A Warning

How the Economy Works

Americans are not taught enough at young age about how money and the economy works. It’s an uncomfortable subject and most believe it’s impolite to talk about money. So, we go on through life not fully understanding the subject of finance or how succeed in accumulating wealth. Most of what I know, I had to learn through trial and error as well as reading about how ultra wealthy people think and act. Unfortunately, despite volumes of literature having been written about the subject, most people consider economics a boring and complicated issue that should be left to the experts. I feel the need to dispel some myths about economics so a better understanding can be reached about where we stand economically today.

Myth 1. The economy is complicated. This is false. An economy is simply the sum total of all the transactions that take place in a given market. Everything can be boiled down the basics, the broad economy is nothing more than individuals trading goods and services for something they deem more valuable than what they are trading. If people are spending less, the economy slows. If people spend more, it expands.

Myth 2. Savings doesn’t matter. We are told to save money at a young age, but if you look at the pundits on television talk about the health of the economy, rarely do they refer to how much a family has stashed away for savings. Instead, they talk about consumer spending. Now, spending is an important indicator of economic health, but so is savings because savings is a measure or future investment and spending. If you are saving your money, it’s because you intend to spend it at a future date for something you need at that time. If you are not saving, you are limiting your ability to spend money in the future, instead opting to spend it now. Savings is one factor that leads to the creation of new capital investments and businesses. If the savings rate is low, this is an indicator the future business creation may slow.

Myth 3. All debt is bad. This is wrong and it keeps people from thinking and expanding in a big way. Most big companies use leverage, (debt) as a way to expand business and income. There are two types of debt, consumer and business. Consumer debt can be bad because generally we are using it to buy goods and services that do not produce future income. Business debt can be good if it is used to produce future income.

Myth 4. People spend based on how much money they have. This is wrong. The ability to spend and the total economy is based on two things; income and the credit (debt). You can buy things with cash, or with credit, which is a future promise that you will pay. The biggest indicator is how people will spend is based on their available credit. Unfortunately, people buy things based on what they believe their future income will be, not what they make now. So, they use credit to buy things that don’t produce income. Eventually when the bills come due, if their income has not gone up enough to cover the new debt plus interest, the person has to default on their credit payments. The company that holds the debt must now take a loss of income and subsequently reduce the amount of credit to consumers. If this happens on a large scale with many people, the reduction of credit will lead to less available purchasing power and less transactions in the economy. Less transactions leads to a slow down in the economy, job losses because companies are selling less and often a reduction in pricing of products.

Myth 5. Wealth is money. False. Wealth is an increase in production and output. If you have a farm and are able to collect twice as much crop as the year prior, you have increased your wealth. People think that the government can just print money to take care of all debt and economic problems. If this were true, we could just all quit our jobs and have the government give us money. Obviously, this cannot happen or basic services necessary to living would never get accomplished. Moreover, an increase in the money supply, if credit levels are still high, without a corresponding increase in the production of goods can lead to an inflation in pricing. In other words, the ability of your money to buy products and services is reduced as more money enters the economy.

Where We Stand Today

At the time of this writing, household debt and government debt has reached record levels. (1.06 trillion for consumer credit card debt, 1.5 trillion in student loans and a total of 18 trillion if we include personal mortgage debt). Government debt has also reached a record 20.6 trillion largely due to unfunded liabilities such as pensions, MediCare and Social Security. The average cash savings of the typical American family is less than $1000 dollar. Nearly 40 percent of families have no cash savings at all, meaning the ability for these families to make future purchases is significantly reduced unless their income expands greatly. Already, auto loan defaults, student loan defaults and credit card defaults are on the high and expected to reach higher levels. In my own businesses, I have seen more credit card declines every month. We have a serious debt problem happening right at the same time the stock market is at an all time high.

What It Means

The American consumer is tapped out as far as their available credit. This likely means that despite all time record level stock prices (which have very little to do with the real economy for most people) their ability to make future purchases will decline, leading to a slowing economy. Of course, no one can predict the future, but if the numbers are any indication, we are at the peak of the debt cycle and what follows will likely be more defaulting on debts and subsequently job loss and a retraction for many businesses. Be warned. Invest in yourself, your skills, your health and save the rest of your money so you can capitalize on lower prices during a downturn. Remember, people always sell things for less when they believe times are bad.

