Saturday, December 31, 2011

The U.S. Trade Deficit: Why It Matters … and Potential Solutions

Several years ago I wrote about three fundamental problems which posed significant long-term challenges for the United States, in terms of overall U.S. economic growth and the standard of living of its citizens. These challenges were:

· (1) Huge U.S. federal trade deficit … in effect transferring a good portion of our wealth overseas;

  (2) The annual budget deficits and the federal debt, in effect leveraging the future of our children and grandchildren in order to benefit us today; and 

  (3) The decline of the U.S. personal savings rate – with its serious

In this blog post I provide an update on the first of these challenges – the U.S. trade deficit – and suggest some potential solutions.

What is the U.S. Trade Deficit?

At $550 billion the projected U.S. trade deficit for 2011 remains an alarming number, and it is running about 10% higher than the 2010 U.S. trade deficit. The U.S. trade deficit is a calculation of the difference between the goods and services Americans sell to foreigners and the goods and services that Americans purchase from foreigners. Over the last 30 years the United States has run consistent and increasing trade deficits.

Why Does the U.S. Trade Deficit Matter?

Some economists like to recite evidence that several decades of U.S. trade deficits has not, according to the evidence, negatively impacted U.S. growth. But truths emerge when confronting the issue with a dose of basic common sense. Indeed, the enormous size of the trade deficits over the last several decades, and the very high size of the trade deficit over the past several years in particular, raises several crucial difficulties for the long-term health of the U.S. economy.

(1) First and foremost, the net outflow of U.S. dollars to purchase imports (net of exports) are offset each year by a net inflow of foreign capital to purchase U.S. assets. Sounds like balance? Not so. In essence, foreigners are purchasing our assets – whether it be debt issued by U.S. corporations or the federal government, stock in our corporations, and even real estate. With each purchase of an asset comes an expectation of profits. In other words, the greater the purchase of our assets, the greater the profits from U.S. assets flows overseas. This in turn boosts, over time, the U.S. current account deficit (the trade deficit plus the income earned by foreigners on their asset holdings in the country net of what the country's citizens earn on the assets they have invested abroad). In essence, any country that runs a current account deficit is borrowing money from the rest of the world. As with any loan, that money will need to be paid back at some point in the future … and until repaid will act as a drain from the debtor nation (i.e., the United States).

(2) A large trade deficit is a sign of an unbalanced economy. In the case of the United States, there is a mismatch with high levels of consumer demand for goods (discussed below) and the weak U.S. industrial sector.

(3) The large trade deficit eventually results in less economic output and less U.S. employment. This is because the transfer of wealth abroad represents a net leakage from the circular flow of income and spending. Workers who lose their jobs in export industries, or whose jobs are lost because of a rise in import penetration, often find it difficult to find new employment – especially at the wage levels they previously had.

(4) Additional potential economic problems can arise from the sources of financing for the U.S. current account deficit. Foreign investors may eventually take fright, lose confidence and take their money out. Or, they may require higher interest rates to persuade them to keep investing in an economy. Higher interest rates then have the effect of depressing domestic consumption and investment.

(5) There exists the possibility of a severe international economic crisis should foreigners begin to dump the dollars they hold in world currency markets. Not to mention the world political crises which might thereafter follow.

How Can the U.S. Trade Deficit Be Solved?

There are three potential broad solutions to the U.S. trade deficit. Neither works alone, and all must co-exist to solve this systemic economic threat to the long-term fiscal health of the nation.

Solution #1: Reduce Oil Imports Through Aggressive National Tax Policies.

First, we can reduce oil imports. In this regard, look no further for a fix to 70% of the trade deficit problem than imports of oil and petroleum products. The hope is that, with very encouraging developments in renewable energy technologies, we can substantially reduce oil imports over the next few decades.

