With the media endlessly trumpeting the decline in American manufacturing, you’d think there was absolutely nothing made in the United States anymore. Nothing could be further from the truth. Though the number has shrunk due to technology advancements and cheap labor overseas, there are still plenty of things manufactured in the US from appliances to yard tools.

What IS “American Made?”

One reason we don’t buy American more often is that we don’t know what is and isn’t manufactured in the USA. When 70 percent of a GM, or Ford vehicle is made from parts manufactured overseas, is it any wonder that we question what is and isn’t American? Honda (Japan), Mercedes (Germany), and Hyundai (Korea) all have manufacturing plants in Alabama, Michelin (France) has one in South Carolina. Are their products American made? Their US employees certainly think so. If 80 percent of your car is manufactured in other countries, is it really American? It’s hard to say with certainty. Sure, legislators assign a certain percentage of parts that must be American made to claim the Made In The USA label, but what is so miraculous about going from 59 percent to 60 percent?

Some would say that a product is “American” if it’s headquarters is in the US and the money stays in the USA. What about Chrysler? Formerly owned by Daimler Benz (Germany), but now owned by Fiat (Italy), do you really know which country receives their money? Regardless of any country’s public partnerships, do we really know whether those dollars are converted to Euros, or Yen, or Yuan as a hedge against the declining Dollar?

We’re disconnected from manufacturing

Not too many decades ago, you knew who manufactured your tires. You knew who wove your carpet yarn. You knew who operated the sewing machines, the presses, the giant machines of manufacturing. They were your friends, your cousins, your neighbors. Today, we’ve lost touch with people who make things.

We’re too interested in accounting

I call it the “accountification” of American business. We’re more interested in the buying process than in the manufacturing process, in how we can tweak the system to eek out another penny per share than in providing the highest quality product at the best price.

We’re too influenced by marketing

Whether we’re willing to admit it or not, marketing plays a crucial role in what we purchase. We’ve allowed ourselves to be convinced that a Lexus (Japan) is better than any other car out there and that having one in the driveway with a big red bow on top is the ultimate gift.

American business has been too slow

Not all the blame can be laid at the feet of the American consumer. American business has been very slow to react to changing conditions. When the gasoline shortages of the 1970’s hit the US, smaller foreign cars were snapped up like they were going out of style because they met the needs of the public. American manufacturing was incredibly slow to adapt and change. Not only that, but American manufacturers were perceived by the public as peddling shoddy materials as other countries (mostly Japanese) were steadily increasing the quality of their products.

Innovation comes from the field but accountants and “experts” are usually too slow to react to it.

The biggest reason is we’re a much more global economy

The interconnectedness of commerce today is astounding. Two hundred years ago, a chair manufacturer would buy lumber from a local forester, shape it with hammers and chisels made one town over, then sell it locally by delivering it on his own handmade wagon. Today, a chair manufacturer (even an American manufacturer) might buy veneers from a company in Canada, use adhesives made in India to attach it to a substrate made in Brazil, stain it with stains made in China after using power tools made with parts manufactured in 12 different countries, then ship it on a truck made in Sweden and a trailer made in Texas to a distributor based in France who will sell it to retailers all over the world using a marketing company that’s a partnership between and English and Japanese conglomerates. Assembled in the USA? Yes. Made in the USA? I’m not so sure.

What’s the solution?

We won’t be getting rid of the global economy anytime soon, not unless we’re hit by an asteroid or comet and life takes a radical change for the worse. What needs to happen is for manufacturers to focus on what they do best and for governments to get out of the way.

Does it really help a country to adopt protectionist measures when the problem is a lack of innovation, too much regulation, and politicians with ZERO business experience dictating how a company should be run?

History says no.

Check out:

Toys Made In America

Made in USA.org

Still Made In The USA

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World Bank President, Robert Zoellick, warned economic policy makers recently that the stimulus packages countries are using to artificially prop up their economies create sugar highs that are not sustainable.

“Right now, the international system appears to have a sufficient amount of stimulus,” Zoellick said. “The danger is if you spend too much government money, you create a different problem.”

That problem is inflation. Expectation inflation. Price inflation. Wage inflation. Cost inflation. “Bail me out, too!” inflation.

The problem with a sugar high is that it is followed by a sugar low. the “crash” that happens when there isn’t enough glucose in the blood stream. Scientists may debate whether sugar highs and lows exist, but parents experience them quite frequently (mostly after a trip to the grandparent’s home).  Zoellick is concerned that we’re on the way to overstimulating the world’s economies just like sugar can overstimulate a child (or adult).

How Can You Avoid A Financial Sugar High and Low?

1. Eat the granola of steady, consistent savings.

2. Eat the vegetables of fully capitalizing your emergency fund.

3. Drink the unsweetened green or black tea of paying off high interest debt.

4. Eat the fresh fruit of using broad based index funds for your investing.

5. Eat the whole grains of having the proper amount and types of insurance.

6. Eat the raw almonds of staying away from temptations to spend.

7. Drink the pure, filtered water of learning how to make extra money.

8. Eat the fresh, lean meat of creating and using a budget.

9. Eat the blueberries of putting aside some money for your child’s college education.

10. Eat the spinach of giving to a cause you believe in.

There really isn’t anything wrong with sugar per se, at least not when used in moderation. The problem is that a “moderate amount” is so easily exceeded, much like credit! Then you end up with that sugar high, followed by a sugar low when the bill comes due.

But ANYTHING can be abused and overused, even super foods. Too much of any one thing, even things that are good, can throw a monkey wrench in the mixer.

The key is moderation and balance.

What’s your take? What other important personal financial issues should be included in our “diet?”

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Today, people rarely see their money. Our paychecks are deposited directly into our checking account, we automatically transfer money into our investment or savings account, and we pay our mortgage and other bills online. We use debit or credit cards to buy gasoline, food, restaurant meals, or DVD’s. When the funds run low, we get an email alert and log on to transfer the appropriate amount to cover the next few days. We give gift cards instead of cash and receive bonuses from employers on plastic. We’re losing our connection money as a real commodity.

A billion here, a billion there, and pretty soon you’re talking about real money. –Everett Dirkson

Today, our government bandies about billions (even trillions) of dollars like they were nothing.

We’re losing our connection with real money.

In 1980, my family moved across town so my little brother and I could attend a private school. I remember one occasion when a friend from a wealthy family lost a five dollar bill. To me, five dollars was an immense sum (especially in 1980). His mother thought it was no big deal because that amount had no real meaning to her. Her husband, a prominent physician, probably earned more than that every minute of an 8 hour work day.

How can re regain our connection with money?

Here are 7 ways to reconnect with your money and make it real to you again.

1. Associate money with something tangible.
When’s the last time you paid for anything in potatoes or cattle or bookkeeping services? Yeah, me neither. Learn to associate your money goals with something else other than just cash. If your goal is to save an additional $50/month, you could equate that to brown-bagging your lunch about 5 times per month, giving up a night or two out on the town, or finally canceling that phone land line.

2. Hours for Dollars
Do you get paid what you’re worth? How many work hours does that daily latte cost you? Convert your spending into working and you’ll be better able to connect the dots between your money and reality.

3. Remember the Tradeoff
The real question is why are you doing this? What’s your motivation? If we can connect our personal money issues to our motivations, we’ll be better able to achieve our goals. Brown-bagging without a good reason won’t keep you motivated. The next time you’re out and that new electronic gizmo or new pair of shoes catches your eye, pause for a moment and rethink the trade-offs and WHY you’re saving money. When you understand why you need your savings cushion, you’ll probably end up putting the money into your savings account instead.

