I think I can, I think I can, I think I can

Building on a theme started yesterday, today’s post builds on the idea a key step to success is believing you can achieve your goals.

A reader shared a quote with me that corresponded with some of the thoughts I had put forward in yesterday’s post.    “If thought was all it took to change the world, all teenage boys would quickly become girls with large breasts”

Self Talk

Self talk simple refers to the things you say to yourself within the confines of your own mind.  Some of these thoughts are conscious, most are unconscious and you don’t even realize you are doing it.  Pause for a second on the bus, a walk to work, getting up in the morning and listen to yourself.  You will probably be surprised to notice conversations in your head really do go on.  For example, on getting out of bed it would not be surprising to hear you tell yourself, “I am so tired already, what a day is coming” .

Paying attention to self talk is a very helpful step in changing the way you feel.  You can consciously speak back to yourself and change the way you feel.  ” I am not tired and this is going to be a great day”.

Studies has been done to gauge the power and effect of “self talk” and the impact of consciously listening to yourself and fighting back.  The results are pretty unanimous that self talk is real, it matters and can be used to promote achievement.

If you have not already done so, give it a try (i.e,. consciously listen to yourself and talk back).  You may be surprised by the results.

Outside the Sports Context

Yesterday’s post had a sports context.  One aspect of this approach is the objective is clear, in sports your goal is winning and you know (based on the rules of the game) how to do that.

In life, first capture your personal objectives clearly (on paper, in your mind, record a message to yourself)  Then focus on believing you can achieve and like in sports, while your skills play a part, positive attitude and belief you can succeed play a large part.  If you are a male thinking positively probably won’t grow you breasts, but thinking positively (supported by self talk) will undoubtably increase the likelihood of success.

Winning – Skill or Desire

The national hockey league season is about to begin.  This got me thinking about winning, is it skill or desire that drives the champion team.

Let’s take the Edmonton Oilers.    In the last six years they have had the worst record in of the league for four of those years and were a losing team in the other two.

In the last six years the Oilers have taken the first pick overall four times.  Few would argue that the skills of the player chosen as the first round – first pick  overall, are high.  So the Oilers have chosen at least four top tier highly skilled players, arguably all star material.

And I should note the 2014 pick was third overall while the 2014 was a respectable seven, still pretty high in the pecking order with lots of skilled players available at the time to choose from.

If talent were all that mattered these six players should make the Oilers a top tier team and a serious playoff contender (Even if they were traded it would be for good skills right).

The results from the 2015 pick are not in yet (we’ll see this season) but my prediction is the desire, that is the hunger for the title is still not there.

Psychology Matters

A colleague of mine once postulated if you can visualize the win, than you will (win that is),   All you need to do is see it, feel it and it is yours.  Skill matters of course but it is probably less than half the equation.   Your psychological state is a much a factor in success as ability.

Before I get a flood of comments about this statement it’s understood that the concept “if I think I can than I will” is not absolute.  But, it sure helps.

So What about those Oilers

As long as the fan’s fill the seats and the large salaries are paid out the Oilers drive to succeed, in a very competitive league will not be enough.

Were I making the first round picks none of them would be minor league or junior stars.  Selecting a player with unrecognized  potential and holding out the incentive of stardom and associated financial awards is far more likely to spark that drive and determination needed to win in the NHL.  That is, someone who is really hungry to prove their worth.

Most importantly is that success breeds success so all I need is one player to ignite the spark( that is with drive, desire and reasonable skill).  Everyone else on the team will step up.   Once the power of the team kicks in they become unstoppable.  Winning breeds winning.

The Oilers are trying the old formula – get the stars and and the rest will take care of itself.  Sadly, I don’t think that is true.

My prediction for this years Oiler’s – in the bottom four finishers.

Poor Service Rant

I am not sure if the older you get the less flexible and forgiving you become.  Over the years I have exhibited a very high tolerance for iffy or downright awful customer service.

