31 causes of failure #1: unfavorable hereditary background

This week I’m going to start another series. These will be posts based on Napoleon Hill’s book Think and Grow Rich. If you’ve been reading Brip Blap you know that this book is a major source of inspiration for me. If you are put off by the title of the book, or the general concept of “financial self-improvement,” this book may not be for you. However, I think there is a lot to be learned from Hill’s book. He based it on some serious research – it is not just his opinion.

Hill published his book in 1937. The inspiration came from several conversations with Andrew Carnegie, who at the time was one of the richest men in American history. The source of Think and Grow Rich was The Law of Success, which Hill wrote after spending twenty years studying the lives and behaviors of more than 40 extremely wealthy individuals. The people he studied had all achieved the great wealth in their own lifetimes, and were not inheritors of wealth.

This book is still today one of the cornerstones of the “financial self-improvement” sphere. It has been the inspiration for many subsequent books. One of the lists in his book is “thirty one causes of failure.” This list seems to me to be one of the best lists in his book, because it provides a useful tool for self-analysis. I have read and re-read the list, and I decided to write on this subject. Each week on Fridays I’m going to highlight an item in the list and talk a little about what it means and how you can overcome it before it causes YOU to fail.


Creative Commons License photo credit: Crossing Sparks

The First Cause of Failure: Unfavorable hereditary background

Hill says that this is the only cause of failure which is difficult for an individual to overcome on his own. He gently refers to it as a “deficiency in brain power,” or what a less polite person might call “not smartness.” Hill ‘s only solution is the use of the Master Mind, which I have written about before.

But I feel that Hill passes over this point too quickly. How do you define a “deficiency in brain power?” You can be illiterate but quite intelligent, and you can be highly educated but make poor decisions. Which one is truly stupid? I would argue that almost anyone who might be classified as being deficient in brain power has talents and abilities he or she can bring to wealth building. The only way that deficiency can truly cause failure is if the person is deficient in courage. Look at dyslexic Richard Branson, who was perceived as “stupid” because of a learning disability, and has proved himself anything but. Think of the almost completely uneducated Henry Ford. Nobody would call them deficient in brain power today, but each was probably assessed as “less than average intelligence” due to their learning disabilities or lack of education.

I am sure each of us knows someone who we secretly think of as less intelligent than ourselves, yet is more successful at building wealth. Are the wealthiest people you know also the smartest? Often they are, but sometimes they aren’t. I am sure you know someone who is slower at processing information than most people who is quite successful at what they do. And I’ll be brutal – most of us know someone who is stupid who actually does quite well for themselves – probably better than some “smart” person we know who makes terrible money mistakes.

Chances are good that you are not the smartest person in the history of mankind. Chances are good that you aren’t even the smartest person you know – but there is no cutoff on the IQ scale where success suddenly becomes impossible, and there is no minimum above which success is guaranteed. Unfavorable hereditary background is a cause of failure only if you allow it to be. Believing that you are smart enough to accomplish the task at hand is often much more important than actually being smart enough.

Resources

  • Think and Grow Rich: Please note that this link, and the link to the Law of Success below, are Amazon associate links. I plan to offer free e-book versions of both in the next week or two, since they are in the public domain. But I do recommend thinking about buying a copy that you can actually keep with you rather than just using an e-book. But if you prefer not to pay for it, there are many places you can get the complete text for free.
  • The Law of Success
  • IQ and wealth – a previous post on this topic

dumbing it down

One of the most annoying phrases I hear at work every day is “dumbing it down.” I heard it once when an employee of my client, a Fortune 500 company, said he was making a presentation to a division CEO. My coworker, a middle manager, had to explain some accounting issues to the CEO and said in order to do so he’d need to “dumb it down.”

A person hearing this phrase could take it one of two ways. The first, more relaxed way to understand it would be that it’s a friendly gesture. If I’m talking to a rocket scientist who is trying to explain how they shot down a spy satellite last week, I’m not going to understand much about thrusts and vectors and attitudes and so on. That rocket scientist is going to have a lot more success explaining it to me by drawing a picture or waving his hand around in the air and making explosion noises.

But I suspect the way my coworker delivered it was that he believes himself superior to this division CEO. Now, I am the last person who believes success in a corporation indicates intelligence (and you only have to read the Dennis Kozlowski headlines to see why) but at the same time for a middle manager to loudly and cheerfully tell a conference call of a dozen people that he’s going to condescend to explain something to a successful corporate divisional CEO just because that CEO isn’t a CPA seems, well, dumb. To assume someone gets to that level of a corporation without a fairly solid understanding of finance seems somewhat naive to me.

