Showing posts with label Spending. Show all posts
Showing posts with label Spending. Show all posts

August 29, 2019

Go Years of Retirement

Thought this was an interesting perspective on retirement.

There are three phases:

1) Go-Go:  You retire and are eager to enjoy your newfound freedom, and you spend the time and money to really do the pursuits and travel that you always wanted. 

2) Slow-Go: After the initial adventurism and spending, you settle in some more and spend your time on quiet activities, socializing, and relaxing. 

3) No-Go: This is the wind down phase, where you spend most of your time at home and at a certain point, may need some assistance to do everyday activities. 

Obviously, the last phase is sort of depressing, but it too is a part of life.  

Like a bell-shaped curve, we are born, grow, mature, and then decline.

This is the cycle of life for every living thing. 

It takes maturity and courage to face it and to make the most out of every single moment that we are blessed with.  ;-)

(Credit Photo: Andy Blumenthal)
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February 17, 2016

Spending It All Down

So Parkinson's Law states that "work expands so as to fill the time available for its completion."

The more time you have on your hands, the longer it takes you to do something. 

I find this to be so true...like on a day off, I don't find myself typically getting any more done than on a regular work day. 

But what is true for time, also seems to apply to money. 

The more money you make, the more you need

And while you may get more or better quality for your extra bucks, you still don't have a lot in net savings. 

Thus in line with Conspicuous Consumption, we spend more on luxury goods when we have more money and we spend more of our leisure time on doing the same basic set of activities when we have more time to spend.

Either way, more time and money often means more wasting of each, with people finding it extraordinarily difficult to save when they have (too) much of either. 

Perhaps, that why the big time hip hop artist, Kanye West recently tweeted about being $53 million in debt.

Or why Benjamin Franklin said, "If you want something done, ask a busy person."

Your personal decision is what you end up spending your extra time and money on. 

The only real difference with time and money is that money you can put in the bank, but time passes whether you are busy or not.

Perhaps the best investment for both is to spend on education, experiences, on loved ones, and on helping others. 

(Source Photo: here with attribution to Parg)
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January 18, 2013

Righting Our National Economy

We made it through he fiscal cliff--whew!  But the economic landscape remains a minefield. 

In terms of our national debt ceiling, we already passed the $16.4 trillion mark at the beginning of the year and are on borrowed time (no pun intended) until about mid-February when we exhaust accounting gimmicks and can no longer pay our national bills. 

Then there is the elusive government budget where we are on a "continuing resolution" that funds the government at the prior years spending levels until the beginning of March; there is no agreement on what the budget should be after that. 

Finally, there is the Sequestration that was delayed from the beginning of the year to March, which will produce across the board budget cuts to government--not surgically, but sweeping cuts that will hit almost all major government spending. 

All of these budgetary and debt issues are highly contentious and politicized and involve substantial policy decisions in terms of tax reform, spending cuts, and even income and wealth distribution. 

As difficult as it is to navigate a mine field, there is genuine fear that our national luck is running out and the sides are digging in such that even if we get over another one of these hurdles (likely by another delay) or even two of these, what are the odds that we get through all three unscathed economically and with our national image and strength intact?

Already in August 2011, S&P lowered the U.S. credit rating because of these unresolved issues and political stalemate around them, and Moody (in September 2012) and Fitch (this past week) threatened the same putting us at risk of higher borrowing costs, inflation, and even recession. 

Bloomberg BusinessWeek (3 August 2011) using game theory seemed to advocate for political compromise--that produces a "deal no one likes" but avoids pure political victory by one party over the other where one party gives in and the other holds out, and also avoids "financial Armageddon" where both sides hold out and can't get any deal done at all. 

In games of "chicken" both sides "entertain the option of killing everyone" until they finally realize this results in mutually assured destruction (MAD). 

