Thank you to my friend and loyal reader, Bob, for the title of today’s edition. The idea of “reflection” came up last weekend while I was enjoying time in a wonderful Southern beach town where the restaurants and bars were full, the sidewalks hopping with people of all ages, the lovely (large) homes newly built or renovated, people enjoying relaxing time on the beach – even the dogs’ tails were wagging with joy! Times are GOOD in lots of places!
These things are what we live for. These things also take planning and discipline – because good times come in cycles. Nearly everyone with whom I spent my weekend is engaged in a different and exciting line of work: from real estate finance, to “retired”, to the medical profession (both human and animal), to start-up tech… to owning or having sold their own businesses. Conversations were around “what’s next?” in terms of work, homes, vacations, kids’ camp, and kids’ college.
Even back at home and work, my friends, acquaintances and clients are mostly gainfully employed or in good shape overall. Those looking for work can be encouraged by a labor market where, finally, reports in recent months show shortages of workers in fields requiring specific skills. This means demand for employment has grown.
The stock and bond markets have delivered steady gains for going on 10 years – which has lent to a sense of confidence in the future. A tax plan, according to regional Federal Reserve reports, has delivered to a large population a bump up in net monthly pay which has fueled consumer spending. The labor market is strong with workers expressing confidence in switching jobs for higher pay. Retail sales – including autos but most prominently at grocery stores, restaurants and clothing retailers – are “robust.” BUT (there’s always a “but”) household debt has also crept up, reaching a record at $13.3 billion.
Household debt is not the end of the world; in fact, there are indicators that show the quality of today’s record household debt is much higher than the (low quality) subprime mortgage debt and massive delinquencies seen in the financial crisis of 2007-2008. Household debt is a tool that when used wisely with discipline and planning can be a source of a strong economy and a way forward for many families and businesses. The “catch” is that, in the background, are rising interest rates from the US Federal Reserve. So, debt-management is key, even in a strong economy.
This situation (really ALL situations) is where a plan comes in handy. Knowledge accompanied by a plan. Knowledge of a “Plan B” – or what would quickly need to be tweaked in case of an unforeseen event or emergency. Or, with rising interest rates, a plan for paying down more rapidly floating-rate personal or business debt. Or knowledge of a short-term and long-term savings vs. spending plan in general.
Financial plans, financial knowledge and financial advice are for those who wish to be slightly more carefree at some point in the future (isn’t that most of us reading this note?). The beach is a great place to relax in the summer or on vacation. And I plan on continuing to do so!
Note: We have clients nationwide; if you know someone we may be able to advise with their financial planning or wealth management we would be happy to discuss it.