Rantings and Ravings of a Baby Boomer

We are a consumer driven economy. You know what that means? It means that in contrast to the past when it was a virtue to save - a penny saved is a penny earned - a couple of decades ago economic growth began to depend on the consumer spending more and more. At first it was based upon spending more and more of our INCOME until savings rates dropped to zero. And then it progressed to spending MORE than our income to drive the economy at the cost of a negative savings rate, i.e. consumer debt. If you've got it - spend it. If you don't - borrow it and spend it. Ultimately, bad lending practices devised to get more people to take on more debt led to the house of cards crashing down. So, what does our government do to fix this problem of consumers spending more than they earn? They borrow money from the Chinese to put into the hands of consumers and tell them to spend it to "stimulate the economy". What is wrong with this picture? Does this drive anybody else out there as nuts as it does me?

It used to be that before we bought anything we would ask ourselves, "CAN I AFORD IT?". For too many the question asked before spending money has evolved (or devolved) to "CAN I AFFORD THE PAYMENT". There is a huge difference between those two questions. The first implies additional questions such as "do I have a rainy day fund? Am I saving enough for my kids college education? Is my retirement savings sufficient at this point? Are my basic needs taken care of before I spend on a luxury? Now, the dominant mind set has become if I have enough cash flow to make the payment, then I can afford it. This attitude has led to choosing short term gratification over long term security.

Whose fault is it? Well we certainly have to look first at the individuals making the poor choices. The Greatest Generation worked hard to provide the Baby Boomers with a much better life than they had growing up in the depression. I am a Baby Boomer that was taught to "pay myself first" by taking a portion of each check and putting into savings. I was told that if I could afford a car payment, then I could afford to put that payment instead into savings and after 3 or 4 years I could pay cash for a car. By not seeking the immediate gratification of having a car I wanted immediately it saved me thousands in interest. I tried to pass those values on to my children. But it is hard for individuals today to be fiscally disciplined when they see a government cutting taxes without cutting spending, funding wars with deficit spending, and encouraging all of us to spend, spend, spend to stimulate the economy.

My wife can tell you which TV commercial I hate the most because it raises my blood pressure and evokes a verbal response every time I see it. It is the one by Chase Bank were a woman is watching a TV that fizzles out and she tells her husband that she concedes that they need a new TV whereupon he immediately leaves for a big box store to buy a big flat panel TV. I recognize that a TV is a necessity in today's households and I have no problem with that. It is the music used in this commercial that drives me nuts. "I want it all, I want it all, I want it now." This is an example of a bank encouraging people to make poor choices. If you have the money, then spend it so that you can have it ALL RIGHT NOW. Fine. And when these same people go to retire and have no savings, the bank will lend them money for food and utilities, right?

What does any of this have to do with value selling, value propositions, or value anything? Well, perhaps it is a stretch but an appreciation of the time value of money is key to personal financial success just as it is for a company making purchasing decisions. Failure to communicate the value of solution in financial terms many times leads to the failure to get budget approved for the investment. The best practice is to communicate the financial value of business solutions in whatever financial metrics are used by the prospect. If they simply use benefit cost analysis then provide them one. If they use NPV over five years, then who better to help them determine financial impact of your solution then the provider of the solution? Well there. An attempt to connect my rantings and ravings to the business of value creation. I feel much better now.

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