As time has progressed, my patience has diminished.  In the past couple of years I have sent written complaints to the President of Bank of Montreal, President of BMW Canada and President of SunLife Canada.  All of my issues were resolved quickly.

Today I had one of my worst experiences ever.  It was with the BMW Assist call center and unfortunately for my loyal readers, I am going to rant about it a bit.

Customer Care Agents (nice title, not accurate)

I received a letter today – Sept 28th.  The letter was dated September 9th and advised my BMW Assist subscription expired on Aug 25th and this was my last chance to renew by September 24th.  After that service would be permanently deactivated and I could not renew.    Given Sept 24th had already passed this was not too helpful.

I had called the BMW Assist call center on August 11th and requested they renew my subscription so I thought an error had been made and I would just call their friendly Customer Care Agents and they would help me and fix the mistake.

Hard to Believe

The agent that answered my call investigated and told me he could not renew my subscription and I would need to contact my BMW Center.  BMW Assist did not renew Canadian subscriptions.   He was unable to tell me how to contact my BMW Center (address or phone #) but this is what I had to do.  I protested that I had renewed my subscription through this call center two years ago and when I had called on August 11th they told me it would be renewed so I was positive they could do it and if he couldn’t help me I wanted to talk to his supervisor.

Supervisor Phil (operator #7091) came on the line and I got a better story.  He clarified they could not renew my subscription because it had been permanently canceled on September 24th.  Maybe my local BMW Center could help (what that was, where it was and how it could help eluded him).  He agreed I had called on Aug 11th but had not provided renewal instructions.  I asked if my word that I had in fact provided those instructions was not good enough.  He said it did not matter he could not renew my subscription if he wanted to.  I suggested BMW Assist had made a mistake and should fix the mistake they had made.  Phil did not agree with me.

I advised Phil that I would be escalating to Andrea Piotrowski the Customer Services Manager who sent me the notification letter about the last chance to renew.   I asked for her e-mail address but Phil would not provide it.

And that’s all folks

So that is my rant in a nutshell.  Now I am off to write my letter to Andrea Piotrowski.  I am going to include the link to this post in my note to her so she can comment on this post directly if she so desires.

 

Do I care about my net worth

Financial Net Worth

Your net worth is basically the value of all household property minus household debts.  Net financial assets is a variation where personal resident and lifestyle property is removed.

Note: The value of a person (i.e, their worth) and financial net worth are totally unrelated.  High financial net worth does not make a good person and visa-versa.

Most personal financial manager (PFM) software products referred to in yesterday’s post include the capability to list all household assets (e.g., owned resident, boat, household goods) as well as financial or investment assets.  Both your net worth and net financial assets can be reported from the PFM.  Monitoring these numbers over time give an indication if you are building wealth or if it is eroding.

In conjunction with looking at spending, net worth  provides another indicator or how you are doing.  This can help you make decisions about changes you want to make in your ongoing financial behavior (e.g, lifestyle, investment risk management, etc)

(A reader made an interesting comment on yesterdays blog – and I paraphrase a bit –  “about paying yourself first”. Tracking net worth/net financial worth will help you understand how you are doing on that front).

Thoughts on Net Worth

Where you fit in the net worth spectrum is a personal choice and the value of being classified as high net worth or not is zero.  What matters is that your lifestyle meets your expectations and that the financial component required to meet that lifestyle is right for you personally.   This is where financial planning, that is an awareness of how you are positioned is what really matters.  This let you manage and make changes as desired.  It becomes your choice, not forced upon you.

Some information I read recently (might have triggered this post somewhat)

In a 2015 study, Boston Consulting Group listed the number of millionaires based on financial assets by country.  Their findings showed  418,000 millionaires in Canada (approximately 1% of the population).  Including personal residence and lifestyle property this number would be much higher.   Forbes indicated in a 2014 article that around the world the average millionaire had financial assets of $3.5 million.

Most research I conducted calls those with a million or more in financial assets high net worth individuals.

 

Why bother with financial tracking?

Continuing the financial planning theme from yesterday, I am going to focus on tracking in a little more detail.

