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The Financial Agony of COVID-19: Part II

Five months ago COVID-19 was just getting started. Fear was rampant. People and businesses made rushed decisions with long-term consequences. In the U.S. fewer than 10,000 people had died from the virus, yet fear was many more would die. 

Over concerns clients and readers (that is you my kind friends) would make poor financial decisions, I published an article encouraging caution and recommended people relax, breathe deeply and think before making a decision. By thinking before acting, I felt my people would be in a better position to make decisions that would serve them well. 

Then I watched my readers act and react on social media. The spread of COVID-19 should have run a chill down the spines of any normal human being. But social media does not bring out the “normal” in people. Some over-reacted with the attitude everyone should shelter in place forever. But as always happens, the disease became “normal” as we saw it every day. Before long people wanted to get out and act as if nothing was wrong or that the risk had ended. The middle, sensible, ground somehow lost out. 

It is sad the intelligent solutions lost out. Again, social media was rife with conspiracy theories, questionable remedies and outright lies. Social distancing, washing hands and masks are three simple things everyone can do to slow the spread of the virus until a vaccine can end its rein of terror.

Logic didn’t work 5 months ago, so now I have to get blunt. This is a financial blog so there is a reason for the focus on a medical issue. Your reaction to COVID-19 is a large part of the way you think. If you conduct stupid, risky behavior with your life, you probably do even worse when it comes to money. The best way for me to convey this message is with the good cop/bad cop routine. 

There are two parts to this post. Part 1 is a mild comedy sketch of the facts. In Part 2 we will put it together and pull out meaningful and valuable data you can use. This value will increase your wealth and allow you to live long enough to enjoy it. Remember, Part 1 is dark comedy and not my opinion. I don’t want hate mail before you read the whole story.

The faulty logic used in our dark humor skit is more than a risk to our physical health; it is the same mindset that harms you financially. We actually have people who believe 1,000 or more dead Americans a day isn’t that bad. There are people who think it is okay to carry on as if nothing has changed because only old people suffer the consequences. They forgot their Hemingway: Do not ask for whom the bell tolls; it tolls for thee. (For exact quote use the link.) The clock keeps counting for all of us and since I see no old people saying, “I don’t care if young people do stuff that might kill me,” I assume today’s young people will want respectfully behavior from the future’s youth.

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What the Bible Teaches Us About Money and Success

Perhaps the most important financial advice in the Bible comes from 1 Timothy 6:10:

For the love of money is the root of all evil. (KJV)

Money is not bad; greed is. Working to have money is of vital importance and God places money and wealth front and center. I see so many people suffering financially because they believe “money” is the root of all evil, when that is the furthest thing from the truth. It is the “love” of money that is the problem. Avoid that and you are golden.

There is so much more financial advice than that just in the four gospels and Proverbs. Of course, if you are serious about wealth, you might want to read the entire Bible as Living Literature. The stories still resonate and for good reason. They are archetypal stories dripping with significance. Virtually every bestselling novel and movie can be traced back to some story in the Bible. You just didn’t know it.

Money and wealth are important. And yes, God wants you to be rich. Really rich! Not just in financial terms, but in physical, mental and spiritual terms as well. 

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How We Are Addressing Climate Change All Wrong

The old story of the frog tossed into boiling water and immediately jumping out comes to mind. With climate change the warming is so gradual (and sometimes welcome) we don’t notice we are getting boiled. Yet the temperature inexorably continues to climb. Like the frog, we will stay in the stew until the meat pulls away from the bone.

Change can be good. And profitable! If only we have the will. Otherwise another kid with a cute message will get a good jab in on Congress thirty years from now when the problem is still unresolved and much worse.

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A Non-Political Look at Income Inequality and the Wealth Gap

Frequently we look for political solutions to income inequality and the wealth gap. While the issues can be improved slightly from political action, there are two additional ways to close the wealth gap and level income.

Politics is the messiest way to fix these problems and history offers ample warning for those who seek answers from this source. One need not look further than Mao’s China or Stalin’s Russia to see how abysmal political leveling can be. North Korea is a modern example of how not to level the playing field. 

Let’s turn our attention to the second way income inequality can be reduced. Walter Scheidel in his book The Great Leveler provides what he calls the “Four Horsemen” of leveling: war, revolution, collapse and plague. Historically these four horsemen have been the leading cause of leveling income and wealth. 

Once again this is not a comforting thought. You can read Scheidel’s work for an in-depth review of his research. The record is clear, however; it takes great dislocation, pain, suffering and death for income and wealth to level naturally.

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The Best Conference on Money

Large conferences are hard to understand before attending first. FinCon has multiple cultures under one roof. Virtually every interest in the financial community is covered. Finding people with similar interests is easy. Finding sessions tailored to your goals is equally easy. So why did I fail the first year and sail the second?

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Planning a Spending Fast

Like regular fasting, a spending fast has different levels of commitment. The idea is to start small, building your financial muscles before advancing to the next level. As your financial skills increase, you can engage in some truly historical spending fasts. And the good news is you get to keep all the money.

Before we begin I must point out spending fasts are not about frugality or cutting spending. The fast is designed to train you mentally and socially to live a normal life without money as part of every step. Enjoying a walk in the park with a significant other is an awesome and free experience. You can leave the wallet at home. Another lesson to learn is to walk out of a retail store without buying anything (or stealing it) if the item you were looking for wasn’t available. Shopping for the sake of finding a “good deal” is the mother of poverty.

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Raising FI Children in a Media Insane World

Raising kids in the best of times is challenging. Add the modern world of distractions (social media, cable and network television, Netflix, email and cell phones) and it’s a wonder every parent isn’t a prime suspect in the mysterious disappearance of their children.

In a bygone era frugality was a virtue. Spending less than you earned was the norm. Money was borrowed in the rarest of circumstances for large items. Borrowed money was paid back as quickly as possible. This has been replaced by the litany of people writing me whenever I publish posts like this one reminding me they borrow money responsibly. By *responsibly* they mean they run the numbers to see how much they can afford to borrow if nothing ever goes wrong. Then they add a really small margin of safety, just in case. Of course, life intervenes. Their responsible handling of debt leaves them working 40 years and broke at the end. Thank God for Social Security.

Friends pressure friends to ‘live a little!’ Raising your children with the right financial attitudes isn’t enough. School, friends and even family members will constantly chip away at their truly responsible behavior with money.

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