What Fiscal Crisis Will Be Next?

The Americans have survived the fiscal cliff.  Sadly for them, cliffs usually are found on the side of mountains.  What does the fiscal mountain look like?

There is a mountain of debt built on a foundation of undeliverable promises and reckless adventurism.  The mountain may be permanent.

You cannot tax incomes to get out of a fiscal problem, because you make the ability to pay weaker with each dollar you take.  Income tax to cure deficits and debt is self defeating.  A capital tax would be worse.  However, a sales tax that flows through businesses and only affects end-user consumption has a chance to work as long as the new revenues are not converted to new spending.

Government spending is insidious.  Every dollar the government spends is more than a dollar that was removed from the economy.  In some cases, it is money that would have been invested productively.  In most cases, it finances regulation or other limits that restrict business productivity and growth.  In all cases, there is overhead attached.  The conventional wisdom, is that government needs to extract $1.67 to spend $1.00 in the real economy.  All costs in, it likely worse than that.

Politicians historically have behaved like amateur salespeople.  They over-promise and under-deliver.  They promise in order to get votes and then hide the shortfalls.

Entitlement programs are generally unsustainable.  Not just in the US, but everywhere.  The problem will be how to explain to the folks that naively believed their representative,  that the promised benefits can never be delivered.  Politicians cannot hide forever, but perhaps hide until they retire is good enough.

I am fascinated by Social Security and the equivalent programs in other countries.  The trust funds holds huge quantities of government debt instruments.  Spending the cash and replacing it with IOU’s seems wrong.

Suppose I want a new set of golf clubs and decide that I cannot afford $3,000.  However, my retirement plan can afford it.  So I take the $3,000 from there and replace it with an IOU for $3,000.  Would you say my retirement plan had the same value as it did before the transaction?  If you think it does not, then you understand why some government retirement plans may not work out as they say.

I don’t pretend to understand Medicare but my general perception is there is a lot of overhead for each dollar of benefit delivered. The overhead cost just to bill the system is astounding.

Welfare is a problematic thing too.  We provide incentives to stay in the welfare system and wonder why people do not move on out.   People respond to incentives.  You need to be careful which ones you provide.  Especially careful to repair unintended ones.

It is difficult to imagine that the people who created the problem have a solution or would implement it if they had one.  I doubt there will be a solution until there is no more money to garner favour with the voters.

That may be unpleasant.  Problems grow slowly and collapse quickly, we may not know what the end looks like before it is to late to do something differently. Pay attention and be prepared to act in your own best interest.

While it is normally not good practice to panic, there are times when you must.  Keep this in mind.  If you must panic, panic first.

Don Shaughnessy is a retired partner in an international accounting firm and is presently with The Protectors Group, a large personal insurance, employee benefits and investment agency in Peterborough Ontario. don.s@protectorsgroup.com

What Every Client Needs To Know About Estate Planning In Sixty-Four Words

Everything you own now and every dollar you acquire in the future will end up in one of three stacks.  You will spend it while you are alive.  You will lose it.  You will give it or leave it to someone else.  Spend it, lose it, or leave it.  There are no other choices.

Can we agree that losing is not the best option?

Don Shaughnessy is a retired partner in an international accounting firm and is presently with The Protectors Group, a large personal insurance, employee benefits and investment agency in Peterborough Ontario. don.s@protectorsgroup.com

Price Cost and Value

Price and cost are not the same thing and anyone who equates them buys trouble in addition to whatever else they get.

Cost is what you give.  Value is what you get.  Price is just a part of cost.  Value is what you want; cost is how you get it.

You cannot get more value without giving up something to get it.  Be sure you know what parts of value will disappear when you reduce the inputs.  A cheap toaster may be missing something.  Like well grounded connections.

Sometimes do it yourself does not matter.  I could likely build a deck, but I would not believe that it would be as square, strong or durable as one built by a competent carpenter.  I might not enjoy it fully and I might need to replace it too soon, but likely there would be no real harm.  It is like cutting your own hair.  It will be okay eventually.

Other things might not turn out as well.  Would you try do it yourself root canal?  Not likely.  How about a natural gas hookup or a brake line replacement?  Not me, but some would.  All of these have serious problems attached if you do a bad job.  (That is what I mean by other cost factors.)  Recognizing serious potential problems, many people won’t try them.

There exist similar potentially catastrophic do it yourself projects that people will try:

  • Online wills.
  • Do it yourself powers of attorney and trust kits  are available too
  • Maybe a do it yourself financial plan, portfolio design, or tax plan.