For example, a substantial number of wind turbines continue to be erected. As wind turbines grow even larger, and equipment is developed to erect these larger turbines in places where nearby residents are not negatively affected (i.e., offshore and out-of-sight), efficiencies will take place which will further reduce the already-competitive price of wind energy. According to the latest edition of the U.S. Department of Energy’s “Wind Technologies Market Report,” turbine prices decreased by as much as 33 percent or more between late 2008 and 2010. More efficient U.S.-based manufacturing is saving on transportation costs, and technology improvements are making turbines better and more efficient. The U.S. Departments of Energy and Interior made several important announcements that moved offshore American wind power forward, including the unveiling of a plan to pursue the deployment of 10 gigawatts (GW) of offshore wind capacity by 2020 and 54 GW by 2030, the creation of high-priority “Wind Energy Areas” off the coasts of New Jersey, Delaware, Maryland, and Virginia. However, wind energy development remains dependent upon the federal Production Tax Credit (PTC), which expires at the end of 2012. A long-term extension of the PTC is required to stimulate investments in long-term, sustainable and more efficient wind farms.

In terms of technology development and reduced costs, solar energy has been the real story of 2011. Rapidly falling solar panel prices over the past two years (including a 30% price drop in 2011), along with predictions of further falling prices in the two years ahead, have the U.S. on course for some form of “grid parity” with solar energy.

Solar grid parity is considered the tipping point for solar power, when installing solar power will cost less than buying electricity from the grid. But, of course, “grid parity” is more complex than just a single measure, as differences exist depending upon the size of the solar installation, its location, and the costs of electricity. Also, the costs of existing electrical resources – already constructed and depreciated coal, gas or nuclear power plants that produce electricity for 3-4 cents per kilowatt hour – is vastly different from the costs of new power plants. The marginal cost for a utility of getting wholesale power from a new power plant is more likely around 10-12 cents per kilowatt hour (for coal, gas or nuclear energy installations).

Still, it is interesting to note that there are claims that “grid parity” has been reached already in some areas of the country where residential electric prices are high and solar energy is abundant. Indeed, the “levelized” cost of solar PV was projected to likely fall below 15 cents per kilowatt hour for most of the developed countries of the world and reach as low as 10 cents per kilowatt hour in sunnier regions like parts of southern California and Arizona (although by other measures the costs of most areas is more like 30 cents per kilowatt, and 21 cents for southern California). While there are debates about just how to properly compute the “levelized” cost of energy production, one thing is certain - there has been an explosion of solar energy installations over the past few years, especially in providing powers to residential users.

Significant financing occurred for new solar initiatives in the 4th Quarter of 2011, and this emerging industry (and driver of new jobs, many of them in the U.S.) will likely continue to attract large amounts of capital. And with significant developments which will likely further increase efficiency in solar photovoltaic cells over the next few years and/or substantially reduce manufacturing and installation costs, the outlook for solar power over the foreseeable future is … to use a pun … very “sunny.”

Battery technology is evolving, as well. New technological breakthroughs are permitting large utility-scale battery development (essential since solar power and wind power don’t provide energy all the time). There have been several research-related breakthroughs which could significantly increase energy density in auto and other batteries; however, commercial application of most of these recent research lab results is not yet certain.

In addition to current (though soon-to-expire) federal tax initiatives, many states have state tax incentives or impose other requirements which stimulate the use of renewable power. For example, many states have Renewable Portfolio Standards (RPS), which require electricity providers to generate or acquire a percentage of generation from renewable sources. Other states provide for Renewable Energy Certificates/Credits (RECs) as part of their Renewable Portfolio Standards. California, with its 40 million people, has through its Air Resources Board recently announced an ambitious goal of moving toward zero-emission vehicles within the next two decades. Energy executives, responsible for long-term planning of their utility companies’ fortunes, are also painfully aware that carbon credits – while stalled for the present – are likely within a decade. Hence, utilities are increasingly likely, from the standpoint of economic costs, to consider the development of large-scale renewable energy plants.

