Archive for March 2013

Welcome to the latest series at the wildly popular JosephSangl.com: “5 Things That Will Help Fix The Economy” In this series, I will be sharing some principles I believe will help fix the economy long term.

The economy has been stuck for some time. The words “Great Recession,” “Fiscal Cliff,” “Sequestration,” “Stagnant,” and “Jobless Recovery” have become common everyday language.

Number 5:  Make rip-off loans illegal

I know this seems a little out of place when compared to the other four items, but I really feel this needs to be included. When economies allow organizations to charge OUTRAGEOUS fees and interest to citizens, it is positioned to eliminate the middle class.

In a coaching appointment, I had a person who had signed up for a “payday” loan. The loan agreement clearly outlines that the “annual percentage rate” was 782.14%. That is not a typo! The interest being charged to this person was 782.14%.

I’ve heard arguments from those who make these types of loans:

• We help people who are “in a pinch”  You can actually say that with a straight face?
• People voluntarily sign up for these loans.  This doesn’t make it right!
• These are smaller loans, so it’s not that big of a deal.  Yes, it is!

Have you noticed where these rip-off loan businesses are located? Near rich neighborhoods? Nope. They are located next to communities where people have little money education. It’s my goal to help educate everyone to the point that no one would ever borrow money with such horrific financial terms and these types of organizations have to go out of business!

This type of lending is awful, and it should be illegal. Who’s with me?

Read the entire series (available after 3/14/2013)

Read recent posts

Welcome to the latest series at the wildly popular JosephSangl.com: “5 Things That Will Help Fix The Economy” In this series, I will be sharing some principles I believe will help fix the economy long term.

The economy has been stuck for some time. The words “Great Recession,” “Fiscal Cliff,” “Sequestration,” “Stagnant,” and “Jobless Recovery” have become common everyday language.

Number 4:  Incentivize Innovation, Job Creation, and Education (Especially Money Education)

Economies that possess highly educated people who focus on developing emerging technologies are the ones who help drive job creation. For this reason, it is essential that countries incentivize this because it will result in global economic improvement.

There are so many great areas where we need innovation:

1. Transportation: Rapid transit and mass transportation
2. Energy: Electricity, Oil, Gas (improving the old ones) and Renewables (replacing the old ones)
3. Housing: Improving efficiency and building materials
4. Education: Improve teaching and learning methods – especially providing experiential learning and connecting theory to real-life application

Here’s why money education is so important:

People without sound money knowledge will do the only thing they have ever seen done with money – spend it. They will spend every dime they have earned, then open a credit card and proceed to spend all of the credit limit also. This WILL help power an economy – but only for a very brief period. Very quickly, those people who have little money knowledge will run out of spending power and have to repay their debts. This causes economies to experience short-term massive expansion followed by years of stagnant growth or even contraction. Sound familiar?

While steady growth is not nearly as exciting as massive expansion, it is sustainable.  That sounds like a good deal to me.

Read the entire series (available after 3/14/2013)

Read recent posts

Welcome to the latest series at the wildly popular JosephSangl.com: “5 Things That Will Help Fix The Economy” In this series, I will be sharing some principles I believe will help fix the economy long term.

The economy has been stuck for some time. The words “Great Recession,” “Fiscal Cliff,” “Sequestration,” “Stagnant,” and “Jobless Recovery” have become common everyday language.

Number 3:  Build substantial financial margin.

When an individual, organization, or government continually operates without a “margin of safety” financially, they are always are at risk of collapsing in the face of a financial emergency.

Over the past decade, the national debt of the United States has soared. The actual debt was:

• In 2000: $5,757,000,000,000
• In 2004: $7,097,000,000,000
• In 2008: $9,472,000,000,000
• Now: $16,614,000,000,000

This debt has increased in large part because the nation has been “against the wall” financially – with no real savings. Just like a person who has lost their job without having any saved money, the decision was made to “finance” the gap to keep everything running. However, just like a credit card has a spending limit, so does the nation.

Just as it is of first and foremost importance for an individual to build financial margin (even before attacking debt), it is vitally important that the nation build savings. Savings allows the nation to have “breathing room” that would allow for the conversations and dialogue that is very necessary to make the best and wisest decisions regarding income and outgo.

Here are ways that the United States could build margin:

1. Pass a balanced budget that is REQUIRED to be followed. (This was part 2 of this series)
2. Ensure that savings is included as an expense that is part of the balanced budget.

I would be more than happy to pay more taxes if the government’s leaders would commit to STOP incurring more debt, and my extra tax dollars would be utilized to build financial margin and to reduce debt. Anything to ensure that my children and grandchildren won’t be left bearing the huge financial burden of a bankrupt nation!

Your thoughts?

Read the entire series (available after 3/14/2013)

Read recent posts

Welcome to the latest series at the wildly popular JosephSangl.com: “5 Things That Will Help Fix The Economy” In this series, I will be sharing some principles I believe will help fix the economy long term.

The economy has been stuck for some time. The words “Great Recession,” “Fiscal Cliff,” “Sequestration,” “Stagnant,” and “Jobless Recovery” have become common everyday language.