This will lead to a discussion of financial net worth in a future blog.

Tracking

Years ago (before the dawn of personal computers) I tracked all my families income and spending manually using a financial ledger (yes a real book) which I wrote figures in (yes with a pen).

In the early nineteen-nineties I was a early adopter of quicken for windows (a so called personal financial manager – PFM).  I used it for tracking my income and expense as well as an ongoing financial net worth calculation.  It was much quicker and less messy then the ledger system, which went bye-bye.   I strongly recommend if you are not using one of these “apps”  you start right away.  As mentioned in yesterday’s post all financial planning stems from this one basic foundation – ongoing tracking.

Which Financial Tracking Tool

For getting started basically you want a product that contains functionality that lets you enter each expense and and income entry by category and by account type (e.g., checking, saving, investments, loans etc).  Most products have default categories to track spending by and you can add your own custom.

Although I am an early adopter and long time user of Quicken I have flirted with other products.  In the end though the benefits of alternate tools have not been enough to drive me to change.  However,  I would recommend a google search to find the application you are most comfortable with (there are some great free shareware products out there).

I got a tool and I am entering every transaction, so what?

The basic tracking information you are gathering in the tool has three principle uses.  (Disclaimer, this is planning 101 so I only am describing the basic uses, there is a lot of advanced stuff you can do)

  1. Report on spending by category over a specified period – You can do this review weekly, monthly, quarterly, etc.  I personally just do it annually (so it is not a lot of work and is just once a year).

    I keep all the summary output of spending by category for each year (my current spreadsheet has 25 years of data).  I can compare what the difference in category spending is year over year; year over overall average; and so on.  This lets me see trends at a glance and make decisions.  For example restaurant spending is on the rise, automobile repairs tripled year over year but are close to the average.

    These observations (which I basically make once a year) let my wife and I manage our spending behavior to match our lifestyle, rather than visa-versa.   This is not a work intensive exercise and the benefit is amazing.

    For example the rising cost of the auto maintenance category could lead to a decision to use public transit (reducing auto cost) so more money is a available for other things we prefer.

    I should note that the analysis you make should be as broad and long reaching as you can, not just a tactical year over year consideration.

  2. Income vs. Expense – I will describe this in a future post.
  3. Net Worth Calculation – I will describe this in a future post.

Does personal financial planning make sense

For any activity I am considering engaging in, the first question I ask is about value.  Value is a measure which considers both the associated effort and benefit.

Let’s say you are planning to spend days researching the best route to drive to work.  This entails determining what the route options are, than trying them out, timing them, maybe trying and comparing them during your leisure hours.   The extra trips have a gas cost associated with them.  In the end you may find the difference in travel time and gas costs between the four routes you found is a maximum time saving of less than 5 minutes.  Also the difference in gas cost negligible and the stress in rush hour is about the same for each route.   I would classify this route planning exercise as low value, the effort to develop the plan is not justified by the benefit.

Unfortunately sometimes it’s much easier to gauge value with hindsight than foresight (just an observation at this point).

This value discussion is relevant mainly because financial planning  is usually considered by most to be high effort and hard to do (often people hire others to do it for them).  While the effort is perceived to be hard the benefits are long term and usually not immediately tangible.    This thinking often leads to the conclusion that the exercise is of lower value,  not worth doing now, maybe later.

Money and Lifestyles

Financial planning is an ongoing exercise covering a lifetime or at least to retirement.   Plans that are developed should be flexible and need to change with your circumstances,  The objective is to enable your personal lifestyle to meet your expectations.

The Price of Entry

Data!  Building a financial plan, monitoring and updating it are 100% dependent on the historical data.  First and most important answer the question, what are you spending your money on?  Spending and saving objectives are the predictive part of the plan and frankly just gazing into a crystal ball to make predictions generally does not work.

The planning exercise starts with capturing and documenting your spending patterns over a reasonable period (at least one year).