In Washington "everyone, however, is playing a game called 'election'" and "the only possible goal in that game is to win the next one"--in this game, the real question--is there the leadership to rise above the politics, the short-term focus, and bring the two sides together in compromise to forge a path through a difficult economic road ahead. 

Truly, there is really only one way ahead and it is through national sacrifice that will spare no one, but may save the country and our ideals and make us stronger in the end. We are at a dead end for kicking the can further--next step must be to right the ship through cooperation and making the tough choices.

Just like the Washington Monument is one, we must become one. ;-)

(Source Photo: Andy Blumenthal)

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November 16, 2012

Either Way A Fiscal Cliff

Okay, so here's the dirtly little secret...

The "Fiscal Cliff" that everyone is supposedly working on to avert--is really unavoidable!

Yes, the Sequestration that was put in place that eliminates the broad-based tax cuts from a decade ago and reduces spending across military and domestic government spending--can be replaced by more surgical tax increases and spending cuts. 

But with a National Debt of more than $16 trillion dollars and one which has been trending up over a trillion dollars a year, we have gorged ourselves and spent beyond our means for too long--and the time to pay up is fast approaching.

For example, critical entitlement programs like social security and medicare are running out of funds and will not be able to cover benefits by 2033 and 2024, respectively.

What is even worse though is that the money you have been paying into "the system" from your payroll taxes for decades hasn't been put aside in trust for you, but has been spent on other things--sort of like robbing Peter to pay Paul. And now what?

At a time when national competitiveness is suffering, jobs are going overseas, test scores in science and math are trending down, and we have the lowest percentage of Americans working in 30 years, we are saying that we've essentially spent our last dime decades ago and have been doubling down with more and more borrowing--that we don't really know if we can ever pay back. 

While we would like to "grow" our way out, by having more people working, earning more, and paying more into the system, our growth projections of slightly more than 2% next year and a historical average from 1947-2012 of just 3.25%--this seems more than wishful thinking. 

More likely, as the percent of our national debt to GDP continues to rise and our national credit ratings are are at risk of falling, interest rates will start to rise first slowly and then faster to elevated levels to compensate for the increased borrowing risks, and we will see inflation rear it's ugly head--it is ugly because inflation will mean your savings are worth less or potentially even virtually worthless. 

This will make the $16+ trillion deficit also worth less, so we pay it back through inflation as Germany did with hyperinflation after WWI, and the essential wiping out of our personal savings. Viola, deficit paid down, but pay attention to at what personal costs! 

Unfortunately, the fiscal cliff is here and will happen whether spending is cut here or there and taxes go up on some or everyone. This is just the negotiation of how to spread the pain and spin the tale. 

And either way the fiscal cliff is going to hurt, because you have to cut spending and increase taxes leaving people with even less money in their shrinking pocketbooks, and if you don't, the credit agencies will continue cutting our national credit rating leading to higher interest rates on the debt and higher inflation--so either way, our creditors will get their pound of flesh. 

In the E.U. now, we are seeing the effects with countries from Greece to Spain, Portugal, Italy, Ireland, and more reeling from the impact, but this is only the beginning, because the lending spigot instead of being turned off, has been opened up further to kick the can down the road. But who will be the lender of last resort, when there is no one that can reliably pay it back?

In the end, you can't raises tax or cut your way out of decades of financial mismanagement, overnight. In the corporate sector, we say Chapter 11--what do you say for Western civilization? And what do we tell our children and grandchildren?

(Source Photo: Andy Blumenthal)

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April 2, 2012

Mind Readers and The Psychology of Excess

Animal_house
Seeing a number of senior officials in the last year "ousted," I find it sort of scary the risks and travails that executive leadership can entail.

There are so many good, hardworking people at GSA making progress for the Government in terms of property management, contract management, fleet management, and more, that it was a huge shock to many today, when GSA leadership including the Administrator, were ousted for what White House Chief of Staff called "excessive spending, questionable dealings with contractors, and disregard for taxpayer dollars." 

