Monday, June 30, 2014

Body Soul and Spirit (Setting Goals With Congruence)

In order to achieve goals, I believe we must set goals. In order to obtain a house, a car, inner peace, or a good marriage, we must start with a clear understanding of what we truly desire before we can work towards achieving that end. If we lack goals, then life just happens to us, like a ship without a rudder, drifting where wind and current would take her. As you begin to set goals, set reasonable goals, goals you can believe in, goals you can clearly visualize. As you practice and become more adept with this process, you will naturally attempt greater goals, ones you can not imagine today.


Goals need to be simply stated and easily understood. This is as true for politicians attempting to direct the course of a nation as it is for me and for you. If you can’t put a goal in a short simple phrase or sentence, you really don’t yet know what you want. Complex goals also seem to frequently contain internal contradictions. Of course a great complexity of different actions flow out of simple goals. I want to build a custom house is a simple goal but there is money to be saved, loans to be obtained, a prime contractor, subcontractors to be identified, and a lot of work to be done over the course of the next year. Some management gurus consider the best example of such a goal to be the one stated by President John F Kennedy at the beginning of his administration, “We will put a man on the moon in less than 10 years.” It was a goal that captured the imagination and energy of the entire nation.


Always start with a goal that is stated in positive language. If you don’t do this, the odds are high that you will never achieve that goal. Consider; one of my most vexing problems is weight. Losing weight is a negative goal. Nobody wants to lose things. Not surprisingly, most people who set out to lose weight either fail or lose it and after a while find what they have lost. A better way to frame such a goal would be to state something like, “I want to run in the 5K race held by my favorite charity this October.” That is a positive goal that would result in weight loss. I have read the highest probability of a successful weight loss program would be the one undertaken by a bride to be as she plans her wedding. For these women looking good in that dress on the most important day of her life is a very positive goal.

Of Benefit to You

Following up on the last paragraph, losing weight to look stunning in a wedding dress is a goal that is perceived to be of enormous benefit in the mind of a bride. However, looking stunning in a tuxedo is not perceived as being of any particular benefit to this tired, balding, retired engineer. Obviously I need some other motivation.

Believable by You

Many people try and set goals they really don’t believe are possible. Generally they do not reach these goals. This is the point at which faith comes into play. We all have different measures of faith in different areas of life. Some of our levels of faith come out of our experience and some is based on the Grace of God. It is often said that an elephant can be eaten, but only one bite at a time. Try this with goal setting. Set a little short term goal, a goal you know you can reach. Then set a bigger goal and build your faith by saying, “I know I can do this, because God helped me do that.” Build a track record of success, one little bite at a time.


Pick a goal that can be measured. How do you measure, “I will be a happier person?” There is really no practical way to chart your movement towards happiness. However, if your life style or even your brain chemistry is making you unhappy, there are things that can be done and goals that can be set. Your unhappiness could perhaps be helped with an antidepressant. Maybe your job is putting you in an early grave. A first step goal might be, “I will apply for at least one new job in the next month.” Maybe your situation would improve if you just took your eyes off yourself and tried to help another. The goal, “I will volunteer 3 hours a week as a tutor at the local high school.” There is always a way to set a goal that will move you in the direction you want to go that can be quantified and tracked.

You Can Control It

Although control is not often included in lists such as this one, I think it is something worth considering. I can set a goal of putting aside 15% of my pretax income for retirement. That I can do, as long as I have a job. It is much harder to state, “I will increase my net worth by 14%.” That is somewhat dependent on the stock market. As we all know, we can not make the market go up by just shutting our eyes and wishing very hard.


Congruence is a strange word, but it is the best word I know for the principle of alignment. In order to pursue and achieve or goals with a minimum of time and effort, it is important that every aspect of our person and our behavior is in alignment with our goals. Two sets of points are called congruent if both have the same shape and size and thus are indistinguishable. Perhaps it would be more accurate to say that we must seek congruence and coincidence in our life, that is we make the effort shape our actions, thoughts and beliefs in such a way that they take the same shape and point in the same direction.

If, for example, a 110 pound woman wishes to become a defensive lineman in the National Football League, her goal would not be congruent with her natural gifts and talents. Clearly, God intended something else for her life, but this principle is often very subtle. We seek good things, that may not necessarily be good for us or we seek them in such a way that causes conflicts in our soul. For example, an individual can find himself at a point in his career, when the only thing he still desires from his employer is a pension. Although, a pension is a good thing, as this individual goes to work day after day, his heart is not aligned with his actions. The result is pain and disappointment even as he succeeds at reaching a good goal. Likewise, individuals who make moral compromises to maintain a relationship will always be at war with themselves. A healthy relationship with a member of the opposite sex is a good goal for almost everyone, but pursuing this goal in the wrong way is a recipe for disaster.

