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This Is Your Wake Up Call – Part II
The Key to Surviving and Thriving in an Economic Winter
(Lesson #2 – Why Focusing on Income is the Best Way)
One of the lessons I have learned in life is to focus on what you can control because any energy you give to what is out of your control only hurts the momentum process. Does that mean you ignore what is out of your control? Absolutely not! The lesson is that you must have awareness of factors you control AND those you do not control in order to make good decisions.
In school I was trained in industrial engineering and accounting. Those disciplines taught me to focus my energy on efficiency and expenses. However, one day when I was working on my personal budgets, I asked myself an interesting question – what would happen if I focused my attention toward making more money vs. trying to control what I was making? That question had a profound impact on changing my thinking and focus. The day I realized that focusing on income was the FASTEST WAY to drive the wealth accumulation process, my financial momentum went into overdrive.
Why am I sharing this story with you? Because I think right now might be the most important time in history to implement this type of thinking if you want to survive and thrive in an economic winter. Let me explain why.
For the most part you have the ability to control both income and expenses. However, there are expenses that are beyond our control. Equally, there are factors in our economy and world that will impact both income and expenses even though we control those areas to some degree. Here is an IMPORTANT REALIZATION that is critical to understand if you desire financial momentum — no matter how tight you squeeze your money, the world out there is going to squeeze it tighter.
Let’s take a look at a couple examples of how expenses that are out of your control will impact your finances.
Taxes – Historically speaking, we currently have a very low tax rate. Of course we pay taxes in various ways (Federal tax, social security, property taxes, sales taxes, etc.). There is one common element to all these taxes – they are controlled by government. Given the economic state of affairs at all levels of government these days, the logical conclusion is that taxes are going to be higher in all areas. Just look at Federal taxes as an example. We currently have the largest deficit in the history of our country. Before the Lehman Brothers collapse, it took the Federal Reserve nearly 14 years to double the cash and reserves of the nation’s banks. However, after the collapse, it took the Fed just 112 days – barely four months – to double the monetary rate. Before the Depression, taxes were 25%. By 1944, Federal Income tax peaked at 94%. So ask yourself this question. Given the current state of Federal, State and Local Governments, do you think taxes are going higher or lower in the future? I think the only logical conclusion is that taxes are not just going higher, they are going much higher.
Fees – To me, fees are just another form of taxes. In reality, taxes and fees are how the government raises income. However, I have noticed over the last year that everywhere I turn fees are increasing. While it is normal for fees to move with inflation, it is my opinion that fees are moving at a much higher rate. Even worse, we are starting to see fees that never existed in the past. The last time I was in California I saw a report on TV about a “crash tax” where you basically get charged for emergency services to come to a crash scene. Remember, with the exception of the Federal Government that has the ability to print money, all governments need to live within their means. Given that expenses have already been cut, the next phase will be increasing both fees and taxes.
There are many other examples of how the expenses we cannot control will be increasing. The simple truth is that more taxes and fees are required for governments, businesses and society to survive. Remember what I said at the beginning of this blog; awareness is a key to good decision making. The way to survive and thrive in an economic winter is to accept a few basic realities:
1. You can only manage your money to a degree.
2. What you cannot manage or control (taxes, fees, inflation, etc.) will become the largest part of your expenses in the future.
3. The best way to sustain financial momentum is to focus on income creation.
I will leave you with one final thought. You MUST start the process of creating income BEFORE the expense train gains steam. You need to be proactive in focusing on income creation now because the longer you wait, the higher the probability that this economic winter will be a painful one for you. In the end it is important to remember that even in an economic winter, you can win and you can win BIG!!!! You just need to start the process now and focus your efforts in the right place – on making more money.
Next Lesson: My next blog in this series will explain strategies on ways to maximize income. Knowledge has value when it is put into action. I will examine some basic strategies that you can implement in an effort to speed up your financial momentum.
Thank you Jim Rohn
Dear Friends,
Today the world lost one of its great stewards for Personal Development, Jim Rohn. I know many of you learned from Jim and are fans of his teachings. Those teachings made a profound difference in my life. While today was a very sad day for the legions of Jim Rohn fans and friends, it is also a reminder that we were blessed to have had him as part of our lives. One of Jim’s quotes reads as follows:
“The Big Challenge is to become all that you have the possibility of becoming. You cannot believe what it does for the human spirit to maximize your human potential and stretch yourself to the limit.”
Jim is a perfect example of that quote. His efforts left the world a better place. I hope Jim left this earth realizing the difference he made to so many, and with peace in his heart knowing he lived his life to its full potential. RIP Jim. I hope your family, friends and fans find love and peace in your memories and contributions.
You can click on the following link to Jim’s website to read about him and post on his website.
With a sad heart,
Gordon Hester
Happy Holidays To You and Yours
I want to take a moment to wish you all a wonderful holiday season! For me this season has always been about family, friends, and the spirit of giving. I am so thankful for each of you, and it is my hope that this New Year will bring you great peace, joy, happiness, and of course…success! Thank you for your support and friendship. I look forward to all that 2010 has in store for us!