Energy conservation has also made waves, with the costs of LED lighting falling dramatically over the past two years, and with more price drops ahead. Federal fuel efficiency requirements for cars are expected to double by 2025 to a whopping 54 miles per gallon. Currently the average car or light truck sold in the U.S. averages 22 miles a gallon, and some estimate that the new fuel mileage standards will drive that average above 40 miles a gallon by 2025. Despite these positive developments, much more could be done in the area of energy conservation – by both consumers and by businesses.

Even with all of the foregoing “good news” on renewable energy technologies and energy conservation developments, oil imports are unlikely to substantially drop under current U.S. tax policy. Some savings in oil consumption will result from hybrid and electric cars, and natural gas cars, and developments in the fuel efficiency of gas engines. Other savings will come from the deployment of renewable energy technologies. However, in reality the growth of the U.S. economy will absorb these savings and keep the demand for oil imports at high levels.

Yet much more can be done to reduce oil imports, if the politicians possess the tenacity to act for the long-term good of the country. It requires the phase-in of taxes on gasoline purchases, year-over-year, and the corresponding use that tax revenue to provide for long-term tax credits in support of renewable energy deployment and in the continued support of research in the renewable energy area. Only then will we likely make a serious dent into the huge long-term fiscal problems posed by exporting hundreds of billions of beautiful U.S. greenbacks a year overseas in return for barrels of ugly crude oil.

Hence, this first solution relies not just on the important developments affecting the efficiency and deployment of renewable energy technologies, but also is dependent upon our leaders making some tough decisions which will, in the shorter term, be painful – but which will help reduce our demand for oil, and trade deficits, substantially in the decades ahead.

Solution #2: Increase the Personal Savings Rate, Reduce Personal Spending, and Cut Imports of Consumer Goods.

While decreasing imports for oil is a major part of the solution, we must also reduce our demand for consumer goods manufactured abroad in order to further reduce our trade deficit. In so doing, we can also increase the U.S. personal savings rate (thereby maintaining cash available for capital formation activities – essential to growth of the U.S. economy).

Of course, saying this and doing it are two different matters, altogether. Much more is needed from our leaders to combat “consumerism.” Not in terms of legislation, but in terms of education and persuasion.

There are lots of resources on the web on how to combat consumerism. Here are just a few to consider:
Solution #3: Promote a Weak U.S. Dollar Policy.

This solution is more controversial. In essence we possess a weak dollar policy currently, but the reason for this policy is to keep interest rates low in order to stimulate the economy and promote the creation of jobs. As the U.S. and global economies improve, central banks will likely raise interest rates. With each interest rate rise in the U.S., the U.S. dollar becomes more attractive to foreign investors. This in turn affects currency exchange rates.

But what if the U.S. Federal Reserve Bank did not raise interest rates as much over the next several years, by continuing its weak dollar policy (relative to that of other countries)? This would make the U.S. dollar less attractive, thereby weakening the U.S. dollar. This in turn would boost U.S. exports and (because of resulting price increases) likely decrease imports.

Of course, weak dollar policies don’t come “free.” The price to pay is the prospect of higher inflation. Hence, there is a difficult balancing act here. But one may argue that permitting a higher degree of inflation in the U.S. – above the 2% or so assumed target of the Federal Reserve – would also lead to serious economic difficulties over the long term.

What NOT To Do – Adopt Protectionist Policies.

The solution is not, however, the erection of barriers to trade. However, I’m all for aggressively enforcing treaties on trade, and seeking sanctions against countries who violate these treaties. And I’m all for increased pressure on China to float its currency. But raising tariffs or imposing other barriers to trade lead to far more long-term negative economic (and political) consequences than the problems sought to be addressed.

In Conclusion

Trade deficits are solvable – with the right adoption of policies and education of the American consumer. It will take a concerted effort, but this threat to the future of U.S. economic growth can be averted.

