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,

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