My Year of Hopefulness - Costa Rica, here I come!

Last night I had dinner with my friend, Jeff, who's turning 30 next month. To celebrate, he's going to Egypt and asked friends to come along. Because of the economy, most of us backed out. Last night, Jeff told me he booked the trip for 3 people, $2000 each - includes airfare, tours, and most of their meals. I almost fell over. I missed out on Egypt for $2000 because I was a little bit afraid of losing my job. (I'm currently still employed.) What a lost opportunity!

Cross-Cultural Solutions contacted me today to see if I had any more questions about booking a trip with them. (They have incredible customer service!) I wrote back a very apologetic note saying that my company had just announced that we'd go through another round of layoffs next month so I had to hold off and see how that worked out for me. Even though a trip with Cross-Cultural Solutions is 100% tax deductible, I still hesitated.

A long time ago a friend of mine sent me a quote that rings in my head all the time: "The world is a very generous place. It gives you the same lesson over and over until you finally learn it and don't have to go through it any more." Costa Rica was my next Egypt.

The moment I got home, I dropped my bag, headed for my Mac, whipped out my credit card, and signed up for a trip to Costa Rica with Cross-Cultural Solutions. Like everyone else I know, I'm nervous about the economy. But does that mean I just go into a holding pattern? Do I not take advantage of a great opportunity out of fear?

Now, I will say that I am in a very good position to just take the money for my trip from my savings and it's a huge benefit to have the trip be tax-deductible. Still, it would be very easily justified to hunker down and not take this trip. It's a matter of priorities, and international travel and volunteering are important to me. So this trip is not an expense, it's an investment opportunity. In me. In the world. And I'm grabbing it with both hands.

My Year of Hopefulness - You Can't Shrink Your Way to Greatness

In this time of budget slashing and cut backs of every kind, I have been working hard to come up with a way to succinctly say why cutting back severely on innovation efforts and investment is a very bad idea. Not only is it a bad idea, in some cases in may prove to be the nail in the coffin for many companies. If they intend to invest in their companies only once the economy improves, they will find themselves far behind their competitors with foresight. Plus, it's cheaper to invest and innovate when times are tough because vendors are willing to make negotiations and compromises that they would never make in fat times.

Until yesterday, I was coming up short on that succinct explanation. I wanted a 10 word sentence to say just what I said in the preceding paragraph. And as if a gift fell out of the sky, someone said to me "you can't shrink your way to greatness." Perfect! 7 words and on-point. We can rise to a challenge or we can steal away from it, hiding under a rock until the clouds clear. It's hard to be brave and courageous in times like this. Some people may even call it fool-hardy. I'd say it's vital.

Look at the alternative: without investment in innovation, we are stalled, suspended in time. We aren't doing anything for our teams, nor are we doing any helpful work to pull us as a whole out of this recessionary situation. I'd argue that it's not our option to invest and innovate now. It's our duty, our responsibility, to ourselves and to one another. We are the ones we are waiting for to save us.

If our goal is to be great, then this is the time to be both prudent and forward-thinking in our spending. This recovery is a long-term proposition so let's decide where we want to be in 5 years, 10 years, and take the steps now that make that goal inevitable as opposed to just a hopeful possibility.

My Year of Hopefulness - Kiva.org

I've given up on opening my 401K statements. The news is just too depressing. Given our current economic state, I've been searching of where to put my investment money. Where will it do the most good, for me and for the companies I choose to invest in. When I look at the Dow 30, I don't have a lot of faith in many of those institutions to reinvent themselves. Some of them have remarkable potential. Most of them have to accept that they have a very tough realization to come to terms with - in the words of Darwin, "Change or die."

The investments that are intriguing to me these days are in entrepreneurs, particularly those in developing nations such as Rwanda. I just placed my first investment in an entrepreneur in Ghana through Kiva.org. I lent $25 to a woman named Agnes Cobbina for a 7-month term. She owns a hair salon and she wanted to borrow $375 to expand her business. With 14 other lenders, I completed Anges's loan goal. What was remarkable is that I clicked on several different entrepreneurs and by the time I got to the "lend to" page, their goal was already completed. In the 10 seconds that it took me to read a bit about them, someone else had stepped in to help! One loan is made every 14 seconds through Kiva.org. 

Some people might think of this as a charitable donation rather than a loan. Nothing could be further from the truth. 99% of those who receive loans through organizations like Kiva.org pay them back in full. How many U.S. investments can say that these days? And not only am I confident that I will receive my money back; I know that I helped someone help themselves through this loan. I am empowering Agnes, providing her with a dignified way to grow her business and support her family. 