Sorry for the negative note. I’m just trying to be clear on what I see happening so I can help you and your family thrive! If you want a great YouTube video on some of these concepts, look up Ray Dalio’s video on “How The Economic Machine Works.” I promise you’ll learn something.

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Yes, It’s Hard!

Yes, It’s Hard.

Sometimes it serves us to admit that certain things are just plain hard. It does us no good to dwell on that fact, but facing reality is important. Without a doubt, life is much easier than it used to be for our ancestors. Almost everyone on the planet now has access to water, food shelter, even technology like radio, television and the internet. This was not always the case. The simplest luxuries today like refrigeration and air conditioning were not available to even to richest people just 150 years ago. Still, as humans we adapt to our environment and become habituated to the world around us. It’s easy to forget how much better the standard of living is today than any other point in history because most people born after the 1990’s don’t know any different. The struggle to survive raise a family with food and shelter has been replaced with more modern struggles. Namely, these are struggles of the marketplace. While the marketplace has raised up even the poorest nations through mass dissemination of products, technology and information, a host of stressors has pervaded our culture as we find a way to make a living and try to dent the universe with our existence.

In a crowded global marketplace where incredibly large businesses dominate and make it difficult to thrive let alone succeed for employees and entrepreneurs, a stress of doing well can lead to tremendous uncertainty and anxiety. The purpose of life used to not be that complicated- you are born, you have to work to survive doing a certain craft or skill, (usually whatever trade your parents did like farming, masonry, etc.), you marry, have children, start a household of your own, and hopefully leave some wealth and real estate to pass on to your heirs when you die. Questions like, “Who am I becoming in this job?”, “Why am I on this planet?”, “Does this job have medical benefits?”, “How do I expand my market share?”, “What companies should I invest in to give me income later in life?”, “What major should I pursue in college?”, “What should I study to make more money and have a happy life?”- these questions were not usually applicable. Today, however, they pervade our very existence. We think about these questions so much because we are so unsure about what our purpose is.

While the marketplace has done so much for humanity, not the least of which allowing seemingly endless opportunities for people to amass wealth, we see examples of wealth and power and wonder whether we are on the right track ourselves. Statistics from the Bureau of Labor show that most Americans stay at job for an average of 4.6 years. This is actually slightly longer than it was in 1983, but much less than it has been in previous generations. The days of staying in a career for 20-30 years and then retiring with a pension are largely over. I believe this uncertainty in the job market has led to a high level of anxiety and uncertainty. Although the marketplace has led to vast choices for consumers and producers, the need for certainty can outweigh the benefit of having multiple choices.

We are, at the same time, presented with unlimited choices and overwhelming uncertainty about where our talents are best suited. The fear that we may be wasting our talents has led to job hopping as well as record numbers of workers consuming opioids and antidepressants. While this type of anxiety is not rooted in actual survival, (most of us know where our next meal is coming from and that we will have a roof over our head), it is still very real. It is, in fact, difficult to know how to succeed and be fulfilled in the modern world. Some things are just plain hard, regardless of how well humanity has it today. It’s hard to know how to choose a job or college major. It’s hard to know exactly why we are here and what our purpose is. It’s hard to know how to invest for the future. It’s hard to hire the right person. It’s hard to choose a career only to find out you are not fulfilled. It’s hard to pay bills every month and then look at your bank balance afterwards and worry about having too much month left for the money that’s left. It’s hard to make a living doing something that you’re passionate about, but it doesn’t pay well. It’s hard to wade through the endless information thrown at us everyday and decipher exactly what it means and what to do. It’s hard to anticipate how consumers will react and how markets will behave. It’s hard to competition-proof your company so your bottom line isn’t affect by others. It’s hard to deal with customer complaints. It’s hard to wait in line at a restaurant when you’re hungry or the DMV when you need a license. It’s hard to know what information and technology you all your children to consume. It’s hard to teach your kids how to survive in a marketplace that is always changing. IT’S HARD. It is. However, at the end of the day, I’d rather deal with all these hard things than go back where humanity used to be. I much prefer the benefits and anxieties of modern society than 200 years ago. I love my internet, refrigerator, car, air conditioning and the supermarket too much. I’m willing to adapt to an ever-changing business climate and deal with all the hard things associated with it. How about you?
Keep grinding,
Sean