4. The Envelope System
Nothing can get you reconnected to your cash like using the old fashioned envelope system. Under the envelope system, you track your money each month by using envelopes and reconnects your budget from an on-paper concept to something you can literally grasp. Gather some blank envelopes. Label one envelope “rent” or “mortgage payment,” another “utilities” and another “food.” Create as many envelopes as your budget requires and fill them with the money you’ve budgeted for that item. Then, if you take money from food to pay rent, put an IOU in the food envelope so you know how much money you need to replace. Unless you pay that envelope back, the whole exercise becomes a shell game and falls apart.

5. Paper or Plastic?
People who use credit cards tend to spend from 12 to 50 percent more than when they use cash, according to various spending surveys. It makes sense to limit your use of credit cards as much as possible. If you’re in bad enough financial shape that you need credit cards to make it through the month, restrict their use to the absolute essentials. Even if you’re using the card for groceries, reconsider. Unless you pay off your balance in full at the end of the month, you’ll pay interest on that box of pasta long after it’s gone.

6. Go On A Cash Crash Diet
As an experiment, go the the ATM and withdraw all the cash you’ll need to meet your needs for the next week. Put the credit and even the debit cards away and test your ability to live on a “cash crash diet.” Make sure you consider eating out, gum, DVD rentals, gasoline, late night runs to the store for milk, and allowances for the kids. All week, carry a notebook and write down where and how you spent your cash. If you can make it one week, you’ve successfully reconnected to your money. If not, where did you go wrong?

7. What’s the Future?
Even at a ZERO percent interest rate, saving $50/month will be $3,000 in 5 years. Add some interest in the mix and you’ll earn more. So what will that extra vacation this year cost you in retirement savings 25 years down the road? Admittedly, this tactic doesn’t reconnect you with your money in a tangible sense, but it does make you pause a moment before spending that $50 bucks on a meal that will soon be forgotten.

Money is a limited resource but by reconnecting to it and converting it into something tangible, losing a five dollar bill actually means something.

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I know Valentine’s Day has already passed, but when you have someone in your life like my beautiful wife of 19 years, Valentine’s Day is every day.

1. She is my one true love.
2. She completes me.
3. She follows through on her commitments.
4. She pushes me to be my best.
5. She is faithful to me.
6. She loves our three, beautiful children.
7. She listens to my rants without judging.
8. She is strong where I am weak.
9. She is always willing to help someone in need.
10. She loves to play and be playful.
11. She supports any effort I undertake.
12. She is always on my side.
13. She is frugal without being too cheap.
14. She doesn’t try to rule over me.
15. She is a great cook!
16. She takes care of herself.
17. She is a very hard worker.
18. She isn’t afraid of risk.
19. She laughs easily and from the heart.
20. She loves the simple things in life … and isn’t afraid to admit it.
21. She still sends chills down my spine with “the look.”
22. She has a genuine spirit of forgiveness.
23. She makes our house into a home.
24. She can be serious when she needs to be.
25. She is always more willing to give than to receive.

I love you, Sweetie! You’re the best thing that ever happened to me and I wouldn’t trade you for anything in the world. I am truly wealthy to have you and our children.

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According to research recently published in the Journal of Consumer Research, partaking of one little luxury, a truffle, was the difference in whether study participants were later able to resist other food items such as pizza, ice cream and potato chips. It’s as if eating the truffle formed a commitment in their minds to continue their indulgence. The study authors explained that one indulgence leads to another and by eating that truffle, they activated an “indulgence goal,” but participants who resisted the truffle activated a “health” goal in their subconscious.

“Consumers many times may perceive that a small act will be enough to stop cravings of fatty food items, but our research shows that small acts may lead people to unconsciously seek more indulgence.” Study authors Juliano Laran and Chris Janiszewski

Last night, after working all day and eating a late, pretty heavy lunch, I truly wasn’t hungry for supper. I arrived at my hotel around 7:30 PM, but instead of going to my room, I decided to drive around and explore the city a bit, ending up at a barbecue restaurant called Rudy’s. I told myself I was stopping because of the sign that advertised that this was also a country store, but after stepping into the building, I was captivated by the aroma of good barbecue, good TEXAS barbecue. I decided I was a little hungry and got in line to place an order. One of their workers noticed me scanning the menu and asked if I have visited before. When I told him, no, he yelled out to the pit boss, “Gimme some samples for my new customer here!” Don’t you just love Texas hospitality?

What was placed before me was brought down from angels in heaven, I’m convinced. I never knew brisket or smoked turkey breast or home-made creamed corn could taste that good. What happened next? I ordered some of each, took them back to my hotel room and ate way, way too much. Don’t ask me how much I ordered. I won’t tell you.

And so it is with the luxuries we allow ourselves to sample. Before long, we simply MUST have them. It doesn’t matter what they are; we will rationalize, we will claim that in “today’s society” these AREN’T luxuries but necessities, and we will allow ourselves to be hooked. Just like the large-mouth bass that must have that shiny, flashing thing scooting through the water, we bite and are reeled in.

But unlike the fish, we have the ability to say, “Wait a minute, I don’t want to live this way,” and we can wrest control of our lives away from our whims and away from the marketing gurus who really just want to separate us from our money. We have the ability to use the self discipline that is inside each one of us. When we resist the urge to splurge, we activate subconscious goals to better ourselves, to better our health, to better our finances, to make wise choices, and to live a better life without the encumbrance of “things.”

What’s YOUR truffle? What’s your luxury turned necessity? What things did you do without for 25 years that you now feel are vital parts of your existence? What steps can you take to reduce their influence on you?

Resisting activates goals just as indulgence activates goals. What goals are you activating in your life?

[tags]needs vs wants, luxuries, necessities, self control, self discipline[/tags]

photo credit: citymama

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In Rich Like Them: My Door to Door Search for the Secrets of Wealth in America’s Richest Neighborhoods, author Ryan D’Agostino decided the best way to learn how the richest people got that way was to simply ask. So, he did. Traveling through almost 2 dozen of the richest zip codes, he knocked on 500 doors and interviewed about 50 wealthy people, simply asking, “How did you get to live in a home like this?”

The diversity of responses was staggering, as were the variety of occupations and careers that these wealthy individuals had chosen. Roughly half of them rose through the corporate ranks, got tired of the corporate rigamarole, and struck out on their own to start their own business. Here’s a few of the things he learned and the people he learned them from:

From a real estate investor who focused on waterfront properties, always keep your eyes open for potential opportunities.

From a health care administrator, delay gratification.

From a divorced mom, you have to earn 2 or 3 dollars for every dollar you spend.

From a psychologist and author, have a growth mindset rather than a fixed mindset. Failing is the best way to insure future success.

From a travel agent, people will pay to have unique experiences.

“For every instance of conspicuous gumption, there are thousands of workers who plod along in their jobs, doing what they’re told, complacent and unimaginative. Which is why anyone who bends the rules even a little bit can go far.” —Ryan D’Agostino

From a rare book seller, always have and show gratitude and maintain your network of connections.

From a former CEO, compounding isn’t the magic, the magic is having the patience to allow it to work.

From an elderly widow in Las Vegas, wade in slowly to your investments and never bet the farm.

From a doctor, be willing to move where there’s more opportunity to produce the desired results.

You have to love what you do. If each $100 you earn saps $100.01 in drive from you, eventually you’ll have nothing.” —Ryan D’Agostino

From the popular band Dispatch, never compromise your principles.

From a real estate speculator, buy crap and make it look like the Pottery Barn.

From another real estate titan, work to take the gamble out of the gamble. There’s a difference between risk and chance. A risk is a bet that you’ve tried to rig in your favor by learning everything you can.

From a shrimp peeling machine manufacturer, stay in your core business.

From an art dealer in San Francisco, pay the people you owe with the cash that’s supposed to go to them.

From a heavy equipment dealer, don’t expect an inheritance. Your parents will probably live into their 90′s!

From another art dealer, don’t plan a career, plan a life!