Investor Warren Buffett was quoted in the Associated Press (January 20, 2006) as saying: “The U.S trade deficit is a bigger threat to the domestic economy than either the federal budget deficit or consumer debt and could lead to political turmoil ... Right now, the rest of the world owns $3 trillion more of us than we own of them.” I concur with the wise sage of Omaha as to the severity of this threat. We must address it … not “next year” – but through policies adopted now.

Wednesday, December 28, 2011

Why is “Self-Control” So Important, and How Can It Be Improved?

“Self-control” is the ability to control one's emotions, behavior and desires in order to obtain some reward later.  In psychology circles, “self-control” is sometimes called “self-regulation.”  Why is learning (and practicing) self-control so important?  Self-control is significantly correlated with “success” in life – whether it is financial success, happiness, or adjustment or other various positive psychological factors.  Indeed, “self-control may be something that we can tap into to make sweeping improvements [in] life outcomes.” [Han-yu Shen, 2011].


Most persons (including college students) suffer from problems with self-control … whether it be in the achievement of the completion of a common college task (e.g., homework) or with regard to matters with huge long-term financial implications (e.g.., saving enough for the future).  “Previous research indicates that people indeed suffer from self-control problems – that is, they intend to make choices that carefully weigh both short-run and long-run costs and benefits, but in the decision-making moment they place disproportionate weight on immediate costs and benefits.”  [Beshears et. al., 2011].


The good news is that “practice makes perfect” – or at least lead to better abilities.  The repeated practice of self-control can improve the strength or capacity for self-regulation.  [Oaten, 2006.]

We must also be aware that self-control has limits, as to its ability to be successfully repeated one time after another after another.  There is substantial evidence that self-control is a limited mental resource, in the sense that once self-control is applied it becomes tougher to exercise self-control for a new task (even an unrelated one) immediately thereafter.  [DeWall, 2011.]

However, a number of studies support the notion that self-control is nevertheless a resource that can be increased through suitable exercise.  In fact, you may be aware of individuals who, through practicing self-control continually, develop an immense ability to exercise self-control, even when accomplishing many tasks requiring self-control in repetition.

But how does one begin to “practice” self-control?


One must first understand that goals and rewards which are abstract and likely to be achieved only in the future, such as “securing a good education, good grades, and landing a good job,” are likely to be de-valued relative to those goals or rewards which can be achieved in the very near-term and more concretely.  For example, “play video games” now, or “let’s go out for a beer,” while neither possesses a great long-term positive effect on one’s development, are much more concrete and near-term (and hence are more motivating) to a person than “read this chapter in order to do well on the final exam several weeks from now.”

Knowing that abstract and far-off goals have a perception of far less value in the brain enables us to first think through the choice with greater awareness.  In so doing we may be able to cognitively recognize that the longer-term, more abstract goal does indeed possess greater importance than the near-term alternative choice.

Also, we can then employ devices to change the motivations, to counter a lack of self-control.  Techniques can be employed which create incentives for a person to follow through on their intended course of action.


Some devices or techniques include those which are externally applied – such as homework assignments from a professor with a firm, near-term deadline attached to them.  For example, a professor may give a quiz for every chapter, knowing that this will motivate students to read the material now (and avoid the result of students who read all the material only the day or so prior to the exam).  Or a professor may require an outline or brief essay on each chapter or topic studied.

Externally applied techniques, such as firm deadlines set by a professor for the accomplishment of an assignment, are usually more effective than deadlines established by the person who is seeking to accomplish the task.  [Ariely, 2001.]  But life won’t always involve situations in which deadlines are imposed by others upon you; often in business (and in life) you will need to self-impose upon yourself your own deadlines … and learn how to stick with them.


Devices to assist with self-control can also arise as the result of internal application – i.e., the person who needs to undertake the desired act (or refrain from an act) employs a technique to provide a substitute near-term and more concrete incentive.  An example of this might be a person who adopts as a near-term reward for a goal: “If I finish outlining this section of the chapter, I will then be able to play video games for ten minutes.”  (It would be best if a timer is set for ten minutes, for playing the video game.)