People have a hard time understanding the difference between summarizing, simplifying and stupidifying (my word). Learning to choose the right one is important:

Summarizing: This rocket will deliver 10,000 pounds of explosives at 543 mph directly into the satellite, vaporizing all of the dangerous toxic fuel prior to reentry of the debris and the potential dispersion of the fuel in gaseous form, causing mild harm to nearby people.

Simplifying: This rocket will destroy the satellite and eliminate the threat of harm.

Stupidifying: Boom!

Too often people choose to stupidify advice instead of simplifying it or summarizing it. I think stupidifying happens as a matter of course in corporations as a political move – an effort to keep specialized knowledge as “leverage” – and is the enemy of teamwork. Stupidifying something is also much easier than putting in the effort to write a clear and concise summary. If the subject you’re explaining isn’t important enough that you feel the need to clearly summarize it, or simplify it, then most likely the “dumbing down” is not for the benefit of the recipient, but for you.

(photo by psd)

what is lending club?

Fight-Club-0015

  1. You don’t talk about Lending Club.
  2. You don’t talk about Lending Club.
  3. When someone says stop, or goes limp, even if he’s just faking it, the loan is over.

And if this is your first night at Lending Club, you have to fight… er, lend.

I am was a writer for the Prosper blog, but I’ve also been looking into other P2P lenders. lendingclubselections

The only other one that I’ve actually made a loan on so far is Lending Club. Lending Club works a little bit differently from Prosper. Lending Club’s operating philosophy is that people are less likely to default to members of their “community.” Unlike Prosper – where you are effectively an anonymous lender or borrower – Lending Club assumes that you will be making or taking loans within your community, that can be defined on any one of many different characteristics, like the rate of the loan, the borrower’s FICO score, their debt-to-income ratio, or the number of their past delinquencies – all good information to know. You can also search by funding status, which lets you know how soon you’ll know if the loan is active or not – the lower the percentage, the longer it’s going to take to start receiving payments and interest.

I’ve always approached these sites as a lender, so I can’t speak much to the borrowing experience. Once you’ve signed up as a lender, you can make loans one of two ways: you can either just go through and select a loan yourself (a minimum of $25) or use their LendingMatch(tm) algorithm to select loans for you. I didn’t want to invest the minimum $500 required for a LendingMatch search, so I stuck with finding loans for myself.

Making a loan is pretty simple: you select an individual loan, then click the “Loan” button. After that you click the “Check Out” button, then you confirm the loan. That’s it. Right now I have two loans at 14.02% each – not too shabby, although I don’t have a huge amount of money invested. My peer-to-peer lending tends to be on the hyperaggressive side. I haven’t lent any money I can’t afford to lose (something I would advise everyone to do if investing in P2P lending) and I generally see little point to investing at rates less than what I could make in an S&P index fund (quit snickering – I’m talking about the return over years, not since the beginning of 2008).

When I signed up for Lending Club, I had a few glitches getting started. I wasn’t able to complete the signup process after I did the bank verification; every time I returned to the “start lending” page it dumped me back into the signup process, even though I had completed all of the steps. It was frustrating and didn’t bode well for the site.

I have to say that one of the interesting ways that you learn what a business is really about in our increasingly connected-yet-disconnected web world is to have a problem. I have had troubles with Google and getting in touch with someone from The Don’t Be Evil Company is about as likely as tossing a message in a bottle into the Atlantic and hoping someone in China will answer it. Lending Club, after I told them about my problem, got on it immediately – I received several phone calls and emails and they fixed the problem quickly, even when I stubbornly insisted on using the same email address rather than starting over with a new one. Their quick response makes me trust them a bit more – maybe that’s irrational but it’s nice to know they have humans working there and not just clever human-impersonating software.

 

Creative Commons License photo credit: Dioboss

You do have to wonder about peer-to-peer lending. I like the idea, and I don’t really see it as particularly risky. Sure, borrowers may try to shine on lenders, but hey, Enron shined on investors. Citigroup and AIG can’t keep their stories straight. But is P2P lending going to grow larger or just stay ghettoized to a few web-savvy lenders and borrowers? I think the number of people who will look to lend could grow, but the growth of borrowers will be critical. Who knows, maybe a recession would be good for P2P lending as people need to turn to alternative sources for cash to stay afloat. Lending Club seems more conservative than Prosper to me. Maybe it will become a great way to fund small businesses, and in fact I think that’s where the future of P2P lending lies, not in debt consolidation. People will probably keep turning to home equity loans to consolidate debt (foolishly, in my opinion) rather than the slightly-higher-rates of P2P lending which are, however, not going to result in losing your house if you fail to pay them. On the other hand, I see a great future for small businesses getting funding through P2P sites like Lending Club. If I needed $10,000 in seed capital, I would go here before I’d go to a bank. Time is of the essence, and banks are not exactly speedy with unsecured loans for business building these days.