Just because you cannot see the danger does not mean it has gone away.

Any of these can create huge problems.  They would be expensive or impossible to fix.  Prepare your will, your powers of attorney and your estate plan as if this might be the last time you do it.  Eventually one will be.  If it does not work, there is no mulligan.  How sure are you that the do it yourself version will work?

Financial and investment plans could be repairable but only after a loss of money and time.  You might get the money back, but you won’t get the time.

Preparing your own tax return is probably okay but then filling out a form is just putting numbers in boxes and doing some calculations.  Tax professionals add value.  You have an unseen cost if you don’t see the return the way they do.  They see what the return could look like with modifications to the way you receive income or in what you could deduct.

Do it yourself is okay for things that don’t matter much or are easy and cheap to repair.  You need to do something with your free time and you may not be able to do serious harm.  For things that matter, or for things that cannot be readily reversed, be sure you know the other cost elements before you decide to get something for a lower price.

Cheap is often expensive.  If you can afford to do it cheap and then fix it, you can probably afford to do it right the first time.

Don Shaughnessy is a retired partner in an international accounting firm and is presently with The Protectors Group, a large personal insurance, employee benefits and investment agency in Peterborough Ontario. don.s@protectorsgroup.com

Large Numbers Are Confusing

Million. Billion. Trillion. Similar right? Not so much! Numbers, especially large numbers, need context to make sense.

If you count one number a second you will reach a million in 1,000,000 seconds. That is not surprising really. 11.6 days.

A billion will take longer. 11,574 days or 31.7 years. That is a bit surprising. A trillion is 31,688 years.

11 days, 32 years, 32,000 years. Not so much alike now, are they?

Politicians throw million and billion and trillion around because they know most of us do not really pay attention. Maybe, they don’t either. There is an old joke about an aide approaching President Bush shortly after the invasion of Iraq. The aide’s message, “Ten Brazilian soldiers have been killed by a roadside bomb.” Bush’s reply, “That’s awful! How many is a Brazilian?”

For those of you who remember The Beverly Hillbillies, Jed Clampett sold his oil patch for $25,000,000. When Granny asked how much he got, he replied, “$25, but I’m not sure. I’ve heard of gold dollars and I’ve heard of paper dollars. They are paying me with million dollars.”

You will tend to understand how huge the numbers that governments spend if you think a million is 12 days and a billion is 32 years. A trillion is incomprehensible. 32,000 years is three times longer than the time since the last ice age. There is no reference point for that.

Another interesting large number is the population of China or India. 1.3 billion each give or take 50 million. For context, Mensa is an organization that requires you to have an IQ in the top 2% of the population to qualify for membership. Statistically, each of India and China has almost as many people who qualify for Mensa as Canada has population.

Let’s go further. Let us suppose one in a thousand of these Asian Mensa members has one important thought each year. 52,000 new Chinese and Indian important thoughts per year. That is 142 per day. About 6 per hour. I don’t know about you, but I think I will have a problem keeping up to that.

In China or India if you are a one in a million sort of person, there are 1,300 of you in each country.

There is something inevitable about large numbers. V.Lenin was once confronted with the idea that the Russian army was poorly trained and ill-equipped. His view, “Quantity has a quality all its own.”

What should we do about the inevitability of size? We need to be conscious of the Asian powers. We need not fear them, but we must devise plans to deal with their mass and momentum. They can do things we cannot. But, we can do things they cannot.

Jason Jennings and Laurence Haughton have the best idea I have seen. It is a book. Check it out.

It Is Not the Big That Eat the Small, It Is The Fast Who Eat The Slow

Big has its own set of problems. The Asian giants will need to deal with them. I wonder what medicare would cost in China. Workplace equality and air quality may be a little hard to deal with too. How about a minimum wage in India? These will make them slow. While they are dealing with those, we can be fast and agile.

When you look back, those skills were once our driving force. Time to emphasize them again. Bureaucracies may not provide the help we need. Fast and agile are not adjectives that come to mind when I think about bureaucracies. We may need to rethink them.

Governments need to make policy decisions that make it easier for us to be fast and agile. As individuals, we need to be adaptable. It is hard to hit a moving target. Get moving. Maybe duck and dive too.