Often such a technique is a “precommitment” device [Ariely, 2001], in which one puts the wrong choice beyond reach.  For example, a student who shops weekly for snacks for her or his dorm room might only purchase a week’s supply of 100-calorie snacks.  By eschewing snacks with higher calorie content the student does not have to confront the difficult choice of whether or not to eat an unhealthy snack.  And by limiting the number of snacks purchased to a week’s supply (even if a larger quantity purchase would result in discounts), the student becomes more aware that eating the 100-calorie snacks all in the first few evenings results in the prospect of no snacks later in the week.

This writer observed early in his life the deleterious effects resulting from alcoholism from distant family members.  Then, as a college student he became aware that if he had a few beers, the next evening he “craved” for more beer.  Realizing the dangers of addiction to alcohol, the author self-imposed a limit – no more than one beer a night, and never drink a beer two nights in succession; this was the only way avoided the “craving.”  A later further self-imposed restriction was to never drink (even one beer) and later drive.  Another form of precommitment was later adopted … “never buy beer to take home.”  This led this writer to lead a life where social alcohol drinking occurs at most once a month (on average) … with a life not torn down by addiction (thereby achieving a much better than the result seen by those in his family who did not adopt such precommitment devices).


Similarly, removing distractions and temptations that induce undesired actions – i.e., that interfere with self-control – is an equally important form of precommitment.  For example, many students study much better in the library or in other, more controlled, environments on campus – rather than attempt to deal with distractions which occur in the dorms.  Making a commitment to study in the library with a friend until a certain pre-established time is often even better, because one is much less likely to return to the dorm room early when a commitment has been made to a friend.

Turning off one’s smart phone (to eliminate interruptions from phone calls, e-mails, and text messages) is another way to avoid the distractions which often interfere with the accomplishment of a task.

Alternatively, one may make the “right choice” in advance.  For example, one might pre-order a healthy meal for a certain day (or choose to meet friends at an eating establishment that serves only healthy meals).  Making a commitment to meet a friend at a particular time in the gym, in order to exercise, is another example of a making an affirmative precommitment.

Practicing such precommitment devices – applied by the actors (students) themselves – is an essential part of learning.  Students will not always have instructors (or parents) who will impose externally implied deadlines.  And in the world of business few supervisors desire to deal with employees who need to be constantly provided deadlines in order to get projects accomplished.  In this regard, the ability to exercise self-control is a key factor affecting an employee’s retention and promotion within a firm.

Of course, practice is just that … practice.  You won’t always succeed in exercising self-control.  No one is perfect.  There will be lapses.  But, over time, and with continued practice, your capacity to exert self-control can substantially increase, leading to a much more fulfilling and rewarding life.

Professor Ron A. Rhoades, JD, CFP(r) teaches Business Law, Retirement Planning, Investment Planning, Employee Benefits Planning, Money & Banking, Insurance & Risk Management, and the Personal Financial Planning Capstone courses at Alfred State College, Alfred, NY. He is an EPLP Mentor, C.R.E.A.T.E. program mentor, serves as advisor to Alfred State's Business Professionals of America club, and serves as academic advisor to dozens of students.

Professor Rhoades is the author of "CHOOSE TO SUCCEED IN COLLEGE AND IN LIFE: Continuously Improve, Persevere, and Enjoy the Journey," a 10-week program for success in college (available for $2.99 in Kindle store at, or in paperback for $6.99). Professor Rhoades may be reached by e-mail at:


Ariely, Dan and Wertenbroch, Klaus, Procrastination, Deadlines, and Performance: Self-Control by Precommitment (June 2001). Psychological Science, May 2002. Available at SSRN:  Also available online at

Beshears, John Leonard, Choi, James J., Laibson, David I., Madrian, Brigitte C. and Sakong, Jung, Self Control and Liquidity: How to Design a Commitment Contract (November 8, 2011). RAND Working Paper Series WR- 895-SSA. Available at SSRN:

DeWall C. N., Baumeister, R. F., Mead, N. L., & Vohs, K. D. (2011). How leaders self-regulate their task performance: Evidence that power promotes diligence, depletion, and disdain.  Journal of Personality and Social Psychology.

