bankrupt
• Oil prices rising
• Gap between rich and rest increasing
• Wages decreasing

They say and I strongly agree that the reason for these long term problems when they first arose. Instead people were taught to depend on government to solve their personal problems for them.

The Laws of Success

Napoleon Hill is one of the titans of self improvement. He's got great ideas but sometimes he gets carried away. For example, he talks about how two or more people can encourage each other and pool their mental resourses to achieve more but then he goes into mental telepathy. The first part is great; loose the second part.

He starts the book by taking up the importance of inter-acting with other people. He would love the possibilities presented by Facebook and Twitter!

"Success is the matter of tactful organization with other people." In the end, it does seem to me that having some kind of mentor/coach/advisor/chief assistant will help anyone "think rich".

How Many Books to Read?

The number of books on personal financial planning, business success, and personal growth are overwhelming. The number of blogs and websites are even worse. Worst of all, many of them contradict one another. I'm a CPA with years of experience and even I am overwhelmed by the volume of the literature.

I suggest not reading too many books. Yes, I know that this seems to contradict the output of this blog but if you notice, major authors are not here. I like to read this stuff because it's fun and interesting as well as rewarding. You don't have to.

The most important thing about having a plan is that you have one. It may not be the best one but as long as it's not really bad, you're better off following one than going through life aimlessly.

I suggest that everyone gets just one book and reads it thoroughly. Know it inside and out. You'll be better off than having a library of books which you know only in passing.

Debt Management Companies

Debt management such as Consumer Credit Counseling Service help get debtors out of debt by consolidating debt and getting lower interest rates. Dave says that they hammer your credit rating by hammering your credit rating the same as if you had filed a Chapter 13 bankruptcy. While people may not be able to get home loans by going through this program as he claims (I do not know about this) I do know that people were able to obtain car loans as well as new credit cards after going through this program.

Sometimes a person just needs outside intervention. Being able to make just one payment a month can get that past that psychological block of keeping track of many payments each month to multiple creditors.

People in Your Customer Company

When selling to Corporate America, realize that while your formal customer may be the company, you must deal with individuals within the company. So, how to plan a sales strategy for:

1) Gatekeepers, who answer telephones and control the information flow
2) Influentials, whose opinions are valued by
3) The Decider, who decides whether or not to buy your product or service
4) The Buyer, who negotiates the terms of the sale
5) The User, who will actually use and benefit from what you sell

When you've developed a strategy for selling accounting and tax services to these groups, call me. It's harder than the textbooks say.

Washington on Success

No man who continues to add something to the material, intellectual, and moral well-being of the place in which he lives is left long without proper reward.

- Booker T. Washington

More on Booker T. Washington

Investment Diversification

Warren Buffet said, “Diversification is protection against ignorance. (It) makes very little sense if you know what you’re doing.”

Their book is about knowing what you're doing.

Sharpen the Saw

This means deliberately taking time out to work on self-improvement. Covey identifies 3 areas: physical; mental; spiritual; and social/emotional.

While the book does not mention it, I recall that Jesus Christ regularly took time out and withdrew into the desert to fast and pray. I like the idea of time-outs and I certainly do think that people ought to do more of them.