Don Shaughnessy is a retired partner in an international accounting firm and is presently with The Protectors Group, a large personal insurance, employee benefits and investment agency in Peterborough Ontario. don.s@protectorsgroup.com

Cost Comparison Shoppers Win

You can choose a ready guide in some celestial voice.
If you choose not to decide, you still have made a choice.
You can choose from phantom fears and kindness that can kill;
I will choose a path that’s clear
I will choose freewill.

Chorus of “Freewill” by Rush

I have been listening to Canadian rock band “Rush” this afternoon.  They are a special  group.  The Rock’n’Roll Hall of Fame inducted them on December 11th, 2012.  You wonder why it took so long.  Rush’s music and the band musicianship are exceptional.  They rank third for most consecutive gold/platinum studio albums.  Behind the Beatles and The Rolling Stones.  Not bad for some boys from Willowdale.

Rush released “Freewill”  in 1980 and it contains important wisdom.  If you choose not to decide, you still have made a choice.

The idea of doing nothing somehow connects to the intuitive notion that doing nothing costs nothing.  Not even close!

To do nothing is a decision.  To do something is a decision.  You can analyze decisions.  You can find the cost of each, but few of us do so.  We should.  When we do, we usually find that doing something is cheaper than doing nothing.

We tend to carry the past forward in our decisions.  We know how we arrived where we are and somehow that makes it more right than any other place we could have been.  The past traps the future.  Doing something different in the future would somehow make the old decisions wrong.  Can’t go there.

A Martian would never have the problem.  Being perfectly objective has advantages.  One of them is that the do-nothing decision never happens unless it is the best choice of all available.  That is what Freewill is all about.  You decide.  You are not compelled to do anything.  You choose.  Your future is independent of your past.

Rule:  There is a cost to do something.  There is a cost to do nothing.  Choose the least costly.

Don Shaughnessy is a retired partner in an international accounting firm and is presently with The Protectors Group, a large personal insurance, employee benefits and investment agency in Peterborough Ontario. don.s@protectorsgroup.com

Compare and Contrast

When I was in high school, I found the compare and contrast essay form to be difficult. Later in business, I found it to be the most effective way to communicate important information.

We live in a world where information is everywhere. Information is past the point of being useful. What is useful now is the way to find it, filter it and to present it. That is where compare and contrast works.

Consider the familiar annual budget.

At the end of the first quarter, actual results are presented alongside the budget. Does that help? No! Because if the budget has been thoughtfully prepared, almost all of the actual results will be “as expected.” No meaningful information there.

There may be some results that are not as expected, but how to find them in a 500 line presentation. How much better it would be if the presentation was only the 5 items that were “not as expected.” Better if there is an explanation of how they came to be. Better still if they include a recommended action.

Information should be the prelude to action. It is of little value in isolation. Do not make the decisive information and the action steps hard to find. Offer explanations of how the difference arises and what options there are to acquire the benefits.

The technique works with more than budgets.

You can do it with client presentations. Two columns. What you are doing, and what I am proposing. List the things that are about the same in each column. Most of the factors go here. Emphasize the commonality. Then point out the few differences. Focus on the differences. Explain the benefits, outline the choice needed and demonstrate the connection that will acquire the benefits.

Accountants will recognize this as a capital budgeting technique. Things that are the same under both options may be ignored because the decision will not alter them. Only the differences matter.

Compare and contrast does not provide more information, rather it provides less. The information that remains though is useful, contextual and actionable.

That is the goal.

Don Shaughnessy is a retired partner in an international accounting firm and is presently with The Protectors Group, a large personal insurance, employee benefits and investment agency in Peterborough Ontario. don.s@protectorsgroup.com

What You Don’t Know Will Hurt You

Ignorance more frequently begets confidence than does knowledge. – Charles Darwin.

In the Art of War, Chinese military theorist and general, Sun Tzu claims that if you know yourself and know the enemy, you win every battle. If you know yourself and not the enemy, you win half. If you know the enemy and not yourself, you win none. It sounds like knowing yourself is highly correlated with success.

I know a person who worked for a major accounting/consulting firm. He worked in the customer relationship management section. One of their findings was quite amazing.

Many consultants like to work with the study of contrasts. Find the unexpected and build from there. The expected is usually not fruitful. In this case, they were studying customer satisfaction at a major bank.

They created the contrast by doing two surveys. The first was to survey bank personnel to discover how they expected customer satisfaction to be. It involved offered services, pricing, convenience, skill of the people, and hours of service. Bank personnel estimated that customers would be about 80% satisfied when they were asked about the same things.

The customers were then surveyed. And the consultants found the other 20% of the satisfaction.