So in conclusion be careful what goals you set for yourself and how you work towards those goals. You might actually get what you want.

Saturday, June 28, 2014

Great Expectations?

How do rates of return affect your plans for retirement or for your child’s education?

As you build towards a long term savings goal it is necessary to guess at the rate of return in order to determine how much you will need to reach your goal. 8% is the traditional rate of return projected by the major pension funds operated by corporations and state governments. Because the actual rate of return has been considerably less than 8% over the last 15 years, some of the pension funds in states like Illinois, New York, California, and Rhode Island are essentially bankrupt. These entities are managed by some of the smartest people in the world. They are swinging deals that run in multiples of $10 Million giving them an economy of scale far larger than the individual investor hope to expect. If they can’t get 8%, do you think that is a reasonable rate of return?

But let’s start at 8%. In all the following examples we will use a couple with a joint gross income of $100,000 a year who consistently saved the recommended 15% in tax preferred retirement accounts such as 401(k) accounts and Roth IRAs over the course of 30 years. Since dividends are typically paid on a quarterly basis, we will compound the interest rate on a quarterly basis.

At 8% that would leave them with a balance of $1,843,131.57 or a lifetime annual retirement income of $73,725 indexed to inflation using the recommended 4% draw.

Assuming Social Security still exists, they will enjoy a comfortable retirement. They will actually be replacing more than 100% of their preretirement income since they were living on 85% of their income during their working years. Can you say, “This year we will be exploring the Greek islands on the luxury cruise ship, Athena.”

If 8% is unrealistic how about 7%, Siegel’s constant for return on equities?

That will give them a balance of $1,512,858.91 or a lifetime annual retirement income of $60,514 indexed to inflation.

In a recent report Richard Young is projecting a 4% return based on a more realistic projection of 5.5% return on stocks and 2.5% return on bonds in a traditional age appropriate balanced portfolio.

That will give our couple $865,517.51 at the end of 30 years or a lifetime annual retirement income of $34,620. Looks like they better put off retirement for a few more years. At 40 years instead of 30 years the number increases to a more realistic $1,472,571.26 or a lifetime annual retirement income of $58,902 indexed to inflation.

John Hussman, the successful manager of a family of funds that bear his name, would consider Richard Young an optimist. Every few months he revises his predictions using proprietary methods that have a very good track record. Currently he is looking at a 1.9% return over the next ten years! What does 2% over 40 years look like? Answer, $917,358.70 or a lifetime annual retirement income of $36,694 indexed to inflation. I guess this couple better be prepared to work until they are dead or live like paupers for the next 40 years.

Don’t despair. Siegel’s constant is based on two centuries of data (1803-2003). Americans have muddled their way through a lot of serious problems with only one really disastrous failure, the Civil War.

However, let me end with this warning quoted from the classic study of Modern Portfolio theory entitled, A Random Walk Down Wall Street:

Investors should also never forget the age old maxim, “If something is too good to be true, it is too good to be true.” Heeding this maxim could have saved investors from falling prey to the largest Ponzi scheme ever: The Bernard L. Maddoff fraud uncovered in 2008 in which $50 Billion was said to have been lost. The real con in the Madoff affair is that people fell for the myth that Madoff could consistently earn between 10 and 12 percent per year for investors in his fund.

The “genius” of the fraud was that Madoff offered what seemed to be a modest and safe return. Had he offered a 50 percent return, people might well have been skeptical of such pie in the sky promises. But consistent returns of 10 to 12 percent per year seemed well with the realm of possibility. In fact, however, earning such returns year after year in the stock market (or any other market) is not remotely possible, and such claims should have been a dead giveaway. The U.S. stock market may have averaged over 9 percent a year over long periods of time, but only with tremendous volatility, including years when investors have lost as much as 40 percent of their capital. The only way Madoff could report such a performance was by cooking the books.

