Blessed Are Those Who Wield Soft Power


softpowerPolitical values like democracy and human rights can be powerful sources of attraction, but it is not enough just to proclaim them. Joseph S. Nye Jr; Soft Power, The Means to Success in World Politics

It is not my usual practice to write a review of a book that I have not yet finished. However; the events of the past several weeks and months leading up to the “peaceful” transition of power in the United States have compelled me to break with my self-imposed tradition.

Over the Christmas break I have been reading through Joseph Nye’s “Soft Power” which was originally published in 2004 at the end of the first term of President George W. Bush. I can’t help but notice a stern warning in these pages against the type of world we may be entering into in the next few weeks. We are standing a crossroads in history in which a populist leader threatens to lead his nation, and by extension the entire world, into a dark age of intolerance, unilateralism and regression the likes of which we have never seen before.

The policies of the Trump administration could set America’s social progress back 50 years and all but destroy their international reputation as an open, welcoming, tolerant and democratic society. As a result the world’s only military superpower could find itself losing key international policy debates in such economically significant and security related decisions as environmental protectionism, nuclear proliferation and terrorist financing to the interests of Russia, China, the European Union and non-state actors like ISIL and OPEC.

This simply cannot be allowed to happen.

flagworldThe term “Soft Power” was coined by Joseph Nye in 1990 in his book “Bound to Lead: The Changing Nature of American Power”. Mr. Nye is the former dean of the John F. Kennedy School of Government at Harvard, the former Assistant Secretary of Defense for International Affairs under President Bill Clinton and is currently a University Distinguished Service Professor at Harvard. His credentials in international affairs are beyond reproach. He actually developed the concept of Soft Power over a long carrier in academics and government which began in the late 1970s but only started using the term extensively after it first appeared in the aforementioned book.

He wrote:

When one country gets other countries to want what it wants this might be called co-optive or soft power in contrast with the hard or command power of ordering others to do what it wants.

Ever since its founding the United States has enjoyed a large proportion of what is now known as soft power. The ideals of democracy, liberty and justice that undergird the US Constitution have been beacons of hope for hundreds of millions of people world-wide for nearly 200 years. It is this soft power, more so than its military or economic might that has helped transform the world from a collection of feudal empires into a largely democratic and capitalist one. American soft power, the attractiveness of democracy and an open society, far more so than the threat of nuclear annihilation or economic isolation is what eventually ended the Cold War.

eagleBut the tide is changing and I fear that a Trump administration and other populist movements around the world are only going to serve to accelerate this change, diminish American influence and usher in an era of instability and violence similar to that which caused two World Wars during the first half of the last century.

The countries that are likely to be more attractive and gain soft power in the information age are those with multiple channels of communication that help to frame issues; whose dominant culture and ideas are closer to prevailing global norms (which now emphasize liberalism, pluralism, and autonomy); and whose credibility is enhanced by their domestic and international values and policies… To the extent that official policies at home and abroad are consistent with democracy, human rights, openness, and respect for the opinions of others, America will benefit from the trends of this global information age. But there is a danger that the United States may obscure the deeper message of its values through arrogance. – Joseph S. Nye Jr; Soft Power, The Means to Success in World Politics

Professor Nye wrote those words in 2004, at a time when America was going it alone in an unpopular war with Iraq. At that time when the world looked at America they saw a country that, while it may have started to betray some its founding values in the name of security against religious extremists it was at least consistent in its application of those values at home. Any damage caused to America’s soft power was limited to its politicians and foreign policy. Today I am afraid that the hypocrisy of the Iraq war pales in comparison to the hypocrisy apparent in Trump’s domestic policy. These policies have the potential to betray the very founding principles of “life, liberty and justice for all.”

Just as the Cold War was won through diplomacy and the effective wielding of soft power, I fear that the next war, cold or hot, will be lost through the ignorance, arrogance and cultural ineptitude of populist movements that have no regard for the soft power of liberalism and pluralism that has served progress so well for so long.

Lauren C. Sheil is a serial entrepreneur who has been in business for over 25 years. He has operated farming operations, a recording studio and a music manufacturing plant, has written 3 books on Economics and Christian Ethics and presented his ideas to business owners and ministry leaders from all over the world. His latest book “Meekoethics: What Happens When Life Gets Messy and the Rules Aren’t Enough” is available on Amazon.com.