The Magic Formula

The Magic Formula

There is one concept, one idea available to anyone that almost guarantees someone to achieve what they want in life. It sounds ridiculous. It sounds impossible. It sounds like a scam or get rich quick scheme, but countless men and women have used this formula knowingly or unknowingly to achieve incredible success. This concept is the very basis of almost every self-improvement book and so much has been written about this topic that I hardly feel I have anything to add to the discussion. I will however, for the sake of those who have not come across this idea, present a brief overview of the Master Key system. It is simply this: Be, Do, Have. Just three words can, if you act upon them, transform your life forever. Here’s how:

BE-

If you want to become a certain person, whatever it is- a nice person, a rich person, a smarter person, a bodybuilder, you must first believe you already are that person. Possession begins in the mind. You must state over and over again that you are rich, nice, strong, whatever it is because your mind must believe that you are capable of being that type of person. Saying, “I hope I’m rich one day” will do nothing. Instead, “I am a rich person.” This has nothing to do with deluding yourself or tricking your brain. It has everything to do with convincing yourself that you are capable of being such a person so that….

DO-

Once you’ve established what kind of person you want to be, and the mind believes it, you can now do what that type of person would do. If you wish to be rich, think about what a rich person would do. How do they act to acquire wealth? What investments or careers do they have? Now you can see that first you have to figure out what you want to be, then you will realize what to do which will lead you to…

HAVE-

Once you have decided who you are and what actions to take, now you may begin to have what you want. You cannot have what you desire until you take the correct action to acquire it, and that cannot be done until you decide what type of person you want to be. If you act first without establishing who you want to BE, you may find yourself toiling away at the same jobs for years or even decades without ever achieving your desires.

I cannot stress enough how important the order of this formula is. Thinking about and deciding upon the person you want to be is vital. That will give you the answer as to what actions to take so that you may have whatever you like. Let’s say you start out by saying you want big muscles. Okay fine. That doesn’t tell us anything about what you need to do or who exactly you want to become. “I am a bodybuilder” you say. Very good. What does a bodybuilder do everyday? See, now you have an action plan, a set of habits and behaviors to follow that will lead to you becoming a bodybuilder. After that, you will have big muscles. What about money? “I want money!”, you say. Fine. Go rob a bank! They have money. See, this is why you must first decide what you want to be. If you’re a bank robber, you may have money, but not for long. If you decide to be an entrepreneur or investor, on the other hand, you will now have a roadmap to follow so that you can achieve financial wealth and help others along the way.

So there it is. The Master Key to getting anything you want. Believe it or disregard it, the choice is yours. All I’m trying to do is present it to you here. It has worked for me, but let me warn you, we live in a universe where sometimes the best don’t win, tragedy befalls good people, and a hailstorm can wipe out your entire crop. That’s just the way things are. So, I would remind you that in order to truly BE anyone, you must also have perseverance and the desire to keep pressing on until you are who you want to be and have what you want to have. Most don’t. Most people quit after a few defeats. BE. DO. HAVE. And remember to keep moving forward until you actually are the person you want to be. At that point, you want need to remind yourself who you are and you won’t have to tell other people. Your actions and all you’ve achieved will speak volumes.

When Is Enough, Enough?

WANTING MORE VS. BEING GRATEFUL

As I get older, I find myself in a curious spot. I am truly grateful for so much in my life, yet I feel that I have not lived up to my potential. Frankly, I’m not satisfied with where I am because I know I can do more. I realize the big irony is that my dissatisfaction is causing me to have anxiety and fear about what actions to take next to in regards to business and lifestyle. Worse, I find myself looking at my wonderful family and remembering the experiences I have had and I feel guilt over wanting more. Is it wrong that I should strive to want more considering that I have so much more than millions suffering from ill health, poverty and want? Perhaps, but it’s in my nature to strive for more. I don’t think I’m alone in this desire. After all, progress is happiness. It doesn’t matter what you used to do, or make, or bench press, if you find yourself slipping backwards, it can be devastating to the psyche. Conversely, if you set a goal which causes you to make progress from your current position, you will have a sense of achievement and worth. I have to remind myself of this constantly. If you find yourself in a similar mental situation as myself, let’s explore the following together…

