What’s the difference between a fiscal cliff and a boa constrictor?

With another presidential election behind us, it’s time for the media to dish up the next big dramatic event. We humans are suckers for drama, and the next dramatic event we are all supposed to worry over is the “fiscal cliff”. Before pondering what it means to our personal economies, let’s first consider what it is.  If your parents preached to you about consequences coming home to roost, you probably understand the implications surrounding our financial reality.
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How to Negotiate the Fiscal Cliff for Baby Boomers
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Join us on Dec 13, 2012  at: 12:00 PM CST.
In this brief webinar, Brad will explore ways you can effectively negotiate the fiscal cliff.

The fiscal cliff is just another deadline in an ongoing series of self-induced time deadlines when our society needs to contemplate what the role of government is and who should pay for it.  On the one hand, previously enacted tax cuts that were sold as temporary are about to expire and some people are going to be forced to part with money they are pretty sure is theirs.  If you wonder how they might react to this, spend time tomorrow with an infant and try taking away one of his toys for a second.  I’ll bet cries of “mine” aren’t too far off.  On the other hand, there are substantial spending cuts looming on government programs that many people have become accustomed to.  If you are wondering how service recipients are likely to respond to service reductions, just think of the infant and his cries for “mine”.  So, the fiscal cliff is really about pondering the inevitable drama that will result when the two infants are forced to part with a toy they are each certain belongs to them.  The truth is, nobody knows how the infants are going to work through this, but as a parent I’m anticipating plenty of tantrums and timeouts.  These tantrums are going to increase the amount of noise you are forced to consider if you consume the “news”.

So, what exactly does any of this have to do with our personal economies?  My goal for this note was not to layout all of the different ways that taxes might rise or ponder all of the government services that might be cut.  This is not the place, nor is it really all that relevant to the attainment of your own life goals.  The purpose of my message is to prevent you from wasting your precious time.The fiscal cliff is ultimately beyond your control.  What we can do, is accept the fact that for decades our entire society, the collective “we”, has been living far beyond our means.  Our instant gratification culture likes to put off pain for as long as possible.  It’s why we make New Year’s resolutions after all.  We have pushed bills as far as they can be pushed and all the easy choices have been made.While our neighbors slowly begin to awaken to this new reality, my reader will have hopefully been preparing for a world in “net income compression”.  This is what we are calling an extended period of rising taxes and prices with moderating returns on investment.  While the media would like us to believe in the drama of cliffs, the pain of this “new normal” is going to feel much more like being consumed by a boa constrictor.  There are many things about the world in which we live that we cannot control, but our own lifestyle goals do not have to be one of them.The media wants you to think that the cliffs will get you in life; when really, it’s the boa constrictors! How you invest today will determine how you live tomorrow.

Register Now

How to Negotiate the Fiscal Cliff for Baby Boomers
with Brad Fortier, CFP®, CEP®

Join us on Dec 13, 2012  at: 12:00 PM CST.
In this brief webinar, Brad will explore ways you can effectively negotiate the fiscal cliff.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.  To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing.
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