Mr. Sheil is currently a Financial Security Advisor and Business Planning Specialist with one of Canada’s premier financial planning organizations.  He is passionate about helping entrepreneurs to live life to the fullest while Eliminating Debt, Building Wealth and Leaving a Legacy.  

He can be reached at themeekonomicsporject@gmail.com or by calling 613-295-4141.

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Five Smart Money Moves for the first 100 days of 2017


happynewyearA New Year will dawn in just over 3 more days. For me and many others who are close to me, the fresh start that a new year brings can’t come soon enough. Every year has its trials and triumphs but it seems that 2016 has had more than its fair share of the former and not enough of the latter. So I thought it was time to write about some strategic moves we can all make with our money in the coming year to make 2017 better than 2016 and set us up for many more good years in come.

With a new president in the United States we will likely be hearing a lot about the first 100 days of the new administration. Like a game of chess, the first few opening moves of a new administration are said to set the tone for the entire four year term. I like the idea of the first 100 days. It is long enough to measure and short enough not to drag on and on. The following are all moves you can make in the first 100 days of 2017 and set the tone for the rest of the year.

1 – Pay off consumer debt

Consumer debt (credit cards, personal loans, lines of credit etc) usually comes with a higher interest rate than your mortgage so that’s the best place to start. As of the last full accounting in 2015 Canadians were carrying an average of $21,164 in non-mortgage debt.

I’ve written at length in the past about various debt repayment strategies like the Debt Snowball and Debt Avalanche. Whether you need a series of small early victories or just want to get rid of your highest interest debt first doesn’t really matter. The key to both strategies is that once you have paid something off you roll the amount you’ve been paying over to the next one on the list and pick up momentum as you go, like rolling a ball down a hill.

Think of your debt repayment as an investment. Every dollar you pay toward a debt with a 19% interest rate is like earning that same 19% on your investments. At the end of the day it’s all about your net worth anyway and by reducing that debt you are increasing your net worth faster than you would be if you put that money toward an investment, even if you achieve an almost unheard of 12-15% on your money.

2 – Pay down your mortgagemortgage

Your biggest debt is likely your mortgage. The average mortgage in Canada is about $175,000. If your mortgage allows for it, consider putting a lump sum directly toward the principle. This could save you thousands in interest over the course of the term.

Alternatively, if you have at least 20% equity in your home you might also consider renegotiating or transferring your mortgage to a different financial institution and rolling some of your higher interest debt into the principle. Many financial institutions offer these kinds of mortgage consolidations that, even when you consider penalties to get out of your existing mortgages could save you thousands per year.

3 – Save for retirement

Money inside a Registered Retirement Savings Plan (RRSP) can grow more quickly than non-registered money because you don’t have to pay taxes on any growth until you make withdrawals. The theory is that when you do finally make those withdrawals you will be in a lower tax bracket than you were when you made the deposits so you will always pay less tax than if you hadn’t registered the money in the first place. Not to mention the fact that you will get a tax deduction based in the amount of your RRSP contribution.

This is an important move for not just the first 100 days of the year but if you make the contribution within the first 60 days of the year (prior to March 1) you can report it on your 2016 tax return.

4 – Save for a short-term goal

shortermgoalThere are lots of things we can consider as a short-term goal; saving for a down payment on a house, a new car, vacation or building up an emergency fund. Open a Tax-Free Savings Account (TFSA) for these types of things. All investment growth in a TFSA is tax-free and can be withdrawn at any time without incurring any taxes. And the best feature of these accounts is that you can withdraw money one year and put it back the next year without losing any contribution room.

As of January 1 every Canadian over 18 will receive an additional $5,500 of contribution room, bringing the total available room depending on your age to $52,000.

5 – Save for education

If you have children that are planning on going on to post-secondary education there is no better investment vehicle than the Registered Education Savings Plan (RESP). It is essentially guaranteed free money. Depending on your income level the government will add up to 20% to your investment. Consider an average investment earning 5% on its own plus the 20% in government grants and there is no other investment on the planet where you could reasonably expect a 25% annual return. Best of all the money is taxed at the student’s income rate when it is withdrawn, which should be next to nothing.

With these early moves you can set the tone for a successful 2017. For more information on how to implement these and other strategies feel free to contact me any time.

Mr. Lauren C. Sheil is a serial entrepreneur who has been in business for over 20 years.  He is currently a Financial Security Advisor with one of Canada’s premier financial planning organizations.  He holds dual licenses from the Financial Services Commission of Ontario (FSCO) for Life, Disability and Critical Illnesses Insurance and the Mutual Fund Dealers Association of Canada (MFDA) for personal investments.  He is passionate about helping people to live life to the fullest while Eliminating Debt, Building Wealth and Leaving a Legacy.  