You can use this historic spending to help predict future spending.  This includes saving plans and investing returns.   Then keep tracking ongoing to see how you are mapping to your predictions.

If your predictions are not going to achieve your goals short and long term using the past spending patterns and personal lifestyle behavior analysis to determine how you can achieve what you seek.

The bottom line

In future posts I will be exploring financial planning activities in more specific detail.  Basically a simple “how-to” primer is to come.   The purpose of this post was set the basic principles plant the idea that the planning effort might well be worth it – i.e,  high value overall.

Thoughts about upcoming elections

For me the Canadian Federal election campaign is too long.  I am used to four to six week campaigns and over two months just seems a long time.

That being said the US presidential campaign meanders on for more than 2 years so I guess two months is not that long.

The latest Canadian polls have the Conservative party edging up into the lead.  As we are now a reasonable length of time from the election (less than a month) I believe the polls are starting to be meaningful.  The past polls were showing the three main parities neck in neck and I postulate this is because so many voters were undecided.  That is starting to change.

We could still end up with a minority government in Canada after this election, however, my prediction is a solid Conservative majority and five more years of stable but unremarkable governance.

Not sure if any of the political types read my blog but for future reference if you want to excite the populous and get a good voter turnout try the American practice of adding questions to the ballot. For example what about a question like  “Should the use of marijuana be legal – yes or no?”  I have not missed voting in a federal election since I was 18 so undoubtedly I will participate in this one, that said a question like that on the ballot would get me pumped about the vote – just sayin.

What about the US Presidential Race

I predict Donald Trump (Republican) versus Hilary Clinton (Democrat) in the final race.  I admit, it is possible anything could occur in the primaries, so this is a very early prediction.  Things are shaping up that way.  I shake my head about Donald Trump but then remember the residents of Toronto elected Rob Ford so anything can happen.   I really believe citizens of the United States could get behind Donald Trump.  What an administration that would be.

 

Changing of the seasons

Each year we experience two equinoxes and two solstices.  These four events are used to define our seasonal changes – officially that is.

Today is the autumnal or fall equinox in the northern hemisphere.  An equinox is simply the point at which the sun crosses the equator and day and night are of equal length.   In the northern hemisphere the fall equinox occurs in September (a slightly different day each year).  It’s the opposite in the southern hemisphere.

Today, September 23rd at 4:21 am the sun crossed the equator and the fall equinox began.  The fall equinox leads to the winter solstice when the night is the longest and day is the shortest (around Dec 22nd).  Again, the opposite in the southern hemisphere.   As the daylight hours reduce it gets colder, hence why the coming solstice officially kicks off the season of winter.

In Reality……..

The truth is the further north you live the earlier you start to experience the seasonal changes so although the equinox and solstice are good rules of thumb as to the seasonal changes and associated weather (brrrr!) they are not absolute.

Before I forget though, welcome to the first day of Fall 2015.  (Unless you live in the southern hemisphere than it’s the opposite.)

Of course if you live on or near the equator the seasonal changes are minimized.  It’s sort of like your weather is just one season year round.

Who figured this out and how did they do it?

Sometimes I wonder how human kind figured out the mechanics of the seasons, the cause (that is, earth orbiting the sun, earth rotating).   I only know this because I was taught in school and it makes sense,  so I believe it (and I guess Wikipedia say’s it’s true too so it must be).   It might be strange but I wonder if I was not taught about the earths obit and rotation would I have been able to figure it out.

It is actually pretty fabulous that others did all the analysis for us, does leave me wondering about my own capabilities though.

Again Happy Fall 2015 and don’t forget to bring in the tomatoes before they freeze on the vine – they won’t turn red and are not really edible after that.

 

 

Do Fire Drill’s add value?

Throughout the years the office buildings I have worked in generally practiced regular fire drills.  Sometimes you would get an advance notice (at least the managers would) and sometimes not.  The purpose was to make sure the occupants of the building could exit in an orderly manner following an alarm.

On the surface this seems like a good practice, however,  I would like to explore the value of this practice a little further.

