Thursday, December 16, 2010

Lesson Learned, or Not

In the global Economics arena, we have seen how in 2001 the country of Argentina defaulted on a $95 Billion debt, as it remains one of the biggest sovereign defaults in history. We have seen how Ireland and Greece, Portugal and Spain struggle to restructure their debts and perhaps leave the euro. Things to account for are inflation, devaluation of a currency, budget deficit and loosing trading partners. Sounds familiar? A break up of the Euro will have ripple effects if it is allowed. Stronger economies are paying for the weaker ones and infuriate its citizens. In order, to maintain social, economic and even political ties, Europe seems to head this way. In the US, this is not good news for our outlook to recovery. Many steps ought to happen. I venture to say the EU, IMF, the US and China will do what it takes to avoid a default and breakup of the euro.

Keep your savings and prepare for turbulence.

Sunday, December 12, 2010


Sunday, December 12, 2010

Assumptions vs. Facts

By Hannibal Chinchilla

Financial plans are mostly based on assumptions. These assumptions can be about taxation, health, income streams, inflation, buying power of the dollar, what the stock market will do in the near future, when you are thinking to retire, how much you will need to retire, etc. One thing is for certain, the plan will change as the assumptions will also change, so why do we spend time planning on assumptions?

We need to start somewhere, to have a road map or a course of action; otherwise it will be like driving a car just to drive it and no destination in sight. Airplane pilots often have a flight plan, but often this plan changes; there are too many variables to consider, too many unforeseen events. But with a basic flight plan the pilot can make minor and consistent changes to make it to the destination. The financial plan works the same. Make minor and consistent corrections to ultimately get what you envisioned.

Nowadays there are too many variables to considered, economic, political, unthinkable variables, like losing existing benefits that were thought to be there for life; but with a steady oversight and consistency and discipline one can make it there. Unfortunately, many people spend more time planning on other things, like a yearly vacation or watching TV, statistically the average American on average watches approximately 30 days of television if you put all the hours’ non-stop. Additionally we tend to take action when it’s too late to take action, procrastination is a common fact.

Once you have a general idea of your desired destination, write it down on paper, and make small corrections over the short term to get there, stage it for a year, two year, five year and 10 year horizons. Make a list of items and things you always wanted to get accomplished; but never made past the first few months of the year. This year take a moment to think what you would like to attain. Make an action list. Make it short, with what I call the “SMART” concept; S for Specific, M for measurable, A for attainable, R for Realistic and the most important T for Time. If you are tired of broken New Year Resolutions and are stuck on that vicious cycle year after year, the only way to break the cycle is to change your mindset of how you view things, make a paradigm adjustment; and stay away from negative people.

If we accept the fact that even the best plan will be wrong, we can shift our energies on the “process” of getting there; the small things that can make an assumption become a fact.

Happy Holidays

From Hannibal Chinchilla

Barca Financial Group,

For similar topics visit our blog and website:

Wednesday, December 1, 2010

The Psyche behind Christmas shopping

It seems that we never learn, the economy, the legislature, trying to fix things and still coming short. We all got a good taste of a major Recession like the 1930's. Yet, we remain committed to help, our grandparents learned it. They saved and prepared for the worst. Yet, we remain unchanged.
The toughest time is during the holidays and the euphoria of the holidays; no one can escape it. It's tradition, right?
Seen from afar, on an early cold hard light of January, holiday shopping can seem a bit insane. I do not have a TV, although I can imagine the news talking about Black Friday and depicting mobs streaming into department stores and rampaging among the shelves, their overload cart piled high with televisions and video game consoles and expresso machines. It seems like preparing for 2012 already....WTF.
Neverthlesess, is it a social obligation? the National Retail Association has it to a science, many retailers depend on this to survive and supposedly help the economy, the feel good about helping our recovery. In a macro level does it really help? well it depends on who you ask. The retailers, yes it does, it keeps people employed. The consumers, it depends. The psyche of shopping is more scientific than that. Studies have been performed to figure out how to tap into your buyer's surplus, an economist term to see how retailers tap into your wallet and what you do not plan to spend but still spend it anyways. Yes, we have prepare for this season, but once you open your wallet for the first time you tend to feel what marketers call the guilt sensation. A guilt that I should not spend this money on nice to have items. Once you have opened your wallet once, the second time it hurts less and less and so on. Then you get the relieve that you are buying something for someone; the feeling of giving, yes it is the time for giving, but did you notice this is an excuse to buy more for oneself? This is what researchers called "the shopping momentum effect", so we buy,we have earned, it has been a tough year; I work hard for this, I should buy a Porsche or a nice hot tub. The psyche of shopping continues. It is a license to buy...
As the holidays approach, this phenomenon can feed on itself in a steady loop of spending events. We are humans after all. We never learn.
Happy Holidays