Number 2:  Require a balanced budget.

In all of my personal finance books, events, and teaching, I share a fundamental and foundational financial truth that the following formula applies to one and all if we truly want to prosper:

INCOME – OUTGO = EXACTLY ZERO

If “Outgo” continually exceeds “Income”, then the formula won’t equal “Exactly Zero” (EZ tm!) Instead, it will be a negative number. This can go on for awhile through the use of debt and creditors, but eventually the game will come to an end and the creditor will shut off future funding.

Balancing a nation’s budget requires the same process you and I put into place at our kitchen table. When faced with a negative number instead of “Exactly Zero,” there are two ways to balance the budget:

1. Increase INCOME
2. Decrease OUTGO

1.  Increase INCOME

How does a government increase income? Generate more tax revenue! This can be achieved two ways: (i) Increase taxes or (ii) Economic improvement (which will yield more taxes as profits and payrolls increase). While most of us are not terribly excited about paying taxes, I am more than happy to pay them to enjoy the good benefits that government provides. I would be even happier to pay taxes if I knew that the government was required to have a balanced budget!

There’s actually a third way to increase income, and it’s my least favorite: (iii) Borrow money. Borrowed money generates money for now, but creates a future liability that adds to future “OUTGO.” A good way to comprehend this is a credit card. You could use your credit card right now to generate income. You could purchase items and “stimulate your economy” right now because it would add to the “INCOME” side of the equation. However, the bill would come due soon and cause the “OUTGO” side to increase. Seems very counter-productive to me! I’ve yet to meet anyone who told me that borrowing a ton of money on their credit card was a great decision that helped them prosper!

2. Decrease OUTGO

This is the unpopular and unsavory part of budgeting. No one wants to reduce spending because that’s our favorite part! We all want to be able to shop, subscribe to cable and Internet service, drive a great car, and have the best of everything, but decisions must be made when faced with substantial budget issues. Using the credit card to fund these items during a slump in income will only work for awhile and then the bill will come due – larger now because of failing to make key decisions and using the credit card instead.

Sometimes in our personal budgets, we must even reduce and potentially eliminate good things and fun activities. We don’t WANT to, but we MUST if we really want to position ourselves to prosper long term. The same is true for governments. When faced with tremendous INCOME challenges, we must reduce and eliminate OUTGO – even for great programs and organizations! It is awful and no fun, but it is NECESSARY if there is to be any fundamental financial and economic improvement!

Let’s look at the United States Budget (see it all HERE). According to the non-partisan Congressional Budget Office, the U.S. collected $886 billion in INCOME during the first four months of Fiscal Year 2013 (FY2013). However, the country spent $1,181 billion in OUTGO during the same period. Our key equation “INCOME – OUTGO” definitely is not EZ! Instead, there is a deficit of $295 billion. Put simply, for every $1.00 the country collected, the government spent $1.33.

To better comprehend these huge numbers, let’s put this in terms of your personal household income. Suppose you earned $4,000 this month. To match the deficit achieved in the first four months by the government, you would need to have spent $5,331 or $1,331 more than you earned. How long could YOU sustain that type of deficit spending?!?!

A vigorous debate must be done with the vision of a great economic future as the main goal – instead of a “I need to win this argument at all costs” posturing and positioning. There will be tough decisions that will impact people, services, and the global economy. It is a huge and complicated task (so is balancing our own budget!), but it must be done to fix the economy long-term.

Your thoughts?

Read the entire series (available after 3/14/2013)

Read recent posts

Welcome to the latest series at the wildly popular JosephSangl.com: “5 Things That Will Help Fix The Economy” In this series, I will be sharing some principles I believe will help fix the economy long term.

The economy has been stuck for some time. The words “Great Recession,” “Fiscal Cliff,” “Sequestration,” “Stagnant,” and “Jobless Recovery” have become common everyday language.

Number 1:  Establish a clear vision of what we want our economy to look like

“Without vision, the people perish” is absolutely true. This applies for each of individually as well as for all of us corporately. If we don’t have a crisp, clear, and compelling vision for the future that is fully bought into by leadership as well as all citizens, the economy will waver and wander.

• President Obama has been sharing his vision for the United States HERE.
• Canada’s prime minister, Stephen Harper, shares vision HERE.
• Mexico’s president, Enrique Pena Nieto, wrote a book about his vision for Mexico HERE.

Here is what I know to be true:

If it always one party completely FOR something and the opposing party completely AGAINST something, progress can hardly be made. Relationships become toxic and non-productive and every issue becomes a “WE versus THEY” battle. Economic progress and stability happens when vision is vigorously debated, everyone has their moment to hear it and have their questions answered, and buy-in from all representatives is achieved. Impossible, you say? It has happened many times in the past – usually in the face of tremendous adversity. What if we viewed our collective global economy as a moment of tremendous adversity?

Maybe this would be a good start to a global vision statement:

“Help people accomplish far more than they ever thought possible.”

Read the entire series (available after 3/14/2013)

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