The disturbing part was that the expectation was so far away from reality that the engagement died. The bank chose to disbelieve their customers response rather than to take actions that might might have brought their own delusional beliefs closer to reality.

If people believe they are doing a good job and they are not, your first step should be to reorient them. There are ways to do that.

In 2000, the Ig Nobel Prize (Worth your trouble to look these prizes up.  They are wonderful) in psychology went to David Dunning and Justin Kruger for their work in this very area. Dunning-Kruger Effect They found that unskilled people mistakenly rate their ability much higher than average.    Because ——-  they do not know enough to recognize their mistakes.  The solution as always – education and training.

Skilled people have the opposite problem. They underestimate their value because they expect everyone knows what they know.

We are not usually objective enough about our own performance to decide the answer. If you think that in your business, there is a disconnect between beliefs and reality, do a survey or just pay attention and ask questions.

Sometimes you will find the staff is not doing what the customers need and other times you will find the reward system is working at cross purposes. People are doing what the boss wants, not what the customer wants. In the latter case revisit the internal management system. Sometimes the source of incompetence in respect to customers is fairly far up the management tree.

Reality is easier to deal with than delusions. At least reality behaves a little bit rationally.

Don Shaughnessy is a retired partner in an international accounting firm and is presently with The Protectors Group, a large personal insurance, employee benefits and investment agency in Peterborough Ontario. don.s@protectorsgroup.com

Language Is Democratic; Not Much Else Is

Language is democratic, but our social space is not.  Trivia requires no regulation.

Democratic means rule by the people.  Whatever the people want, the people get.  Austro/British philosopher Karl Popper has argued that a democracy is such that the government can be changed without a revolution.  If that is the determinant, it would be difficult to believe that we are a democracy today.

In the United States, congress enjoys a 10% approval rating.  In Canada, the Harper government is near 50%.  Hardly a ringing endorsement.  Most people don’t like what their government is doing, yet the government continues to rule.  I know a political operative who claims that as long as their popularity is higher than the prime rate, they are okay.

The rule of the people over the social space is tenuous at best and is a leading cause of dissatisfaction.  People no longer create or rule the space and they are beginning to notice.  All goods and all services are regulated.  Why does a barber need to be licensed?  You would think competence would be the only hurdle to entry in that trade.

All providers of labour are limited in the free use of their resource.  Unions, labour standards, and taxation limit what they can get and keep for their efforts and skill.

There are profound changes in the way society relates to the basics of our culture.  Family and religious values are becoming bent beyond recognition.

Myriad regulations limit choice and increase price.

Have you ever wondered why the price of a meal in China is an eighth of that same meal here?  Think about minimum wage, high rent because of zoning laws and construction minima, high municipal taxes, food safety rules, fire safety, fuel prices to transport the product, and a hundred more.  All regulation cost is passed to the customers.  There is no free lunch.  (The devil made me say that.)

Most would agree that some regulation is needed but it is awfully difficult to place the line between needed and extravagant.  There is an argument that claims that governments have been very good at their work.  As a result all the real problems have been solved.  For the past 30 years or so they have invented problems and perfected old ones to retain some relevance.  Probably true about unions too.

On the other hand, language is uninteresting to governments so things change to suit the people who use the words and the construction.  I am old enough to remember when sick, bad, gay and hot meant something different than what they do today.  It was once unacceptable to have a sentence end in a preposition.  People used commas correctly.  People were much less creative then; they knew how to spell a given word in just one way.  No longer the case and if anything, language is easier to use.

Is it reasonable to believe that a government agency of language integrity could create a better result?  Yeah! Right!  It used to be that a double positive was not negative.

So why do politicians act to change our social space?  Because it gives them advantage at election time.  In reality though, society is beyond direct management because it is complex, even chaotic.  Things change by the instant not over years.  Then they change again.  You could not keep track of how changes affect the different elements. Every change affects everything else in some way.  Did people really believe that using corn to make fuel would have no impact on food prices?

We hear fatuous ideas like “fine tuning the economy.” The human body is less complex than the market, but we would be astounded if politicians thought they could rearrange the internal parts to make it more efficient.

It does not look like the politicians are going to act in our interests.  It is time we acted in our own interests.

Complain about unreasonable regulation, unfair taxation, wasted resources, useless programs and above all, shop selectively.  And don’t stop.  Governments have two ways to deal with complaints.  Fix the problem or make the complainant go away.  The latter is their preferred course.

In the old marketplace our money and our time was our vote.  Use them more wisely than we use our ballots.

Don Shaughnessy is a retired partner in an international accounting firm and is presently with The Protectors Group, a large personal insurance, employee benefits and investment agency in Peterborough Ontario. don.s@protectorsgroup.com

Stewardship As An Element of Estate Planning

Last week I talked about sterile money and how money has value only in use. Dynamic rather than static money. In terms of advancing the wellbeing of a family, taken as a whole, some assets that the parents own are sterile.

Good estate planning recognizes that.

If a parent owns financial assets that exceed the amount needed to fulfill their life plan, there is an opportunity for beneficial planning on a multi-generational basis. The excess, once defined, is a portfolio that the parent holds as “a steward.” The parent has title to assets but will spend neither the income nor the capital in their lifetime.

Stewardship is complicated. Wikipedia offers 12 different ideas relating to it. We only need to know about the idea of a steward. There are at least five definitions. None quite suit. A simplified amalgam of the definitions serves our purpose.

“A steward is a person who owns and manages assets on behalf of others.”

If the parent invests according to a risk profile appropriate for their age, they will tend to own fixed income assets. For the part of the portfolio they need for their security and lifestyle, that is reasonable. But when the portfolio is larger than the one needed to guarantee lifestyle, the asset mix in the excess portfolio is flawed.

This observation leads to an interesting place. You can deal with the excess asset creatively and beneficially once you can quantify it. You do that by building a model to show future income, future taxes, future expenditures, future inflation, future capital transactions, and as a result, future assets.

The advantage to do so is that the parent can see how their future financial well-being and security will evolve over time. Typically the client is concerned about the ratio of financial assets to the annual spending that these assets must develop.

The model should deal with important non-recurring events and some probabilistic ones:

  • Sale of assets “owned to be used” rather than to produce income, (cottage, ski chalet, collectibles)
  • Inheritances
  • Negative events like home care or special medical expenses.
  • Unusual expenditures. In 1990 I had a client who wanted to build in the purchase of a Dior gown for the New Year’s celebration at the turn of the millennium. She did it too.

Building such a model serves several useful purposes:

  1. The client can observe the effect on assets as cost of living changes with inflation. The inflation step is crucial and is not as easy as inflating today’s values by some arbitrary or even well supported number. Expenditures are layered and each layer behaves differently with age. In addition, inflation is not one-way. Cost may inflate, but the ability to spend deflates.
  2. Modelling requires understanding. Involve the client. For example, care is required in projecting some expenditures. One difficult condition involves currency exchange rates if a meaningful share of expenditures is in non-Canadian currency.
  3. The client can test the impact of an adverse medical event.
  4. The client can test the cost/benefit of insuring life, long-term care and critical illness.
  5. The client can quantify the financial effect of disposing of “use” assets.
  6. The client’s stress level reduces in respect to safety/security. They can see the relationship between financial assets, near-financial assets, yield, taxes and cost of living, and they can test under variable conditions.
  7. They can see what assets are redundant

This method makes the estate a living thing. A dynamic estate allows people to use better judgement in managing investments. They can test and eventually build a web of assumptions around time, yield, tax, inflation and change within which they are comfortable.

The epiphany occurs when the client realizes that he holds title to all his money but, in reality, he cannot reasonably use some or even most of it. He is “a steward.”

The discussion becomes two part.

  1. How much of the estate is required to provide for living expenses up to and including the result from some outrageously conservative variables?
  2. How much can the client do without and never notice its absence?

One client found a set of variables that busted his estate prior to age 100. The assumptions included taxes at one third more than now, inflation at 10% and investment yield at 5%, fully exposed to taxation. By using more realistic variables, principally that investment yields would be at least as much as inflation, an apparent asset surplus arose. It ranged from around $500,000 to more than $2,000,000 depending on the level of inflation. High inflation has a tax penalty.

The talking points became:

  1. Most people who inherit money are over 50 and often over 60.
  2. By the time children inherit, they don’t need the money. About the only thing they notice is that their tax bill goes up. By doing nothing, sterile assets become a chronic family problem.
  3. In the early years, children give up a great deal of potential to pay non-deductible interest and to pay off debts. Capital for business startups is difficult to come by.
  4. Money injected into their care early can provide years of advancement and many options. A few hundred thousand dollars at 30 is worth far more than a million dollars at 65. Some people see it as insurance against divorce.
  5. Would it not be prudent to use assets as effectively as possible on a family wide basis?

If you have dynamic information, you make better decisions. This client made several modifications to the “during life” part of his estate plan. None of them benefited him, but then, none of them cost him anything either.

  1. He gave his daughter $150,000 to pay off the balance of a mortgage on a cottage.
  2. He created two trusts, totaling $100,000, for the education of two grandchildren. These supplement RESPs which he funds. The trust assets are tax-efficient.
  3. He loaned his daughter $500,000 to invest. The loan is interest free, is repayable on demand and is well secured. She may spend the income if she wishes. The ability to retract the debt forms part of his emergency fund.
  4. Over the next 10 to 12 years, he will invest in a permanent life insurance policy on his own life. The transferred amount will be $500,000 currently held in fixed income assets. Depending on his longevity, and assuming interest rates remain low, he expects to do better than 4% after taxes as an estate investment. Better than that if rates go up. This also provides him the option to buy life annuities in the future should he want unconditional guarantees on his cash flow.
  5. He will allocate $750,000 of his remaining assets to investments that do not necessarily suit his risk profile but do suit the daughter’s risk profile. These investments are more equity oriented and more tax efficient than the ones he has held in the past.
  6. He will revisit the program at least every two years and, while living, will gradually move the $750,000 tranche to his daughter. Potentially as a gift but more probably by secured loan. (At least in the early years. That decision will depend on his age and health.) If investment yield is adverse, or inflation is high, some or all of this may go back into his income producing asset portfolio.
  7. All other assets are manged to be tax efficient and to provide income that matches his cost of living projection. You do not want to pay tax on income before you spend the after tax amount. If you do receive it then taxes compound.

Many estates hold sterile assets. These should be managed differently than common practice dictates. Inter generational estate planning is more beneficial for the family than holding everything to the end and investing on the parent’s risk profile.

The stewardship idea is the key to starting the discussion.

Don Shaughnessy is a retired partner in an international accounting firm and is presently with The Protectors Group, a large personal insurance, employee benefits and investment agency in Peterborough Ontario. don.s@protectorsgroup.com

New Year’s Resolutions

“What you’ve done becomes the judge of what you’re going to do especially in other people’s minds. When you’re traveling, you are what you are right there and then. People don’t have your past to hold against you. No yesterdays on the road”

From “Blue Highways” by William Least Heat-Moon

Life is a journey. It will be easier on the road of life if there are no yesterdays that limit you. You should let the past be a guide but not some immutable road-map. Who you have been does not define who you will become. There are new adventures, new people, new places and new feelings along the road. Do not let what you have done become the judge of what you can do. Shakespeare pointed out, “What’s past is prologue.”

If you let your past define the future, then New Year’s resolutions are just hope being valued more than experience. The hard reality is that fewer than half of the resolutions survive to February 1st. Despite that, they must have some value because they have been around as long as civilization. Certainly the Babylonian and Roman cultures featured them.

I suppose it is possible that the resolutions disappear because they have been satisfied by February 1st. Why stay on a diet after losing that extra 30 pounds?

Right! More likely, we fail because we have not prepared the resolution properly. It is not enough to want to quit smoking, lose weight, clean up your office, or return borrowed farm equipment to its owner (A common Babylonian resolution.) We must feel the need to make it happen.

When we need something we prepare differently than when we want something. Wanting is like dreaming. Needing is about doing. Prove the need to yourself and the resolution business will go more smoothly.

When you need, you have an action plan. You have a time frame with intermediate goals. You have resources committed. You have a person to report to. You have a plan B for when Plan A does not work out. You should have plans C, D and E too, because no plan survives contact with reality. Keep in mind that plans are not actions. Resolving does not create the fact. Know what you will do when your easy to say resolution becomes hard to do.

It is okay to change your plan as you learn more. Good plans evolve; they are not created.

Maybe the strength of your resolution will be to learn how you came to be overweight, a smoker, a couch potato or a slob. Once you know it, you can manage it.

Failing in the resolution and addressing the failures with plan B, C, D, E and more, will eventually fulfill the resolution. Possibly you will come to understand that the matter does not need resolving. In any case, you will be a more versatile person for having gone down the hard path.

Good Luck with it and Happy New Year. May 2013 exceed your hopes.

Don Shaughnessy is a retired partner in an international accounting firm and is presently with The Protectors Group, a large personal insurance, employee benefits and investment agency in Peterborough Ontario. don.s@protectorsgroup.com

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