Han-yu Shen, Henry, “The Irrationality of Organizational Escalation: The Danger of Spider-man & Overcommitment,” blog post May 2011 located at

Oaten, Megan & Cheng, Ken. (2006). Improved Self-Control: The Benefits of a Regular Program of Academic Study. Basic & Applied Social Psychology, 28(1), 1-16.

Ron's Top 10 Secrets for Personal Productivity

RON'S TOP 10 KEYS TO PERSONAL PRODUCTIVITY.  There are many theories about what makes some people more productive than others.  Some say it's the ability to multi-task, while others say productive people focus and don't multi-task.  Some say it's scheduling time to return e-mail, while others say return e-mail promptly as a means of enhancing communication.  I believe the keys to productivity may be different for every person.

Having said that, here's "Ron's Top Ten Keys to Productivity":

10.  KNOW WHAT'S IMPORTANT IN LIFE.  What are the long-term major goals in your life?  Then, how does what you are doing now relate to the accomplishment of those goals?  Once you've figured out your lifetime goals (which some may regard as discovering "the meaning in life"), you can then make day-to-day decisions much better.

9. FIND A WAY TO ENTER DATA - FAST.  Personally, I'm a very fast typist.  But most other professionals are not.  The solution for them is likely a dictation system (Dragon Naturally Speaking), or recording and then sending audio files off to be transcribed (there are many services available for this; some rely on software to transcribe, others cheap labor overseas).

The solution is NOT to forego entering data.  Financial planners and investment advisers MUST keep good notes.  And they SHOULD be summarizing conversations with clients - by having minutes prepared of meetings and telephone conferences, and then communicating such minutes to the client.  All of this requires a fast way to "dump the data" - i.e., take your notes and thoughts and either type them up quickly, or dictate them quickly.

8. DELEGATE, DELEGATE, DELEGATE.  If you are not skilled at properly delegating to others, they you are not properly skilled.

Have no one to delegate to?  In the early steps of one's career, it is o.k. to be a "delegatee."  As you gain experience, however, you need to focus on your "unique abilities" (as Strategic Coach founder Dan Sullivan) calls them.  You need to CREATE time for yourself through delegation.

Interestingly enough, as a professor this past semester I've found there is much I would like to delegate - but the delegatee options are few.  The solution for me is two-fold.  First, work smarter - by creating less work for myself that could be delegated to others.  Second, hire an assistant - something I will do this coming semester.  (What's more important ... the money I spend out of my own pocket for an assistant, or my time?)

Don't have time to delegate?  STOP.  Schedule a FOCUS day (another Dan Sullivan task).  A day in which you spend the entire day prioritizing, creating systems that shift work away from you, training others, and/or delegating tasks.

7. CONTINUALLY INVEST IN YOURSELF - EDUCATION AND CONFERENCES.  Can you afford to attend a conference?  Can you afford to take a course for a certification designed to make you a better financial advisor?  Here's a better question ... can you afford not to?

Nothing beats going to conferences in person.  I bring a pad of paper, and by the end of the conference I have dozens of new ideas written down.  Most of these are from hallway conversations (or over lunch, or dinner) with colleagues ... a few are from the presentations themselves.  But then comes the next step. Narrow the list of ideas down to THREE (not more than three) items to accomplish.  These become Quadrant Two (see below) tasks, usually.

Local luncheons with FPA Chapters help ... but the major benefit there comes from networking (and learning insights over lunch or dinner).  For real in-depth exploration, attend major conferences ... those that last 2.5 to 4 days in length.

And don't just go to one conference a year.  Do two or three.  I always try to go to NAPFA National Conference.  I try to also attend a second and third conference each year.  For me, that second conference might be another conference from NAPFA, FPA, fi360, or TD Ameritrade.  But then I try to also try to attend a conference which is different - IMCA, American Economic Association (jointly held annual conferences with American Finance Association), Hecklering Institute on Estate Planning, a conference on tax law developments (when there are a lot of changes), etc.