Whats the impact and likelihood.

The risk event  (e.g., delayed exit during a fire, building collapse, attack by a jet airplane ) certainly has the potential for a high impact.    A delay or being trampled could result in death or serious injury.  For most of these risks though there are a number of mitigating factors that reduce the risk from occurring in the first place.  Things like regular inspections of buildings for fire hazards, early warning, special engineering for earthquake impact reduction and fire suppression devices are just among a few of these mitigating processes.   As a general rule, I would argue the likelihood of the risk event resulting in the need to exit rapidly is reduced to low by the various mitigating factors employed by building owners (recognizing some more than others, but building codes require a certain minimum level of mitigation.

So based on the assessment of high impact versus low likelihood how valuable is the pre-risk event mitigation of a fire drill.  One way to view this question is to consider the effectiveness of a fire drill.

My Experiences with fire in large buildings

I have only responded to three real fire alarms in my lifetime and all occurred in buildings where I had not participated in a fire drill  (two were hotels and one was an apartment building I lived in).  In all cases the building occupants exited rapidly, orderly and without incident.  Also, I can say with confidence the majority  (like me) had never participated in a fire drill in those buildings.

Unnecessary Risk Mitigation

Considering the effort, loss of productive work time and minimal risk mitigation value I am not a fan of fire drills.  Even without a practice drill the likelihood of someone not being able to exit or a mad panic occurring which delays the ability to exit is low in my mind.  And the impact would probably be quickly resolved.

And my final point would be the places where rapid exits from a building has resulted in people being trampled or injured usually occur at events (concerts, dances, etc) and generally none of these places (where the risk event has actually occurred in the past) conduct drills.  This of course is mainly because it is not practical.

 

 

 

Tesla Electric Vehicles (EV)

One of the largest markets for refined oil is automobile gasoline.  Electric cars will reduce that market.  I do note that some electricity is produced using oil products, so more electricity use could increase oil demand somewhat.

All in all though, it’s obvious electric cars will have a strong impact on demand for refined oil.  For me, the key question is when will  electric vehicles (EV) fully replace those based on internal combustion?  Will this occur before oil supplies are exhausted, or just around the time they are running out or will the drive to electric be linked to the depletion of oil supplies.  That is, when there is no more gas will people flock to EV’s.  Or, will people flock to EV’s before gas supplies are an issue.

Of course, planes, ships, trains, power plants and a number of other things use gas so even if automobiles completely switch to electricity there will continue to be a demand for fossil fuels (just very reduced).

Overtime replacements for these other uses of oil will appear (e.g., methods to produce heat and power through renewable energy sources are already being promoted as replacements for fossil fuels)

Is past behavior a predictor of the future?

The opportunity to switch from internal combustion automobiles to electric vehicles has both existed and been practical and viable since the nineteen seventies.  Yet, on the whole, the populations of the earth have chosen not to switch.  This behavior predicts that switching will neither be fast nor occur without some strong motivation (e.g., no more oil or refined oil products are no longer affordable).

Ecology or Supply

It is quite interesting that the fact that using fossil fuels is proven to damage our environments has not caused us to stop using them.   I postulate one of the key reasons for this is immediate impact.  The reality is the boiling frog analogy is quite accurate.   In this example,  if you put a frog in a pot of water and start to boil it, the frog will remain in boiling water until it is unable to escape.  When  the danger is realized, it is too late.

In the case of the human race, the capability to adapt and recover (human resiliency) has been proven throughout the past centuries to be very real.   That is, a flood or earthquake or volcanic eruption are taken in stride, the populations react, recover and move on.   Will this be true for the overall ecology of the planet remains to be seen.  I will probably be dead before then and so it’s hard to get motivated.

The Economic Dilema

I will close this post with the other key factor around the switch to electric vehicles.  Much of our current economies (world wide) are dependent on acquisition and refining of fossil fuels and building and maintaining of internal combustion vehicles.   Can we switch to electric vehicles without a massive economic turmoil?