This at a time when the nation is struggling to reduce the national deficit now at $15.6 trillion and avoid another debt ratings cut from the three credit report agencies that would potentially drive interest up and cause even more damage to the nation's economy.

Of course, the GSA is not the only example, just last year, we had the unfortunate "muffin mini-scandal" as reported by Bloomberg BusinessWeek (29 September 2011), where the Government was alleged to have paid $16.80 apiece for muffins.

What causes this psychology of excess where taxpayers end up footing the bill for extravagant items and events? 

1) Hubris--Are there people who feel they are so high and mighty, they just have all the trimmings of office coming to them and theirs?

2) Neglect--Do some executives rise too far and fast, and maybe things get out of control?

3) Misguided--Is it possible that some may actually really think that hiring a mind reader on the taxpayer dime is a good idea?

4) Accident--At times, oversights, mistakes, and accidents happen, and while we may prefer they didn't, they are a learning opportunities.

5) All of the above--Perhaps it is some combination of all the prior four?

It reminds me of something my father taught me that "G-d does not let any flower grow into the sky."

This means that no matter how good we are or how far we go in our careers and in life, we remain mortal and infirm, and subject to human imperfections. 

That's why it's never a good idea to tout your own infallibility.  Just Last Thursday, the GSA Administrator, as reported by Government Executive Magazine, told a conference "Why us? Because we're the expert shoppers. We're the folks you want on your team when budgets are tight, you're making purchases, and there's no room for error..."

Obviously, I assume there was no intent to brag, but we all say things like this at one time or another, and it's good to reflect and stop ourselves from going too far. 

This is not about the GSA or any other agency or organization in particular, but rather a lesson in humility for all of us. 

This unfortunate incident should not obscure the good work, done every day, at all levels, by every Federal agency.  

(Source Photo: here)

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May 31, 2009

From Pigging Out to Piggybanking

Recently there was some media interest in the government system of funding allocation, which essentially rests on one principle: “Use it or lose it.” Unlike in the private sector, where unused funds may be reserved for future use, money that is not spent in a given appropriation year is simply returned, for the most part.

In our own personal financial worlds, in fact, it is a primary lesson that we should not spend every dollar we earn. Rather, any financial adviser will tell you that money must be managed over many years, including saving money for the proverbial “rainy day” (the recent financial meltdown and recovery act not withstanding).

In business as well as in our personal lives, we are taught to do three things with our money:

·      Spend some—for business operating expenses or living expenses in our personal lives.

·      Save some—for unexpected needs like when a economic recession negatively impacts business cash flow or in our personal lives when a job is lost and we need savings to tide us over; or the saving could be for opportunities like to accumulate funds to get into a new business or to save up for a deposit on a home.

·      Invest some—for longer-term needs like research and development, potential business acquisitions, and so forth or in our personal lives for college education, weddings, retirement and more.

My question is why in government is there not an option #2 or #3—to save or invest funds for the future, like we have in our personal lives and in business?  Why can’t agencies and lawmakers plan longer-term and manage funds strategically instead of tactically—beyond the current year here and now?

The Clinger-Cohen Act of 1996 called for the development and maintenance of an IT architecture, since interpreted more broadly as the mandate for enterprise architecture, where we plan and govern investments strategically (i.e. no longer based on short-term gut, intuition, politics, or subjective management whim).

Managing for enterprise architecture necessitates that we manage business and IT investments with the ability to spend, save, or invest as necessitated by agency mission and vision, customer requirements, and the overall investment climate (i.e. the return on spending versus the return on saving or longer-term investment).

Managing money by driving an end of year spend-down seems to negate the basic principles of finance and investing that we are taught from grade school and that we use in business and our personal lives.

By changing the government budget process to allow for spending, saving, and investing, we will open up more choices to our leaders and hold them responsible and accountable for the strategic long-term success of our vital mission.


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