Yes, conferences are expensive ... but if you to them with a purpose ... and come back with great ideas (and new knowledge), you really cannot afford to miss attending them.

Education does not being and end with formal schooling or with conferences.  If you are not reading five hours of professional material, relating to financial planning generally (or better yet, relating to your specialty within financial planning), then you'll likely never really master the craft of financial planning.

Even better - spend ten hours a week, for ten years, and you'll likely become "the expert" in a particular subject which others turn to.

6. FOCUS ON JUST ONE MAJOR PART OF YOUR LIFE, EACH DAY.  Don't try to work and accomplish three things from one list (as described below), then turn your attention and accomplish two things from another list.  For me, at least, it is far better to focus an entire day on a particular segment of my life.  Most days at this point the focus is on teaching.  But, at times (as will occur over the next two weeks) the focus returns to my financial planning practice (I serve a small group of select clients).  On other days I devote myself to research and writing.

Yes, there may be phone calls needed to be returned each day (as to those phone calls that can't be scheduled for another day).  But those should be rare.

Of course, this item #4 might be personal to me ... I have a hard time shifting gears from one segment of my life to another, mid-day, without coming up with an excuse to "blow off" the second segment.  So rather than fight this temptation, I just avoid it - by seeking to arrange each of my days around a different segment of my life.

Also, for me, I am most productive in the morning.  I try to get to work by 7am (and am often to work earlier).  I then will save some projects for late in the day that require less creative thought.  But again, that's just adapting my personal schedule to take advantage of personal traits I possess - rather than fighting against my personal tendencies.

5. HAVE "FREE DAYS."  Very essential.  This is another concept learned from the publications of Dan Sullivan (Strategic Coach).  These "free days" are the days when we focus on family and personal relationships.  These are the days when our passions take over - with a plan for doing so.

Want to have a REAL free day?  No cell phone.  No e-mails.  No internet browsing, related to any work activity.

That's not to say that the day is not planned out.  It may be a day for shopping, going to see a movie, going out to eat, walking, mowing the lawn, or reading a (fiction) book.  It might be traveling, or sailing, or kayaking, or playing tennis or racquetball, or several of these things.  It might be socializing with family and/or friends.  Whatever it is, the day's focus is entirely about these things.

The result?  Relaxation, as the day goes on.  And with relaxation comes greater creatively.  I'll frequently get ideas (work-related) as I relax ... but on these free days I just jot them down ... to consider further on another day.

4. HAVE A "TO DO" LIST AT ALL TIMES.  Revise it DAILY.  If you don't have 5-10 minutes to update your to do list each day, then you are out of control.

My "to do" list begins with this message at the top: "Make Each Day Count."

I've tried a number of software programs and different methods for keeping a to do list, but I keep coming back to a simple Word document.  It's easy to move items up, or down - add items during the days, etc.

(By the way, I use two screens while working - my laptop, and a larger 24" screen which usually has two open windows.  Outlook is open on my laptop screen.  Usually a Word document and reference material occupy side-by-side screens on my 24" monitor.  Having two screens enhanced my personal productivity about 20%.  Having the second screen be large enough to split into two increased my productivity another 10%.  And I think I could be even more productive with 5-6 screens (or 3 24" monitors, each displaying two windows) ... but that's a future goal.

I actually keep several to do lists (all on separate pages of a Word document).  One list of upcoming tasks for each class I teach.  Another for my financial planning practice.  Another for my professional growth and development.  Another for family/personal matters to attend to.  And yet another for each committee I serve on.

Part of keeping the list updated is to focus, at the end of each day, by highlighting the items to accomplish the next day.  From Covey's The Seven Habits of Highly Productive People, I focus on Quadrants 1 and 2 - and hardly ever on Quadrants 3 or 4.  There's a lot of good information on this four-quadrant approach, including some good instructional videos on YouTube.