I'm thrilled to be able to participate with Kiva.org. But I want to do more. I'd be willing to take part of my investment money and provide it directly to an entrepreneur in a country like Rwanda for a return. What an amazing thing it would be to combine the idea of Sharebuilder with that of a Kiva.org. Could this be a new paradigm for global investment?  

Worried about the economy? Here are some quick answers to common questions

I was going to post about myself, my life, and my observations about the world around me today. However, I'm hearing so many people say that they don't understand how this current economic crisis is going to hit them personally, that I wanted to do my part to try to get the word out about 4 common questions that many people have asked me over the past few weeks:

1.) "Do I need to pull my money out of my savings and checking accounts and put it in my mattress?"

No. Please don't do that. If it gets stolen or you have some disaster like a house fire, you'll lose it all. Also, as long as your money is in a bank that is FDIC-insured, your money is safe up to $100,000. If you have more than $100,000 with the same bank, then take out the balance above $100,000 and move it to an entirely different bank, not just into another account at the same bank. The $100,000 insurance is per depositor, not per account! Don't know if your bank is FDIC-insured? Call them, stop into a branch, or visit their website.

2.) "I think I am going to stop investing in my retirement fund because the market is so bad. Is that a good idea."

No. No, no, no, no! Please don't do this. Please. Economies go in cycles. You need the compounding on your retirement savings to make retirement plans work. If you pull out your money or stop investing, you will lose the compounding factor you need. And you'll pay hefty penalties on the withdrawal plus lock in the loss. What you can and absolutely need to do is make sure that your portfolio is balanced. Many retirement plans have a "set it and forget" plan. That's what I have. You plug in the number of years you have until retirement, and the plan automatically calibrates different investments to get you to your retirement goals. Still unsure? Make an appointment with an advisor at the institution that manages your retirement accounts - it's free and it's their job to explain your options to you. And if you don't know how to make an appointment with them, contact your HR department. 

3.) "This job market is so crazy that I've decided to get out of the job market. Is that a good idea?" 

AH!!!!!!!!!! No - no no no. Don't do that. If you retire now, you essentially lock in all the loses your retirement fund has just been hit with because you begin to draw on those funds yo worked so hard to save. This is bad - really, really bad. You worked hard all these years, and you're not getting the full benefit of that hard work. If you're quitting your job with nothing else to go to, you need to reconsider immediately. And change your mind - do no leave your job without another place to go. There will likely be nothing for you to go to. Now, I do think you should be networking and watching out for new employment opportunities that sound interesting. Actually, I think you should ALWAYS do this, even if you are 100% in love with your job. You need to cover your bases and in this day and age, getting a job interview (and probably getting your dream job or even just your next job) has much more to do with who you know rather than what you know.   

4.) "I don't think Wall Street zillionaires should get a bailout so I'm against the Government's $700 billion plan."

I don't blame you for being confused on the bailout - I blame politicians who don't understand economics (inexcusable) and make this a partisan issue (also inexcusable). This is not about bailing out Wall Street. I'm really upset with the person who coined this plan as a "bailout" - it's not. This money will make the Federal Government a bank that will loan money to banks like Citi or Bank of America to make it easier for those banks to responsibly loan money to average consumers (you and me). There will be plenty of Government oversight to make sure that money is loaned responsibly. And when the market recovers, those banks will pay back the Government, who will pay back the tax payers.   

If we don't have this plan, here's what will happen:

Access to credit will plummet, making it hard for all Americans and all American businesses to have any access to credit. All free markets need access to credit to function properly. This los of access to credit is not good - you won't be able to get car loans, schools loans, mortgages, or any other kind of consumer loan. Credit card companies will cut your limit. All businesses, whether it's your local pizzeria or GE, will not be able to get the loans, short-term and long-term, big and small, that they have to have to do business and to get us the goods and services we need to survive. Bankruptcies and home foreclosures will skyrocket, and as a result, unemployment will also skyrocket. We'll be in a downward spiral.

So here's the choice: a) pay some more taxes now and get that money back in the fairly near-future so our economy can get going again. b) pay a whole lot more now with people losing their homes and companies going out of business, causing unemployment to rise rapidly, and pay even more later as we struggle to deal with the fall out. And we will ALL deal with the fall-out, especially those in lower and middle income brackets. The recovery from option b) will be slow and painful. a) will be less painful and shorter. I'm going with a). I don't like that we're in this situation, but here we are.

This might be the only idea that George Bush and I will agree on, and I took some convincing. I read A LOT about this, talked and listened to a lot of people very knowledgeable in finance. At this late date, the horse is out of the economic barn and the only way to corral him back inside and under control is through a rescue plan. There simply is no other better option.  

The above image can be found at: http://www.gulf-times.com/mritems/images/2008/9/22/2_243164_1_248.jpg