I don’t know how it will develop, but I will continue to watch, because it’s an interesting and creative way for everyone who participates to benefit.

Check it out!


38 random thoughts on building prosperity

APOCALYPSE
If you were going to sit down and write a list about building prosperity, what would be on your list?
Here are 38 random lessons I’ve learned about making money. Not one is set in stone, and some of them are my own goals. Almost all of them, though, are critical to building prosperity for anyone.

  • Spend less than you earn is not always the FIRST way you should think. “Spend less than you earn” and “earn more than you spend” could be the basis of a much shorter list: the only two things you need to know to be wealthy.
  • Pay yourself first. When money comes in (paycheck, client payments, alimony, whatever), put the first 10% in savings until you have an emergency fund of at least $1000. Then put the first 10% into paying off any debt you have. After that, put the first 10% into retirement accounts or investments. No excuses. Ever. Make do with the other 90%, no matter what. NO MATTER WHAT.
  • Invest early and often. $100 invested at 8% for 50 years will be worth $4,690. $100 at 8% invested for 40 years will be worth $2,346. 10 extra years means twice as much money. Start investing today.
  • Buy and hold. You are not smart enough to time the market all the time. You may win some and lose some, but unless you are incredibly lucky – or smarter than an investment bank with 1000s of employees studying the market full-time – you will probably not be able to time the market much better than a mutual fund.
  • Don’t let STUFF rule your life. If you are 25 years old today and buy an iPhone for $399, that would have been $8,700 when you retired. But at least 40 years from now you’ll still have that iPhone. Right.
  • Don’t go into debt. If you go into debt, even if you manage to pay it all off someday, you will be starting out significantly behind even the laziest, slowest investor who never incurred debt in the first place. Debt will destroy your future.
  • Get educated, and keep learning throughout your life. Do you think Warren Buffet stopped reading about finance and taxes and economics when he finished school in 1951? Do you think he chills out in front of the TV watching Gray’s Anatomy or playing with his Wii, or do you think he’s educating himself right this very minute?
  • You shouldn’t try to keep up with the Joneses. It’s a race that has no winners, only losers.
  • A penny saved is a penny earned…thanks to the miracle of compound interest it’s actually a nickel earned.
  • You don’t need that. I told myself that I really needed a brushed nickel mortar and pestle for crushing spices. I didn’t. Every time you go shopping, write down anything you see that you NEED. Wait until the next time you go shopping to get it – because by then you’ll probably realize that you lived without it.
  • Getting married and staying married is a good financial move. Losing 50% of your money and buying a second home in one year is a tough way to grow wealth.
  • Live somewhere with good public schools. Private schools are fine if you want it for religious or social reasons, but the simple fact is that you are paying for your child’s education twice: once in private school tuition, and once in taxes.
  • Don’t gamble. If you feel the urge, just send me a donation instead. Either way you’ll be giving your money away.
  • Money is replaceable. Time is not. Money that is wasted can be replaced, because technically there is an infinite supply of money that you can acquire in your life. Actually acquiring it may be tricky, but if you waste $10 today you can think of ways to generate alternate income tomorrow to replace it. Time, once wasted, is gone. If you watch 2 hours of TV a night starting at age 21 and living to age 78, you will have watched TV for 24 hours a day, 7 days a week for 4 years and 9 months of your life. Think about that.
  • You cannot spend too much on your health. This may be one of the oldest cliches in the book, but if you don’t have your health, you don’t have anything.
  • Complaining is counterproductive. Move on. All of the time most of us spend complaining – and this one is a HUGE problem for me that I’m trying to overcome – is time that we could spend on a million different positive things: exercising, learning, playing, cooking, laughing… the list goes on and on.
  • Write down your goals.
  • Half the battle is preparation. Going half-cocked into any venture is a sure recipe for disaster.
  • Athletic ability or musical talent or fantastic good looks are great ways to become wealthy. For the rest of us, brains will have to make up the difference.
  • Inherited wealth gives some people a head start, but we are all working – on average – within a 78 year average lifespan. You and Bill Gates both started out as naked, squalling babies with approximately 28,470 days to spend on this planet; he didn’t have any advantages in terms of 27 hour days. He’s making the most of his time (at least as far as wealth, I can’t speak to his personal development…)
  • Doing what you love is a good way to be happy. It is not always a good way to be rich. You don’t have to be rich to be happy, but not being rich doesn’t guarantee you’ll be happy, either. Do something you can tolerate for a job. Do something you love for a hobby.
  • Persistence is admirable…to a point. After that, it can become stupidity. After that, it can become dangerous.
  • Your first job out of school will set a pattern for your entire life – if you let it.
  • Chasing gains in the market is a sure way never to catch them.
  • Investing in the stock market is very difficult, and there are millions of people better at it than you – don’t kid yourself into thinking you are smarter than 99.9999% of the investors there.
  • Buying a home is satisfying, but it costs a lot more than just the cost of the house.
  • The biggest money drain in your life is your own lack of self-control.
  • Don’t borrow money from friends or family, and don’t lend money to friends or family. Ever. Unless you do it through some sort of P2P lending website.
  • Personal finance doesn’t have to be boring, but often it is – a lot of it has been said before.
  • Mutual fund performance is variable, but fees are forever.
  • Dividends are cash in hand. Unrealized gains are just that – unrealized.
  • Investment advisors are not going to be any better with your money than you are. If for some reason you find a multimillionaire advisor who is willing to take care of your investments for you, fine, but otherwise they are probably getting the same information you are. Don’t assume they spend all of their time studying the market while you’re working at your day job – most of their time is probably spent making cold-calls.
  • If you don’t learn about taxes, you will pay for it dearly for your entire life. And afterwards.
  • Not everyone has the fortitude to prepare their finances for their own death, but people with a wealthy mindset do.
  • Frugality does not mean spending ten hours sewing socks together that could be replaced for $8, or using a blend of toenails, toothpaste and BubbleYum to make homemade glue. Your time must be SPENT wisely.
  • Eating out is a lot of fun, and you pay a premium for that fun. If you ever doubt that, look at the cost of a six-pack of beer versus a single beer at a restaurant. Consider how much the restaurant charges for a side order of french fries, then go see how much potatoes cost per pound. There is a labor cost to shopping for food, preparing it and cleaning up afterward that you avoid when you go out, but it’s not as much as you think.
  • Driving a gas-guzzling car is always a waste of money, no matter how much gas costs. In addition to the fact that you probably paid too much for an overpriced tank that’s designed for offroading and you don’t even like getting your shoes muddy, you are helping to destroy the earth’s environment by contributing to climate change. One way or another, climate change is going to be expensive.
  • If you get married, make sure you are on the same page about money, lifestyles and children before you get married. Why? Reason #1: If you have the same goals, you have a better likelihood of achieving them.  Oh, and reason #11 above.

And a final bonus thought: it’s not easy, but it’s doable – there’s room enough for all of us at the table.

Other recommended reading

photo credit: *L*u*z*a*
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this thin filament

Not my original thoughts, but a great list of questions if you’re interested in providing a service (a blog, a business, consulting – basically any service you can think of):

  • What needs do people have that I can fulfill?
  • What trend or trends are present here?
  • What opportunities do they present?
  • What are the current gaps in the marketplace?
  • What is the insight that can lead me to create greater value in this segment?
  • How can I leverage what I know about this category or industry that makes sense for my [work] and my brand name?
  • How can I test the efficacy of my idea?

These ideas came from Thomas Edison, and they are remarkably applicable 100 years after he said them. I am trying to apply these ideas to my thought process about future work after my current career winds down.

What really kills me – and this happens more and more often – is how much inspirational and quite frankly useful stuff has already been written. So much of what’s written about inspiration, getting rich, etc. has already been covered better and earlier. Even what I’m trying to write about has probably been covered better by people like Ben Franklin already. It’s amazing how “The Secret” is not really a secret – it’s there and it’s available, we (and I include myself) just don’t take advantage of it.

The simplest, most straightforward ideas are right there. They are public domain works. You don’t need to buy anything. You don’t need to attend a seminar. It’s all free already – the concepts behind wealth and health and happiness. Don’t buy another self-help book, just hit the Internet. In 10 years it will all be monetized and privatized, but right now it’s the biggest treasure trove of free information the world has ever seen…

(photo credit by ishrona)

job jumper tip #5: take a break

I’ve started out the job jumper tips talking about WIDD files, being a discriminating networker and remembering it’s not all about the money and leaving on your own terms. This week, we’re taking a break – so to speak.

Tip #5: take a break.

When was the last time you took a break from working? Not a vacation, but a complete break – a pause between jobs. One of the greatest advantages to job jumping is the ability to take a break between jobs. In today’s busy world, even a vacation is filled with emails, voicemail and “just checking in.” Part of this is due to insecurity (people are afraid that while they are out on vacation they’ll be perceived as “not hard working” or slackers) but part of it is just the inevitable blending of career and personal time. The only time most people are ever separated from the need to stay connected to their office is when they switch jobs.

In my pre-consulting career I took anywhere from one week to four months off between jobs. That gap has become longer and longer each time I’ve switched jobs, with the exception of my most recent switch to consulting. Once I switched to consulting I realized I could actually take breaks between clients, so my “break time” could be even greater. Last year I took off more than two months between my three consulting projects.

Your first reaction might be to say “I can’t do that, I have responsibilities!” or “I have bills to pay!” Many people – even though they may not admit it – are afraid of that time off. “How can I explain wanting to take off four weeks before starting my new job?” Americans are particularly concerned about the appearance of laziness. The idea of telling a new employer that you want to wait one month before starting strikes most people as madness. The paycheck-to-paycheck lifestyle also causes some nervousness; people are worried that missing one paycheck may mean they won’t be able to pay their bills. While this may be true for some people, for many people it’s just an excuse to avoid giving up luxuries they don’t need in exchange for free time that terrifies them. If you are careful with your spending, you’ll be amazed at how your expenses plummet when you aren’t going to work (no dry cleaning, no lunches out, no expensive gas tank fill-er-ups, no rushed Chinese take-out dinners).

So why should you take a break? Let me give you a few reasons:

  1. Rest. The almost-alien concept of resting is hard to absorb for many people, but imagine just having a few weeks to do nothing. Sleep late, drink some coffee, go for a walk or play catch outside. Imagine no cell phones ringing, nobody calling you for an “emergency” – you can recharge yourself for your new job.
  2. Clear the to-do list. Even though you might leap directly into your new job, your personal to-do list won’t go away. Need to see the doctor? Take your car in for service? Clean the gutters? Imagine if you took a few weeks off between jobs to completely clear as much of your personal to-do list as you could. The first few weeks at your new job – a critical time to impress people – you can be a whirlwind of productivity, a warrior of focus. You won’t have to worry about asking your new boss off to go to the dentist.
  3. Explore other interests. There are few times in your life where you can really explore non-work related interests with your full attention. I started this blog while taking five weeks off between clients. I never would have done it during the normal day-to-day busy routine of commuting, working and taking care of house chores and my family.
  4. Take a real vacation. Here’s an idea: instead of a hurried weekend in Florida, take a week to go somewhere and really experience it. Pick a random city in America or Canada and explore it. Take the train. Not every vacation needs to be a sprint to the finish line.
  5. Network. You will be amazed how well people respond to networking when they find out you are between jobs but you already have your next job set. Go to some professional assocation meetings, or have a few business lunches. If people know you’re not trolling for a job, they’ll be happier to see you.
  6. Learn. Taking a break is the perfect opportunity to brush up on your professional education. Take a short course, or buy a few books on a subject that interests you. Don’t assume that learning should stop with college.
  7. Spend time with your family. I know it’s a terrifying idea for many career-focused individuals, but spend time with your family. Play with the kids. You may find it more rewarding than working, believe it or not.

So don’t worry about the money, or the appearance of laziness, or the nervousness about filling those long days with activities. Scale back on some non-essentials for a few weeks (for example, eat at home!) and make the best use of your free time during your next job-jumping break. Remember that a work-life balance means devoting some time to life, too.

Check out the rest of the job jumper tips:

(photo by Joe Shlabotnik)

a brief foray into political what-ifs

Imagine, for a minute, that you don’t have to worry about saving for retirement. Imagine that you don’t have to worry about health care costs bankrupting your family, or losing benefits when you lose your job. How would that affect your life?

Bubelah and I like to gripe that consideration of these two factors cripples much of the entrepreneurial spirit of America, or at least ours. I remember when I was working in western Europe most people had a very lazy attitude about saving for the future. The social contract in most of those states provided for their health care and retirement, so the practice of amassing huge amounts of wealth was not a popular one. Mortgages were much less common, so people would rent until they had enough cash to buy a home. At least amongst my colleagues the use of credit cards was minimal and concerns about the future seemed muted (or restricted to meta-problems like the environment or peace in the Middle East).

“But wait! The taxes!! The taxes!!” the American psyche cries. I pay a lot of taxes already. If you bundle up what I pay (and even worse, will be paying) in health care costs, plus the costs of what I have to save since there’s no REAL governmental pension forthcoming, I bet 80% of my income is gone:

  • Approximately 40% goes to federal and state taxes.
  • Another 6% goes to property taxes.
  • I pay 8% of my gross monthly income to healthcare premiums.
  • Another 20-25% (at least, sometimes more) goes to “savings” – loosely including IRAs, 401(k)s, our cash savings, our brokerage accounts.

Now imagine all that is gone and you pay a flat 70% tax, but in exchange you have free healthcare regardless of age/job status/condition/etc. Imagine that you have a guaranteed retirement income of 80% of your (admittedly quite low net of taxes) salary. In exchange you have a smaller income, but no need to save for retirement or worry about a single health-related incident bankrupting your family.

You know who doesn’t want this? Consumer products corporations. Companies that make flat screen TVs, iPhones, DVDs, designer jeans and gourmet coffees. The US stock market, because all that money that’s pumped into mutual funds and locked up until you’re 59 1/2 won’t be coming to them any more. Any company that makes stuff we don’t actually need. They want you to feel like you have that extra income. They don’t want the choice to save or spend taken out of your hands. They need you to keep buying.

No politician – not Barack Obama, not Ron Paul, not Ralph Nader, not John McCain – is ever going to seriously propose fixing this system. We’ll keep putting our “savings” into the market and spending money on cheap consumer goods imported from Asia, and sneer at Europeans and their high taxes. Yipee.

(photo by ButterflySha)

preparing for the cost of dying

tomb tombstone grave graveyard crosses

It costs anywhere from $6000 to $10000 to die in New Jersey (note that I said “to die”, not “to kill someone” – we aren’t all captains in crime families here in the Garden State, although we have our fair share and even some favorite sons).

Nobody wants to confront their own mortality, of course. My guess is that it’s probably right down there with cleaning septic tanks and reading children’s toy assembly guides on everyone’s list of least favorite things to do. But you have to stop and think about it for a second if you have a family – and even if you don’t.

If you are single, you may not have life insurance. If you are married, you may not even have started working on this yet. If you are married with children and don’t have life insurance, you need to go talk to an agent rather than reading this post. But life insurance may not always cover all of the costs, and you may leave behind a huge financial hit to your loved ones if you haven’t prepared properly. There is nothing more grim than planning your own funeral down to the last detail… except leaving your loved ones to do it for you. Think about a few of these things:

1. Burial? Cremation? A flaming ship pushed out to sea, Viking-style? You have to make your wishes known. You may assume that you’ll be buried in the family plot or have your ashes scattered to the winds, but have you told anyone about that? Can you imagine leaving that decision up to someone else, particularly in a moment of grief?

2. Taking care of the costs should not be a concern for your survivors. Can you imagine being a spouse or a parent or a child and trying to talk to a funeral director while doubled over in grief? Is that going to be a time that they need to be making decisions about money? Make sure that you take care of picking out a casket, or a mausoleum, or an urn or whatever it is you will need – but don’t leave that decision to your survivors.

3. Have money set aside as “don’t worry about anything” money. Make sure that you have an emergency fund well-funded or a separate account altogether (a “disaster fund” maybe) so that nobody has to worry about going to work or taking care of flying relatives into town – those details should be taken care of without worrying about the cost.

A confession – I haven’t done ANY of these things. I know I should, since I have a good example in the family. My grandfather had taken care of every single detail of his funeral 30 years before he died, to ensure that when he did absolutely no pressure to determine anything would fall on my grandmother. It was a brave thing to confront his mortality at such a young age (in his 40s) and certainly made a world of difference for all of us when he passed. He had expressed all of his preferences, leaving almost nothing to the imagination.

So just remember “worrying about death expenses” as item #675 on your list of a thousand things you need to plan for but haven’t yet.

(photo credit: robin.elaine )

an interview with Ur

I activated my time machine so I could sit down with Ur, a Cro-Magnon man, for an interview. We had a little trouble agreeing on basics of the interview. He preferred to conduct it after ritual drinking of antelope blood, which I politely declined on the basis of personal beliefs – namely, my belief that a person should not drink antelope blood. In the end I got a few good quotes. Here’s the result.

Ur, thanks for joining us. What would you say are the greatest financial challenges facing you and your family today?

Ur fear no challenge. Ur fought mighty Cave Bear. Ur does have concern about saving for old age, since Ur has already seen all fingers plus one foot of toes worth of summers – Ur is almost old man. Ur like to retire from hunting in time to enjoy his time as Elder of Clan at age of all fingers plus all toes summers. Ur worry that cost of living in cave very high. Ur paid ten wolverine skins for flint spearhead that cost seven wolverine skins just many-many moons ago!

How much do you save each year?

Ur set aside one kill from five for winter. Ur know one finger of hand is hard target to achieve, but Ur has fought the mighty Cave Bear. Ur knows no fear, except fear of getting cavity.

What are your long-term retirement goals?

Ur much like have a least some teeth when retired. Not have teeth, no eat meat. Antelope have much gristle.

If you could give just one piece of advice to 10,000 future generations, what would it be?

No invest in dinosaur futures. Ur lose his pelts investing in dinosaur futures. Better to diversify – flints, wolf pelts, grains and fire. Oh, and take care of teeth.

(strange picture that stole Ur’s soul by Lorri37)

~~~

Odds and ends:

I recently won a copy of The Prosperity Bible from JLP at All Financial Matters. If you’ve never heard of it, you’re not alone – but Bubelah and I were really impressed by the book when it arrived. The book has those thin, soft cotton-y pages you see in family heirloom books or Bibles. Two of the first few books included in the The Prosperity Bible (and yes, it contains 19 full-length books) are two of my absolute favorites: The Science of Getting Rich and Think and Grow Rich. I am really looking forward to reading it once I can snatch it out of Bubelah’s hands. I’ll try to post a more thorough review in the future (although I really hate doing book reviews).

Just in case it wasn’t blindingly obvious, my post yesterday was meant to be about 98% sarcastic. My parents are both educators, with degrees in philosophy and classical languages. Despite my staggeringly practical accounting MBA degree, my undergraduate degree was in mathematics, and I received enough credits for minors in linguistics, Russian and German (and had Russian been available as a major I probably would have double-majored in Russian and mathematics). I do think private schools need to pick up more of the burden of financial aid for their ballooning tuition rates (as Harvard and some other Ivies are doing, for example), and that the primary goal of federal financial aid should be subsidizing public university students’ tuition, but the last thing we need in this world is an America filled with accounting graduates and no poets. I also really liked PaidTwice‘s comment:

poetry may not win the war in Iraq, but little else will either. maybe we should try poetry. 🙂

It would have to be pretty hardcore poetry. Maybe this one would work:

“…Mere anarchy is loosed upon the world,
The blood-dimmed tide is loosed, and everywhere
The ceremony of innocence is drowned;
The best lack all conviction, while the worst
Are full of passionate intensity…”

(read the rest of the poem here)

Eh, too depressing. Better use this instead:

Humpty Dumpty sat on a wall.
Humpty Dumpty had a great fall.
All the king’s horses and all the king’s men
Couldn’t put Humpty back together again.

~~~

I haven’t done a giveaway in a while, but I have a few ebooks and even a couple of books that I’m going to give away in honor of my upcoming birthday, which takes place on a holiday (Town Meeting Day in Vermont – everyone knows what day THAT takes place on – sheesh)! Stayed tuned, I plan to offer several over the next few weeks.

a clear and present danger: the humanities

The US government currently has a debt of over $9.2 trillion dollars. In every measure of economic growth the US lags behind Europe and the emerging economic superpowers of India and China. At the same time, over $90 billion dollars will be spent in 2008 on financial aid. At least some of that money will go to pay for financial aid to students of the humanities, some probably at very expensive private schools. The economic policy of the United States encourages students to study any subject they wish, with no view to the ultimate goal – a return to society on its investment in the education of its citizens.

The increasingly dire economic situation in the US means it is time for action. The economic crisis is due in large part to spending on a war that, whether you support it or not, has far outstripped even the most wildly pessimistic initial estimates of its cost. It is also due to a lack of financial education in our citizenry that led thousands if not millions of people to believe that buying a house with a million dollar mortgage on a salary of $80,000 per year was not only possible but advisable. Many of these people would have benefited from government-subsidized finance or accounting college educations.

The average salary for a college graduate with a degree in English is about $30,000. The average salary for a college graduate with a degree in engineering can start at $68,000. Who is more likely to pay off a $40,000 student loan? Of course it depends on the individual, but the simple fact is that there should be some effort on the part of the government to encourage people to use financial aid to obtain degrees that result in higher-paying jobs; an employee who is paid more contributes more to the coffers of our nation in terms of taxes, productivity and usefulness of their output. The engine of our corporate economy is driven by the technical professions. Poetry will not win the war in Iraq.

In addition, the government should eliminate all financial aid for people who take more than 4 years to obtain a degree. They are delaying their entry into the workforce and thereby delaying repayment of their aid. They drain resources and attention away from the more capable and efficient students.

For these two reasons, the government must redirect financial aid to students who make the choice to (a) graduate as quickly as possible and (b) study science or engineering or math with the goal of obtaining a job with the maximum possible salary.

To me it becomes a question of subsidizing those professions that will help the United States remain the technological and scientific leader of the world. Private schools that value the humanities can dip into their endowments to reduce tuition for people who want to study linguistics, but as a taxpayer I want to see our nation’s universities churning out graduates who will get high-paying jobs and share the burden of high taxes with me.

The sole purpose of a university’s financial aid programs should be to churn out better, higher-paid employees (or better soldiers or technological innovators). There is no room for the pursuit of “thinking” in our schools. Those days are done.

(note: I am being sarcastic – I don’t actually think this at all)

(photo inflicted by Boris from Vienna)

job jumper tip #4: leave on your terms

I’ve started out the job jumper tips talking about WIDD files, being a discriminating networker and remembering it’s not all about the money. This week, I wanted to make a point that’s near and dear to my heart.

With a looming recession, people are starting to worry about their jobs, with good reason. You can’t make it a day here in the New York area without hearing about layoffs and redundancies. People get emotional about their jobs. They suck up a lot of your life; you know your cubicle neighbors’ kids’ names, you have eaten at the local Olive Garden together and cried over broken fax machines. It’s tough not to get emotional. Here is my tip, then, to try and keep some perspective.Tip 4: You will leave your job, someday. The ONLY questions are when (not if) and how.

You are going to leave your job someday. You will retire, quit, get fired or die. Most of us desperately want to avoid getting fired or dying on the job, but that leaves only two options: retiring or quitting. Unless you are Bill Parcells, retirement only happens once. That means that chances are very, very good that you will quit your job if you don’t get fired or laid off first. Maybe not tomorrow, maybe not this year – but you will quit it. And the sad truth, for most people, is that the job you leave will become a memory. You may think you had lifelong friends there, but when you are surrounded by your new co-workers who are there 12 hours a day, will you be trudging back over to the old office after work to hit Friday’s? Chances are you won’t. I have made some friends from work over the years that I’ve kept, but the fact is that I don’t see them much. With commute, my current work, family and personal friends you just can’t make a lot of time for old work friends. If you jump a lot, your list will get long in a hurry.

So try to keep up with old work friends, if nothing else for networking’s sake. But in this day and age you can’t afford to get sentimental about your job. You’ll be leaving it someday, and it’s better that you do it on your own terms, when the getting is good. If you are frustrated today, remind yourself that in a matter of time – days, week, months or even years – the boss who annoys you, the coworker who backstabbed you or the people who were more than just coworkers will all be a part of your past.

Check out the rest of the job jumper tips:

(photo by wim harwig)

brutal honesty

strangling statues

What is brutal honesty? Can you afford to be brutally honest? And what is the alternative to brutal honesty?I see this phrase from time to time and wonder when it first came about. The phrase ‘brutal honesty’ is actually a very clever juxtaposition of two very different things. Look at the dictionary definitions:

bru·tal [broot-l] –adjective
1. savage; cruel; inhuman
2. crude; coarse
3. harsh; ferocious
4. taxing, demanding, or exhausting
5. irrational; unreasoning.
6. of or pertaining to lower animals.

hon·es·ty [on-uh-stee] –noun, plural -ties.
1. the quality or fact of being honest; uprightness and fairness.
2. truthfulness, sincerity, or frankness.
3. freedom from deceit or fraud.

So using those definitions, let me just associate a bit here: savage uprightness, crude sincerity, exhausting frankness, unreasoning freedom from deceit. Each one of them has a highly negative meaning to me.

So when should you be brutally honest? If you’re trying to confront someone with a substance abuse problem? If you’re telling Jane that dress just doesn’t match her eyes? If you’re telling Junior there is no Santa Claus?

Brutality is an act of violence. If I am being brutally honest, I am assaulting your beliefs in some way. I would probably guess that this happens very frequently when people confront others over:

1. Money
2. Relationships
3. Substance abuse
4. Lifestyle habits (overweight, etc.)
5. Illness or injury
6. Psychological problems

#6 is probably an area best left alone since I’m not a psychiatric professional, and I will only speak to the other five. Taking money as an example, when is brutal honesty necessary? If you have a friend who is spending like crazy, running up a significant credit card debt, should you tell them to stop? Should you be brutally honest and tell them “you have a low-paying job, too much debt and you’ll never be able to buy a house or retire or live like a normal person until you get your spending under control”? That depends on your relationship with the person, but my guess is that brutal honesty is almost always met with hostility and seldom achieves its goals.

I personally hate people being brutally honest with me. And I hate being brutally honest with others. Probably tells you something about me, doesn’t it?

(photo by victoriapeckham)

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