Of course, reading Covey's book helps to understand the four-quadrant system.  Because when placing tasks into the quadrants, you need his first habit - "begin with the end in mind."  In other words, define the most important goals to accomplish.  Does this task facilitate the accomplishment of that goal?  If not, it's likely not a Quadrant 1 or 2 task.

3. MINIMIZE YOUR TIME WATCHING T.V.   This is a key about NOT doing something.  Let's see ... if one spends two hours watching t.v. a night, five nights a week ... that's 10 hours a week.  What was gained?  Sure, there are some shows which are educational in nature - and perhaps worth watching.  And I'm all for moments when one needs to "gel" or "escape."  (Walking is better for that, by the way.)  I've never had any client, tell me near the end of his or her life, that he or she wished they had watched more t.v.  Lots of other regrets, but none about missing a show, etc.

Best way to minimize?  Limit yourself to one or two series to follow.  Anything else you watch must be a one-time event - sports event, or movie, or an educational session.

Want to watch t.v. as a way to relax, just before going to bed?  Not the best idea ... reading is much better.  Part of the light emitted in t.v. signals acts to trigger your brain into thinking that it is daylight.  There are glasses you can wear to counter this ... or better yet, just listen to a t.v. program (with eyes under a pillow).  Or better yet, listen to the radio, or a collection of music.

2. PRACTICE SELF-CONTROL.  In the end, it all comes down to your ability to sacrifice the present in order to gain more in the future.  To get the (truly) important things done first, before doing other things - or goofing off.

Self-control can be taught - and it must be continually practiced.  If you go away on a vacation for two weeks, do nothing, and then come back to the "real world," it will take a while to "get back into the grove" - i.e., get back in the habit of self-control.  Is it worth it?  Probably not ... if you are trying to make a favorable impression.  Vacation should have "free days" - plenty of them - but those should be planned.  Having free days takes self-control, too!

Part of self-control is getting enough sleep.  A study (by Dr. James Maas) has shown that the average college student needs 9 hours 15 minutes of sleep every night.  Most persons over-estimate their abilities, even when it comes to how much sleep they need.  Not I.  I try (at my age) to get eight hours of sleep a night ... and often get nine hours of sleep.  If I'm drowsy during the day (even after lunch), it means I'm sleep-deprived, and I'm likely suffering a decline in personal productivity of 20%, 30% or greater at such time.

Of course, I'm by no means perfect at exercising self-control.  It takes continual practice.  It means doing things that are good for me ... such as working in my university office most days (not at home, where distractions are potentially many).  It means limiting who has my phone number (and encouraging e-mails as a means of contacting me, for most people).  And other tips to maintain focus, and avoid distractions.

1. HIRE A COACH.  As financial advisors we act as financial life coaches to our clients.  We each need one, too.  Hire a coach to assist you personally - or assist your practice.  Consider rotating coaches every year or two ... to get fresh perspectives.

Practice and personal coaches usually pay for themselves ... many times over, in terms of propelling you, professionally and personally, to greater and greater success.

Interested in these concepts, and want to learn more?  Try these web sites and/or publications:
Professor Ron A. Rhoades, JD, CFP(r) teaches Business Law, Retirement Planning, Investment Planning, Employee Benefits Planning, Money & Banking, Insurance & Risk Management, and the Personal Financial Planning Capstone courses at Alfred State College, Alfred, NY. He is an EPLP Mentor, C.R.E.A.T.E. program mentor, serves as advisor to Alfred State's Business Professionals of America club, and serves as academic advisor to dozens of students.

Professor Rhoades is the author of "CHOOSE TO SUCCEED IN COLLEGE AND IN LIFE: Continuously Improve, Persevere, and Enjoy the Journey," a 10-week program for success in college (available for $2.99 in Kindle store at, or in paperback for $6.99). Professor Rhoades may be reached by e-mail at: