December 2010 | Bigg Success

Monthly Archives: December 2010

Are the Twelve Days of Christmas Signaling Stagflation?

Written on December 20, 2010 by George Krueger & Mary-Lynn Foster in Money

twelve-days-of-christmas For the last 27 years, PNC Wealth Management has calculated the PNC Christmas Price Index. Based on the famous song, The Twelve Days of Christmas, it calculates how much it would cost to buy all of the gifts.

True love is a lot more expensive this year. The index rose 9.2% – its second biggest jump ever – to a total price of $96,824 for the twelve days!

(If you want to here some horrible singing, listen to the podcast. We do our short variation of this song.)

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Hear George & Mary-Lynn discuss stagflation on The BIGG Success Show! Click the player to listen: Play Now | Play in Popup | Download

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While all the gifts of true love for the 12 days of Christmas are up over 9%, the federal government’s index is up just a little over 1% for the year. So which one is right?

Well, the federal government’s index covers a broader basket of goodies. So you’d have to lean its way. But we think the increases shown in this Christmas Price Index do highlight some concerns.

Is inflation a concern?

All you have to do to confirm it is go grocery shopping. Commodities are up and it’s affecting all food prices. All the birds in the Christmas Price Index are up in price because it costs more now for their feed.

And skilled labor costs are up. In spite of our high unemployment rate, by historical standards, the cost of labor is apparently rising. Higher labor costs lead to higher prices for goods and services.

Inflation and slow growth?

Yet the economy still isn’t growing. Demand still seems tepid.

This is why we’re talking about this today. We may be entering a period of slow economic growth combined with inflation. Back in the 1970s, the term stagflation was coined to describe this same situation.

The Misery Index was created. It’s the sum of the Unemployment Rate and the Rate of Inflation. It’s hard to prosper in times of stagflation.

Of course, we can’t say with certainty that we will experience stagflation. However, it does pay to spend a little time thinking about the scenarios you may face. This is certainly a possibility.

Opportunity for entrepreneurs?

There are opportunities for entrepreneurs who understand the rules. Let’s talk about one of them:

We often hear that cash is king. In times of inflation, cash gets killed.

Interest rates often lag the inflation rate. So, when you deduct your marginal tax rate and the rate of inflation from your nominal interest rate, you can find yourself in a situation where your real rate of return is less than zero.

An example
You earn a nominal interest rate of 10% on a CD. It sounds like a high rate, relative to current rates. But it’s deceptive.

First, you have to calculate the taxes on the interest. Assume your marginal tax rate – the percentage of tax you’ll pay on the next dollar of income – is 30% (federal and state). Let’s calculate your after-tax rate of return:

Nominal After-Tax Rate of Return = 10% x (100% – 30%) = 7%

You netted 7% after taxes. However, we still need to consider inflation. Let’s say it’s 9%, as in the case of the Christmas Price Index. Now we can calculate your real after-tax rate of return:

Real After-Tax Rate of Return = 7% – 9% = -2%

In just 10 years, you will have lost 20% of your purchasing power, all else equal. In other words, you will only be able to afford 80% of what you’re buying now.

We’ll share the rest of our rules for dealing with stagflation in an upcoming newsletter. We hope you’ll subscribe today!

Direct link to The Bigg Success Show audio file | podcast:
http://traffic.libsyn.com/biggsuccess/00655-121910.mp3

(Image by Flickr,CC 2.0)

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5 Ways to Land a Job You Hate

Written on December 15, 2010 by Guest Post in Work

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In this economy, any job is a good job. Especially if it's in a particular salary range. After all, we can't all have the jobs we want (right?). Well, here are my tips for finding a job you HATE – that awesomely awful job that you take because it fits every qualifier on your list and meanwhile, no matter how bad it is, pays the bills, and gets rid of that pesky uncomfortable "unemployed" status. So if you have decided that it simply isn't worth the wait, that What Color is Your Parachute has sold over 10 million copies because finding a suitable job is just a trend, and that having your dream job is simply not going to happen (who needs to be happy anyway), then here are some tips for you:

First, lose sight of all your personal priorities, especially your morals and ideals. Become focused on money and your title. Trust me, those few moments of satisfaction that you experience in telling friends and family your new position while handing out business cards, will surely be worth the endless hours of misery you endure in that job. You can even put your title in your email signature!
Look for a job you already know how to do. That way, you won't have to learn anything. The last thing you want is a challenge that might lead you into new horizons, give you a chance to stretch your wings, and open up doors that you never could have entered before. Learning new things might give you a feeling of accomplishment and increase your self-esteem, making it much harder for you to develop angst and unhappiness. Don't get seduced by the lure of education! Likewise, try to find a job in which you are supervised by someone who has absolutely nothing to teach you and who you do not particularly respect or admire. If you end up admiring and respecting your boss, you may unintentionally end up learning things from him or her. Down that path lies job satisfaction and that is what we are trying to avoid.
Investigate jobs that don't interest you at all. Perhaps if you are a creative type, you should become a data processor. Likewise, if you like numbers, you should work in an art museum. Paper the market with resumes, and when the offers start to come in, prioritize the job that pays the most. Who cars if it involves mindless tedium, a long three-bus-transfer commute across town, or a boss who is a terrible personality fit with you? If a job offer does come in that sounds perfect for you, and melds your personal interests with your background and skills, reject it. You are at risk of becoming happy at work, and happiness at work is a slippery slope. Who knows what will be next? Happiness at home? No, better to be safe than sorry. Stick with work that is mind-numbingly dull, as long as it comes with a good salary and benefits, and you will have it made.
Don't ask any questions during your job interviews. After all, once you've found out the basics like how much you are going to get paid and what your benefits will be, what else is there to know? Remember, curiosity killed the cat. If you have questions about the job, that might mean that you are starting to become intellectually engaged in your work and that's the last thing that you want! Remember Rule 3 above – you want is a job that does not interest you at all, not a job that pulls you in and inspires you to ask questions. Stop thinking with your brain and start thinking with your wallet.
Don't spend time trying to figure out what you want. Don't think about what types of work you find stimulating and compelling. And definitely don't think about how your personal values and hobbies might correspond with your professional skills. Instead, look for a job that you can do even if your brain goes on vacation for a week or two. Watch out for work that requires a fusion of intelligence, information and job skills as those kinds of jobs tend to be far too emotionally satisfying and simply won't give you the level of frustration and deep unhappiness that you have the potential to achieve.

Remember, the last thing you want is the perfect job. What you want is a job, any job, as soon as possible. Jump at the first offer you get, especially if it means doing work that you hate. You will be well on your way to total and utter abject misery. Congratulations!

Author Bio
Brendan Cruickshank,(Vice President of Client Services), is a veteran of the online job search and recruiting industry. He is quoted regularly as an expert in employment and jobs trends in major media outlets like the Washington Post, US News & World Report, and Forbes.