It's that time of year when everyone is wearing something new (well almost everyone) as Santa has fulfilled his rightful duties and delivered his packages with glee. We all have eaten too much, or again, most of us have eaten too much, and now, we are fat and happy and waiting for that magic countdown signaling the start of another year. Heck, I am going to take my lights down tomorrow as we are heading to Las Vegas for the New Years celebration. (I will not be gambling: See "You Want To Bet" 12-26)
Why is New Years so darn important to people? They simply just can't wait to start another year. I liked 2006 and 1993 and 1979 and a whole host of other years and "schools definitely out" on 2007. We know nothing about 2007 and won't have it basically figured out probably until September at the earliest. It will take a month or two to stop writing 2006 on your checks.
So what’s with all the hullabaloo....I for one do not know. One good thing is that there is no election this coming year so we won’t be subjected to those adds. The argument of who should play in the BCS National Championship in college football will be over and forgotten in a bout a month. Tiger Woods can get closer to be the undisputed best golfer in history and probably very soon be old enough to stop being called Tiger. We will have significant passing’s and more significant celebrity births. The stock market will set a new all time high and by mid year be in what I believe will be the "doldrums". Housing will slow a bit more early in the year and then start the short road back to where we left off about a year ago.
So the time is coming to sit down and do your New Year’s resolutions which are neither fun nor useful.
We will start with the need to lose weight, make more money, travel to more places, work less and play more (in my case golf). That’s it, consider them made. You can now release yourself from any more conscious thought until late 2007 when you will sit down and realize you didn’t do a thing but you can try again next year. The aforementioned resolutions are the average ones most Americans will make and also believe that they actually might happen. Yet, they aren’t really sure because they can’t imagine how they actually would be accomplished. We all know that setting a goal without a plan to get there isn’t going to work, but who said New Year’s resolutions need to succeed; they really only need to be set.
So let’s skip the resolutions and start with another idea. Why not seek the perfect world and find out how to get to said world. Why not do what the title of book I found over the holidays says: "Live what you love". We are all getting older, hopefully, so why not finish the trip through life being supremely happy? Why not design the model for your perfect world and then build it step by step? The ingredients would be good health, sufficient wealth, harmonious family life, challenging vocation or avocation, good relations with you and your Maker and a chance to help your fellow man. I think that is a good start.
The first two are probably the foundation of your world but can only be achieved with liberal doses of all the of the other parts right from the start. In as much as I do not really know your situation, I will use mine as an example. I generally to the doctor three or four times a year to have my blood taken mainly to check my cholesterol and some other areas. I generally listen to about half of the advice he gives me, but this year, I have decided to take the tests he wants and see if I need to change a few things. I was particularly moved by a report I saw on television where Rupert Murdoch stated that most people spend more money taking care of their car than their own health.
Sufficient wealth is the tough one. I know my back isn’t in great shape, and I am taking steps to alleviate some of the problems. I wouldn’t have known how bad without the x-rays and tests the doctor performed and it can’t improve unless I follow his or someone’s advice. Most people know they need some work on their financial well being but do not even comprehend the point of asking someone for some assistance, let alone follow the advice. I find the main reason for this is that it would require explaining your financial goals. I have found that most people either do not have goals or they are so broad they aren’t really goals but desires.
Example: I want to be a millionaire and live in a large house and be able to retire when I wish to retire. How do you define being a millionaire: Have $1 million in liquid assets? $1 million or more in equity in real estate of some kind? Have an annuity that will pay $80,000 a year for at lest twenty years? Have $1 million life insurance policy or own a business which you believe is worth at least $1 million? Perhaps you have stock options that aren’t exercisable for a few more years that value more than a million dollars. Some other considerations concerning wealth and finances: How big is a large house: 2000 sq. ft. or 12,000 sq. f t.? Do you want to retire at 50 years old, 60 years old or 80 years old, or are you the type that will retire when you can and not retire when you want because you will convince yourself that it isn’t the money but the desire that keeps you working?
It's time to break the pattern!! Sit down and design a "Down to gnats whiskers" plan and then have the courage to take it to someone you respect and review it with that person. If you find out you need to make some changes to make it work, make the changes. Be small minded in the plan but enlarge your view when exercising it. I have a rule in the stock market to buy or sell at market unless I have a stop loss order in. Why? When I was a young stock broker, I had a client try to sell a stock at $113. He kept putting in limit orders to sell until he finally got in the mid $30 range. Moral of the story: If you need an extra eight to make the transaction work then realize it hasn’t really worked so get out and move on.
In an effort to finish this column in the parameters I am allowed, I will cut to the chase and tell you that apparently no one ever complains in their dying breath that they didn’t spend enough time at the office. (My wife constantly tells me this). I am making a conscious effort to let some things go and spend more time with my adult children, traveling with my wife, playing golf, and spending time where I worship even if it is just being home and meditating and trying to help plight of people less fortunate than me with housing through Habitat for Humanity. I look better on paper than I really am but each year I am more conscious about the deficiencies and thus more able to correct them. You have the same opportunities.
As we start the New Year, 2007, remember the Chinese proverb "A trip of a thousand miles begins with one step". (That is freely translated but you understand). I promise to spend more time giving you facts and figures in the field of finance that will help you with one of the big building blocks of your perfect world. Will you promise yourself to take care of the rest? Who knows--maybe 2007 will be a memorable year and will go down as one of our greatest yet. We will probably know that answer to that about this time next year.
Roger Schlesinger's Mortgage Minute is heard on hundreds of radio stations and daily on the Hugh Hewitt radio show and Michael Medved shows. Roger interacts with his hosts and explores the complicated financial markets in order to enlighten his listeners and direct them along their own unique road to financial freedom.