Body, Soul, and Spirit (The Sisters Patience and Persistence)

There are a lot of what I will term, mind science teachings that are popular today. They come in different religious flavors and varying degrees of sophistication but they all contain a similar teaching. They all claim mind or intention is the beginning of all things. That is correct. They all claim that before something can materialize in your world, you must first have the thought in your mind. That is correct. Some of them even teach methods of visualization to help you learn how to clearly see your goals. Visualization works. Even Olympic athletes utilize visualization techniques as part of their training. It has been found that mentally rehearsing a gymnastic routine or even shooting foul shots will improve an athlete’s actual performance. But often, that is where these teachings stop. They imply that you do not need to practice or continue exercising in the face of disappointment and discouragement to achieve a goal. In fact, even the exceptional athlete runs hundreds of wind sprints and spends hours in boring repetitive drills of fundamental skills.

Persistence is the point at which divine will takes shape in human hands. We can say this mountain will be removed from my life, but mountains are large. Rent a bulldozer and start digging. If the rock is worth something, people will pay you for a chance to haul it off. If you believe you have found God’s will for your life, persist in seeing your goal, even as you work towards that goal.

Persistence has a sister. Her name is patience. If you set a very large goal, at some point in time you will be tempted to cry out, “The task is too great.”

Patience says, “This is not so.” If, for example you have set a goal of $1,500,000 in cash, stocks, and bonds for retirement, this is can seem an overwhelming goal, particularly as you watch your investments decline in value as happened in 2008.

Patience says, “Can you put aside $1,000 this month? Perhaps that is something that can be done by payroll deduction into a 401-K, every month. Perhaps your employer will add something to that money. Perhaps the mutual fund purchased with that money will eventually begin to grow again.”

Patience will tell you, “You can take another step and not even notice it.”

If you keep doing the right thing in the right way you will get closer and closer to your goal. If God has truly told you, this mountain will be removed. It might take some effort, but enough bulldozers, enough dump trucks, and enough time and that mountain will be removed.

This principle applies to any problem. Consider the real case of a very lonely unhappy divorced man. One day he decided he had enough of his own sorrow and self pity. He didn’t know how to start meeting women. After all, he was over fifty years old. He decided to take a class in ballroom dancing. He thought women might like dancing. He was right. He was greatly outnumbered by women in these classes and some of the women were divorcees looking for a husband. It took some time, but eventually, through persistence and patience, he found a good Christian wife.

The sisters, patience and persistence would be number six on my list of seven.

“Courage does not always roar. Sometimes courage is the quiet voice at the end of the day saying, “I will try again tomorrow.”

Mary Anne Radmacher

Thursday, June 26, 2014

Your Problems are not Your Identity!

Maybe it is too soon to write this post. I am in the process of learning what amounts to a new skill. I have been fortunate in that I haven’t had to simultaneously fight money problems deeply entwined with waves of powerful negative emotions since the early years of our marriage. Even then those occasions were rare events. Looking back over those years with the perspective of nearly 40 more years of experience and wisdom, I would be more fearful then than I was at that time. The courageous optimism of a young man still in his early twenties is a wonderful thing.

I have spent the last month in another city dealing with a family emergency involving my elderly parents. Money isn’t the problem. Access to money is the problem. As I worked on the problem, I felt as though I was drowning in my own emotions. From time to time I had to stop, take a deep breath, and realize I am not the same thing as my problems.

Yes, I have problems. They are very real. Pretending they do not exist will not help. Running away will not help. Clarity of vision is the only way to begin the process of healing.

I must accept the facts as they exist. If your credit card balances total $15,432.15, that is the reality of your situation. You can’t change the past.

It is now time to do what will solve the problem or at least improve the situation. That requires understanding. Although I have already been reading up on the subject, in my particular situation I need expert advice from an estate planner, a CPA, and an attorney in another state. I already have a relationship with a CPA and an estate planner. Now that the immediate, acute medical situation is stabilized, I will begin to explore our family’s options with these individuals who have helped me in the past. I also need to investigate a recommended attorney.

When you are in over your head, don’t be afraid or ashamed to seek out knowledgeable professionals. When money is involved, just be careful. As the Great Communicator observed, “Trust, but verify.”

Before you can understand a problem and implement a solution, you must separate your emotions from the problem. Easier said than done. When you need a time out, take a time out. Treat yourself and your emotions kindly. Ask for prayer. Find a friend who is willing to listen to you unload a great heap of negativity. When you have returned to a semblance of sanity you will be better able to fight those battles.

Lao Tzu understood this conundrum, “A skillful solider is not violent, an able fighter does not rage, the greatest conqueror wins without struggle.” When I have successfully separated my problems from my identity I will be better able to help those I love.

Wednesday, June 25, 2014

Family Emergency

For nearly a month I have been out of town and off line while dealing with a family emergency.