WHAT DRIVES PROGRESS-

All human progress stems from dissatisfaction. Period. If man were perfectly content with his lot in life, there would be no reason for innovation, increased production or investments. The desire to improve lifestyle, length of life, financial position and physical capacity is what underlies our entire economy and society. It takes millions of people working to increase their value to others which leads to advancement and the creation of new wealth. Without this desire, which is unique and inherent to mankind, the free market and all its benefits would not be available. Society would not exist as we know it today. Life would be a very different experience for us without the need for self improvement. Therefore it’s reasonable that we should all want to do more, produce more, be more valuable so that we may help others as well as improve our own lives.

PURPOSE OVER HAPPINESS
I stated before that progress equals happiness, but happiness is overrated. I’ll say that again; happiness is overrated. Perhaps “progress equals fulfillment” would be a more appropriate statement. Happiness is too vague a term. It’s fleeting and it is not a dependable nor accurate barometer of how ones life is progressing. Yet too many people look to how happy they are currently as a measure of how they perceive their life. Happiness can be a bar of chocolate or a smile from an attractive person. It can be a past memory that comes into your consciousness. It doesn’t last. Happiness is a feeling and feelings don’t last. Happiness will flee anytime you fall ill, become stressed, experience pain or a change in fortune. We look at happiness as a destination, but it is not. This is the reason so many are drawn to television, sports or foods and drink that bring about a change in mental state. We are pursuing happiness in the form of a change of consciousness. We are seeking happiness by doing these things. We all know that spending time with certain people can be a great source of happiness. It can also be a source of anxiety. According to many studies, our relationships with others is the greatest indicator of how happy we are. I would suggest however, that the focus not be on happiness, but rather purpose. Who am I? Why am I here? What do I want? These are the three questions according to Stanislavsky that we need to answer in order to fulfill our purpose. By shifting your focus to answering these questions instead of wondering what will make you happy, you may just find true fulfillment, which is much more important than happiness.

FINDING BALANCE

Of course purpose and fulfillment cannot occur without reflection of your current situation and where it stands in relation to your goals. This requires one be both mindful of what is going right and what needs improvement. It’s not possible to get an accurate reading without considering both the positive and negative of your situation. If you are only focussed on what is lacking, without taking into consideration what you have accomplished, it will become impossible to get into an emotional state that will allow you to take the action needed to progress towards your goal. Once you achieve that emotional state that causes you to dream about what you want and jump out of bed early in the morning to get it, remember that what you’re doing is transforming into the best version of you. It’s not about what you’re getting, it’s about what you’re becoming. It does no good to ask, “What am I getting?” Instead, “What am I becoming?” If the answer is you are becoming more because you learned more and have more to give, you are on the right track. Therefore, no guilt should be associated with wanting more from life, so long as we don’t lose sight of all we have to be truly grateful for. And therein lies the difficulty. Balancing equal time on focussing what you have to be grateful for, with planning and taking action on how to become more and fulfill your potential. There must be balance or neither will happen and anxiety will ensue. It is a tricky task to balance, but I think it will be worth it in the end.

To becoming more!

-Sean

The Problem With Competing

DON’T COMPETE

We live in a very competitive world. We have the idea of competition engrained in us when we are very very young. We are told that we have to try harder and do things better than everyone around us so that we can succeed. In school, we have to be at the top of the class. In sports, we have to be the MVP. Winners are recognized by society and we all desire significance on some level. Indeed, the idea behind winning is that we have performed better than everyone else doing the same activity as us and we should be recognized for being outstanding. I do admit that there is some value in competition. In certain situations it causes people to try harder and push past their previous perceived limits. On another level though, competition is one of the major causes of unhappiness in our culture. The constant stress of outperforming others can lead to some just “shutting down” instead of pressing on harder. Competition also creates constant fear that we may lose our jobs, our businesses, our titles and status to others. This fear can be useful if it leads to massive action and creativity, but I think in most instances this is simply not the case. From what I have observed, the opposite is true.

Competition kills creativity. This may fly in the face of what you’ve been told since childhood, but I stand by the statement. By definition, if you are competing against someone, you are doing the same thing as them, only attempting to do it better. This is the opposite of creativity. This is a form of copying. In the business world this is easily observed. Most companies start out trying to do the exact same thing as their competition, only perhaps make it slightly better or more convenient. Sometimes, businesses are engaging in the exact same activity and a customer would have a difficult time distinguishing between them. By copying what others are doing, the creative process of building something new is shut down. So much focus is given to outperforming the other, innovation takes a back seat. However, when you look at the most respected companies throughout history, most of them are recognized for being the first to do something or drastically improving the way something is done. The fifth company to the marketplace is rarely recognized, but that is what most people do- they start companies that are copies of others, or they get a job in the marketplace without giving much thought to what special skills will set them apart and allow them to do something unique.

Our world is in dire need of innovation. We need brand new technologies and ideas to drive humanity forward, but society teaches us from an early age, especially in our primary schools and universities to compete with each other for the same prizes, as if there was one pie and we all have to fight to get a slice. The truth is that through the creative process, we can all expand the size of the pie, or create a different prize all together. Get a piece of cake instead of pie. The world is not “dog eat dog”. In fact, dogs don’t really eat each other anymore, so I think it’s time to throw at that whole phrase and start working to build something new to benefit mankind. This requires that we use our mind as much as our bodies. Humanity must continue to evolve in its thinking and use the untapped mind-power we were blessed with at birth. Yes, it’s hard to think creatively in a world with constant noise. We have information at our fingertips today, but it’s not necessarily leading to more creativity. Much of it is just more noise. Our brains cannot process all the information it receives while at the same time trying to engage in creative thinking. The noise must be quieted in order for our minds to generate new ideas. Everyone is capable of creativity so long as we are not preoccupied with keeping ahead in the proverbial rat race. Break out of the race and blaze a new path. If you are an athlete, take your focus off the competition and put it on bringing something new and phenomenal to your sport. Develop a system, rituals or technology that allows you to surpass what you were previously capable of.

Happy New Year. May the coming year be a never ending fountain of creativity and energy for you and your family. Spend time thinking about new ideas. Who knows, if you’re trying to build something new, you might just do so!

In Health,
Sean

Why I Write

Getting Out Of Your Head

I think often about why I write and why I even started this blog. Writing is something that I’ve been doing since age eight, at the age at which my father made me write an essay every day after school about what I had learned that day. Although I may have hated it at the time, looking back it was one of the best chores I ever had as a kid because it became a lifelong habit that I continue. The ability to communicate, especially through the written word has served me well in my time here on this planet. The most important aspect that I like about writing, as opposed to other forms a communication ( my college major), is that writing allows me to clear my head of the noise caused by thoughts. In a way, it’s my preferred form of meditation. The added bonus is that when I write, often I’m able to share my ideas with others. However, make no mistake, I write as much for myself as for anyone else. It’s my therapy. I can be yours as well. What follows are my suggestions for anyone looking to start writing.

1.Keep a journal. This doesn’t have to be a diary, but at least some sort of book or binder that you can use to collect your great ideas, experiences and insights. I use legal pads as well as The Five Minute Journal, which gives prompts on various topics to write short answers. Collecting your thoughts in physical form is a great way to clear your head and it provides you with something to pass on to others. Indeed, some of the great ideas and philosophy have come from the journals on incredible individuals.

2. Try to write at least one long paper, and a few short articles. The ability to write is something that needs to be exercised often to ensure it remains effective. The greatest advantage of college, in my opinion, is that students are forced to produce long form term papers. The ability to construct such documents is greatly advantageous in life, especially for scientists, authors and attorneys- the livelihood of which depends on their ability to read complex documents and produce them. However, short, concise articles can be just as effective to communicate with others.

3. Start a blog or write letters to the editor. Communicating your ideas to others with the purpose of influence is vital to furthering discourse in society. While you don’t have to hold strong opinions on all subject, nor should you if you’re not informed, it is highly useful to present an argument in writing and back it up with facts, logic and reason. Any argument will do, from why Disneyland is the best theme park on Earth, or why It’s a Wonderful Life is the greatest Christmas movie ever, to more serious subject like politics or the economy. It doesn’t really matter what you think, only that you’re able to convey it well!

4. Write for yourself, but understand your audience. As a former newsroom editor, I’m used to writing very short, easy to read sentences in the present tense. This is done so the writing is easily read by the on air talent and it sounds like they are speaking directly to you. If you notice, on television and radio, most of the dialogue is very short and to the point. However, I also like to read very dense literature like philosophy, biographies and so on. I also love poetic literature and plays. While I would love to write in this style, and I may do so in the future, I understand that short articles are more read and easily understood than most long form content. I know that may audience is busy and usually wants me to get to the point, so I keep most of my work short and I even use bullets and numbered paragraphs to make it even easier for them to follow. (I do hope this helps.)

In closing, I suggest writing a little something every day (other than a social media post), so that you may refine your skills of written communication. More than that, writing and note taking can be the best form of therapy you ever undergo because it allows you to take the thoughts in your head and “dump” them onto paper. It can be a form of organizing your thoughts and clearing your mind. You may even use this to write down and keep track of goals you set for yourself. Whatever you do, just remember to WRITE!!!!!

In Health,
Sean

Guard Your Mind

Volumes of literature have been written about the impact that your thoughts can have upon your life. Although you are not your thoughts, (you are the one producing them) you certainly can become what you think about most of the time. Our thoughts influence our moods and therefore our actions more than anything else. But where do our thoughts come from? How and why do we produce the thoughts we do? Certainly some ideas and notions just “pop” into our head- the product of billions of neurons in our brains making connections without us consciously trying to cultivate such thinking. These random thoughts serve as a great reminder that we are not our thoughts. Our brain is producing them but we get to decide whether we “listen” to them and subsequently if we act of them. I believe that given the fact the brain/mind produces thoughts, it can be likened to a factory. Think of it as sort of a mental factory if you will. How do factories work? They take raw ingredients or inputs and work to turn them into a more finished product. Therefore, it is fair to say that our minds produce thoughts largely in part to the input it receives. Which leads me to this point…

BEWARE OF WHAT YOU FEED YOUR MIND!

If you find yourself having predominantly negative, unproductive or sad thoughts, or, if you find yourself in the same situations you have been facing for sometime without progress, it may be useful to examine what ingredients are going into your mental factory. Consider the input that you are giving your brain day after day, year after year. How many hours of television, social media, movies is your brain being “fed”? What type of media is it being fed? Dark fictional stories? Negative news programs? What people do you most associate with? Whose ideas do you let influence you? These are all questions that should be answered periodically. If your mind really is a factory, it would be wise to make sure the ingredients it uses are pure appropriate. Can you imagine trying to make delicious chocolate bar with rocks and dirt? I firmly believe that is what most people are trying do achieve on a daily basis. They would like positive happy thoughts and emotions, they want the chocolate bar. But they are baking with the wrong ingredients which leads them to producing negative thoughts and emotions. If it’s true that you become what you think about most of the time, and I believe it is, it’s clear to see how important it is to give your brain the right inputs so that you may have happy, productive thoughts and actions.

IT DOESN’T MATTER WHERE THE BAD INGREDIENTS COME FROM

One of my favorite stories to listen to is business and author Jim Rohn speaking to a room of school children. He asked the kids, “what would happen if my worst enemy put sugar in my coffee?” The kids replied that he’d be okay. Jim goes on, “What would happen if my best friend accidentally put strychnine in my coffee?” “You’d be dead!”, the kids said. Jim says, “That’s right! Lesson one; life is both sugar and strychnine and it doesn’t matter if it’s your worst enemy or you best friend that drops the poison in your coffee. And that brings us to the next lesson; watch your coffee!” I love this analogy because it’s so simple and easily understood. Even if the people you trust and love are accidentally putting negative ingredients into your mind, the outcome would be as if your enemy was doing it. It’s important to understand who and what is influencing us and that we constantly guard our mind against those who would do it harm, even inadvertently. That doesn’t mean we should necessarily cut people out of our life, although sometimes I firmly believe it is necessary. It would be wise to understand how our brains work and that our minds are constantly being fed information and opinion and images and sometimes we are receiving information and ideas from people close to us those inputs are not serving us. Don’t just let anything into your mind without analyzing it first! It could be strychnine that is poisoning your thoughts without even realizing it.

In closing I’ll leave you with this Jim Rohn Quote. It would do us all well to read it daily-

“Every day, stand guard at the door of your mind.”