He can be reached at themeekonomicsporject@gmail.com or by calling 613-295-4141.

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Are You A Survivor?


survivorLast night my wife and I watched the season finale of Survivor. I know we are a bit late to the party on this one but we tend to load up our PVR and binge watch things over a few days rather than invest an hour or two a week for several months. We miss the boat on some of the water cooler talk that way but in the long run it saves us lots of time so it works for us.

Usually when I watch Survivor I can’t help but wonder what the real survivalists think of this show. Forget the school yard games and the psychological game play, that’s clearly just for TV. What I want to know is how realistic are their attempts to build shelter and hunt for food? I’m guessing not very.

I am clearly not a survivalist. I don’t even have the recommended 72 hour emergency kit in my house. I know where my flash light is (I think) and the last time I used it the batteries seemed okay. I usually have at least a few bottles of water in the house but if there were to be a serious interruption of services, like a long term power outage brought about by a massive winter storm or the Zombie Apocalypse I’m pretty sure I would be one of the first to die.

All kidding aside though, all this talk of survival though got me wondering about how many of my readers would survive another type of emergency, a financial one.

emergencyLast fall Manulife Bank completed a homeowner debt survey. They found that half of the households polled have less than $1,000 in emergency savings. But considering the impact of a job loss or the cost of making a major repair like replacing a roof or a furnace, $1,000 clearly won’t go very far.

In addition to the more common unexpected expenses, consider a couple of others as well, like pet care and aging parents. Unexpected health care expenses for Fluffy the Cat can run into the thousands, $1200 for dental care alone. Provincial health plans rarely provide the level of care aging parents might need following surgery or any other kind of health crisis. Not to mention the cost of travel if you live a distance away and if you need to make a last minute trip to attend to their needs.

The survey found that while 73% of homeowners believe they are at least somewhat prepared to deal with the unexpected, 38% admitted that they were caught short when something did happen, 24% didn’t even know if they had any emergency funds at all and 13% admitted to having no money set aside for emergencies.

Click this link to my financial readiness quiz and see what areas could use some improvement in your life then call me to talk about your results and figure out what next steps you should take to boost your score.

Results

0-38 points – Some serious improvement needed

39-60 points – Moderately ready

61-75 points – Financial readiness all-star

Mr. Lauren C. Sheil is a serial entrepreneur who has been in business for over 20 years.  He is currently a Financial Security Advisor with one of Canada’s premier financial planning organizations.  He holds dual licenses from the Financial Services Commission of Ontario (FSCO) for Life, Disability and Critical Illnesses Insurance and the Mutual Fund Dealers Association of Canada (MFDA) for personal investments.  He is passionate about helping people to live life to the fullest while Eliminating Debt, Building Wealth and Leaving a Legacy.  

He can be reached at themeekonomicsporject@gmail.com or by calling 613-295-4141.

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Quote of the Day – 12/11/2016


For ever so long, each year millions of children painfully died on our planet. Second, and unlike just a century ago, now most of the horror can be readily prevented. But, third, a great deal of what’s so preventable isn’t prevented. Finally, for years to come, this sad situation will continue. So, it may be usefully fair to say that, in our era, at least, this is a perennially rotten world. – Peter Unger; Living High and Letting Die

 

Quick Tip #13 – The Value of An Advisor


A paper commissioned in 2011 highlighted that many non-advised Canadian investors engaged in significant non-rational investing behaviours. To reduce emotionally driven decision-making and increase your potential financial gains, I’ll help you assess the situation, weigh your options, identify benefits and risk, and collaboratively come to a decision that meets your needs, wants and goals.

[Connaissance financiére et rationalité des investisseurs: une étude Canadienne, CIRANO et École de comptabilité, Université Laval, 2011]

Quick Tip #1 – Just the Facts


A financial security advisor will help you build a financial portfolio that’s right for you. According to Morningstar – an investment resource that specializes in investment planning – intelligent planning decisions made with the help of an advisor result in 29 per cent more retirement income.

“You Pay Your Bills With Cash”


Book Review –“How the Mighty Fall” by James Collins

I read a book yesterday.

That might not sound like a very big accomplishment and to be honest it’s not.