From a media planner:

“First of all, to work hard to achieve the goal of just being able to afford stuff is a terrible way to go through life.”

That same guy said to make sure your boss doesn’t saddle you with just doing one thing for the rest of your career.

From a real estate titan in California, if you sell things quickly, you might get rich, but if you hold on to them, you’ll get wealthy.

From an ophthalmologist, chase whatever makes you happy and give you joy.

From a credit card processor, there are NO rules. ANYTHING can be done so go ahead and challenge the norm.

From a produce broker, never stop being a student. Learn everything you can.

From the former CEO of TRW, bend the corporate rules once in a while.

From a Seattle airline executive for 18 years who quit to become a home-builder, take a risk!

From a venture capitalist, value your relationships more than the financial assets you’re earning. Greed values accumulation for accumulation’s sake, wealth values relationships. Remember, you are not a god.

There are five major chapters and they are organized to teach some of the lessons of wealth. Each chapter has subchapters with tips like these below:

1. Open Your Eyes. Find opportunities that others don’t see. You’ll find them by always having your eyes open. When you hear someone say “If only I could … ” THAT is an opportunity. Connect the people you meet.
2. Luck Doesn’t Exist. Choose your purpose and don’t let anyone tell you you’re wrong. Watch your pennies no matter how many you have. Don’t deviate from your planned path for a quick gain.
3. The Economics of Obsession. Love what you do. Do what you love. Take your mind off the money and you’ll earn more. Turn your fear into passion.
4. The Myth of Risk. Take risks. If you work smart and hard, those risks will be reduced. Calculate every risk – even the one you live in. If you want autonomy, let it motivate you. If you hate your career, um, change it.
5. Humility. Be humble. Realize what you can’t do, and work on what you can do. Don’t be a slave to plan A, it will prevent you from seeing plan B. Don’t be afraid to make less than your spouse. Remember that you are not, nor will you ever be, a god or goddess.

Very few of the people D’Agostino interviewed had inherited their wealth, but those who had, had a full time job just maintaining it. An enviable position, to be sure, but taxing to say the least … in both respects of the word.

What I took away from the book was the vast majority of people who read it can probably ascend to similar heights of wealth as the interviewees. That’s encouraging. But it’s also important to realize that getting wealthy is hard work. There are no over-night successes. One person related how he had worked 7 days a week, sometimes until 4 AM, to get his company up and running. He did this for 12 years and poured his soul into it. Then people claimed he was an overnight success!

People only see the results of labor, rarely do they see the knotted stomachs, the late nights, the missed ballet recitals, the loan rejections, the $35,000 lost in a customer’s bankruptcy, the sleepless nights when you don’t have the cash to make payroll tomorrow, or the disapproving looks from the in-laws when you announce you’re going to quit the corporate job to strike out on some “unproven” venture. But I doubt any of the interviewees would go back and change much!

In case you’re wondering about those top 100 wealthiest zip codes in America, the data was compiled by ERSI taking into consideration factors such as average household income, the value of material possessions and resources, and the sustained accumulation of wealth. By state, New York had the most zip codes on the list at 24, California 20, New Jersey 10, Connecticut 9, Maryland 8, Massachusetts 8, Illinois 5, Virginia 4, Florida 2, Georgia 2, Ohio 2, Pennsylvania 2, Arizona 1, Missouri 1, North Carolina 1, and Washington 1. D’Agostino makes a distinction between those who have a lot of money, those who are well off, and those who are truly loaded.

Buy or Don’t Buy

I honestly liked the book. It was a fantastic read and I finished it in just two sittings. I probably could’ve finished it in one, but after I got started, I decided that the information was so good, I wanted to take notes and I started over again. It really is a good book so I’d recommend picking this one up … that is, if you don’t win it in my free book giveaway! I’m going to give away one copy of this book in a random drawing in one week. If you would like to be entered into the drawing, simply email the FREE BOOK CODE located at the bottom of my RSS feed to thewisdomjournal at gmail [dot] com.

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