I read a lot. My goal is to read about 25 pages a day. That works out to an average of one book every 10-14 days or so. I read just about everything I can get my hands on. They can be books about business, philosophy, history, theology, biographies or even the odd novel, the type of book isn’t really the point.

I read to learn. Part of my personal mission as a writer and teacher is to always be learning.

Yesterday I started a new book and was so captivated by it that I read the whole thing, just over 200 pages, in one sitting.

“How the Mighty Fall” by James Collins is a study in failure. It’s a study in how once great companies go from good to great to gone and how some companies can recognize the onset of decline and reverse the trend while others can’t or don’t do the work necessary to bailout and repair a sinking ship.

Collins became famous for his first book, “Good to Great” which is a study in how companies break through mere success to iconic greatness. His follow up book “Built to Last” studied how these great companies are then able to maintain their status over the long haul but within that second study Collins began to notice that some companies, even after a long time of sustained greatness would collapse into irrelevance or disappear completely, sometimes with alarming speed.

Collins claim, based on extensive research, is that there are five stages to decline.

  1. Hubris Born of Success
  2. Undisciplined Pursuit of More
  3. Denial of Risk and Peril
  4. Grasping for Salvation
  5. Capitulation to Irrelevance or Death

Companies can appear to be healthy industry leaders right up until they transition from Stage 3 to Stage 4 but in hind sight the writing is on the wall long beforehand as they arrogantly go about their business under the mistaken impression that they are and will remain invincible. In my work as a Financial Coach both to individuals and small business I see the same 5 stages over and over again. In my experience the tipping point comes in Stage 3, its’ how you avoid or manage risk that is the key to survival.

Towards the end of the book Collins tells the story of Professor Bill Lazier who teaches small business management at Stanford. He begins his course with a case study in failure and asks the class what the central issue was as the company collapsed. These are MBA students that are used to looking at macroeconomic forces and strategic planning so at first the answers he gets are a grand analysis of big schemes and outside forces.

“No! Think!” is Lazier’s response to these egg-head answers. Eventually a student will somewhat sheepishly venture what seems so simplistic that it couldn’t possibly by right, this is an graduate class at one of the most prestigious universities in the world after all. They will say something like “they can’t make payroll next week, they are out of cash.”

At that point Lazier will jump up and write in huge capital letters two-feet high, CASH. “You pay your bills with cash! Never forget, you can be profitable on paper and bankrupt at the same time.”

Cash is king. Everyone knows that, especially when you are first starting out in life or business, but as we become more and more successful we can get drawn in to the North American lifestyle of buy now, pay later, so we forget that. When available cash is replaced by access to credit and the whole system gets flipped on its head.

The key lesson I took from this book is the simple fact that we must pay our bills with cash.

We may be able to buy on credit, we may even be able to extend credit and pay off one card with a different one but all this is a fool’s errand! Eventually you will have to pay – in cash. Buy now pay later is always replaced with pay now or else.

To a large extent the North American way of life was built on what sociologists and historians have dubbed The Protestant Ethic. Max Webber literally wrote the book on it in 1904, “The Protestant Ethic and the Spirit of Capitalism” originally published in Germany in 1905, put words to a sentiment that had been growing in western democracies for over two centuries. Simply put the Protestant Ethic says that time is money and there is honor in any work that contributes to the common good.  In addition, wealth comes to those who diligently work at their given task and spend less than they make.

But another social-economist, Daniel Bell would later note in the 1970s that the Protestant Ethic was dead due mainly to the invention of credit. Bell published his seminal work on the demise of the Protestant Ethic and the rise of capitalism, “The Cultural Contradictions of Capitalism” in 1976 at a time when interest rates and inflation were on the rise, and for the first time since the Second World War people were spending less and going deeper into debt.

The Protestant Ethic is undermined not by modernism but by capitalism itself. The greatest single engine in the destruction of the Protestant Ethic was the invention of the installment plan, or instant credit. – Daniel Bell, The Cultural Contradictions of Capitalism

Now, according to Bell you can achieve the trappings of wealth quickly without completing the work previously required to get there. And that contradicts the basics of capitalism and capital allocation. Buy now pay later is just horrible planning and fundamentally wrong both ethically and mathematically.

And so, we come full circle. As a Financial Coach I see it every day. The Protestant Ethic, if not completely dead as Bell would have it, is indeed on life-support, put there by continued access to easy credit. Paying in cash is viewed as a curiosity at most retail institutions and downright discouraged at others. (Ever try to book a hotel room, or buy a car with cash?) In recent years central banks have continually lowered interest rates in order to encourage people to borrow ever more money so that they continue to spend money and keep this giant wheel called the economy moving.

People who refuse to take part in debt fueled spending are dismissed as “old fashioned” and even looked upon by their peers as a bit delusional, to be pitied as folks who just don’t know how to enjoy life. I know, I’ve been on the receiving end of this kind of derision more than once.

But – At that end of the day, as Professor Lazier likes to so dramatically point out to his students – “You Pay Your Bills in Cash!” Staying on top of cash flow is the first, second and last thing every person interested in building wealth needs to get a handle on. Without it you become locked in a perpetual cycle of working for the things you’ve already consumed and continually mortgaging your future for the things you think you want now. You’re taking on more risk than you can handle and you’re teetering on the edge of Stage 4 decline. Once you start grasping at straws in order to stay afloat, the dominos start falling quickly and it’s a short trip to the bottom.

Contact me for more information on how we can help you return to the Protestant Ethic, work hard, save for the future, and get out of debt before you reach the tipping point to stage 4 decline and it’s too late do anything about it.

 

 

 

Under pressure – 3 steps to making things better


Money worries are never far from mind – but did you know they can also affect your health?

Whether it’s a looming deadline at work or a race to get out the door on time, we all get stressed sometimes. But too much stress can be overwhelming – and according to the Canadian Mental Health Association, chronic stress can have an impact on our lives. Being stressed out affects our ability to concentrate and our self-confidence. It can even lead to sleep difficulties, headaches and more frequent illness.

While plenty of things in life may cause us to feel stressed, one of the biggest culprits is money. Before I faced facts and went bankrupt in 2005 I was losing a lot of sleep and it seemed like the headaches would never go away.

And far from just anecdotal, the evidence is strong. According to a national survey by the Financial Planning Standards Council, 42 per cent of Canadians now rank finances as their number-one source of stress. That’s not surprising when you consider how financially stretched we are. As we work to save for retirement and pay for our kids’ education, we’re also dealing with more debt than ever before. As I have noted many times, for the first time in our 147 year history, Canada’s consumer-debt-to-income ratio (total household debt compared to disposable income) topped 163.3 percent in 2014 as we take on debt to pay for homes, cars and vacations.

And these money worries are affecting our health. A recent study but Manulife and Ipso Reid shows that financial stress can take a toll on our mental and physical well-being – and even affect us on the job. Here are a few key findings:

  • 76 per cent of those who report high stress levels say the state of their finances is partly or entirely to blame.
  • Highly stressed individuals are significantly less likely to be motivated to do their best at work or feel they have a healthy work-life balance.
  • Those who are very comfortable with their current financial situation are almost twice as likely to say they are very happy and are 1.5 times more likely to report that they are in good health. They are also more likely to be exercising regularly.

While being in poor financial shape can cause a lot of anxiety, (I know, I’ve been there), the good news is there are ways to help fix it. In fact, making improvements to your financial health can have a positive impact on your personal well-being. If you’re feeling stressed because of money issues, here are three steps you can take to help make things better:

 

  1. Face it. Finding money to contribute to your retirement savings or dealing with a drawer full of unpaid bills can seem like monumental tasks. Even today, over a decade later I struggle with this one, it’s easy to set your bills aside and forget about them, especially if you don’t have the money right now. But if I don’t stay on top of my bills I know that there will be a painful reckoning in the not too distant future. The longer you ignore your financial situation, the worse your stress is likely to get. Facing the issue is the first step towards improving matters and alleviating your stress. Open up to your spouse, your advisor and others who can help you take control of your finances. Once you know what you’re dealing with, you can begin to tackle the issue head-on.
  2. Make a plan. Having a concrete strategy in place, such as a debt repayment plan, can help you feel more positive and in control of your future. I can work with you to assess your goals and put together a step-by-step plan to achieve them. Step one of my six steps to financial freedom is Dominate Debt.
  3. Have fun. Whether it’s a walk in the park or a nice dinner at home, make room for relaxation and fun. Laughter and friendship are excellent stress-busters. Find low-cost or free ways to let off some steam and enjoy life.

Remember: your finances don’t have to drag down your health. If you address your money worries, you might just find you have a lot more to be positive about than you thought. In fact, talking to someone and taking steps towards financial wellness can lead to a happier and healthier you.

Contact us today and start taking control of your finances for a better tomorrow.  Or as I say around here nearly every day, “Take Action Today That Your Future Self Will Thank You For.”